A long-awaited federal audit has uncovered serious irregularities in a program meant to give contracting preference to indigenous-owned businesses, revealing that most companies claiming indigenous status were never properly verified.Blacklock's Reporter says the probe into Indigenous Services Minister Mandy Gull-Masty’s department found that two-thirds of suppliers who said they were indigenous could not prove it. “A random sample of 50 indigenous businesses revealed 68% of cases had missing or incomplete verification documents,” said the Audit Of The Procurement Strategy For Indigenous Businesses. “This issue was primarily linked to the third-party audit processes at the time.”The audit was launched in 2024 after complaints that the Indigenous Business Directory included companies that were not actually indigenous-owned. .Those firms benefited from a 5% federal set-aside reserved for First Nations, Inuit, and Métis suppliers.Auditors said scrutiny “varied significantly,” with some companies barely checked while others faced detailed review. The directory listed 2,925 verified contractors, though the report did not estimate how many claims were fraudulent.Indigenous contracting set-asides totalled more than $862 million in 2023, according to the report, but auditors did not determine how much of that money was spent on companies that faked indigenous ownership.The audit cited “gaps in staff training,” “limited oversight of third-party verification,” and “inconsistencies” in confirming indigenous membership. It called for standardized checklists and stricter verification procedures to stop abuse of the system..The review followed a Commons investigation into Dalian Enterprises Inc., a now-suspended Ottawa firm that collected more than $16 million in federal contracts. The company’s CEO, a Defence Department employee, claimed to be descended from an Ojibway chief.Indigenous leaders have warned MPs that fake claims of ancestry are common in federal contracting. “There have been token Indians,” testified Assembly of First Nations Regional Chief Joanna Bernard of New Brunswick. “You can pick up someone on the side of the street if they are indigenous. They become that token Indian and there is no qualification needed.”Deputy Public Works Minister Arianne Reza told MPs last year that the practice was “a terrible situation” and “clearly unethical,” adding that she personally contacted the RCMP Commissioner over the matter.
