Westbank First Nation Chief Robert Louie.

(JOHN MCDONALD / iNFOnews.ca)

KELOWNA - The Westbank First Nation has confirmed its private for-profit hospital project has been plagued with problems and the band now has to pay $7.9 million or risk losing the land the hospital was supposed to be built on.

However Chief Robert Louie also says an agreement with the outside partners hired to raise money for the project is still technically in effect and that he believes a "medically-themed facility" of some sort will eventually be built.

Louie called a press conference to clarify the status of the project after an investigation by Infonews.ca revealed problems with the hospital and efforts by some band members to force Louie and his councillors to resign.

The band members claim chief and council have violated the WFN constitution by spending more than $500,000 without a band vote but Louie insists there was no constitutional violation and the petitioners have no case, because every move was vetted by lawyers.

Louie says band members will have a chance to vote next month on whether to spend the $7.9 million owed to Candian Western Bank to recover the 12-acre property overlooking Okanagan Lake. The original deal called for the band to provide the development site but no cash for the project.

However, in order to kickstart the development, Ad Vitam, the private company that is partnered with the band on the project, was allowed to draw on a $15-million line of credit secured on the property.

Ad Vitam used the money to pay the partners Mark McLoughlin and Lyle Oberg $700,000 each. Another loan of $2.5 million was paid off with this financing and another $2.35 million was paid to Oxbridge Ventures, a venture capital financing company that raised $150 million to develop the project, however the company pulled its financing offer when the partners could not meet all the requirements of the contract.

An audit of the deal ordered by chief and council couldn't account for all the money spent, citing the lack of proper financial documentation from Ad Vitam.

Ad Vitam stopped making payments on the outstanding debt in February, Louie said, and the bank foreclosure on the outstanding debt is imminent.

However a review of the entire project and whether to proceed will take almost a year, he said. And if it does go ahead, it will not likely be of the same scope as the original proposal, which called for a full-service private hospital.

Louie said the band has the resources in its reserves to pay the $7.9 million debt and will take that option to band members in a referendum. He added the band has the financial resources to develop a health care facility on its own without venture capital funding, though that isn't his preference.

The chief said band finances and its internal investments will continue to be closely held as confidential information and the media will not be allowed to attend council meetings.

— This story was corrected at 9:40 a.m. July 24 to correct a potentially misleading statement about the results of the audit.

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 © iNFOnews, 2015