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|ORNGE briefing ignored by officials with premier’s office and health, finance ministries
Published On Sun Mar 04 2012
The briefing document was addressed to Health Minister Deb Matthews.
TORONTO STAR/TANYA TALAGA
Kevin Donovan Staff Reporter
The Ontario government employs a small army of officials to guard the public trust.
Did they fall down on the job in failing to spot the problems in the province’s air ambulance service?
Twelve of them — including three from the premier’s office, a minister and four deputy ministers — received a detailed briefing document in January 2011 on the web of for-profit companies ORNGE was setting up.
They were told of plans to “leverage” public assets in a way that ended up enriching ORNGE founder Dr. Chris Mazza and others; how Mazza’s for-profit company had received a $5 million payment (which grew to $6.7 million) from an Italian helicopter firm that Ontario had purchased choppers from. These issues and more are now the subject of an Ontario Provincial Police investigation.
As the ORNGE story develops, questions are being asked by critics about who knew what and when. The premier’s office has refused to answer questions from the Star on the matter, always passing the questions to the health ministry, which has steadfastly accused ORNGE of lying, but never explaining why red flags were ignored. The 12 top officials who received the detailed briefing have not responded to questions from the Star.
The January 2011 briefing note, which the Star first reported on Jan. 14 of this year, is a 35-page document addressed to Health Minister Deb Matthews but copied to the following people:
• In Premier Dalton McGuinty’s office: principal secretary Jamison Steeve; policy advisers Cathy Worden and Dan Carbin. Steeve would have had extra insight into ORNGE, having been a chief of staff to former Health Minister George Smitherman, who created ORNGE.
• In the Ministry of Finance, deputy minister Peter Wallace, who as of last November was promoted to the position of secretary to cabinet, the most powerful civil servant in Ontario. Tim Shorthill, chief of staff at Finance, was also sent a copy.
• At the health ministry, in addition to the minister, the briefing note was sent to deputy minister Saad Rafi; chief of staff Mary Lowe; and Malcolm Bates, director of the Emergency Health Services Branch. Bates is the official with the most oversight responsibility for ORNGE.
• At Infrastructure Ontario, deputy minister David Livingston was sent a copy.
• At Economic Development and Trade, deputy minister Wendy Tilford received a copy. So did chief of staff, Flavio Volpe.
The briefing note and PowerPoint presentation, according to ORNGE, was intended to keep the Ontario government “fully informed about developments in its operation.” ORNGE was set up as a non-profit in 2005 and receives $150 million annually for providing what it describes as an “essential service” to Ontario.
Included in the document are numerous issues that have now become controversial. Upon recent publication by the Star of the following issues referred to in the document, the province has taken action. In January 2011, it appears no questions were asked.
Among the red flags:
• Millions of dollars from Italian helicopter firm AgustaWestland. The briefing notes states that $5 million has flowed to an ORNGE for-profit company from AgustaWestland, which is identified later in the note as a company from which ORNGE purchased 12 state of the art helicopters, using taxpayer financed money. The note states ORNGE is providing “marketing services” based on its successful outfitting of the choppers with medical interiors. ORNGE Global, which ultimately received a total of $6.7 million, was being paid to help AgustaWestland “penetrate” the international market. The OPP is now investigating. An ORNGE insider said officials should have asked if ORNGE purposely overpaid for the helicopters so that money could flow back to the for-profit company.
• Taxpayers footing the bill. The briefing note states that ORNGE’s new ventures are not being paid for out of the public purse. In fact, as the Star has revealed, taxpayer money is used for everything ORNGE does, including paying interest and principal to investors who contributed $275 million to buy new aircraft and an office building. Senior officials at the Ontario Ministry of Finance were briefed separately on the $275 million and ORNGE insiders say it was very clear that public money was paying back investors. Insiders ask how the “Queen’s Park 12” could have missed this.
• ORNGE top executives, who all hold positions at the non-profit ORNGE, cashing in on the for-profit side. A section of the briefing note, with a chart attached, describes the creation of numerous for-profit companies and details how their shares are owned by “Founders,” including Mazza and two vice-presidents (they all lost their jobs when the government shuttered these firms in January). The document says Mazza and others will have a “long-term incentive plan” and participate in “equity upside sharing upon the occurrence of monetization events.” ORNGE insiders question whether Queen’s Park officials asked how much Mazza and others were making. An early story by the Star revealed Mazza received $1.4 million annually, which angered Matthews.
• The 3 per cent solution. The document tells provincial officials that ORNGE Global (the Mazza for-profit company) has near exclusive rights to use the non-profit ORNGE’s “intellectual property” throughout the world. In return, ORNGE Global will pay Ontario 3 per cent of its gross revenues, up to a maximum, the document says, of $200 million. In reality, no money was made and the companies have been closed. ORNGE insiders with knowledge of this question why provincial bureaucrats did not ask how the 3 per cent was arrived at and whether Ontario did not deserve a higher return.
• Gap or no gap. The briefing note tells the province that ORNGE has identified a “service gap,” meaning that 9,000 Ontario people are not served by air ambulance due to funding constraints. However, later in the document, a plan to capitalize on what is described as “excess capacity” in ORNGE is laid out. Insiders say this confusing section should have raised a red flag.
Early last week, the Star asked the premier’s officials and the others for comment but received no response. We asked in January of this year and received a brief response from Neala Barton, Premier Dalton McGuinty’s press secretary. Asked if the premier or any of his officials, including those copied on the document, read it or took any action, Barton said.
“The matter was left to the Ministry of Health who followed up with ORNGE directly, as was appropriate given the letter was addressed to the minister,” Barton said in an email.
The OPP, which reports to the Ontario government, will be in the awkward position of having to question these top 12 officials to see if they read the briefing note and what, if any, response they had for ORNGE.
Tom Lepine, ORNGE’s former chief operating officer, was at the January 2011 Queen’s Park briefing and told the Star their plans were “well received.”
Top people no longer associated with ORNGE (Mazza, lawyer Alf Apps and ORNGE chair Rainer Beltzner) told investors last year that top government officials were backing their plans.
Friday, ORNGE told the Star that it was unable to find if any record existed of a Queen’s Park official responding to the briefing document. The problem, spokesperson Jennifer Tracey said, is that the police investigation has hampered access to ORNGE files. Also, the people involved in the briefing have all left ORNGE>
“We can’t say, at this point with any certainty, what if anything might be in the database or in the records which could be responsive to the question,” Tracey said.
Kevin Donovan can be reached at email@example.com or (416) 312-3503