$7M misspent, health-care audit finds
Report cites questionable spending practices by native agency
Fri Aug 17 2007
By Jen Skerritt
A Winnipeg-based native agency misspent nearly $7 million in federal health-care funds on trips to the Caribbean and unjustified payments to the organization's CEO, a federal audit revealed Thursday.
Health Canada released the long-awaited details of its financial investigation of Anishinaabe Mino-Ayaawin -- a native agency launched in 1996 to oversee community nursing stations and provide dental benefits and pharmacare for 7,500 aboriginals living on and off reserve in the Interlake.
The audit revealed 11 per cent of the $56.9 million AMA spent between 1997 and 2005 was questionable.
Health Canada found AMA repeatedly failed to give federal money to the aboriginal communities it was earmarked for, and in one case, gave $150,000 to an outside firm without documenting what the money was used for.
The audit flagged several examples of questionable spending, including:
* A number of insufficiently supported payments that were made to chiefs and councils
Timeline of AMA scandal
Health Canada first question's some of AMA's expenses.
Virginia Fontaine scandal breaks when Health Canada uncovers millions of dollars of taxpayers' money spent on lavish trips, cars and jewelry. It broadens its investigation into native health branch.
A financial review found AMA did not provide $1.7 million in health services it received money for.
AMA CEO Daryl Cote resigns.
Health Canada stops funding AMA, and launches a lawsuit against them.
The same year, AMA launches a lawsuit against Cote, alleging he was involved in kickback schemes without the board's approval.
* Numerous transactions that were recorded as "community expenses", and for which no receipts, invoices or other support were available;
* Travel claims that were deemed questionable because no receipts were available, or because the relationship of the travel to delivering health programs was unclear.
* Professional fees for third-party firms and "finder's fees" that were paid to the CEO of AMA. These fees were considered duplicate payments for services and placed the CEO in a conflict of interest situation.
* A number of questionable expenditures that involved cheques issued to one person who "then apparently disbursed cash to other persons."
Health Minister Tony Clement blamed the mismanagement of funds on the former Liberal government's lack of accountability, and said Health Canada is taking steps to ensure the government has more control over future funding agreements.
"I think when the Liberals were in power and this occurred, political oversight and accountability wasn't something they were terribly interested in," he said during a phone interview from Argentina.
Health Canada first flagged AMA for its spending habits, after a 1998 departmental audit determined some expenses should be investigated.
Two years later, the department launched a broader investigation into its native health branch, when an audit uncovered 70 Virginia Fontaine Addictions Foundation in Manitoba used taxpayer's money to take a Caribbean cruise. Paul Cochrane was head of the First Nations and Inuit Health Branch at the time, and has since spent time in jail for accepting more than $200,000 in bribes in exchange for allowing millions of dollars to flow into the Virginia Fontaine centre.
Clement denied Health Canada is incapable of overseeing its funding, and said the Harper government has made internal changes and introduced strict accountability legislation to prevent any misuse of public money and conflict of interest.
He said standard funding agreements have been strengthened and are now clearly outlined with conditions and objectives.
"I can't guarantee this will never happen again in the history of Canada, but if it does happen we can catch it sooner and make sure the bad guys get punished," Clement said.
In 2001, a Health Canada review found AMA did not provide $1.7 million in health services it had received funds for.
AMA's executive director Daryl Cote left his post in 2004, before the federal audit was complete.
In February 2005, Health Canada stopped funding AMA after questions were raised about whether the organization was delivering services it received funding for.
Later that year the federal government launched a lawsuit against AMA in July claiming they mismanaged federal funds -- including spending $850,000 of federal money to purchase a building on Smith Street and $26,000 to send AMA board members on a retreat to the Dominican Republic.
Clement said the government has since recovered $1.7 million, but is still trying to reap the remaining $4.7 million.
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