09/25/2013 16:00 EDT | Updated 11/25/2013 05:12 EST

GO Transit auditors probe allegations of fraud, overbilling

GO Transit has called in its auditors to probe allegations of fraud involving millions of dollars during the expansion of GO Train rail lines west of Toronto between 2005 and 2008, CBC News has learned.

The internal probe was announced Wednesday after a former CN Rail construction supervisor Scott Holmes filed a complaint with the OPP, alleging CN Rail overcharged GO Transit and improperly billed Ontario taxpayers for millions of dollars in upgrades to CN freight lines that had nothing to do with commuter train expansion along the Lakeshore West line.

In the mid-2000s, the province agreed to a $72-million expansion for CN Rail to build a dedicated commuter rail line for GO Transit between Burlington and Hamilton. It was completed in 2008.

"I know GO Transit and Metrolinx are taking this seriously. I understand they have a team of auditors looking into it," said Ontario’s Transportation Minister in a written statement. “These are just allegations right now; nothing has been proven. GO Transit is doing its due diligence. I want to know the facts before I comment further."

Scott Holmes is embroiled in a bitter legal fight with CN after he was dismissed in 2008. The company filed a lawsuit and won a court application to seize his assets, alleging it was Holmes himself who was secretly defrauding CN by hiring his own companies to do construction work.

Holmes denies the allegations and has filed a suit of his own against CN and CN Police. The case has been dragging through the courts for five years.

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This past spring, Holmes met with detectives from the OPP Anti-Rackets branch who for months now have been pouring over reams of internal CN invoices, billing documents and emails. The members of the Anti-Corruption Unit are trying to determine whether to launch a full-blown criminal investigation.

CN Rail has not yet commented on the allegations or the review launched by GO Transit auditors.