Newspaper article The Canadian Press

Ornge Did Nothing Wrong with Private Companies, AG's Report Full of Errors: Apps: Ornge Did Nothing Wrong, AG Wrong: Apps

Newspaper article The Canadian Press

Ornge Did Nothing Wrong with Private Companies, AG's Report Full of Errors: Apps: Ornge Did Nothing Wrong, AG Wrong: Apps

Article excerpt

TORONTO - Former Liberal party president Alfred Apps insists Ontario's troubled air ambulance service did "nothing wrong" in setting up a web of spinoff companies that are now under a criminal probe.

Apps, a lawyer who acted as a legal adviser to Ornge, lashed out at the media and the province's auditor general Wednesday for "totally misunderstanding and misconstruing" Ornge's corporate structure, which he helped set up.

"The structure was not in any sense a private empire or conglomerate or web of companies designed to reward private interests of Ornge management," he told a legislative committee that's investigating Ornge.

In his March report, auditor Jim McCarter found that Ornge set up "mini-conglomerate" of spinoff companies owned by its senior officers, which used public money to make "questionable" business deals.

Among them was last year's $15-million purchase of a building to serve as Ornge's headquarters by one of its for-profit subsidiaries. The company then leased it back to Ornge at a rate that was 40 per cent higher than fair-market rent, McCarter found.

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.

Apps, who started working for Ornge in 2007, vehemently denied McCarter's findings, saying his report is "misleading, "incomplete" and "riddled with errors."

The building deal was a credit lease transaction, a "common practice" among corporations and governments that was designed to benefit taxpayers, Apps said.

PricewaterhouseCoopers even vetted the deal, said Apps, who has strong ties to Ontario's governing Liberals.

"From a layman's perspective, it wasn't much different than increasing your mortgage to finance sending your kids to college," he said.

But McCarter is standing by his report, noting that both Ornge and government agreed with his recommendations and admitted there wasn't enough oversight.

"I clearly think our report is bang on," he said.

Apps said neither Ornge nor its lawyers misled the government, which was fully informed about its structure and plans for a $275-million bond offering in 2009, and raised no objections.

Finance Minister Dwight Duncan insists Ontario taxpayers aren't on the hook for the $275-million debt that's still being paid off, even though it's part of the provincial debt and the government still provides all of Ornge's funding -- about $150 million annually.

The only "issue" at Ornge was the $1.4 million salary of ousted CEO Chris Mazza, which he knew nothing about, Apps said.

Mazza's pay was also not disclosed in the province's annual list of top-paid public sector workers.

Guy Giorno, past chief of staff to Prime Minister Stephen Harper and former Ontario premier Mike Harris, was the lawyer who advised Ornge about matters of salary disclosure and regulatory compliance, Apps said. …

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