A man who once handled the finances of the troubled northern Ontario reserve of Attawapiskat faces fraud and theft charges stemming from what police are calling "an isolated incident."
The Nishnawbe-Aski Police Service said Tuesday that Clayton Kennedy, 62, was charged with one count each of fraud over $5,000 and theft over $5,000 on March 26.
Kennedy, the co-manager of the Taykwa Tagamou Nation in Cochrane, Ont., which is south of Attawapiskat, was released with conditions and is set to appear in court on May 28.
Dwight Sutherland, the Chief of the Taykwa Tagamou Nation, later stated that Kennedy had been relieved of his duties while the "alleged fraud charges are dealt with through the court system."
He said Kennedy has been asked to "deal with the legal matter on his own time and away from the community."
Kennedy was the reserve's co-manager on and off from 2001 to 2012 and is also the common law spouse of Attawapiskat's high profile chief, Theresa Spence.
Spence rose to prominence in December 2012 when she staged a six-week hunger protest in Ottawa over living conditions on reserves and treaty issues, sparking nationwide demonstrations.
Police said their investigation into Kennedy began in February last year after they received a complaint from the band about a fraud committed in Attawapiskat, a community of about 2,000 which lies on the frigid western shore of James Bay.
"It was alleged to have occurred in August of 2012," said Sgt. Jackie George. "As far as we're concerned, this is an isolated incident."
Attawapiskat's council said the band went to police after conducting its own internal investigation.
"This is a very serious matter," it said in a statement. "The First Nation entrusted Mr. Kennedy to handle funds on behalf of the members of the Attawapiskat First Nation."
The council added that Spence has "recused herself" from any involvement in the issue.
Kennedy did not immediately respond to requests for comment. A woman answering the phone at the Taykwa Tagamou Nation repeatedly said "no comment" before hanging up when The Canadian Press asked to speak with Kennedy.
The allegations against him have not been proven in court.
Sutherland said a letter has been sent to Aboriginal Affairs Minister Bernard Valcourt demanding that any potential costs associated with relieving Kennedy of his duties as co-manager be reimbursed.
"We believe that Aboriginal Affairs was aware of potentially troublesome issues about Mr. Kennedy and yet the Dept. of Aboriginal Affairs approved his appointment," Sutherland said in a release.
Attawapiskat was thrust into the national spotlight in 2011 when a housing crisis on the reserve triggered a state of emergency. Kennedy — who has an accounting background that stretches back 40 years — was overseeing the band's books at that time.
He first became the band's money man ten years earlier, filling the role of Attawapiskat's director of finance, co-manager and band manager between 2001 and 2004.
During that time, corporate documents show Kennedy incorporated a business called Moo Shum Enterprises in October 2003, which provided "expertise and advice primarily in the areas of finance and management," according to an affidavit he swore after Attawapiskat declared its state of emergency.
He then left Attawapiskat in 2004. But in July 2009, the band was looking for a new co-manager and Kennedy's company was among five applications it received.
The job at the time ultimately went to another big accounting firm — BDO Dunwoody — but that deal lasted less than a year.
Under a tight, Aboriginal Affairs-imposed deadline to find a new co-manager, the band council once again looked to Kennedy and he returned to work in Attawapiskat in July 2010.
The contract between Kennedy's company and the band shows he earned $850 a day for his services. He left the job in the summer of 2012.
Meanwhile, a scathing audit of the band's books — which overlapped with part of Kennedy's second tenure as the band's co-manager — found no paper trail for millions of dollars between 2005 and 2011.
The Attawapiskat audit was commissioned by Ottawa in December 2011 after Spence had declared the reserves's state of emergency.
The Conservative government questioned why the problem existed, given the millions provided to Attawapiskat over the years, and Ottawa briefly imposed an external manager on the band.
The audit was publicly released by the government in early January 2013, as Spence was on her hunger protest in Ottawa.
The audit said among the 505 transactions examined from April 2005 through November 2011, fewer than 20 per cent could be fully tracked and documented —and 61 per cent had no documentation at all explaining the reason for payment.
The auditors reported they found "no evidence of due diligence in the use of public funds" by the band, and concluded they were unable to determine if the funds were spent for their intended purpose.
The government-appointed auditors also found that poor housing conditions were not flagged by federal authorities, despite inspections by the Canada Mortgage and Housing Corporation.