TORONTO - The Liberal government, trying to contain a second expense scandal during the summer, fired the head of Ontario Lottery and Gaming Corp. because she refused to terminate other executives to create public scapegoats, Kelly McDougald said in court documents.

McDougald was fired with cause as CEO of OLG Aug. 31, the same day the Liberals released thousands of pages of what were deemed "unacceptable" expense claims filed by lottery executives.

McDougald launched an $8.4-million wrongful dismissal suit last Friday against OLG, the Crown and Finance Minister Dwight Duncan, claiming breach of contract, moral and punitive damages, defamation and "loss of opportunity to enhance reputation."

In her notice of claim, released Tuesday, McDougald outlines a series of late night meetings in August as the government scrambled to prepare its reaction to the public release of the expense claims, which the opposition had requested under access to information laws.

She says Duncan ordered her to fire the chief financial officer of OLG and one other executive as signs the corporation was taking "significant action" to deal with the expense abuses, and left the choice of who else to fire up to her.

"The minister said he wanted Ms. McDougald to . . . terminate the CFO of OLG with cause and terminate one other individual with cause, the identity of whom was to be determined by Ms. McDougald," she states in the 18-page document.

However, McDougald says she sought legal advice and told Duncan that she could not fire anyone with cause to serve as "the symbol of change" the minister was looking for, and proposed alternatives including offering her own resignation.

"McDougald made it clear that she was not prepared to terminate the employment of any senior executive at OLG for cause, the minister ultimately decided to terminate the employment of some other senior executive at OLG for cause, namely Ms. McDougald," says the notice of claim.

"There is no justification for her termination for cause, none whatsoever," McDougald's lawyer, Brian Grosman, said in an interview Tuesday.

"The government for reasons which only they can tell you decided not to live up to the contract and, to act in breach of that contract."

McDougald says she tried to put the expense claims in some context, noting they covered a time period in which there had been three different CEOs at the corporation, which was already dealing with a scandal involving too many insider wins by lottery retailers.

Less than four days after being assured by Duncan that he was not asking for her resignation, the minister announced McDougald had been fired.

In the legislature Tuesday, Duncan dismissed opposition claims that a cabinet minister should have to resign because of the problems at the lottery corporation and suggested the government would dispute some of McDougald's statements in her notice of claim.

"I would submit with respect to any statement of allegations that is made with respect to the circumstances at OLG is just that, and we will defend vigorously the taxpayers of Ontario in a court of law," said Duncan.

The Opposition said the Liberals are quick to get rid of executives but complained Premier Dalton McGuinty keeps protecting cabinet ministers who should be fired.

"We've had back to back OLG scandals and no minister has ever been held to account," said Progressive Conservative Leader Tim Hudak.

"There have been five CEOs of that agency under Dalton McGuinty, but not a single minister has been held to account for the outrageous spending at OLG."

The entire board of OLG resigned when McDougald was fired, but her notice of claim states the board of directors were told they too would be fired if they didn't resign, including chairman Michael Gough.

"Gough stated that he only asked that the minister not make road kill of me in tendering his resignation as chair of the OLG," McDougald says in the document.

McDougald's firing came as a surprise to many after the government paid Sarah Kramer, the former CEO of eHealth Ontario, more than $315,000 to leave her job after the agency handed out $16 million in untendered contracts to consultants.