07/06/2012 01:37 EDT | Updated 09/04/2012 05:12 EDT

Manitoba First Nation accused of misappropriating $4.6M

A First Nation that helped build Manitoba's newest hydroelectric dam is being accused by the federal government of misappropriating $4.6 million in job training funds, according to court documents.

The Nisichawayasihk Cree Nation (NCN) in northern Manitoba received $8.4 million in federal funding between 2006 and 2008 to build a training centre for First Nation members who wanted to help build and operate the Wuskwatim dam and generating station, which officially opened on Thursday.

The 200-megawatt station was developed by the Wuskwatim Power Ltd. Partnership, a venture between NCN and Manitoba Hydro.

But the First Nation and two management agencies that were involved in the project did not meet all of their obligations under the funding agreement, the government alleges in a statement of claim filed with the Manitoba Court of Queen's Bench on June 15.

Nisichawayasihk Chief Jerry Primrose told CBC News he wants to talk with NCN's lawyers before commenting on the lawsuit.

The federal government claims NCN needed just $3.8 million to build the facility, known as the Aboriginal Training and Education Centre.

Ottawa alleges NCN and management agencies used the remaining $4.6 million for other purposes, including:

- Paying down NCN's operating line of credit.

- Paying Meetah Building Supplies Corp., a company owned by the First Nation.

- Adding money into the First Nation's "RCMP account."

- Buying guaranteed investment certificates to benefit the First Nation.

NCN is also accused of funneling more than $255,000 of the federal funding into the band's general account, where it was used for purposes not related to the training centre, according to the statement of claim.

"Canada has demanded the return of its funds from the defendants … but they have refused or neglected to return them," the government's claim states.

Ottawa wants to recover $4.6 million from the defendants, as well as interest and legal costs and possible other damages.

In addition to NCN, the federal government's lawsuit names Cochrane Group Inc. of Calgary and Genivar Inc. of Montreal, which are both described as project management agencies involved in the First Nation training project.

The allegations have not been proven in court. The defendants have not filed a statement of defence.