03/20/2012 04:05 EDT | Updated 05/20/2012 05:12 EDT

CP Exclusive: Former Ornge execs refused to co-operate with AG, source says

TORONTO - A long-awaited report on Ornge by Ontario's auditor general won't be able to tell the whole story behind the scandal at the province's troubled air ambulance service, The Canadian Press has learned.

The former management and board of directors at Ornge refused to co-operate with auditor general Jim McCarter, denying him key documents that would have revealed what a source familiar with Ornge characterized as "the truth" about the agency's web of for-profit subsidiaries.

Those executives and directors — who were replaced in January — also refused to co-operate with the government, the source said.

McCarter's value-for-money report, which will be released Wednesday, was expected to shed some light on "financial irregularities" at the agency, which is also under a criminal probe. But McCarter may not be able to fully tell that story.

The agency, which receives about $150 million a year from the province, has been mired in controversy for months over high salaries, questionable business practices and allegations that public dollars may have been used for personal gain.

McCarter's complaints about being stonewalled by Ornge during his routine review prompted Health Minister Deb Matthews to send in a team of about 30 forensic auditors last December. She called in the Ontario Provincial Police in February after receiving information from the auditors, which has been passed on to police.

"If the former management and board had nothing to hide, why would it refuse to throw open its books?" said a senior government official, who spoke on condition of anonymity.

The police probe is expected to delve into some questionable financial transactions, such as the $6.7 million paid by helicopter firm AgustaWestland to an Ornge subsidiary controlled by then chief executive Chris Mazza.

The payments were made after Ornge used provincial funds to buy 12 helicopters. Mazza's replacement, Ron McKerlie, has acknowledged that the marketing work performed by the Ornge subsidiary didn't reflect the amount of money that was paid.

AgustaWestland denied any wrongdoing in a March 7 statement, saying the propriety of its actions "cannot be questioned."

It hasn't received any inquiries about its business relationship with Ornge from "any competent authority," the company said.

"Should any competent authority approach us with questions related to our business relationship with Ornge we will co-operate fully," it added.

Ornge has proved to be one of the governing Liberals' biggest embarrassments, with the opposition parties hammering Matthews almost daily with calls for her resignation.

But Matthews said she won't step down.

"In my humble opinion, I have shown tremendous leadership on this file," she told the legislature.

"We have new leadership in place. Their instructions were to put patient safety first. Patient safety is their No. 1 issue."

On Tuesday, the New Democrats and Progressive Conservatives banded together on a motion to create a legislative committee on Ornge, which passed by a vote of 53 to 41. Both the New Democrats and Progressive Conservatives say the committee is needed to get the answers the public deserves to restore confidence in the health-care system.

It would look at issues that aren't within the scope of McCarter's audit or the police probe, conduct public hearings, compel witnesses to appear and provide protection to whistleblowers, the NDP said.

Premier Dalton McGuinty said he hasn't seen McCarter's report, but believes it will offer some insight on Ornge without the politics.

"I think it's really important that we find ways to speak to and uphold the public interest as distinct from partisan interest," he said Tuesday.

"And that's why I'm very much looking forward to the auditor's report. It is arm's length, it is dispassionate, it is objective. It's going to be helpful."

Matthews, whose ministry was in contact with McCarter as he conducted the audit, was also tight-lipped about whether the report will contain any nasty surprises.

"We won't do everything perfectly the first time," she said outside the legislature. "So when there are problems that are identified, I think it's incumbent upon us to fix those problems. The auditor general will give us good advice on that."

The Liberals were already in damage-control mode Tuesday, with McGuinty and Matthews making a feel-good health announcement about two new birthing centres for midwives, the New Democrats said.

The timing of the photo op — where McGuinty and Matthews cradled newborns and greeted mothers — is very suspicious, said NDP health critic France Gelinas. There were few details about the initiative, such as where the centres would be built or how much it would cost.

"This is a great news announcement," she said, noting that the NDP promised birthing centres in last fall's election.

"I can't help but think that the only reason it's being announced today is because Ornge is coming out tomorrow."

Both opposition parties say they're expecting a scathing report from McCarter that will likely confirm what everyone's known for months — that the government failed to keep an eye on Ornge despite years of warnings and complaints about the agency.

"I think it will be quite a damning report for the premier and for the government and the Ministry of Health," said Tory health critic Elizabeth Witmer.

The government is already aware of McCarter's recommendations because it's usually given a chance to respond to them before the report is tabled, said NDP Leader Andrea Horwath.

"A lot of what we've seen already in terms of the government trying to clean up this mess is directly as a result of this auditor's investigation," she said.

"It's not like the government suddenly figured it out and decided that they knew what to do. I suspect — and I would suggest — that much of what's already happening is directly a result of the auditor's involvement over the last several months."

But Matthews insists Ornge has turned a corner, promising new legislation that would tighten the leash on Ornge and a new performance agreement to boost oversight of the agency.

Matthews has acknowledged that the 2005 performance agreement that led to Ornge's ill-fated foray into the for-profit sector wasn't adequate to prevent the apparent "abuse" of taxpayer dollars.

The new rules would stop Ornge from selling assets or taking on more debt without ministry approval, strengthen conflict of interest provisions and give the ministry more audit and inspection powers, she said. It will also create a new patient advocate and complaint process to ensure patient safety.

But Matthews wouldn't say Tuesday when the legislation will be introduced, other than it will be "very soon."

In addition to the criminal probe and McCarter's report, the Ministry of Health's emergency health services branch is also investigating 13 incidents related to air ambulance transports, three of which involved deaths of patients.