An ongoing controversy over more than $1 million in payments made to band officials has disrupted a northern Alberta First Nation community, prompting a lawsuit and a blockade of band offices.

Last week, members of the Fort McMurray No. 468 First Nation blocked access to the band's offices with a pickup truck and signs.

When CBC News visited Wednesday morning, the third day of the protest, an outfitter tent had been set up and about 20 people gathered around a fire pit with placards.

The First Nation includes four reserves in the Gregoire Lake area southeast of Fort McMurray.

"Each of our members have complained to me ... complained among themselves about what's happening with our leadership, with our finances, with our future," said Velma Whittington, one of the protest organizers.

Brad Callihoo is CEO of Fort McMurray No. 468 First Nation. (David Thurton/ CBC)

On Wednesday evening, the band obtained an emergency court injunction against the protesters. The injunction allows protesters to demonstrate but prevents them from blocking access to the offices.

The protesters told CBC they're vowing to challenge their leadership in the wake of a lawsuit over expenses and bonuses paid to Chief Ron Kreutzer, CEO Brad Callihoo, a corporation controlled by Callihoo, councillor Ronald Kreutzer and former councillor Byron Bates.

Band councillor Samantha Whalen initiated the lawsuit. She has since been suspended from her duties and faces an internal disciplinary hearing at an unspecified future date.

All the defendants deny the allegations, none of which have been proven in court.

Misappropriation of funds alleged

In an amended statement of claim filed in December, Whalen alleges misappropriation of the band's funds. She alleges that $600,000 from a $34.8-million settlement with the federal government was diverted to Callihoo in November 2017.

It is alleged the money was transferred to Calihoo's company without following the band's governance procedures.

Fort McMurray No. 468 councillor Samantha Whalen sits down with CBC for an interview on Jan. 10, 2018. (David Thurton/ CBC)

Whalen also claims the band covered about $500,000 of charges on Callihoo's personal credit card in 2017. The charges "included personal expenses," Whalen says in her statement of claim.

"It just didn't pass the sniff test," she told CBC in an interview.

Whalen also alleges that in 2018, Christmas bonuses were paid out to Callihoo, the chief, two band councillors and Bates, now CEO of Christina River Enterprises, the band's business arm.

Altogether, the lawsuit alleges $270,000 in bonuses was paid out December 2018.

Whalen, one of the band councillors, said she didn't cash the cheques she received.

"I was enraged. I was completely enraged," Whalen said. "I don't deserve $65,000.

"It's my opinion that the nation is not doing well enough to deserve that."

Sophie, Countess of Wessex, centre, and Fort McMurray No. 468 First Nation Chief Ron Kreutzer, right, watch a traditional ceremony during a visit to Fort McMurray Alta, on Friday, June 24, 2016. (THE CANADIAN PRESS/Jason Franson)

Whalen said the reserve is dealing with a number of pressing issues, including the lack of proper housing.

CBC visited the home of a 74-year-old elder who said his trailer was infested with black mould and the rotting exterior no longer kept out the cold. You can watch the video below.

Fort McMurray #468 First Nation councillor Samantha Whalen initiated a lawsuit over alleged mismanagement of First Nation finances. 2:17

False allegations, chief says

The chief, the band's CEO and the other defendants named in the lawsuit declined CBC's request for an interview. But in a news release Thursday, the defendants denied all the allegations in the lawsuit.

"Each and every allegation by Ms. Whalen is false and her claims will be defended in court," the statement said. "[Our nation has] seen remarkable progress in recent years through strong and effective governance, increased accountability and transparency."

In a joint statement of defence filed in November, the defendants say the $600,000 paid to Callihoo was a performance bonus for an underpaid band CEO who worked for "less-than-market rates."

The payment was approved in writing by the chief and two councillors, recorded in the band's financial statements, and not hidden from view of band members, the statement of defence says.

As for the CEO's personal credit card paid for by the band, the statement of defence says Callihoo was being reimbursed for work expenses, all of which were "fully documented and verified prior to reimbursement."

The statement of defence does not respond to Whalen's allegations about Christmas bonuses. It was filed Nov. 26, 22 days before Whalen amended her statement of claim with allegations about the bonuses.

The news release said Whalen was suspended as band councillor with pay for various reasons, including "breaching her oath of confidentiality."

"This is an extraordinary step, it is a necessary step," Chief Ron Kreutzer said in the release.

Whalen will face a disciplinary hearing at a date to be determined.

Connect with David Thurton, CBC's Fort McMurray correspondent, on Facebook, Twitter, LinkedIn or email him at david.thurton@cbc.ca