05/29/2013 11:54 EDT | Updated 07/29/2013 05:12 EDT

Mazza upset it took Ornge board 45 minutes to approve compensation: ex-director

TORONTO - Ousted Ornge CEO Chris Mazza was "extremely upset" when the board took 45 minutes to approve his compensation plan, said a former director of Ontario's troubled air ambulance service.

The plan was presented to the board in 2006 and they asked Mazza to leave the room while they talked about it, said Shanon Grauer, a lawyer who served on the Ornge board from February 2005 to October 2007.

But it was too long for Mazza, she told a legislative committee Wednesday.

"When Dr. Mazza came back in, he was extremely upset that we had taken so long because he couldn't understand what the problem was," she said.

"I remember saying to him, 'This isn't about you, this is about the board learning what's the appropriate thing to do to measure compensation,' because he was not a happy fellow that he had been excluded from that for so long."

The legislative committee has heard that Mazza received $1.4 million in compensation, on top of hefty loans totalling $1.2 million in a single year.

He also collected hundreds of thousands of dollars a year in "medical director" fees.

Mazza's salary last appeared on the so-called Sunshine List of top paid public sector workers in 2007, when it was listed at $298,000, not including his medical director fees.

Former members of the Ornge board have testified that they had no idea he was getting those extra fees, on top of his salary and bonus.

Former board chairman Rainer Beltzner testified that he signed off on the agreement, but didn't know that Mazza was demanding and receiving money for services there's no record he provided.

Grauer, who was a director from 2005 to 2007, said Mazza earned about $300,000 when she was on the board.

She said she was "quite shocked and surprised" that executives salaries were shifted to Ornge's web of for-profit entities and away from public view.

Grauer said Mazza was also displeased by her questions about creating a web of for-profit companies.

In early 2006, Mazza told the board about their lawyers' opinion about setting up a different structure than just the not-for-profit organization, she said.

The idea was to have a charity at the top, a not-for-profit underneath and a for-profit company on the bottom, she said.

The plan was to turn the not-for-profit into the charity, but they needed to put it between the charity and the for-profits entity because the legislation prohibited a charity from owning more than 10 per cent of an organization for more than seven years.

"The legal fix was to always interpose a not-for-profit, because the not-for-profit could own the for-profit," she said.

That was the beginning of a plan under Mazza to create a web of at least 20 for-profit companies. The idea was the reduce Ornge's dependence on the $150 million it was getting from the government each year by generating its own revenue.

Some of them were owned by Mazza, other executives and the board of directors, according to former auditor general Jim McCarter.

But Mazza didn't like it when she asked to see the lawyers' opinion, Grauer said.

"I asked if I could see the opinion, and Dr. Mazza was not very happy with that request," she said.

The board members told Mazza to "just give it to her" and she got it a few weeks later, she said.

"I know at times Dr. Mazza did not appreciate my asking questions," she said.

"Not that I thought I had the most penetrating questions in the world, but I seemed to irritate him by asking questions."

Grauer said she was no longer sitting on the board when the "grand plan" was approved.

Usually, not-for-profit organizations have members who elect directors, who then elect officers, she said.

"In our case, we seemed to have the CEO recruit the board and decide who got to stay or not stay on the board," creating an "inverted" governance structure, she said.

The committee has heard from former Ornge executives that Mazza was a dynamic leader, said Progressive Conservative Frank Klees.

"Then it turned out that we had this Dr. Jekyll and Mr. Hyde creature, who with all of the spoken good intentions, really ended up leading the destruction of a very important organization," he said.

Mazza was very charismatic, Grauer said. When his son Josh died, it "profoundly affected" him and drove his vision to improve the air ambulance service.

But there were definitely stresses in his personality, she said.

McCarter criticized the governing Liberals for failing to oversee Ornge, despite giving it $730 million over five years and allowing it to borrow another $300 million.

Ornge is currently under a criminal probe for "financial irregularities."