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Mazza rejected deal on discounted helicopters: former exec

May 10, 2012, Toronto - ORNGE paid about $7 million more for 12 helicopters than it had to, a Queen’s Park committee was told Wednesday.


May 10, 2012
By The Toronto Star

Topics

Former ORNGE aviation boss Rick Potter said he negotiated millions of
dollars off the purchase price AgustaWestland was charging and then was
surprised when ex-ORNGE CEO Chris Mazza told him to pay the full price.

“Are you freaking crazy?” Potter recalled telling Mazza when he
confronted the boss of the air ambulance service. The savings related to
extra money he said AgustaWestland was attempting to charge for
obtaining government certification that the helicopters could carry
carry a greater weight than usual, a requirement because the choppers
were being used for air ambulance work.

In his testimony, Potter described the savings he negotiated as $10
million. He said ORNGE ended up paying Agusta $7.2 million in additional
charges.

This set the stage for the payment of $6.7 million from
AgustaWestland back to an ORNGE for-profit company controlled by Mazza,
committee members suggested.

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Potter, who now consults at ORNGE for $20,000 a month, told the
hearing looking into the air ambulance scandal that he spoke to ORNGE’s
corporate lawyer Cynthia Heinz, former executive vice-president Maria
Renzella, and others and said “this is nuts.”

The startling testimony was heard at the public-accounts committee
hearing probing questionable contract payments, high salaries and the
creation of spinoff for-profit companies at ORNGE, an agency that receives $150 million a year in public money.

Progressive Conservative MPP Frank Klees asked Potter if he contacted
the board of directors when he found out about the $7.2 million.

“I did not contact the board of directors; I thought it’d be
inappropriate as an employee. I contacted seven people including legal
counsel and confirmed the legal counsel on both sides was in agreement
with this. My assumption was I was obviously missing something,” he
said.

After the hearing, Klees said the $7.2 million subsequently became a
$6.7 million marketing agreement paid back to an ORNGE for-profit firm.

“So, in the end, you have Agusta paying back to an ORNGE company some
$6.7 million. For what, we asked. Mr. Potter made it clear in his
testimony he thought it was inappropriate,” said Klees. “You know, I
have referred to this as a kickback and I am just fine with reasserting
that today.”

Now, the committee must “follow the money,” said Klees.

The Ontario Provincial Police is now investigating the $6.7 million
contract. Klees has also contacted the U.S. Attorney General’s office
and asked it to investigate. Since the deal was negotiated through the
Philadelphia headquarters of Agusta, there are “international
implications” here, he said.

“You have here, the beginnings of the unraveling of a story that not
only involves putting peoples’ lives into danger and compromising
patient care, but, I think at the base of this is greed,” Klees said.

The Speaker of the legislature has issued a rare warrant forcing
Mazza to testify on May 16. However, the Star has learned two
psychiatrists have deemed him unfit to testify.

Klees said the committee will wait for Mazza and has asked to sit through the summer, if necessary.

Potter testified he first met Mazza in 2005 when he was asked by
Kelly Mitchell, of Pathway Group, to become a board member. Potter also
told the hearing he is a lifelong member of the Conservative party and
ran as a federal candidate in Thunder Bay. Mitchell is also a prominent
Conservative.

Mazza was an impressive personality, a visionary and “brilliant
individual,” said Potter, but his management style “left something to be
desired. It was somewhat confrontational.”

It was accurate to describe Mazza’s management style as tyrannical, he added. “I think I threatened to quit twice,” he said.

Last February, the Star previously revealed Potter pretended to have a
Scottish MBA to help woo investors into kicking in $275 million for new
aircraft.

However, Potter emphatically told the committee it was Mazza who
urged him to say he had the degree. “At no point in time did I ever tell
anybody at ORNGE that I had an MBA. As a matter of fact, I told Chris
Mazza twice I didn’t,” he said. “He said it would look a lot better if I
did.”

Potter said he didn’t know Mazza was earning $1.4 million a year
until he read about it in the press. Potter quit the board five years
ago when he joined the company as an employee.

Like Mazza, Potter’s salary disappeared off the public disclosure
sunshine list. Potter was last listed in 2008 as earning $180,000 a year
at ORNGE. But in 2009 it evaporated, noted NDP committee member MPP
France Gélinas.

“That was a corporate decision. I volunteered every year to have the salary published,” he said.

The hearing resumes next week. 


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