More details emerge about scale of alleged fraud by suspended Denesoline CEO
CBC
Suspended Denesoline CEO Ron Barlas designed contracts which gave him the power to bankrupt the company "at his whim", lawyers for Denesoline owner Łutsel K'e Dene First Nation alleged in Northwest Territories Supreme Court on Friday.
It was, they said, just one of a long list of actions Barlas took over his time as CEO of Denesoline which were contrary to the best interests of the company – and the people it was created to help, members of Lulsel K'e Dene First Nation (LKDFN).
The First Nation's claim rests on proving that Barlas "acted oppressively" towards LKDFN members, or unfairly disregarded their interests.
They argued that, if the court finds Barlas did meet that threshold, Canadian corporate law gives the presiding judge "broad discretion" to make orders to remedy the damage.
They are justice Karen Shaner to permanently remove Barlas as Denesoline CEO and order him to pay back all the money he took from the first nation.
They also want three properties he is alleged to have bought with Denesoline money to be put in a trust.
They argue that Shaner has enough information to make those orders based on the written evidence alone, saying that because so much of the case rests on financial documents and Barlas's own emails, a trial isn't necessary.
On Friday, LKDFN lawyers spent the bulk of the day going over evidence they have gathered to support their claim.
The evidence was presented by lawyer Matthew Sammon.
Sammon has said that much of Barlas's self-dealing was related to what he called a "sham" joint venture agreement Barlas created 2016 between Denesoline and Northern Consuling Group, a company owned by his wife.
Northern Consulting Group was solely registered and owned by Barlas's wife Zeba, but Sammon alleged that Barlas said under cross-examination that his wife wasn't very involved, and described the agreement as part of his compensation for his work with Denesoline.
By 2017, the joint venture entitled Northern Consulting Group to half of the profits from Denesoline's major contracts, Sammon said.
In the fall of 2018, Barlas made changes to the agreement, Sammon said. The new agreement dictated that if either Denesoline or Barlas's family company bowed out of the joint venture, Denesoline would have to pay out $4.25 million to Northern Consulting Group.
The payout was structured as a secured debt, essentially giving Barlas, through Northern Consulting Group, a stake in all Denesoline's assets.
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