Nunavut beneficiaries beware
If you’re a beneficiary of the Nunavut land claim agreement, you have good reason to worry this year.
That’s because one of the biggest private development corporation that you purportedly own, the Nunasi Corp. along with one of its biggest subsidiaries, Norterra Inc., have not performed well in recent times and may now face an uncertain future.
Just take a look at the meager amounts of financial information that the company allows the public to look at. They’re not encouraging.
In 2009, the Nunasi Corp.’s revenues fell to $300 million, a precipitous drop from the $465.5 million in revenue they claim to have received in 2008.
Nunasi’s expenses also fell, but not enough to head off a $12.7 million loss in 2009. (These figures are available at www.nunasi.com/ouroperations.)
The total value of all business assets that Nunasi manages on behalf of Nunavut beneficiaries is still estimated at about $312.3 million. But the company’s ability to generate income from these assets appears to be in jeopardy.
Just consider the Northern Transportation Co. Ltd., which, through Norterra, is half-owned by Nunasi through a 25-year-old partnership with the Inuvialuit Development Corp. It’s reputation has plummeted due to continuing problems with the coastal barge service it offers to most communities in the Kivalliq region.
Earlier this year, one of its tug boats failed a Transport Canada safety inspection. That set into motion a chain of events that delayed shipments for numerous contractors and retailers in the region for at least one month. Given Nunavut’s short shipping season, such foul-ups do not add value to the NTCL brand.
For sealift customers in the Kivalliq, the solution already exists: competition. Nunavut Eastern Arctic Shipping Ltd. and Nunavut Sealink and Supply Inc. already offer cargo service to the region from Montreal. Both are capable companies with good service records. Customers fed up with NTCL have the option of turning to them next year, although they may have to deal with the issue of finding new suppliers in eastern Ontario and southern Quebec.
But this is not an appealing prospect for those Nunavut beneficiaries in whose name this asset is managed. If the concept of “ownership” is to hold any meaning, it ought to include the effective ability to know whether the thing that you own is gaining or losing value. It’s likely that few beneficiaries possess this kind of knowledge.
Another troubled Nunasi asset is Canadian North. Like its principal competitor in the eastern Arctic, the highly-secretive First Air, Canadian North does not publish financial information. So if they have suffered losses due to competition and the recent recession, we have no way of knowing how serious those losses are.
But based on Canadian North’s recent route cancellations in the west and its loud complaints about what it portrays as “unfair” competition, its reasonable to infer that this company is not prospering.
To be fair, it’s worth noting that in North America, airlines are generally regarded as money-losing propositions, no matter what market they may serve. Many airlines lose money as a matter of course. Only a few manage to break even or turn small profits.
So if Canadian North does suffer a bad year financially, this is not necessarily a sign of poor management. The airline industry is a tough business at the best of times.
But a number of senior management changes within Norterra suggest the company’s directors are less than pleased with the recent performance of Canadian North and its sister company, NTCL. In the latest such move, Carmen Loberg, the former operating boss of Norterra, has departed the company after a short stint at NTCL, where he recently replaced another departed executive.
Again, we have no way of knowing whether these actions are justifiable, or simply a panicked reaction from a board that’s losing its nerve.
That’s because all these questions will likely never be answered in public. When Nunasi Corp., like most other aboriginal corporations, was created as a privately-held company in 1976, nobody cared much about governance or accountability. No one cares much about those issues now either. JB