It’s all part of a payment schedule set in motion in December 2009, when former president Dr. Chris Mazza and lawyer Alf Apps sold bonds on the private marketplace so that a fleet of airplanes and helicopters could be purchased.
Financial documents show that starting next year taxpayers will pay $22.1 million to the institutional investors across Canada that purchased $275 million of the low-risk bonds. This year, documents show taxpayers will pay $15.7 million to investors but that will be interest only — the contract states that interest and principal payments will begin at the end of 2012. Investors are paid interest of 5.7 per cent annually.
Taxpayers already pay $150 million to ORNGE annually to perform air ambulance services. ORNGE does not make detailed financial statements public (it is also not covered by freedom of information laws) and so the Star could not determine how much of the new annual $22.1 million payment will come out of what taxpayers already pay ORNGE, and how much will be payments on top of the $150 million.
Investors were quickly attracted in 2009 by a prospectus that boasted ORNGE was “the glue that holds the Ontario health-care system together.” Though the Ontario government did not guarantee the bonds, it was made clear to investors that taxpayers would pay investors back.
Meanwhile, the top official whose MBA was faked on the prospectus has formally been fired. Rick Potter, who said Mazza told him to pretend he had an MBA from a Scottish university because it would look good to investors, has been told to leave ORNGE March 31.
ORNGE originally told the public and staff that he was demoted but in actual fact he was “terminated” March 1 and asked to stay around four weeks to complete a project, spokesperson Jennifer Tracey said.
The $275 million “bond issue” is controversial for two reasons.
First, it is unclear where all the money raised has gone. An analysis by the Star could account for only $250 million, including payments for ORNGE’s office building, a fleet of 12 helicopters and 10 airplanes.
ORNGE was originally created in 2005 as a non-profit but Mazza quickly began a whirlwind of schemes and dreams, setting up for-profit companies and buying a fleet of helicopters outfitted with medical interiors that have caused one problem after another.
Some of the excess money likely went into poor or excessive business decisions, such as the “ORNGE Pickers” that were supposed to lift patients into aircraft but never did (the arms were made too short), and the complicated medical interior that all but pinned a patient against the aircraft roof during flight making it impossible to do CPR.
Other money, the Star has found, funded lavish trips to Italy, Switzerland, Brazil, the Middle East and other places, to investigate business opportunities that never came to fruition. Forensic auditors and the Ontario Provincial Police are probing ORNGE.
The second reason the bond issue is controversial is that it’s unclear whether it was necessary to purchase a relatively large fleet of aircraft and a huge office building that is only 75 per cent occupied. ORNGE is still paying to lease its former office space, though they are not using it.
Until Mazza went on his aircraft buying spree, ORNGE contracted with a large helicopter company (Canadian Helicopters) and a series of small air ambulance companies that provided air ambulance service. ORNGE was the coordinator and dispatch agent.
Today, Ontario taxpayers pay $150 million a year to fund ORNGE, making payments on the bond issue, paying for the contract carriers that still do work in Northern Ontario, and paying high salaries. In December, the Star revealed Mazza was paid $1.4 million a year. In January, the Star revealed Mazza in one year was given no-interest loans and cash advances of $1.2 million.
Other executives have been paid between $300,000 and $800,000, sources say. ORNGE and the provincial health ministry have not revealed the salaries, though opposition critics say the salaries should be disclosed on the provincial sunshine list.
Apps, who helped Mazza with many of his plans, earlier told the Star the $275 million bond issue was one of the most successful of its kind ever. Apps was counsel at the time to law firm Fasken Martineau, which worked on the deal and did much of ORNGE’s legal work. Shortly after the Star revealed Fasken Martineau received fees of about $9 million from ORNGE over a six-year period, Apps left the firm.
Original Article
Source: Star
Author: Kevin Donovan
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