I didn’t do it, says Denesoline boss accused of taking millions

A man accused by the Łútsël K’é Dene First Nation of misappropriating millions of dollars from its business arm says he did no such thing.

The First Nation and Chief James Marlowe allege that Ron Barlas, the president and chief executive of economic development wing Denesoline Corporation, spent years furtively diverting up to $14 million.

In documents filed with the NWT Supreme Court this week, the First Nation and Marlowe accuse Barlas of committing “blatant self-dealing” by moving revenue from diamond mines and other ventures away from Denesoline and into other companies only he and his wife control, for no work in return.

He is also accused of manipulating how some corporations related to the community are run, with the alleged goal of protecting his position and preventing independent oversight of what was happening

On Friday, a judge will hear the First Nation’s request for injunctions that would strip Barlas of any responsibility for Denesoline and related corporations, then place those corporations into the care of an independent accounting firm while freezing Barlas’ assets.

In an affidavit filed on Thursday in response to the allegations, Barlas denied any form of misconduct.

“I have never taken funds which belong to the community. I have never taken steps to take over control of the corporations,” his affidavit states in part.

Barlas and his legal team submitted more than 500 pages of exhibits on Thursday that he says demonstrate Denesoline and its parent corporation, TSA, had appropriate oversight.

Those documents show that various corporations operated at times with only Barlas and a second person, Tom Lockhart, as directors. The documents show Lockhart signing a series of statements declaring that Barlas “had fully disclosed his personal involvement” with Northern Consulting Group – a company Marlowe and the First Nation say Barlas used to misappropriate millions of dollars from Denesoline – and that “the directors had concluded that all contracts entered into … were reasonable and fair.”

A brief affidavit bearing Lockhart’s name, in support of Barlas, asserts that Lockhart was visited on Sunday by Chief Marlowe and a lawyer for the First Nation. Lockhart says they tried “to put words into my mouth” and left him feeling uncomfortable.

Lockhart writes that he is “not aware of any impropriety” committed by Barlas.

In his affidavit, Barlas asserts: “No funds are being diverted to companies owned and controlled by me or my family and fulsome disclosure has been provided to TSA members.”

He also rejects a specific allegation from Marlowe and the First Nation that he used money from one corporation to buy a house for his family in Yellowknife. “The house I purchased with my own money,” he writes.

Asks for more time to respond

In general, Barlas states that a series of affidavits filed this week in support of the First Nation’s case – including from a former employee, a former board member, a former chief, the current chief and Diavik diamond mine boss Angela Bigg – contain “false, unfounded or misleading allegations.”

He dismisses an email sent by an anonymous author late last year, which appears to have initiated the First Nation’s case against him, as containing “bald faced and totally false accusations.”

The affidavit is particularly critical of a former Denesoline employee that the First Nation has characterized as a whistleblower.

Barlas writes that most of the former employee’s projects “were complete failures” and attaches what he says is a complaint he lodged with RCMP about the former employee on Wednesday – after he had been made aware of the NWT Supreme Court case.

Bigg had asserted in her affidavit that Diavik was about to pay some $13.5 million to “Denesoline-related entities.”

“Based on the information provided … DDMI is deeply concerned that if it were to advance payment on these invoices, the funds received by Denesoline may not be used for their intended purpose,” the mine’s president and chief operating officer wrote.

Barlas, in response, said that figured included “Denesoline’s joint venture partners … which is misleading.” He did not specify who those partners are.

Barlas wrote: “Historically, there has been an adverse relationship between Denesoline and Angela Bigg and Diavik Diamond Mine.”

Lastly, Barlas said he needs “more time to respond to the allegations made,” saying he only received materials from the First Nation at 5:30pm on Monday, leaving “little time to respond” before Friday’s initial court date.

He is asking for the court to adjourn to allow more time “to properly respond.”