Use of FNDF monies raises issues with operators, government

The operator of the River Cree Casino and Resort are hoping to speak to Premier Alison Redford about the difficulties they are encountering in negotiating their second First Nation Development Fund grant.

“We want to know what we can do with the policy in place that everybody agreed to for over a 25-year term,” said Tamara Hicks, director of communications with Paragon Gaming EC Company, which manages the casino and resort for the Enoch First Nation. “We’re hoping to get this in front of the premier.”

Last month, Paragon hit a snag in paying interest on a $111 million loan that was taken out to develop the casino and resort when $11.7 million in FNDF money held by CIBC Mellon Trust and its successor BNY Trust Co. of Canada was not released. The government has confirmed that the money was paid to the Enoch First Nation in mid-April. However, the legal counsel for the group of lenders, who financed the loan for the casino and resort, allegedly told the trust company to hold off on payment.

On Apr. 19, Paragon filed an application with Alberta Court of Queen’s Bench asking that the trust company be directed to disburse $11.7 million in FNDF money.

In his affidavit, Scott Menke, president of Paragon, said the company was not able to repay its loan by an Apr. 16 deadline but “fully intended to make an interest payment to the lenders from the FNDF funds received.”

Claims Menke, “The FNDF funds are used for, among other uses, to fund the operations of the resort. Without the FNDF funds, (Paragon’s) ability to operate the resort is and will be seriously impaired.”

Menke also notes that Paragon has concerns over negotiations presently occurring with the province  for a new FNDF grant.

According to Menke’s affidavit, the 2005 FNDF grant approved by the province included use of the funds to provide employment, training and social development, both for “casino and non-casino operations.” Menke further states that the Chief Internal Auditor said “… it appears that the proposal meets the funding criteria as per the First Nations Gaming Policy.”

Paragon wants to continue with the same funding proposal. However, an application for an FNDF grant that was put forward in February 2012 has not been approved by the government because of concerns that the proposed funding use differs from what was approved in 2005. The funding uses are the same, says Menke, and without grant approval, Paragon “is unable to access funds that it requires in order to operate the resort….”

“We have an agreement with Enoch (First Nation) for what they can use that money for and it’s for non-gaming operations,” said Mike Deising, spokesperson for Alberta Intergovernmental, International and Aboriginal Relations, adding that the money has never been used to finance the casino. “From our perspective, Enoch has been using the money for social and community development projects as per their initial FNDF application.”

FNDF guidelines state that “grants cannot be used for operating or financing costs of a casino or other gaming facility/equipment, or for per capita distributions, or for security against loans or debts.”

“Our relationship is with Enoch. We give FNDF funding to Enoch. If Enoch has a relationship with a casino operator, that’s between them,” said Deising, who would not speak directly to the court proceedings Paragon is involved in.

Under the seven-year FNDF agreement which expires in October 2012, the government owes Enoch another $22 million and that will be paid out, said Deising. To date Enoch has received $190 million. He also noted that under the 2012-2013 budget, approximately $120 million has been forecasted into the FNDF and Enoch First Nation will receive $40 million of that.

“We’ve been very clear that FNDF funding is going to be available to Enoch on a go-forward,” said Deising. “That money is going to be there, for them to apply for and to use for community, social and economic development projects.”