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Stalled private hospital has Westbank band members, police asking questions about finances

The site of the private for-profit hospital proposed for development on Westbank First Nation land.
June 25, 2015 - 6:17 PM

FUNDING COLLAPSE; RECALL CAMPAIGN

WESTBANK FIRST NATION - Canada’s first private, for-profit hospital, slated for development on Westbank First Nation land, has stalled amid lost venture capital funding and criminal allegations and the political fallout could claim the band’s chief and councillors.

The Lake Okanagan Wellness Centre is a project the band announced with much fanfare in 2011. The high-end private medical facility was to provide a roster of surgical procedures for well-heeled clients in a resort setting on 20 acres of band land overlooking Okanagan Lake. Opening of the facility was originally scheduled for March, 2015.

Principals of the Lake Okanagan Wellness Centre limited partnership is a company called Ad Vitam and Westbank First Nation, which was to contribute land for the development. Ad Vitam’s role was to provide overall medical direction and raise the money to build the facility.

Ad Vitam principals Lyle Oberg and Mark McLoughlin say they are hopeful the project will proceed with a new funding partner, a process they say is already under way, however the future of the project appears to be in doubt, according to numerous interviews and documents obtained by infonews.ca.

A commitment letter from March 2013 shows that approximately $150 million for the Lake Okanagan Wellness Clinic was secured from Oxbridge Capital Group of Companies but that money was never advanced. The partners refuse to say when or why the funding stopped and a letter from the band, in response to questions posed by a band member, says the RCMP is investigating.

“The basis of the investigation is that Oxbridge has absconded with a sum in excess of $2 million where it had not earned those funds,” wrote WFN Council secretariat Kevin Kingston.

Several calls this week to Oxbridge have not been returned. Attempts to interview Chief Robert Louie were also denied, although he did issue an email statement. “The proposed medical centre project on WFN community-held lands adjacent to the WFN office are undergoing a master planning review with the membership currently and we have no updates for the public at this time.” Louie did not elaborate what the “master planning review” was.

An artist's rendering of the Lake Okanagan Wellness Centre.
An artist's rendering of the Lake Okanagan Wellness Centre.
Image Credit: Contributed

In February, band members took the rare step of engaging the band’s self-governance constitution to circulate a petition forcing chief and council to conduct an audit of the partnership and its business dealings. That audit was never completed. A report from accountant BDO says documents were not made available by Ad Vitam and could “provide no assurance as to the amounts being reported.” It quotes McLoughlin saying the documents were locked in Ad Vitam’s office in Estates Square in West Kelowna. Ad Vitam was evicted by its landlord because it stopped paying rent in October 2014.

A default judgment against Ad Vitam in favour of its landlord is registered in B.C. Supreme Court for nearly $150,000.

From the auditor’s report, it appears Westbank First Nation is on the hook for between $7.9 to $10.3 million in debts through mortgages and brokerage fees still owing to Oxbridge.

The band’s role in the partnership was originally limited to providing only the land for the clinic — no cash. However to raise capital, the partnership secured a mortgage on those lands from Canadian Western Bank, and Ad Vitam stopped making payments toward the mortgage February 1. If the bands wants the lands back, the $7.9 million owing on the mortgage must be paid. The auditors report also notes another $2.8 million is owed to Oxbridge for brokerage fees, despite the loss of funds and the criminal allegations.

The band’s constitution states any expenditure over $500,000 requires a special membership meeting and a vote by the membership. Band members say neither of those occurred prior to taking out that mortgage or an earlier $2.5 million loan that was paid off by the $7.5 million mortgage.

Roxanne Lindley is one of many band members now questioning the entire project. Since the fall of 2014, she says there have been several acrimonious meetings with the band council trying to get information about the wellness centre development.

“There could be millions of dollars missing and they won’t tell us about it,” said Lindley. “If you screwed up, just tell us. We want them to be accountable.”

A second petition is now circulating among Westbank First Nation members calling for the removal of Robert Louie and the four sitting councillors, Chris Derrickson, Mic Werstiuk, Brian Eli and Mike De Guevara. It cites their failure to respond to the first petition by not producing a full and complete audit and “failure to disclose to all membership how the WFN Council proposed to repay existing and ongoing financial obligations resulting from (the partnership).”

“These breaches show a complete lack of transparency in the financial matters of the WFN, have nullified any accountability of their fiduciary duties (to) membership and through the blatant mismanagement of membership monies,” the petition reads in part.

It’s not known how many signatures are on the recall petition so far, which requires the signatures of 20 per cent of voting members. Just 72 signatures was sufficient to force the band to conduct the audit.

(LtoR) Westbank First Nation councillors Mic Werstiuk, Mike De Guevara, Chief Robert Louie, Chris Derrickson and Brian Eli.
(LtoR) Westbank First Nation councillors Mic Werstiuk, Mike De Guevara, Chief Robert Louie, Chris Derrickson and Brian Eli.
Image Credit: WFN website

On Wednesday, Ad Vitam partner Lyle Oberg, a former MLA and cabinet minister in the Alberta provincial government, said it may have appeared last October the project was dead, however it is back on track.

“We are in negotiations on finishing the financing,” he said. “That has been the difficult part on the health centre.”

Neither he nor McLoughlin were aware of the petition to remove chief and council. In an interview, McLoughlin said he couldn’t disclose any information about new financing for the project because he is bound by a non-disclosure agreement. He said a unique project such as the wellness clinic should be expected to have “ebbs and flows” but he has no new timeline for its completion.

“We are hopeful to be able to have, over the next couple of months, some positive indications to be able share,” he said. “There is due diligence happening (but) we can’t get into the specifics. It is moving in a positive direction.”

Former WFN chief Noll Derriksan, who is backing the recall drive, said the band leadership is playing fast and loose with the constitution and governance policies.

“They aren’t supposed to spend more than $500,000 on anything without membership approval. Period. Yet here they are making transactions, moving money around that’s way more than that,” he said. “They can’t put a mortgage on that land without going to the people. And they didn’t do that.”

— This story was edited at 5:09 p.m. June 26 to clarify a mortgage amount and description

To contact the reporter for this story, email John McDonald at jmcdonald@infonews.ca or call 250-808-0143. To contact the editor, email mjones@infonews.ca or call 250-718-2724.

News from © InfoTel News Ltd, 2015
InfoTel News Ltd

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