Denesoline Corporation wants reports on bankrupt company
The financial arm of the Łútsël K’é Dene First Nation is seeking a court order that would force its former business partner to hand over reports related to the bankrupt fuel transport company they both owned.
The move is the latest in a years-long court battle. In May 2017, the Denesoline Corporation sued the Tłı̨chǫ Investment Corporation – the business arm of the Tłı̨chǫ Government – claiming nepotism and mismanagement led to the financial failure of trucking company Ventures West.
In court documents at the time, Denesoline alleged the Tłı̨chǫ operated the company as a “personal fiefdom” by appointing relatives and friends of Tłı̨chǫ chiefs to management positions for which they were unqualified, then paying them “exorbitant” salaries.
Denesoline also claimed the Tłı̨chǫ corporation failed to pay $373,333 in dividends and withheld financial information about the company to which Denesoline was entitled.
In response, the Tłı̨chǫ called the allegations “wholly without merit, totally inappropriate, frivolous,” and “for the sole purpose of attempting to embarrass the Tłı̨chǫ defendants as a means of exerting settlement pressure.” The Tłı̨chǫ said the dividend payment had not been made as doing so would have impeded Ventures West’s ability to meet working capital commitments.
At the time, the Denesoline Corporation asked the court to order the Tłı̨chǫ to pay the $373,333 plus $500,000 in damages. It also wanted the Tłı̨chǫ corporation – which owned 90 percent of Ventures West – to buy the remaining 10 percent owned by Denesoline.
Since then, court documents indicate the Tłı̨chǫ corporation has handed over financial statements pertaining to Ventures West and paid the Denesoline Corporation its outstanding share of dividends in October 2018.
But the court battle continues.
“The dividend is one component of a much, much larger puzzle,” Tess Layton, lawyer for Denesoline, told Cabin Radio, noting the company had to file a lawsuit to get that money.
“The other concern, from Denesoline’s point of view, is that the damages go well beyond the dividend – because what used to be a profitable company is now a bankrupt company, from what they allege is nepotism and mismanagement.”
In late 2019, following years of financial losses, Ventures West and Tłı̨chǫ Landtran – a transportation company wholly owned by the Tłı̨chǫ – filed for creditor protection.
In court documents Mark Brajer, the current chief executive of the Tłı̨chǫ Investment Corporation, said the loss of a contract with the Diavik diamond mine, which accounted for 60 percent of Ventures West’s fuel hauling business, was partly to blame. He said the Tłı̨chǫ could not lower their bid for the contract and still turn a profit.
That year, the Tłı̨chǫ chief’s executive council commissioned two financial reports, one on the Tłı̨chǫ Investment Corporation and one on Ventures West.
The Denesoline Corporation now wants access to those reports, saying they could contain information relevant to allegations of mismanagement and nepotism. The corporation also wants Brajer to answer questions about why the Tłı̨chǫ corporation’s former chief executive and president resigned in 2019, and if there were any concerns about the corporation’s leadership.
“Without that information, we can’t move forward,” Layton said.
“Denesoline’s ultimate goal is to uncover the reason for the financial decline of Ventures West.”
A lawyer for the Tłı̨chǫ corporation, however, argued in court proceedings that the report on the Tłı̨chǫ corporation excludes information about Ventures West and isn’t relevant to the lawsuit.
That lawyer also objected to questions about the report or Tłı̨chǫ management beyond their handling of Ventures West.
Brajer did not respond to a request for comment.