* 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
* Judge slams police for not removing rail line protest
(Adds judge criticizing police for not clearing rail protest)
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 to 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 blockaded
rail lines and threatened to close Canada's borders with the
United States in a campaign they call Idle No More.
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.
But the August 2012 report from accounting firm Deloitte
said Spence's Attawapiskat First Nation in northern Ontario had
shown "no evidence of due diligence" in accounting for how it
spent federal money intended to improve housing and health.
The audit was leaked to some media organizations over the
weekend, and released on Monday.
A spokesman for Spence said she would address the audit on
Friday when she and other aboriginal leaders will discuss social
and economic issues with Conservative Prime Minister Stephen
Harper. The leak was designed to discredit Spence, he added.
"They're trying to undermine the process here, the movement
of the people. The people are speaking out," Danny Metatawabin
Successive Canadian governments have for decades struggled
to improve the life of natives, who want more federal money and
a greater say over what happens to resources on their land.
Ottawa spends around C$11 billion ($11.1 billion) a year on
an aboriginal population of 1.2 million, yet living conditions
for many are poor, particularly for those on reserves with high
rates of poverty, addiction, joblessness and suicide.
Critics say bands do not have to show enough evidence of how
they spend the money they receive, and some groups insist on
living in remote regions with few jobs or prospects.
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 did not
document the reason for payment. The band received C$109 million
in federal funding over the 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 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
leaders. "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.
As part of the Idle No More campaign, protesters blocked a
Canadian National Railway Co line in Sarnia, Ontario,
in late December and early January. CN went to court to obtain
an injunction on Dec. 21, but local police did not enforce it
until Jan. 2.
The judge in the case, Justice David Brown, expressed his
frustration at the failure of the police to act, saying "local
police agencies cannot ignore judicial orders under the guise of
contemplating how best to use their tactical discretion."
Brown granted CN another injunction on Jan. 5 to clear a
separate group of protesters blocking the main rail line from
Toronto to Montreal.
Sarnia police were not immediately available for comment. A
CN spokesman declined to say how much money the blockades had
cost the company.
(Additional reporting by Susan Taylor in Toronto; Editing by
Frank McGurty, Peter Galloway and Eric Walsh)