Ex-Ornge CEO wanted pay for services he failed to provide: chairman
TORONTO -- Ousted Ornge CEO Chris Mazza had a hand in his $1.4-million compensation package, contrary to what he told a legislative committee, the former chairman of the Ontario's troubled air ambulance service said Wednesday.
Ornge's board of directors approved a compensation package for Mazza that gave him a salary of about $500,000, but he also demanded and received payments for services he never provided, ex-chairman Rainer Beltzner told the committee.
Mazza's generous compensation has been a major focus of the committee's hearings, which are looking into the scandal that's engulfed Ornge. The organization, which receives about $150 million a year to provide air ambulance services, is currently under a criminal probe for financial irregularities.
Beltzner said he signed off on a separate contract in 2008 for Mazza's services as a medical director, which were above and beyond his duties as CEO. He was told that the contract had existed for years and he didn't see anything wrong with it.
The contract wasn't brought to the board and "disappeared off the radar track" until 2011, when he was "disturbed" to find out that Mazza wasn't providing those services, Beltzner said.
"The payments were demanded by Dr. Mazza and made," he said.
Mazza testified two weeks ago that he had no input in what he was being paid at Ornge and was handed raises by the board of directors.
But Mazza did have a hand in determining his compensation because he had to prepare a report to the board about his performance each year so they could determine how much he should receive as a bonus, Beltzner said.
On top of his salary, benefits, bonus and the "stipend" he received as a medical director, Mazza also received an interest-bearing $400,000 housing loan and a $250,000 advance on his bonus, Beltzner said.
Mazza told him that he'd convinced investors to kick in about $20 million to $30 million and felt he deserved a bonus for his hard work, he said. But he wanted it in advance of closing the deal.
The housing loan was secured against insurance policies and Mazza's shares in one of Ornge's for-profit entities, which were valued at $100 million, even though it has no revenue or assets, Beltzner acknowledged.
Ornge Global Management Inc. -- a partnership with Mazza -- did have a licence to Ornge's intellectual property, he said. He couldn't recall how many shares were issued, but said Mazza held the majority.
Beltzner said he felt pressured to give Mazza more money after being told by a compensation consultant in 2010 that Mazza was "looking to greener pastures" and may leave Ornge.
"There was a risk, we evaluated the risk and we said, well fine, if we can lock him down with a long-term cash incentive plan, that wasn't such a bad idea," he said.
He defended the board's actions, echoing Mazza's testimony that the government was fully appraised of what they were doing at Ornge and never pushed back.
Two former senior bureaucrats in the health ministry testified earlier than they had no idea what went wrong at Ornge, adding their voices to a chorus of government officials hard-pressed to pinpoint how the organization went off the rails.
For years, whistleblowers, opposition parties and even bureaucrats raised red flags that trouble was brewing at Ornge, the committee heard.
But no one seems to know why no action was taken until late last year, when Ontario's auditor general told Health Minister Deb Matthews he was being stonewalled by Ornge.
Ron Sapsford, who was deputy minister of health from 2005 -- the year Ornge was created -- until 2009, said Ornge withheld information that might have raised suspicions.
"Actions were taken that were not revealed, and things were done behind closed doors and difficult to discover and understand," he said.
"I think if you start there, then the problem becomes: well, how do you catch with that? And I guess in this particular case, it took the provincial auditor's report to do that."
Auditor General Jim McCarter has 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.
Concerns about Ornge were raised last year in a letter by bureaucrats who examined Ornge's financial statements. The lending of millions of public dollars, the potential transfer of other taxpayer funds outside the province and the purchase of a building that was leased back to the publicly funded organization were some of the issues they highlighted.
Health Minister Deb Matthews testified that the letter, marked "Confidential Advice to Minister," wasn't meant for her, but senior bureaucrats in her ministry.
McCarter's report also focused on the complex web of for-profit companies set up by Ornge to generate revenue, many of which were controlled by executives. The committee has heard that public money likely flowed to those companies.
But it's not unusual for non-profit agencies funded by the government to set up for-profit companies, Sapsford said. But taxpayer dollars aren't supposed to flow to them.
Matthews maintains she didn't know anything was wrong at Ornge until late last year, when McCarter told her Ornge was stonewalling his investigation.
She insists Ornge went rogue, misleading her about its activities and not disclosing key information that would have spurred her to take action sooner to rein it in. Mazza said the ministry was informed of all the changes he was making at Ornge, but they never told him he was veering off course.
"It would be very helpful for that committee to prepare for us some substantive recommendations," he said Wednesday.
McGuinty is on the list of witnesses, but can't be scheduled to appear before the all-party committee until the fall. If it decides not to hold any more public hearings after Thursday to write its report, the premier wouldn't have to testify.
The Progressive Conservatives are also hoping to recall Mazza in the fall, since he's currently medically unfit to testify.
Conservative Frank Klees has accused the Liberals of trying to shut down proceedings early by introducing a motion to stop the hearings and start writing the report. The motion was defeated.