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The federal government has launched legal action against the Federation of Sovereign Indigenous Nations (FSIN), seeking to recover nearly $12.4 million in disputed funding. Indigenous Services Canada (ISC) confirmed it will file a statement of claim after issuing the organization a final repayment notice. The move marks a significant escalation in a dispute that has stretched on for more than a year.
The FSIN represents 74 First Nations in Saskatchewan. The organization has consistently rejected the federal government’s findings and has also taken legal action of its own. Global News obtained federal court documents filed by the FSIN in August, in which the group requests a judicial review. The FSIN alleges unfair treatment by ISC, including the withholding of funds while the repayment dispute remains unresolved.
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A Year-Long Dispute Over Millions in Spending
The conflict stems from a forensic audit that ISC ordered and KPMG conducted. Last fall, KPMG flagged approximately $34 million in questionable, ineligible, and unsupported spending. The expenses related to COVID-19 expenditures, travel costs, and payments made to a former employee.
Earlier this year, ISC identified $28.7 million in ineligible or unsupported expenses covering the period from April 2019 to March 2024. However, the repayment amount later dropped by more than $16 million, bringing the current claim to $12.4 million. ISC has not disclosed what happened during the seven months of negotiations that led to that reduction.
ISC spokesperson Carolane Gratton explained the department’s silence on the matter. “Due to privacy requirements and contractual obligations between Canada and the recipient, we are not in a position to share the letter, discuss its contents nor disclose any details of any subsequent meetings between ISC officials and the FSIN Executive,” she said.
PPE Costs at the Centre of the Dispute
The FSIN says the two sides made meaningful progress before the federal government reversed course. According to the organization, federal representatives had confirmed that all purchases of personal protective equipment were substantiated as purchased and delivered. Those PPE costs account for almost $8 million of the current $12.4 million claim.
The FSIN said it was surprised when those expenses later reappeared on the list of ineligible spending. The organization also stated that it participated fully in the federal review and held extensive line-by-line discussions with a negotiation team appointed by ISC. By June 12, the two sides had substantially narrowed the disputed amount, the FSIN said.
Meanwhile, the FSIN disputed claims that Minister Mandy Gull-Masty had engaged directly with the organization. The group said the minister communicated only through the media, despite repeated attempts to reach her by phone and email. In response, ISC clarified that department officials, not the minister, handle audit processes. ISC also said its auditors met regularly with FSIN officials to share updates and request additional documents.
Deadline Set and Legal Proceedings Underway
ISC has given the FSIN until November 13, 2026, to repay the full amount to the Receiver General of Canada. However, the letter sent directly to the FSIN described that date as a deadline for payment in full. ISC has not provided further clarification on the discrepancy or additional details about its statement of claim.
Global News reached out to FSIN Chief Bobby Cameron for comment but did not receive a response.
Policy expert Ken Coates noted that federal departments rarely pursue legal action against organizations they fund. He said the two sides typically maintain longstanding relationships that make such steps uncommon. “In fact, critics of federal government spending have actually said for many years that they’ve been far too lax about doing that,” Coates said.
Coates also suggested the court case will likely spark a broader conversation about federal funding decisions made during the COVID-19 pandemic. “We’re gonna see what’s underneath the mushroom cap and we’re not gonna like it,” he said. “We’re going to look and see how the Government of Canada authorized money. How did they make their decisions during the pandemic? What was the immediate oversight that was provided?”
