A Northwest Territories Supreme Court judge has ruled in favour of the Łútsël K’é Dene First Nation, or LKDFN, in its lawsuit against the former head of its business arm.
The First Nation and Chief James Marlowe filed the lawsuit against Ron Barlas, his wife Zeba Barlas and several companies in April 2023. It claimed while Barlas was the chief executive officer of Denesoline Corporation – the First Nation’s economic development arm – Barlas misappropriated millions of dollars, among other allegations.
Barlas denied the accusations arguing that all of his dealings were legitimate and served the interests of the First Nation by increasing overall profits.
In a written ruling on Tuesday, Justice Karan Shaner sided with the First Nation, finding that Barlas had “engaged in egregious conduct and abused his position as CEO.” She also found that his wife had knowingly assisted in his transactions and knowingly received proceeds and benefits from them.
“There is overwhelming evidence that Mr Barlas knowingly breached his fiduciary duties and in doing so harmed the interests of the LKDFN members and the LKDFN companies and its stakeholders while gaining significant financial benefit for himself and his family,” Shaner wrote.
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Shaner permanently removed Barlas as a director or officer of any kind with the First Nation’s companies and placed a constructive trust over his family’s home in Yellowknife, another property in the city and a cabin, for the benefit of the First Nation. Shaner also ordered Barlas and his wife to account for all the benefits they had received and ordered a trial to determine the financial losses the First Nation has suffered.
“Determining the extent of the losses will, doubtless, require the assistance of forensic accounting and other experts,” she wrote.
Shaner said that Barlas had failed to properly disclose his interest in various transactions with companies controlled by him or his wife and had “actively concealed” his dealings from the First Nation.
She said the agreements and transactions Barlas made were “clearly not reasonable, fair or in the best interests” of the First Nation and that he had “robbed” the First Nation of the power to contest those transactions.
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Shaner further found Barlas had made changes to the bylaws of Tsa, a non-profit that owns Denesoline, that gave him greater control over its board, which he “used to threaten individuals who questioned how he conducted business.” She said that created “an atmosphere of fear” and allowed Barlas to pursue his own business interests with less scrutiny.
In a separate decision on Wednesday, Shaner allowed the First Nation to file separate but related lawsuits against law firm Reynolds Mirth Richards and Farmer, or RMRF, and four lawyers from the firm, as well as accounting firm KPMG.
The First Nation has accused the law and accounting firms of assisting Barlas in wrongdoing. Both RMRF and KPMG have denied the claims.
