Ornge for-profits got public dollars: auditor

TORONTO – Taxpayer dollars going to for-profit companies, incomplete documents and the absence of approval for a loan to Ornge’s ousted CEO Chris Mazza were among the findings of a team of auditors who combed through the troubled air ambulance’s books.

Ornge’s for-profit entities got public dollars from the publicly funded air ambulance service, said Allen Tait, the director of the government audit team.

“We did not identify a regular source of revenue that was not ministry-related,” he told a legislative committee.

Roughly 93.5 per cent of the total money going to the conglomerate came from the government, he said. The remainder was borrowed or donated money, tax rebates and money from a controversial deal involving Ornge’s headquarters.

Ontario’s auditor general found that one of Ornge’s for-profit subsidiaries purchased a building for $15 million, then leased it back to the publicly funded agency at a rate that was 40 per cent higher than fair-market rent.

That allowed the subsidiary to obtain $24 million in financing for the building, $9 million of which was intended to flow back to a related for-profit company that was owned by a senior Ornge manager.

Tait said his team identified 20 for-profit companies created by Ornge, which gets about $150 million a year from the province. Those entities are now being wound down.

Some of them were owned by ousted CEO Chris Mazza, other executives and the board of directors, according to auditor general Jim McCarter.

His report last year criticized the governing Liberals for failing to oversee Ornge despite giving it $730 million over five years and allowing it to borrow almost $300 million more in 2009.

Tait said his team mapped out Ornge’s corporate structure and spent a “significant” amount of time documenting the board membership of each entity. They identified who belonged to what board, so when they looked at the cash flow, they “could see the extent of, shall we say, common interest,” he said.

“There were some board members who were on a significant number of the 20 entities in the conglomerate,” Tait said.

“We didn’t find anyone who was on all 20. What we did find, certainly some who were on more than half.”

Some of the directors were given shares in the companies and there was an expectation that by sitting on their boards, they would profit, said Progressive Conservative Frank Klees.

“And they profit at the expense of taxpayers in the province of Ontario,” he said.

Tait said his team also looked at the three loans totalling $1.2 million that Mazza collected in a single year, on top of the $1.4 million he collected in salary and bonuses.

Mazza got a $500,000 housing loan in July 2010, $250,000 from Ornge Global as an advance on his bonus and another $450,000 from Ornge Global in July 2011.

The documents supporting the loans were “inconsistent,” he told the committee.

“We did have a situation where one of the documents there appeared to be a form of approval from the board, there appeared to be email approval on one, and to the best of my recollection, one we did not find any evidence of approval,” Tait said.

Tait wouldn’t comment after his appearance before the committee about which of the three loans lacked approval.

The audit team was asked by the Ministry of Health to do a forensic audit of Ornge’s books from 2007 to 2012. But Tait wouldn’t give full details about what they found, saying he didn’t want to compromise the criminal investigation by the Ontario Provincial Police, who have the report.

The police have said it could be another year before charges, if any, are laid.

Klees said Tait confirmed what the committee had suspected during the course of their hearings on Ornge.

“We’ve been told repeatedly by these directors, by the chair of the board, that any of the funds that flowed into these companies came from outside investments, were not co-mingled with Ministry of Health funds,” he said. “That is simply not the case.”