Ornge’s not-for-profit companies got taxpayers’ funding
May 9, Toronto, Ont. – 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.
May 9, 2013 By Wings Magazine
May 9, Toronto, Ont. – 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
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
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 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
"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 were asked by the Ministry of Health to do a
forensic audit of Ornge's books from 2007 to 2012. But Tait wouldn't
go into 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.''