Lawyers for Ron Barlas have filed a key document setting out his defence against claims he misappropriated millions of dollars from the Łútsël K’é Dene First Nation’s economic wing.
Barlas was responding to a 200-page compendium of allegations filed by the First Nation’s lawyers earlier this year, who allege he systematically diverted huge sums that should have gone to its Denesoline Corporation.
They contend he instead routed the money into separate companies he controlled and used the cash to enrich himself and his family.
The First Nation is now pursuing accounting firm KPMG and law firm Reynolds Mirth Richards & Farmer for a combined $50 million in damages over allegations that those companies helped Barlas perpetuate fraud for years. Both firms deny doing so.
However, the initial case against Barlas is ongoing – a year after it began – and Barlas is maintaining he did nothing wrong.
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While the First Nation has said it has significant email and documentary evidence pointing to Barlas giving himself large sums he didn’t earn, changing corporations’ governance structures to avoid oversight and designing schemes to syphon off more cash, Barlas – in his lawyers’ latest filings – says none of that happened.
The First Nation has “presented an unfair and inaccurate portrayal of the totality of the evidence,” those filings state.
In his lawyers’ words, Barlas acted “with transparency at all times.” He, his family members and the companies they own “dispute all allegations made against them” and “did not misappropriate, steal or receive any money or payments to which they were not contractually entitled,” a summary states.
Central to Barlas’s defence is the argument that he was performing so well in his role that Denesoline Corporation was benefiting hugely from his skills – and he was being rewarded accordingly. (The First Nation has alleged Barlas was using unusual mechanisms to take millions beyond his stated salary and bonus, and says its members who authorized some of Barlas’s practices didn’t understand what they were signing, which Barlas’s lawyers dispute.)
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Barlas showed “extra efforts and business development activities … over and above” the standard duties of a chief executive, his lawyers write, resulting in “amazing performance” that “did more good for the Łútsël K’é Dene First Nation community than anyone had ever done before.”
Where the First Nation says Barlas was rerouting the corporation’s revenue to accounts he controlled, Barlas’s lawyers say he was “not engaged in self-dealing [but] rather engaged in mutual dealing, which was in the best interests of Denesoline.”
And where the First Nation says corporate credit cards were misused, Barlas’s lawyers say any outstanding non-business charges to those credit cards or accounts “are being rectified and reimbursed.”
Addressing the First Nation’s statement that Barlas had twice entered bankruptcy prior to joining Denesoline, Barlas’s lawyers say each of those bankruptcies was “due to circumstances outside of his personal control.”
In all, the lawyers say, Barlas contributed more than $13 million in “total value delivered” to the community of Łútsël K’é since he began working at Denesoline in 2014.
Barlas urges court to hold trial
The lawyers want the First Nation’s application to be dismissed with “costs payable on an enhanced scale,” but they also say the application was the wrong way to go about this.
In civil court, an application is carried out purely involving documents and presentations from lawyers to the judge.
Barlas’s lawyers say this should instead be an action – in other words, a trial that would involve witnesses being questioned in court. The First Nation has said this is a transparent delaying tactic, but Barlas argues it would be “impossible” for the court to “safely reach conclusions … without the benefit of complete discoveries and oral evidence.”
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The First Nation’s application “should be converted into an action with the requirement to file pleadings and exchange records and ensure the corollary rights of all parties to complete discoveries (rather than be limited to cross-examination of select affiants), the ability to examine Denesoline board of directors members whose evidence is not presently before this court and, most importantly, the ability to present oral evidence on critically disputed facts and matters of credibility at a trial,” Barlas’s lawyers state.
Lastly, Barlas’s lawyers suggest the First Nation’s recent pursuit of KPMG and Reynolds Mirth is a reason for the court to tread carefully – and take its time – in handling his own case.
In the light of the KPMG and Reynolds Mirth cases, Barlas’s lawyers say his own year-old case now looks like “the opening salvo in factually complex, multi-party litigation involving a law firm and potentially an accounting firm.”
“Litigating the issue by instalments runs the risk of inconsistent or premature findings of fact and law,” they argue, suggesting that the court may wish to examine how the KPMG and Reynolds Mirth proceedings evolve before reaching conclusions regarding Barlas.
Barlas’s lawyers are expected to have time next week to present their arguments to the NWT Supreme Court in person.
There is no fixed timeline for the court’s decision to be reached.
