In a searing indictment of the provincial Health Ministry’s slack oversight, auditor Jim McCarter and his team reported Wednesday that ORNGE air ambulance bought more aircraft than it needed; purchased a fleet of land ambulances that often sat idle; and used public money to fund a controversial real estate deal that put $9 million into a for-profit company owned by ORNGE executives.
The only action the Ministry of Health appears to have taken since it created ORNGE in 2006 was to increase its annual funding from $97 million to $150 million.
“To the nose of this watchdog, this did not pass the smell test,” McCarter said, referring to the real estate deal and a series of “questionable” financial transactions his team uncovered.
As the province poured more and more money into ORNGE (a funding increase of 20 per cent from the pre-ORNGE system) the need for air ambulance was actually dropping (now 6 per cent less than five years ago).
Health Minister Deb Matthews responded Wednesday by revealing a new performance agreement with ORNGE and introducing new legislation to govern the service.
Matthews stuck to her guns and repeated a refrain that began in early December — she and her ministry were misled and made no mistakes.
“I am sickened when I see people who are in a position of trust who abuse that trust,” she said at a Queen’s Park news conference.
McCarter, whose year-long probe was hampered by ORNGE management stonewalling him (at numerous points over the years lawyers from law firm Fasken Martineau besieged him, successfully saying his office had no right of access to documents), remarked to reporters that the ministry ignored numerous “red flags” over the years, particularly in a January 2011 briefing that more than hinted at plans now under investigation by the Ontario Provincial Police.
ORNGE was so successful in stopping the auditor that he never got access to key documents the Star eventually used to unravel the ORNGE scandal. Chief among these was a marketing services agreement that saw Italian helicopter giant AgustaWestland pay ORNGE’s for-profit companies $6.7 million after ORNGE’s non-profit company purchased $148 million worth of helicopters. The OPP is investigating that deal and police have obtained a copy of the contract.
McCarter and his sleuths were also unable for many months to access financial information including salaries and expenses of Dr. Chris Mazza (it was $1.4 million plus an additional $1.2 million in a no-interest loan and cash advance for one year), his executive team and key board members. That’s because the province allowed ORNGE to create a series of for-profit companies (McCarter laments he does not think they have found them all) that had the effect of shielding much of the service’s business from his scrutiny.
One financial fact the auditor did uncover was that six now-former board members of ORNGE were paid a total of $643,000 in one recent year as a “retainer,” with one unnamed board member receiving $200,000. The most senior board member at the time was Mazza confidant and chairman Rainer Beltzner, but McCarter did not disclose who received the hefty payments.
In her comments to the media, Matthews said she was “outraged” at the audit’s revelations.
“We’re talking about people who chose to take money out of the pockets of the taxpayers of this province, to take money out of health care in this province so they could put it in their own pocket,” Matthews said.
That did not get her off the hook with opposition parties.
“It’s clear the health minister is ill-equipped to lead the government’s largest department and should resign or be fired,” said NDP Leader Andrea Horwath.
“When everyday folks look at this scandal and they hear about shell companies, diverted millions, missing funds, they think more about organized crime than they do about a health system,” Horwath added.
Progressive Conservative MPP Frank Klees, who first raised questions about ORNGE a year ago, said the auditor general confirmed what he has said for months — that the government failed to provide oversight at ORNGE.
“This report is just confirmation of the fact this minister, under her watch, allowed this scandal to develop and to grow,” Klees added.
McCarter’s audit did break new ground in some areas.
He discovered that the “Crystal Palace” (ORNGE’s head office) was purchased with $15 million of taxpayer financed funds, then leased back to a related ORNGE company for rent 40 per cent above market rates. Then $24 million was borrowed against the property. The $9 million difference between purchase amount and mortgage is something the OPP are investigating.
“Where is that money?” McCarter said.
All told, ORNGE borrowed $300 million to purchase 12 helicopters and 10 airplanes over the last three years, plus the office building and other unknown expenditures. McCarter said that taxpayers are on the hook and the transaction has added $300 million to the provincial debt.
He also uncovered a feasibility report by ORNGE that stated the service really only needed six new airplanes and nine new helicopters. ORNGE, at the time run by founder Dr. Chris Mazza, purchased 10 airplanes and 12 helicopters. Two of the helicopters, which ORNGE is trying to sell, were oddly outfitted with 12 seats each, and insiders speculate Mazza wanted to use them to fly prospective investors for his for-profit deals.
The auditor general’s report includes one revelation of waste after another. In one such case, the ministry of health committed $25 million of additional funding to ORNGE over five years to staff and maintain two extra aircraft because Mazza and executives said they were needed to support the “Thunder Bay angioplasty” program. McCarter checked and only three of those patients have needed transport in the past five years.
McCarter also found that ORNGE purchased 18 land ambulances with ministry money ($2.1 million), plus start-up funds of $9 million and annual funding of about $15 million annually to transfer patients by ground between hospitals.
McCarter said ORNGE obtained that funding saying 20,000 patients would be transferred annually by land. In fact, he found, only 14 per cent of that target was achieved and the cost was seven times per transfer what a municipal ambulance service charged.
ORNGE paramedics and pilots have told the Star the ambulances are so infrequently used that, to increase their kilometres and make it seem like they are needed, they are told to drive them from base to Tim Horton’s or to buy groceries.
McCarter found that the much maligned “performance agreement” struck between ORNGE and the ministry in 2005 required ORNGE to provide the ministry with an annual budget. ORNGE never did; and the ministry never asked.
The auditor was also hot on the trail of funds from the Italian helicopter company. Though he did not get the marketing service agreement he did find that AgustaWestland had struck a deal to give one of ORNGE’s charities $2.9 million over several years. The only funds that flowed were $500,000, which was used to build two “ORNGE Choppers,” motorcycles Mazza wanted for fundraising events. Previously, ORNGE has said the choppers cost just $150,000 in total.
One of the two choppers recently sold for $30,000 and ORNGE will receive that money back. McCarter noted that much of the other wasted money will never be recovered.
Original Article
Source: Star
Author: Kevin Donovan, Rob Ferguson and Tanya Talaga
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