A larger web of questionable financial deals has been uncovered at the troubled ORNGE air ambulance service, including the wasting of millions of tax dollars and paying one board member a $200,000 retainer.
Ontario Auditor General Jim McCarter detailed the troublesome practices and a lack of health ministry oversight Wednesday in a long-awaited 39-page report that comes as an Ontario Provincial Police investigation continues into ORNGE.
“ORNGE is a textbook example of what happens when the government doesn’t get the information it needs to do its job,” McCarter told a news conference.
He raised the question of what has happened to about $9 million in profits after the posh ORNGE headquarters, nicknamed the “Crystal Palace,” was purchased for $15 million by an air ambulance subsidiary, then leased back to ORNGE with a rent 40 per cent above market rates and used as collateral to borrow $24 million.
“Where is that money?” he said of the $9 million difference between the purchase price and the amount borrowed, which went to another ORNGE subsidiary owned by management and the board, not taxpayers.
“I think that’s something the OPP is looking in to.”
This is one of many transactions that “didn’t pass the old smell test,” McCarter added.
When asked why no one at the health ministry noticed such irregularities, the auditor replied: “good question,” calling the myriad of ORNGE subsidiaries a “mini-conglomerate” that was hard to trace.
“I don’t think we got them all,” McCarter said, adding that getting information from ORNGE and its corporate offshoots for his audit was “like pulling teeth.”
Health Minister Deb Matthews acknowledged that the report revealed “just how much we were misled” by the recently deposed executive team and board at ORNGE.
“I am sickened when I see people who are in a position of trust who abuse that trust,” she said toward the end of a 32-minute news conference in a sweltering room at Queen’s Park.
“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. I am outraged.”
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,” she added.
With the OPP investigation ongoing, it’s likely that “this is only the tip of the iceberg at ORNGE. But that should be enough to sink this minister.”
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.
“This minister if she wants to do the right and honorable thing, she must resign. She has no choice. There is far too much evidence here that she failed in her responsibilities.”
The air ambulance service has been given $700 million by taxpayers and raised almost $300 million in private financing since being formed in 2006, with some of the money going for more aircraft than it needed.
In another troublesome example, ORNGE paid $28 million for 11 “used and aging” helicopters —some over two decades old — until new ones were delivered, arguing it was cheaper than renting.
Apparently not.
“At the time of our audit, ORNGE was in the process of disposing the 11 used helicopters for what was expected to be less than $8 million,” McCarter wrote in the report, which was underway before the air ambulance service became a full-blown political scandal.
Taxpayer funding of ORNGE — now at $150 million annually — has also risen 20 per cent over the last few years while the number of patients transported has fallen by 6 per cent.
McCarter faulted the health ministry for missing a number of signals that problems were brewing and for “performance agreements” with ORNGE that did not allow the government to claw back unspent air ambulance funding and allowed the service to borrow money without government permission.
Other problems found by McCarter include reports submitted on the differences between planned and actual expenses at ORNGE that “in most cases lacked detailed explanations.”
Weak performance agreements did not require detailed breakdowns of results from the complex web or ORNGE subsidiaries, leaving the health ministry in the dark in tracing transactions.
Matthews, who has been under fire for weeks in the Legislature, said she’ll take action on all the recommendations being made by the auditor general to repair transparency and accountability at ORNGE.
“There is a lot of blame to go around here…I make no excuses for anybody.”
Matthews said the government put in place a new “performance agreement” with ORNGE this week that boosts powers to audit, inspect and verify financial information coming from the agency.
Along with new legislation introduced Wednesday, the performance agreement “will give us the powers we need to safeguard patient care, stop future abuses and get better value for our air ambulance dollars.”
There will also be new powers for the government to take control of ORNGE directly if any more shenanigans are suspected and a patient advocate appointed, along with a complaints process to be set up.
Among the troubles uncovered at ORNGE, deposed chief executive officer Dr. Chris Mazza was being paid a salary of $1.4 million a year, air ambulance helicopters were purchased for $144 million from Italian company Agusta Westland but had little overhead room for paramedics to properly administer CPR to patients, and Agusta paid ORNGE $6.7 million for questionable “marketing services.”
As well, Mazza received loans from ORNGE to purchase a stately home in Etobicoke.
The financial irregularities prompted Matthews to call in a forensic audit team from the finance ministry, and later turned the case over to Ontario Provincial Police for investigation. But that forensic audit did not come until December, four months after McCarter first raised red flags about his concerns in a draft report.
Ron McKerlie, the interim CEO of ORNGE, welcome the amended performance agreement with the province.
“This amended performance agreement is a key step toward ensuring the people of Ontario have confidence in the vital, life-saving service provided by our frontline crews every day,” said McKerlie.
Some of the provisions in the performance agreement includes tying ORNGE’s funding to key indicators and public reporting of expenses.
“As we embark upon this renewed and improved relationship, we welcome the new transparency provisions, which will ensure past mistakes are not repeated,” said McKerlie.
Original Article
Source: Star
Author: Rob Ferguson, Tanya Talaga and Kevin Donovan
Ontario Auditor General Jim McCarter detailed the troublesome practices and a lack of health ministry oversight Wednesday in a long-awaited 39-page report that comes as an Ontario Provincial Police investigation continues into ORNGE.
“ORNGE is a textbook example of what happens when the government doesn’t get the information it needs to do its job,” McCarter told a news conference.
He raised the question of what has happened to about $9 million in profits after the posh ORNGE headquarters, nicknamed the “Crystal Palace,” was purchased for $15 million by an air ambulance subsidiary, then leased back to ORNGE with a rent 40 per cent above market rates and used as collateral to borrow $24 million.
“Where is that money?” he said of the $9 million difference between the purchase price and the amount borrowed, which went to another ORNGE subsidiary owned by management and the board, not taxpayers.
“I think that’s something the OPP is looking in to.”
This is one of many transactions that “didn’t pass the old smell test,” McCarter added.
When asked why no one at the health ministry noticed such irregularities, the auditor replied: “good question,” calling the myriad of ORNGE subsidiaries a “mini-conglomerate” that was hard to trace.
“I don’t think we got them all,” McCarter said, adding that getting information from ORNGE and its corporate offshoots for his audit was “like pulling teeth.”
Health Minister Deb Matthews acknowledged that the report revealed “just how much we were misled” by the recently deposed executive team and board at ORNGE.
“I am sickened when I see people who are in a position of trust who abuse that trust,” she said toward the end of a 32-minute news conference in a sweltering room at Queen’s Park.
“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. I am outraged.”
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,” she added.
With the OPP investigation ongoing, it’s likely that “this is only the tip of the iceberg at ORNGE. But that should be enough to sink this minister.”
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.
“This minister if she wants to do the right and honorable thing, she must resign. She has no choice. There is far too much evidence here that she failed in her responsibilities.”
The air ambulance service has been given $700 million by taxpayers and raised almost $300 million in private financing since being formed in 2006, with some of the money going for more aircraft than it needed.
In another troublesome example, ORNGE paid $28 million for 11 “used and aging” helicopters —some over two decades old — until new ones were delivered, arguing it was cheaper than renting.
Apparently not.
“At the time of our audit, ORNGE was in the process of disposing the 11 used helicopters for what was expected to be less than $8 million,” McCarter wrote in the report, which was underway before the air ambulance service became a full-blown political scandal.
Taxpayer funding of ORNGE — now at $150 million annually — has also risen 20 per cent over the last few years while the number of patients transported has fallen by 6 per cent.
McCarter faulted the health ministry for missing a number of signals that problems were brewing and for “performance agreements” with ORNGE that did not allow the government to claw back unspent air ambulance funding and allowed the service to borrow money without government permission.
Other problems found by McCarter include reports submitted on the differences between planned and actual expenses at ORNGE that “in most cases lacked detailed explanations.”
Weak performance agreements did not require detailed breakdowns of results from the complex web or ORNGE subsidiaries, leaving the health ministry in the dark in tracing transactions.
Matthews, who has been under fire for weeks in the Legislature, said she’ll take action on all the recommendations being made by the auditor general to repair transparency and accountability at ORNGE.
“There is a lot of blame to go around here…I make no excuses for anybody.”
Matthews said the government put in place a new “performance agreement” with ORNGE this week that boosts powers to audit, inspect and verify financial information coming from the agency.
Along with new legislation introduced Wednesday, the performance agreement “will give us the powers we need to safeguard patient care, stop future abuses and get better value for our air ambulance dollars.”
There will also be new powers for the government to take control of ORNGE directly if any more shenanigans are suspected and a patient advocate appointed, along with a complaints process to be set up.
Among the troubles uncovered at ORNGE, deposed chief executive officer Dr. Chris Mazza was being paid a salary of $1.4 million a year, air ambulance helicopters were purchased for $144 million from Italian company Agusta Westland but had little overhead room for paramedics to properly administer CPR to patients, and Agusta paid ORNGE $6.7 million for questionable “marketing services.”
As well, Mazza received loans from ORNGE to purchase a stately home in Etobicoke.
The financial irregularities prompted Matthews to call in a forensic audit team from the finance ministry, and later turned the case over to Ontario Provincial Police for investigation. But that forensic audit did not come until December, four months after McCarter first raised red flags about his concerns in a draft report.
Ron McKerlie, the interim CEO of ORNGE, welcome the amended performance agreement with the province.
“This amended performance agreement is a key step toward ensuring the people of Ontario have confidence in the vital, life-saving service provided by our frontline crews every day,” said McKerlie.
Some of the provisions in the performance agreement includes tying ORNGE’s funding to key indicators and public reporting of expenses.
“As we embark upon this renewed and improved relationship, we welcome the new transparency provisions, which will ensure past mistakes are not repeated,” said McKerlie.
Original Article
Source: Star
Author: Rob Ferguson, Tanya Talaga and Kevin Donovan
No comments:
Post a Comment