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MPs want to know how a mobile app’s costs grew out of control. An abandoned house on an Ontario First Nation is an important stop in the search for answers

The house at 55 Vimy Ridge Rd., a 90-minute drive northeast of Toronto in the Alderville First Nation, has seen better days. The wooden front steps are broken, a basketball-sized wasp nest hangs from its roof, and debris – gas cans, a fridge, furniture and rusting metal – litters the backyard.

Passersby would never guess that the property is connected to a business that has received more than $100-million in federal spending. In corporate records, the home is the registered address for David Yeo, a former soldier who is now an entrepreneur and the founder of Dalian Enterprises Inc., one of the companies at the centre of a growing controversy over government contracting related to the ArriveCan mobile app.

Mr. Yeo, a great-grandson of former Alderville First Nation Chief Robert Franklin, doesn’t actually live in the home. Locals say no one does. But it is one of Mr. Yeo’s ties to Alderville – neighbours say the residence has been in his family for years. These connections have allowed him to participate in the federal Procurement Strategy for Indigenous Business, a program created to ensure Indigenous companies receive a portion of federal contracts and help their communities grow.

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David Yeo testifies to a parliamentary committee in March, part of MPs' efforts to take stock of the ArriveCAN controversy.Supplied

The ArriveCan app, commissioned by the government to gather contact information and quarantine plans from people coming into Canada at the height of the COVID-19 pandemic, attracted attention in late 2022 for its $54-million price tag. That initial scrutiny has morphed into something much larger.

Revelations about ArriveCan’s development, first in The Globe and Mail and later in more than a dozen probes by federal watchdogs and parliamentary committees, have called into question the government’s reliance on staffing and information technology companies such as Dalian, which win government contracts and then charge fees to farm out work to technical specialists. The head of GCStrategies, a two-person staffing operation that won more ArriveCan work than any other contractor, told MPs at a committee hearing that his company’s fees were at times as high as 30 per cent of a contract’s value.

But the ArriveCan investigations have also raised questions about the PSIB, the program Mr. Yeo participated in. It has come under scrutiny for a feature that some critics say can be exploited: non-Indigenous businesses are allowed to receive federal contracts under the program, as long as they partner with Indigenous businesses in joint ventures. In those cases, the government requires that at least a third of the total value of the work be performed by an Indigenous company or Indigenous subcontractors.

This aspect of the program has been key to the success of Mr. Yeo’s company.

Dalian Enterprises, which last month was suspended from federal contract work, received $7.9-million in taxpayer funds to build ArriveCan, according to a recent report from the federal Auditor-General, who said her numbers were only an estimate because of poor recordkeeping. The company has long availed itself of the PSIB, including for the ArriveCan work. Mr. Yeo told parliamentarians at a hearing in March he had advised the government on designing and implementing the program. “It’s a very good policy,” he said via video conference.

Dalian often works in tandem with Coradix Technology Consulting Ltd., a larger non-Indigenous company that has also been suspended because of the ArriveCan probes. For more than a decade, the two companies have won contract after contract through the PSIB joint venture program. Dalian has just two full-time employees. Coradix’s president told MPs at a hearing in the fall that his company had more than 40.

Ottawa spends more than $15-billion a year on outsourcing. Since 2003, Dalian and Coradix have collectively been paid $635-million through federal contracts, according to the government’s public accounts. Of this total, $496-million was directed to Coradix, while Dalian received $139-million.

During Mr. Yeo’s appearances before parliamentary committees, he said the PSIB is working exactly as it’s supposed to. His lineage, he explained, makes him Indigenous, which makes Dalian Indigenous-owned and therefore eligible. The program also specifically allows him to partner with larger, non-Indigenous companies such as Coradix to win business.

To be considered Indigenous under the program, a company must be majority Indigenous-owned.

But Mr. Yeo’s description doesn’t match what Indigenous business leaders say are broader objectives of the PSIB, which include producing an economic boost for Indigenous communities and workers.

When pressed by MPs, Mr. Yeo was unable to tell them how many of the 20 subcontractors hired by Dalian to work on ArriveCan were Indigenous.

What’s more, experts say, Ottawa has done a poor job measuring whether the program has served as a boon to the people it was meant to help.

“There was never any deep understanding of who was benefiting and whether the program was leading to higher employment,” said Allan Clarke, who worked as a director general responsible for economic development policy at what is now the Department of Indigenous Services from 2008 to 2017. Mr. Clarke said “successive evaluations” of the program have called out the need for “a proper monitoring function.”

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Illustration by The Globe and Mail (Source: Getty Images)

As The Globe first reported in December, Indigenous Services, which is responsible for overseeing the PSIB, has never conducted after-the-fact audits of the work Dalian and Coradix performed to determine whether the program’s requirements were met, including the one-third threshold.

The department has only conducted advance audits, which tested whether Dalian qualified as an Indigenous business.

Last year, a group of more than 50 Indigenous finance institutions warned in a report that the program was encouraging the use of “shell companies and other modes of obfuscation to gain an advantage in procurement processes, and more – all to the detriment of legitimate Indigenous Peoples of Canada, communities and businesses.”

Coradix and Mr. Yeo declined to answer a list of questions for this story. Mr. Yeo has testified that his company has hired Indigenous staff members in the past. Sarah Musgrove, a Dalian employee from 2008 to 2016, confirmed this to The Globe.

When he appeared before MPs, Mr. Yeo also rejected the suggestion that he should have a robust history of hiring Indigenous workers to be compliant with the program’s requirements.

He said the intent of the PSIB is to allow companies like his to “get access to government contracts” and “compete against bigger companies.”

When The Globe visited the house on Vimy Ridge Road, it looked to have been empty for a long time. In the backyard were old gas cans and a dirty water tank; on the eaves, wasps had built a large nest. Christopher Katsarov/The Globe and Mail

David Yeo joined the Canadian Armed Forces in 1987 as an infantry soldier with the Royal Canadian Regiment, and was deployed to Cyprus from 1991 to 1992, according to the Department of National Defence.

Andrée-Anne Poulin, a department spokesperson, said in a statement that in 1993 Mr. Yeo “underwent an occupational transfer to musician, a trade in which he served until his retirement” from the military. He is a fan of pipe bands. His Facebook page brims with photos of drummers and bagpipers.

He moved to the reserve forces in 2001, and then a decade later to the supplementary reserves, before finally ending his service with the rank of warrant officer in 2016.

After leaving active duty in the early 2000s, Mr. Yeo began working to win federal technology contracts through his company, Dalian.

His LinkedIn page lists no technology certifications or postsecondary training. He described himself to parliamentarians as a “tactical security specialist certified in high-assurance capabilities.”

In part, Mr. Yeo credits his business to Sir Terry Matthews, the Welsh-Canadian billionaire and co-founder of Mitel, a technology consultancy. In recent testimony to a House committee, Mr. Yeo said he’d spoken with Sir Terry at a breakfast meeting, in which the entrepreneur told Mr. Yeo to “go after Indigenous business.”

“At that point I looked into it, and I found an Indigenous contract that I could go after, and I won it within the first year that I started the company,” Mr. Yeo said. Through a spokesperson, Mr. Matthews said he has no recollection of the discussion and does not know Mr. Yeo.

Dalian, incorporated in 2002, aimed to “provide long term integrated business solutions to Government and Fortune 500 companies using state-of-the-art technology,” according to an archived version of its website. “Dalian” is a combination of the names of Mr. Yeo’s children.

Mr. Yeo has had several other ventures during his career. He has incorporated or served as a director for at least five other businesses. One of those, Franklin Arms Inc., sold ammunition to the federal government. In 2020, the company was renamed Franklin Capital Management Inc. Its social media presence says it is focused on cryptocurrency trading.

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Mr. Yeo and his Coradix counterpart, Tony Carmanico. Their firms have worked jointly on many contracts over the past two decades.Supplied

Dalian had a relationship with Coradix from day one. “I came to them in 2002 with my first contract,” Mr. Yeo told a House committee last month. “Coradix does much different work than we do at Dalian as far as security is concerned, so it seemed like a good fit.”

While the two companies often bid for government contracts together as a joint venture, Dalian’s website gives the impression that it is an independent company. It describes itself as “Aboriginally Owned – Veteran Operated,” and lists several global tech giants as vendors, including Microsoft, Amazon Web Services and Dell Technologies.

The two companies overlap substantially. Coradix is a minority owner of Dalian, and Coradix’s founder, Tony Carmanico, sits on Dalian’s board. Both businesses have long shared an office space in Ottawa, and The Globe identified several current and former employees who seem to have held jobs at both companies successively or simultaneously. Dalian’s website registration information points to an IT worker for Coradix, and Mr. Yeo’s Facebook account includes a photo of him in a Coradix hockey jersey.

In House committee testimony, Mr. Yeo said he has a “shared services” arrangement with Coradix, in which the larger company shares basic office functions with Dalian, such as financial management, human resources and operational support.

Ms. Musgrove, the former Dalian employee, said that despite the companies’ closeness, Dalian and Coradix were distinct. “They were sister companies, is the best way to put it,” she said in an interview.

The Alderville First Nation was once governed by Mr. Yeo’s great-grandfather, chief Robert Franklin. More than 600 people live in Alderville, according to the First Nation. Christopher Katsarov/The Globe and Mail

In 2021, the federal government set itself an aggressive new target: Departments and agencies should ensure that, at a minimum, 5 per cent of the total value of contracts they issue go to Indigenous businesses. In effect, the government had significantly expanded the PSIB.

By then, Ottawa had already been repeatedly warned, both internally and externally, about problems with its Indigenous procurement program. For instance, a 2007 federal report noted that several stakeholders had said there are no adequate ways of enforcing compliance with the program’s rules.

John Bernard, chief executive officer of the Indigenous-owned consulting company Donna Cona Inc., said he tried for years to advise the government on how it could refine its Indigenous set-aside contracting policies. His company operates in large part in the information technology sector, and has competed against Dalian and Coradix.

(The Auditor-General’s recent report on ArriveCan said Donna Cona had received $3-million in contracts related to the app. Mr. Bernard said the news came as a surprise to him, and that his company had no ArriveCan-specific contracts.)

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John Bernard, CEO of consulting company Donna Cona Inc., has spent years advocating for better Indigenous contracting rules from the federal government.Patti Gower/The Globe and Mail

Mr. Bernard helped found an advocacy group, the Public Sector Aboriginal Business Association, which he said lobbied the government from 2006 to 2010 but never managed to make a significant impact. Mr. Yeo sat on the association’s board, but Mr. Bernard said their interactions were minimal.

“We were trying to change the rules – trying to give it more oomph – so that it wasn’t enough to be Aboriginal,” he said. “You had to have shown that you were giving back to your community in some way. But that never went anywhere.”

Mr. Bernard said he took issue with some of the joint ventures operating under the program, but he did not comment on Dalian specifically. “These JVs that never go anywhere, they’re nothing but a shell company,” he said. “They’re not interested in anything but a set-aside.”

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Tabatha Bull from the Canadian Council for Aboriginal Business is optimistic about the PSIB's power to do good, if used correctly.Galit Rodan/The Globe and Mail

Tabatha Bull, president and chief executive of the Canadian Council for Aboriginal Business – which in 2021 also warned Ottawa about problems with joint ventures – said the federal government’s incentives for hiring Indigenous subcontractors are important for growing the Indigenous economy, because those subcontractors may then go on to grow their own businesses. Ms. Bull also did not speak specifically about Dalian.

Overall, Ms. Bull said, the PSIB’s successes far outweigh its failures. She expressed concern that the current focus on its faults could empower those who want to get rid of such procurement targets entirely.

“We need to really mandate and prioritize that there are Indigenous businesses in this space, and you have a requirement to ensure that you’re looking for them. And we’ve seen over years that if we don’t put those things in place, it won’t happen,” she said.

Anispiragas Piragasanathar, a spokesperson for Indigenous Services, said the program “supports Indigenous businesses in order to grow and improve the socio-economic conditions of Indigenous communities.”

He said in situations where it is suspected that program requirements have not been met, the department that issued the contract would request an audit to ensure compliance.

But Michael Wernick, former head of the federal public service, said he believes there are broader problems with government procurement. “Many, many issues” have surfaced around the larger procurement system, which has been given too many objectives, he said. Mr. Wernick is of the view that the system needs a “complete rebuild.”

The existing approach to procurement does not seem to work for anyone, he said. “It doesn’t work for the government, it doesn’t work for the suppliers and it doesn’t work for taxpayers.”

Even Prime Minister Justin Trudeau has weighed in on the government’s issues with procurement. “There needs to be significant changes,” he told reporters last month.

On its website, Alderville boasts of having the first fully Indigenous-owned solar farm in Canada, and an array of small businesses and entrepreneurs. Mr. Yeo’s newfound fame has led to questions about how he made use of procurement policies to help Indigenous businesses. Christopher Katsarov/The Globe and Mail

Already under heavy scrutiny because of his ArriveCan contracts, Mr. Yeo made headlines again in late February when it emerged that he had been working as a public servant in the Department of National Defence, a job he started in September, 2023.

During that time, Mr. Yeo testified to MPs on behalf of Dalian at one of the ArriveCan hearings but never disclosed his government position. It also emerged that on the same day he was offered his defence job, Dalian was awarded another contract – using his signature – with the federal government.

Shortly after his job as a public servant became public knowledge, he was suspended from his position.

Treasury Board President Anita Anand said at the time that she was “extremely surprised” to learn that Mr. Yeo was both a government employee and a recipient of government contracts. “There is certainly a rule that would prevent a conflict of interest of that sort,” she told reporters.

Mr. Yeo submitted a conflict-of-interest report to the Department of National Defence on March 3, then resigned two days later. “That’s on me,” he told MPs. “We probably should have done that way before … and we didn’t.”

Bill Matthews, the department’s deputy minister, said at a hearing that Mr. Yeo had failed to inform his superiors of his conflict of interest. Mr. Matthews told MPs that an internal review had since found that Mr. Yeo was also engaged in “schemes with other companies.”

“Whether Mr. Yeo had a poor understanding of the rules or is ethically challenged, I would tell you my experience so far is he has an ethical issue,” he said.

Dalian and Coradix found themselves in the hot seat as well.

In early March, the federal government suspended the two companies from all of their current contracts and barred them, for the time being, from obtaining new ones. GCStrategies, which was suspended from border agency work in November, also had its security status suspended.

The federal Procurement Department declined to give specific reasons for the suspensions. In an interview, Procurement Minister Jean-Yves Duclos said the decision resulted from an internal review. Indigenous Services has now also launched an after-the-fact audit of whether Dalian and Coradix complied with the PSIB’s terms. The results are expected this summer. Indigenous Services is also conducting a review of the PSIB.

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Alderville First Nation Chief Taynar Simpson says there’s no question as to Mr. Yeo’s Indigenous background.Christopher Katsarov/The Globe and Mail

Back at the Alderville First Nation, Mr. Yeo’s newly raised profile has had an impact on the community. Taynar Simpson, the nation’s chief, said he has fielded questions from concerned community members, who are wondering whether Mr. Yeo really is from Alderville.

“We acknowledge him as Indigenous,” Mr. Simpson said. He noted that Mr. Yeo has family members in the community, and that his brother works for the First Nation. “We’re vouching for him, basically.”

As is the case for many people of Indigenous descent, Mr. Yeo is a non-status Indian, a legal term used to describe people who identify themselves as Indigenous but who are not entitled to registration under the Indian Act. This is often because of a rule introduced in 1985 that made it so that children can no longer obtain status after two consecutive generations where one parent has status and the other does not. Mr. Yeo has said this is his situation.

The issue of status looms large for Mr. Yeo, who ran for a House seat in the 2021 federal election as a candidate for the People’s Party of Canada, a right-wing party that opposes excessive government spending and strongly opposed pandemic restrictions. During his most recent testimony, he told MPs that he had hoped, if elected, to “create a private member’s bill that would allow that part of the Indian Act to be solved once and for all.”

In the past, Mr. Yeo has also laid claim to another identity: Métis, a heritage that is distinct from First Nations.

At one point, Mr. Simpson said, Mr. Yeo told him that he had obtained a citizenship card from the Métis Nation of Ontario. “I said, ‘That’s crazy. You’re non-status Indian. You’re not Métis.’”

The Globe confirmed that Mr. Yeo no longer holds that citizenship.

Mr. Simpson, as it happens, is also an Indigenous business owner, and he also contracts with the federal government, both through mainstream procurement and the PSIB. His company, Wampum Records, focuses on historical archival research, and has done extensive work related to residential schools settlements and the Truth and Reconciliation Commission, among other things. “That’s been my life’s work – reconciliation,” he said.

Mr. Simpson’s own experience with the Indigenous procurement program has been one of frustration. “I’m a status Indian, with a company that specializes in Indigenous issues,” he said. “And they’re regularly questioning whether I’m an Indigenous company or not.”

Sitting in his office a brief drive from the derelict home at 55 Vimy Ridge Rd., he said that if people are upset about the ArriveCan affair – and he is, too – contractors aren’t entirely to blame, and neither is Mr. Yeo.

“If there is something that’s gone wrong, I’d point the first finger at the policy,” he said. “Not the contractor.”

With reports from Rick Cash, Stephanie Chambers and Mahima Singh

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