An ORNGE accountant blew the whistle in 2008, telling the province that the publicly funded ORNGE was “handing out money like water.”
In an interview audio taped in 2008 by Ministry of Finance investigators, Keith Walmsley said former ORNGE boss Dr. Chris Mazza (who was terminated Thursday) and other executives were paying themselves whopping bonuses and had set up a spiderweb of for-profit companies. Walmsley went on to provide detailed allegations of numerous abuses of taxpayers money and said ORNGE was deceiving the cash-strapped health ministry, hiding a $5 million annual surplus in taxpayers funds by using a double set of books.
Walmsley had first brought his concerns to his bosses at ORNGE in 2007 and was told “what the Ministry (of Health) doesn’t know won’t hurt them.” When he complained further, ORNGE let him go just before his three-month probationary period was up.
Walmsley put his issues in writing to provincial officials, was interviewed by investigators in November 2008, then the health ministry told him the next month that the problems were solved.
A spokesperson for current Health Minister Deb Matthews confirmed that Walsmsley’s allegations were received by the ministry and passed to finance for investigation. Zita Astravas said ORNGE assured the investigators that all was well at the province’s air ambulance service. The probe was dropped.
Astravas said issues first raised by Walmsley are now being probed by a team of forensic auditors from the Ministry of Finance.
At ORNGE this week, there are now 43 auditors going through computers and paper files. A guard has been posted on the ORNGE file room to stop anyone from removing documents.
ORNGE was created in 2005 by then Liberal health minister George Smitherman and Mazza, a former Sunnybrook emergency doctor. It was set up as a not-for-profit agency to deliver air ambulance service across the province. At the time, ORNGE received about $115 million a year and they now receive $150 million annually.
Walmsley, a certified general accountant, was hired in September 2007 as senior business analyst at ORNGE. His salary was $80,000, and he was told he was eligible for performance bonuses of up to 7 per cent.
In an interview, Walmsley said ORNGE gave him the task of setting up the next year’s budget. Walmsley, who currently works at a Toronto hospital, had spent his career as an accountant in hospitals and private industry.
What he saw in the fall of 2007 shocked him. He presented the following information to government investigators as serious allegations that should be probed:
• Big bonuses. Mazza was getting a $250,000 bonus on a salary that back then was in excess of $300,000 (his compensation package grew to $1.4 million in 2011). Even junior employees were receiving a $16,000 bonus in 2007. Walmsley counted $2.4 million in bonuses in 2007, which he told investigators was unusual in what was supposed to be a non-profit, government-funded agency.
• For-profit companies. Walmsley said ORNGE Peel and other companies recently shut down by the province were being used to pay “stipends” or consulting fees to ORNGE executives. This shielded their salaries from the public Sunshine List.
• Perks in the woods. Walmsley tripped over information he said revealed weekend trips by ORNGE executives to Muskoka Woods, a high-end summer camp ORNGE was using as a base for its J-Smarts charity program. J-Smarts was supposed to teach youth how to safely do extreme sports. ORNGE had purchased a $50,000 water ski boat and Walmsley said executives would go to the camp on the weekend at ORNGE expense. A woman who became one of Mazza’s vice-presidents was a former water ski instructor.
• Untendered consulting contracts. ORNGE was handing out contracts with no tendering or advertising. Some people who were high-level ORNGE employees were also paid through consulting agreements. “And T4 (tax) slips were not being handed out,” Walmsley said.
• Big surplus. With health-care dollars scarce in Ontario, Walmsley was surprised to see ORNGE had an annual surplus of $5 million. He said he approached his boss and they both went to talk to then vice-president Maria Renzella (terminated Thursday along with Mazza and one other executive).
“I complained and was told they would hide the surplus,” Walmsley recalled. That $5 million, he said, was spread out among executives and used to pay for what he later described as “luxurious” company purchases.
Shortly after he complained to Renzella, Walmsley was told his employment at ORNGE was “not working out.”
That was just before the end of 2007. That December, with ORNGE complaining it was strapped for cash, then health minister Smitherman authorized a one-time $2.9 million funding to ORNGE for an increase in “salaries and wages and other operating expenses,” according to a letter written to ORNGE by Smitherman in December 2007.
After being let go by ORNGE, Walmsley waited until he found a new job, then wrote on April 14, 2008 to Margaret Best, the provincial minister for health promotion. In his letter, he set out allegations of financial wrongdoing. Walmsley realizes now he should have sent it to Smitherman, who had responsibility for ORNGE.
Best’s office forwarded Walmsley’s letter to the health ministry on Nov. 14, 2008. By that time, David Caplan had replaced Smitherman as minister. The letter was received by Ruth Hawkins, a senior health ministry official. Hawkins forwarded it to the Ministry of Finance and two investigators from the Sudbury head office were sent to interview Walmsley.
In a 45-minute tape recorded interview he set out the problems he had seen and urged investigators to take action.
His letter of complaint to the ministry stated he saw “several eye-opening situations” at ORNGE, including two sets of accounting records, hiding the surplus and executives “benefitting far too luxuriously.” He asked the ministry and investigators if it was possible that the ministry was supporting what ORNGE was doing (that question was not answered). Walmsley told the ministry he thought health-care dollars were supposed to be spent only on health care.
On Dec. 29, 2008, Hawkins wrote on behalf of the Ministry of Health to say that all of Walmsley’s allegations had been investigated by the “Ministry of Finance’s forensic investigation team.”
“I am pleased to say that the issues identified in your letter have been addressed and once again thank you for bringing forward your concerns.” Hawkins wrote.
This week, the aide to current Minister of Health Matthews said that after the investigators met Walmsley they “followed up with senior officials at ORNGE and the ministry’s Health Audit Services Team and concluded at that time that evidence did not exist to support Mr. Walmsley’s allegation of a second set of books.”
Astravas said “senior officials at ORNGE also provided assurances about their compensation policy to the ministry in December 2008 that led the ministry at that time to conclude that Mr. Walmsley’s concerns had been addressed.”
The Star revealed in a series of articles over the past two months that ORNGE was paying exorbitant salaries to executives, had set up a series of for-profit companies at taxpayer’s expense, and executives — including Renzella and Mazza — had many perks (Renzella received $110,000 to fund an executive MBA including international study in Belgium).
Walmsley’s tip off to the health ministry in 2008 came just a few months before scandal erupted at eHealth over executive perks, high bonuses and untendered contracts.
Original Article
Source: Star
Author: Kevin Donovan
No comments:
Post a Comment