03/22/2012 11:12 EDT | Updated 05/22/2012 05:12 EDT

Ornge Scandal: Ontario Tories, NDP Hammer McGuinty Liberals Over Air Ambulance Report

TORONTO - Health Minister Deb Matthews kept rejecting calls for her resignation Thursday over Ornge, sparking accusations that she's flouting centuries of democratic tradition by dodging her ministerial responsibility in a major scandal.

Two former health ministers — Conservatives Jim Wilson and Elizabeth Witmer — along with the NDP demanded Matthews' head in the wake of a scathing report about Ontario's troubled air ambulance service, whose "financial irregularities" are also being investigated by police.

Wilson pointed out that he stepped down as minister in 1996 over allegations that his staff leaked confidential information about a doctor's pay — a "matter far, far, far less serious than this Ornge scandal."

"You're in danger of snubbing your nose at 500 years of parliamentary democracy by refusing to step down," he told Matthews during a raucous debate in the legislature.

"What makes you, your cabinet and your premier so superior, so high and mighty, that you can thumb your nose at 500 years?"

Auditor general Jim McCarter found that Ornge received $730 million from the health ministry over five years — and borrowed $300 million more — with virtually no government oversight.

Despite numerous red flags, the government failed to monitor the agency as it used the money to make "questionable" business deals through a "mini-conglomerate" of spinoff companies owned by Ornge's senior officers, he said.

Matthews insisted Thursday that she's taken responsibility for the debacle by tightening the leash on Ornge with draft legislation and a new agreement with the publicly funded agency.

But critics say the new rules are flawed, allowing Ornge to be exempt from freedom-of-information rules and its executives to "line their pockets with limited health-care dollars." It also can't be called before the government agencies committee, the NDP said.

When the parties pressed Matthews on why she didn't act last September when her ministry received a draft of McCarter's damning report, she told them she was too busy campaigning for the Oct. 6 election.

"We were on the campaign trail," she said. "The ministry was operating in a caretaker role. It would have been completely inappropriate for the ministry to share that report with a person who was a candidate in the election ... I was not sworn in."

That's "ludicrous," NDP Leader Andrea Horwath fired back, accusing Matthews of covering up the problems at Ornge until it became front-page news.

"During the writ period, you still take full responsibility of your management of your ministry," she said outside the legislature. "The executive council (cabinet) remains in place during the election period."

And Matthews had no trouble acting as the health minister when it suited her, making at least two ministerial announcements at hospitals along the campaign trail, the NDP said.

"If she can be a minister for the purposes of ribbon-cutting and handing out cheques to all kinds of different projects ... then she can take responsibility for the unravelling of one of the departments within her ministry," Horwath said.

Now the cash-strapped Liberals, who are facing a $16-billion deficit this year and wasted millions on Ornge, are poised to cancel planned construction of new hospitals and upgrades in next week's budget, the opposition said.

"They spent a lot of time — the minister of health did — travelling around the province announcing these projects, and for them now to say they're not going forward indicates that they have lied to people in the province," said Witmer, the Tory health critic.

McCarter said taxpayers didn't receive value for tens of millions of dollars that went to Ornge. And his efforts to follow the money that went to their for-profit subsidiaries were cut short by Ornge's former executives who refused to provide those records.

One of the "questionable business practices" McCarter uncovered was the $15-million purchase of a building by one of Ornge's for-profit subsidiaries, which then leased it back to Ornge at a rate that was 40 per cent above fair-market rent, he said.

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.

His report criticized the ministry for signing an inadequate agreement with Ornge in 2005 and then failing to follow up on whether Ornge was performing its duties as promised. It was even told last year that Ornge was setting up a complicated web of spinoff companies owned by senior executives and directors.

Government funding to Ornge only increased, rising 20 per cent in its first four years of operation, even though the number of patients transported by air fell during that period — largely because the ministry wasn't paying attention, the report said.

There were other warning signs, the report said. The ministry's own auditor reported in 2010 that Ornge wasn't telling the government whether it was meeting its performance requirements. The ministry was also advised to obtain "more comfort" regarding Ornge's corporate structure and how it affected air ambulance services.

But Matthews, whose predecessor George Smitherman signed the 2005 agreement with Ornge, is blaming the agency's former managers for the debacle.

She insisted for weeks that she didn't know anything was wrong at Ornge until last December, when McCarter told her he was being stonewalled. But on Thursday, Matthews revealed that she was briefed in late October — after her ministry received McCarter's draft report and she was sworn back in — that Ornge needed her attention.

The minority Liberals have also refused to strike a special Ornge committee, even though Matthews promised she would abide by the will of the legislature if a majority of its members supported the motion, which passed on Tuesday.

Government house leader John Milloy said there will be ample opportunity to discuss McCarter's report in existing committees, including public accounts which meets Wednesday.

McGuinty was absent from question period Thursday, but has said that if police discover that public funds were misused, the government "will take all steps necessary to recover those funds."