July 31, 2015 - 8:00 PM
WESTBANK - The company that partnered with Westbank First Nation on its first failed attempt to build a private for-profit hospital on band land raised less than $3 million and spent more than $11 million including money for travel, homes, a boat and took home nearly $1.4 million for themselves, according to financial documents.
Chief Robert Louie confirmed at a recent press conference Westbank First Nation is on the hook for $7.9 million in debt racked up by its partner, Ad Vitam Health Care, which appears to be insolvent and unable to pay. To finance operations, they drew on a $15 million loan from Canadian Western Bank, guaranteed by the band.
According to a scaled down audit of the band and Ad Vitam from April 1, 2012 to December 31, 2014, the company, as general partner, had few checks and balances on how it carried out business for the partnership.
Ad Vitam principles Mark McLoughlin and Lyle Oberg delivered a commitment letter from Oxbridge Securities for $150 million in funding but it was pulled in August 2013. It appears from internal documents that Ad Vitam breached one or more conditions on the money, but the company still owed brokerage fees of more than $2 million.
Ad Vitam raised $2.5 million for the partnership from Aspen Medical Canada for an ownership share, while Ron Christman, a Kelowna businessman, invested $300,000. It’s not clear if these partners are still involved. Ron Christman did not respond to a request for an interview. Other potential partners are mentioned in various documents, but not in the financial review.
Oberg and McLoughlin weren’t investors themselves — records show they had no skin in the game. They did, however, collect $668,000 each for ‘management fees’ while Sheila Mackay received $66,500 as a management fee.
The rest of the money came from borrowing including a mortgage of $2.5 million to Peace Hills Trust secured against leased lands where the hospital is to be located.
The money was sometimes spent in odd places.
Ad Vitam spent roughly $265,000 on travel as well as ‘promotion and advertising.’ The review doesn’t break down travel destinations or who went on the trips but some band members say it included a trip to the Philippines.
Ad Vitam spent another $499,624 on a home and lease on band land. Oberg told infonews.ca the house was used to accommodate visiting consultants, contractors and trades people.
The house was later sold in 2014 for $667,124. The mortgage was paid off and the net proceeds of $167,000 were deposited in the partnership account, possibly representing the only money made during the hospital project.
Ad Vitam made nearly $800,000 in “additional capital investments” including another house and land lease as well as a car and a boat. The report notes those assets were later sold or disposed of, but shows no record of that money being returned to the limited partnership. No breakdown is available of how much any of these items were worth individually. The auditor provides no explanation of why the boat or car was purchased.
The company paid $720,000 interest on its long-term debt, $45,000 for office supplies and equipment, $110,000 in rent, a net rental loss of $45,000 and something called “partner drawings” of $137,000.
The financial review also notes $998,000 was paid out to band members if the form of a dividend in September 2012. It equates to roughly $1,300 per band member.
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News from © InfoTel News Ltd, 2015