Garry Hartle, a former auditor of the Indigenous Procurement program from 2016 to 2023, said in an interview that he had repeatedly warned Indigenous Services Canada about problems with the program.Dave Chan/The Globe and Mail
A former auditor of a federal program designed to prioritize Indigenous companies said he produced a report alleging a large nurse staffing agency exploited its Indigenous partner and submitted fraudulent documents, but federal officials didn’t act on his call to refer the findings to the RCMP.
Garry Hartle appeared Tuesday before the House of Commons committee on government operations, which is holding hearings into Ottawa’s Procurement Strategy for Indigenous Business (PSIB), which critics say is vulnerable to abuse by non-Indigenous companies through joint ventures.
The Globe and Mail reported Monday that Mr. Hartle, an auditor for the PSIB program from 2016 to 2023, said in an interview that he had repeatedly warned Indigenous Services Canada about problems with the program.
The Globe also reported in October that Mr. Hartle produced an audit report in late 2016 that found the nurse staffing company – called Canadian Health Care Agency – landed contract work through a joint venture with a small one-person foot-care company that was not in compliance with the program’s rules requiring joint ventures to be majority owned and controlled by the Indigenous partner.
Mr. Hartle provided more detail on his findings Tuesday, saying he urged numerous federal officials with Indigenous Services Canada and Public Services and Procurement Canada to refer his findings to the police, but he says the government didn’t act.
He said his audit found that the joint venture between the nursing company and Pedabun 35 Nursing Inc., owned by Moose Factory-based First Nations nurse Pearl Chilton, was not genuinely led by Ms. Chilton. He said the audit found CHCA employees were falsely listed as being employees of Ms. Chilton’s company.
Calling it a “particularly egregious file,” Mr. Hartle said the joint venture was awarded an eight-year contract through the PSIB to deliver nursing services in remote Indigenous communities. Mr. Hartle said the contract was worth $160-million, but The Globe could not verify that figure.
“My audit determined that the joint venture was a shell for the non-Indigenous Canadian Health Care Agency. This business took advantage of the naivety of the owner of Pedabun 35 Nursing to win and execute a large set-aside contract. In my audit, I concluded the joint venture did not exist for any other function except to enable CHCA to win and execute the PSIB mandatory set-aside contract,” he said.
The Procurement Strategy for Indigenous Business is a federal policy meant to foster the growth of Indigenous businesses in Canada. It allows government departments to “set aside” certain contracts for Indigenous companies registered with Indigenous Services Canada, significantly reducing the competition pool.
It allows for Indigenous and non-Indigenous companies to enter into joint ventures to bid on government contracts, so long as the Indigenous company retains ownership and control of the enterprise.
The program is facing criticism from some Indigenous business owners and leaders who say that many of the joint ventures under the program are not actually benefiting Indigenous people, and that contracts are being won by shell companies connected to non-Indigenous businesses.
Mr. Hartle said he had several meetings with officials in 2017 that included Public Services and Procurement Canada and the department now called Indigenous Services Canada.
“I presented the evidence, which was substantial, to indicate there was fraud. And my recommendation was that it be given to the RCMP to investigate, but they didn’t want any troubles, and they didn’t do it,” Mr. Hartle said. He did not explain how he knows the RCMP wasn’t contacted.
“I thought it was fraud, because you can’t invent employees for a company and then submit that in your bid proposal to win the contract. Because the number of employees in the Indigenous company went towards points to win the contract. So, it was always, to me, that’s definitely fraud. And all the documentation was there to prove that,” he said.
The Cambridge, Ont.-based nursing company was acquired by Premier Health of America, a Quebec-based health care company, in 2022. Gustavo Serra, a spokesperson for Premier Health, said in an e-mail Friday in response to questions from The Globe that since taking ownership, the company has “focused on strengthening the agency’s governance and operational processes to ensure compliance with all ethical standards and regulatory requirements,” and that it has “no tolerance for fraudulent activity or misrepresentation.”
Mr. Serra declined to provide additional comments in response to Mr. Hartle’s testimony, instead referring back to the company’s initial statement.
Mr. Hartle’s audit findings were made about six years before Premier Health’s acquisition of Canadian Health Care Agency.
“We take the concerns raised by Mr. Hartle seriously and continue to ensure that our activities are fully consistent with the values of transparency, accountability, and ethical conduct,” Mr. Serra said.
The audit led to the removal of the CHCA joint venture from the Indigenous Business Directory, which is managed by Indigenous Services Canada.
Since then, the department has continued to award work to Canadian Health Care Agency outside Ottawa’s Indigenous set-aside program. Since 2019-20, the company has won 30 contracts worth at least $131.7-million. There is nothing in the rules prohibiting that since the contracts were not under the Indigenous business program.
In response to Mr. Hartle’s initial comments in Monday’s Globe and Mail, Indigenous Services Minister Patty Hajdu said she is calling for an external review of the Indigenous procurement program.
That would be in addition to a planned audit by Auditor-General Karen Hogan.
The minister’s press secretary, Jennifer Kozelj, repeated the pledge for a review after Mr. Hartle’s committee appearance. ”These allegations are serious, and we are taking immediate action to call for an external audit to make sure that the proper checks and balances are in place,” she said in an e-mail.
The meeting ended with Conservative MP Garnett Genuis proposing further hearings into the nursing contracts, including by inviting company representatives and government officials who were involved.
“We’ve got to get to the bottom of this issue with Canadian Health Care Agency. Clearly,” he said.
With reports from Tom Cardoso in Toronto