02/16/2012 12:58 EST | Updated 04/17/2012 05:12 EDT

ORNGE Investigation: OPP Called In To Probe 'financial irregularities'


TORONTO - A criminal probe of Ontario's embattled air ambulance service has provincial police investigating "financial irregularities" at an agency that's been engulfed in controversy for months.

"The OPP is conducting an investigation into possible criminal activities on the part of Ornge air ambulance service," police spokeswoman Cathy Bell said Thursday.

The investigation was launched at the request of the Ministry of Health and Long-Term Care, she added.

Sources said the ministry asked police to look into "financial irregularities" at Ornge after receiving advice from forensic auditors who examined its books.

The criminal investigation is the latest blow to Ornge, which receives about $150 million a year from the province to operate a non-profit air medical rescue and transport service.

The publicly funded agency, which set up a series of private for-profit entities, has been under fire for months over questionable business dealings and exorbitant executive salaries.

Police, Ornge and Health Minister Deb Matthews declined to say what prompted the investigation, but the minister said she's disappointed that the police had to be called in.

"When I see what appears to be an abuse of taxpayer dollars in a health-care system that is under real pressure, when people in this province aren't able to get everything they want when it comes to health care, it is a huge betrayal — a betrayal of trust," Matthews said.

One source who spoke on condition of anonymity said there were two red flags that prompted the ministry to call in the cops.

One concern was $6.7 million paid by helicopter firm AgustaWestland to an Ornge for-profit subsidiary controlled by Chris Mazza, Ornge's founder and former chief executive officer, the source said.

AgustaWestland made the payments after Ornge purchased 12 helicopters for $148 million.

Ron McKerlie, the agency's interim president and CEO, recently acknowledged that marketing work performed by the Ornge subsidiary did not reflect the amount of money that was paid.

"It doesn't take much to connect those dots," said Progressive Conservative Frank Klees.

"We know that when helicopters were purchased that, within a matter of weeks, a huge sum was paid back to one of the for-profit companies."

Klees added, in his view, "that's called a kickback."

Another red flag was the $1.2 million in loans Ornge reportedly provided to Mazza on top of his generous salary, the source said.

It was recently reported that Mazza bought a house in Toronto after receiving a $500,000 housing loan from Ornge's publicly funded operation, and that the loan was approved by the board of directors. The luxurious home is now up for sale for $1.4 million.

Ornge wouldn't confirm or deny whether loans or any other cash was advanced to Mazza, who no longer works at Ornge.

"I can advise that if Ornge did loan any money to its former employees, Ornge would pursue its legal remedies to collect any debts which may be owing to the organization," Ornge spokesman James MacDonald wrote in an email.

Mazza could not be reached for comment.

Matthews cleaned house at the agency last month, replacing Mazza — who was paid $1.4 million a year — and the entire board of directors. Ornge was also ordered to shut down its for-profit companies.

The agency said no severance payments were offered to Mazza, who was paid more than any other public sector worker last year.

Klees said the health minister must also step down until the police have completed their work.

Complaints about Ornge have been circulating since last spring, but the governing Liberals — who were aware of Ornge's plans to create for-profit subsidies — did little to investigate, he said.

"I'm very confident that when this investigation is complete, there will be a real story here for Ontario taxpayers," he said.

"And it will be more about the lack of oversight on the part of the Ministry of Health than anything else that Dr. Mazza or any of these executives have done."

Matthews said she's not stepping down, but admitted that the government could have done a better job of overseeing Ornge.

"That is something that we are determined to remedy," she said.

The ministry's emergency health services branch is also investigating 13 incidents related to air ambulance transports, three of which involved deaths of patients.

If the Liberals called in the cops just before the legislature resumes simply to avoid answering tough questions about Ornge from opposition parties, they won't get away with it, said NDP Leader Andrea Horwath.

"If that's the cynical game that the government's playing, then that's their business," she said. "I certainly believe that the people of Ontario deserve at lot more respect."

Bell said the OPP probe is being lead by the Criminal Investigation branch, which takes on major cases.