Matthews “powerless” to change federal charity: Ornge fiasco
March 29, 2012 By The Toronto Star
March 29, 2012, Toronto - Health Minister Deb Matthews stunned a legislative hearing probing the ORNGE scandal by saying she was powerless to take action because the air ambulance service was set up as a federal charity.
That meant she could not step in and fix a series of problems at ORNGE, Matthews said.
“Because ORNGE was a federally incorporated charity, legislative options were not available,” Matthews told the all-party legislative committee, adding she could not even ask the board to resign after she discovered irregular compensation was paid to some executives.
Eventually — after a series of investigative articles in the Star — Matthews said she told the board of directors, many of whom were also paid “retainers” as high as $200,000, “their house of cards was about to fall.”
Government insiders question why ORNGE would have been off-limits to the health ministry, given that hundreds of provincially funded and regulated agencies (such as hospitals, children’s aid societies and the giant Cancer Care Ontario) are created as federal charities. This is done so that the agency, which receives government funding, does not have to pay taxes.
Last week, Auditor General Jim McCarter issued a searing indictment of the provincial government’s lack of oversight at ORNGE. He found Ontario threw $50 million in funding increases at the service over five years but never checked how taxpayers’ money was being spent.
McCarter and his team reported 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.
Deputy health minister Saad Rafi, who also faced the committee Wednesday, said that while the government provides ORNGE funding through a contractual agreement, it had little control over it.
“It is not an agency of the government, nor a Crown corporation nor any other extension of the government. (It) is a not for profit corporation governed by the Canada Corporation Act that operates as an independent undertaking,” said Rafi.
“ORNGE is a federally incorporated registered charity. That means the provincial government has no power to create laws that would affect its corporate governance or structure.”
A Star review of the 2005 “performance agreement” between the ministry and ORNGE shows numerous ways the province could have exerted control on the air ambulance service. Instead of taking action to rein in the service, the health ministry repeatedly increased ORNGE’s funding over five years to what is now an annual payment of $150 million.
Progressive Conservative MPP Frank Klees demanded to know why the ministry of health suddenly acted to intervene in late December and early January if the charitable status prevented earlier intervention.
“What changed that allowed the ministry to intervene once the minister decided to do so?” he asked. “What changed from the time the minister said she had no authority to your very aggressive intervention?”
Rafi said the change was the board finally voluntarily resigned. “Absent that, we still would not have been able to affect ORNGE’s structure,” said Rafi. Rafi earned $427,551 last year for helping to run the health ministry, a $48 billion portfolio.
Klees shot back: “So in other words, until such time as you went to ORNGE and asked the board for their cooperation, the ministry took no initiative to do so? That could well have taken place much earlier.”
Matthews gave the hearing her own timeline of events and maintained she “took action immediately upon learning of the problems at ORNGE.”
But NDP MPP France Gélinas pointed out that the New Democratic Party began asking questions about ORNGE and the compensation of senior executives more than two years ago.
Gélinas was stunned by Matthews’ testimony.
“There are big holes in the story. This is completely out of character with the way she usually behaves . . . and the way ministry of health usually functions,” she said. “There were some bigger pressures at play in this issue and they aren’t telling us what it was.”
Meanwhile, ORNGE this week has revealed more high salaries, though it has not yet officially confirmed founder and former CEO Chris Mazza’s $1.4 million annual payment. Maria Renzella, former chief operation officer of ORNGE Global, received $430,255 in 2011, made up salary and a taxable benefit (which is not identified). Former top aviation executive Rick Potter was pulling in $412,318 in salary and benefits.
One fewer ORNGE executive will be working at the troubled air service by the middle of April. Bruce Tavender, vice-president of finance, quit this week and told ORNGE he has accepted a position elsewhere. Tavender ($286,127) started at ORNGE in 2009.
The hearings resume at Queen’s Park next Wednesday.