* Native band failed to show how it spent money: audit
* Aboriginal leaders set to meet prime minister on Friday
* Many of Canada's 1.2 million aboriginals live in poverty
By David Ljunggren
OTTAWA, Jan 7 A Canadian native band that
successfully pressured the prime minister to hold a special
meeting on aboriginal grievances cannot account for millions of
dollars in federal funding, according an audit that critics say
was leaked to discredit a growing protest movement.
Angry native activists, fed up with poor living conditions
they blame on decades of neglect from Ottawa, have already
blockaded rail lines and threatened to close Canada's borders
with the United States as part of a protest campaign they are
calling Idle No More.
The August 2012 report from accounting firm Deloitte said
the Attawapiskat First Nation in northern Ontario had shown "no
evidence of due diligence" in accounting for how it had spent
federal money designed to improve housing and health.
Attawapiskat Chief Theresa Spence has been on a hunger
strike for almost a month near Parliament Hill in Ottawa to
demand better treatment for natives. She and other leaders are
due to meet Prime Minister Stephen Harper on Friday to discuss
social and economic issues.
The audit, released by the office of Aboriginal Affairs and
Northern Development Minister John Duncan on Monday, was
initially leaked to some media organizations over the weekend.
A spokesman for Spence said those responsible wanted to
discredit the chief.
"They're trying to undermine the process here, the movement
of the people. The people are speaking out," Danny Metatawabin
told reporters. He said Spence - who has been Attawapiskat chief
since August 2010 - would address the audit on Friday.
Successive governments - including the current Conservative
administration - have for decades struggled to improve the life
of natives, who want more federal money and a much greater say
over what happens to the resources on their land.
Although Ottawa spends around C$11 billion ($11.1 billion) a
year on an aboriginal population of 1.2 million, living
conditions for many are poor, particularly for those on reserves
with high rates of poverty, addiction, joblessness and suicide.
Critics of the current system say bands are not required to
show enough evidence of how they are spending the money they
receive. They also complain some groups insist on living in
remote regions where there is little economic activity.
Deloitte, which surveyed the Attawapiskat First Nation's
expenditures from April 1, 2005 to Nov 30, 2011, said a probe of
505 transactions showed 81 percent of files did not have
adequate supporting documents and more than 60 percent had no
documentation of the reason for payment. The band received a
total of C$109 million in federal funding over that period.
"We were unable to determine if the funds were spent for
their intended purpose. There is no evidence of due diligence in
the use of public funds," Deloitte said in a letter to Spence,
recommending the band implement better financial controls.
"The independent audit ... speaks for itself, and we accept
its conclusions and recommendations," said Jan O'Driscoll, a
spokesman for federal Aboriginal Affairs Minister John Duncan.
Ontario Finance Minister Dwight Duncan, a Liberal, accused
the federal government of trying to discredit aboriginal
"Tough love the rallying cry of the cowards who 'leak' these
'audits'. Too much tough, not enough love, for our aboriginal
brothers and sisters," he said on Twitter.
(Reporting by David Ljunggren; Editing by Frank McGurty; and