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Strnge Hppenings At Ornge

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Auditor to peel ORNGE

 

All ORNGE companies and an ORNGE charity arm run out of a building ORNGE bought near Pearson Airport. Employees, former employees and relatives of employees have nicknamed the building, which includes fitness and recreation facilities, the "Crystal Palace.

 

"12Ontario's auditor general is investigating the secrecy surrounding executive salaries at ORNGE, the air ambulance service operating out of the Airport Corporate Centre in Mississauga that's funded by taxpayers.

 

Health Minister Deb Matthews asked the auditor to step in this week.

 

ORNGE is the company responsible for airlifting injured or sick people around the province, either between hospitals or from emergency scenes. It has recently purchased a fleet of airplanes and helicopters, painted bright orange.

 

Ontario's Public Sector Salary Disclosure Act, or "Sunshine Law," requires government-funded entities to reveal salaries of $100,000 or more as a way to let the public know how its dollars are spent.

 

ORNGE, which discloses a few executive salaries that hover under $300,000, will not say how much president and CEO Chris Mazza earns.

 

ORNGE also won't reveal how much four other top officials earn. It maintains it is obeying the law because it has disclosed the salaries of operational staff at ORNGE.

 

Mazza and the others who do not disclose their salaries work for one of a number of for-profit consulting firms that were created by the non-profit air ambulance service.

 

Mazza, a former emergency room doctor at Sunnybrook Hospital, founded ORNGE. In addition to his titles at ORNGE, he is listed as an executive with several other companies operating under the ORNGE umbrella.

 

Another executive whose salary is not disclosed is Rick Potter, ORNGE's chief operating officer for aviation.

 

ORNGE receives about $150 million a year in public money. All ORNGE companies and an ORNGE charity arm all run out of a building ORNGE bought south of Hwy. 401, near the off-ramp that heads north towards Pearson Airport.

 

Employees, former employees and relatives of employees have nicknamed the building, which includes fitness and recreation facilities, the "Crystal Palace."

 

ORNGE spokesman MacDonald said the building is not opulent. It was purchased in 2009 at a cost of $15.6 million. MacDonald said $478,000 was paid to renovate it. He said no public money was used for this. Rather, MacDonald said, ORNGE issued bonds on the public markets to pay for aircraft purchases and the building.

 

On its website, Ornge officials have issued a statement about the company and disclosure of salaries.

 

"Ornge is a federally incorporated, non-share, capital corporation and a registered charitable organization. Ornge is not a crown corporation or a government agency, nor is it a hospital," says the statement.

 

"Given that Ornge receives funding from the government to provide transport medicine services, it is required by statute to report the salaries of all operations and front-line staff who earn more than $100,000 per year. All employees of the Ornge group of companies who fall outside this scope are not covered under the Public Sector Salary Disclosure Act.

 

"For instance," says Ornge, "our CEO, Dr. Mazza, receives a modest amount of income from Ornge Ontario for occasional services as one of our many base-hospital physicians. He is employed by one of the for-profit companies in the Ornge group of companies, not by Ornge Ontario. This is because his responsibilities extend much more broadly than overseeing the Ontario air ambulance system."

 

Until 2007, ORNGE disclosed all salaries. The next year Mazza's salary and others disappeared from the list. At the time, Mazza's published salary was just under $300,000.

 

Meanwhile, Auditor Jim McCarter has been probing other issues at ORNGE since early 2011. He recently said he needs two more months to complete his probe.

 

George Smitherman, health minister at the time, authorized one-time $2.9 million funding to ORNGE for an increase in "salaries and wages and other operating expenses," according to a letter written to ORNGE by Smitherman in December 2007.

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ORNGE spinoff lands rich payout from same firm that sold Ontario its air ambulances

Published On Mon Dec 19 2011

 

Kevin Donovan

Staff Reporter

 

 

First, Ontario’s ORNGE air ambulance service paid $120 million for 10 new helicopters, purchasing them from an Italian aircraft giant in 2008.

 

Then the Italian company’s American office struck a $6.7 million deal to hire a Toronto firm made up of ORNGE executives to provide it with “sales and marketing services.”

 

ORNGE will not discuss the deal. The Star has obtained a copy of the contract and related documents.

 

“With respect to your inquiry regarding the marketing services agreement, we do not wish to engage in public discussion of commercial agreements of Ornge Global, which is a private company,” ORNGE spokesman James MacDonald said in an email.

 

ORNGE, a non-profit agency that is paid $150 million annually in taxpayer money by the province to deliver air ambulance service, is under fire because it has created a web of for-profit consulting companies for which salaries are secret.

 

Virtually all the top executives who oversee the non-profit air ambulance service now work for the primary consulting company, according to documents obtained by the Star.

 

The provincial auditor general is investigating.

 

One of the for-profit companies was formerly called ORNGE PEEL. (The name was recently changed to ORNGE Global.) Its president is Dr. Chris Mazza, who is also president and founder of the non-profit, publicly funded ORNGE.

 

According to a recent “offering memorandum” to raise $15 million from investors to start a new business, Mazza owns a “majority” of the for-profit ORNGE company’s voting shares. The company plans to offer high-end emergency travel insurance coverage to wealthy executives and also provide air ambulance consulting service to corporations and to governments outside Ontario. Other ORNGE managers and board members own shares as well.

 

The new company wants to “leverage” its connection to the publicly funded ORNGE and will pay 3 per cent of gross revenues back to the public company, starting in 2014.

 

The genesis of the $6.7 million that Italian helicopter manufacturer AugustaWestland is paying the for-profit ORNGE for “sales and marketing” traces back three years. (Sources say this is seed money for Mazza’s for-profit company.)

 

In 2008, ORNGE purchased 10 brand new helicopters called the AW139 from Augusta to place at Ontario’s air ambulance bases. ORNGE has stated that the $120 million purchase price was paid for by selling a bond issue on the public markets.

 

ORNGE, which relies almost entirely on public funding, has not said how it will make interest payments to investors but the company insists that no taxpayers’ money was used for the purchase.

 

In June 2010, according to contract documents, Augusta’s U.S. arm in Delaware entered into an agreement with Mazza and ORNGE PEEL (now ORNGE Global) to hire the fledgling Toronto firm to help market the international aircraft giant.

 

The deal covered three phases spaced over 18 months, which are now complete. The initial payout for the three phases, according to the contract, was $4.7 million. Augusta recently signed an extension that will pay the ORNGE for-profit company an additional $2 million over two years, for a total payout of $6.7 million.

 

What did Mazza and his fellow executives do for this money?

 

In the first phase, they were to produce a marketing report for Augusta that would “identify international target market segments.”

 

In the second phase, the Toronto firm was to develop a global marketing program for medical helicopters and to help Augusta “mine opportunities.” In the third and final phase, ORNGE PEEL was to continue to develop “leads” and attend “events and tradeshows.”

 

ORNGE executives attended a trade show in Saudi Arabia with Ontario politicians and staff this past year.

 

The extension phase, for which their firm is to receive $2 million, requires them to provide more marketing assistance to Augusta.

 

The new company’s startup expenses include the leasing of a Hawker 800XP jet (to fly sick or injured executives home) and the establishing of a call centre.

 

Both the for-profit and non-profit ORNGE are housed in the same building near Pearson International Airport, where the non-profit call centre is based.

 

According to corporate information, ORNGE PEEL (now ORNGE Global) includes Mazza and ORNGE vice-presidents Maria Renzella and Rhoda Beecher. It also includes the chair of the non-profits board, Rainer Beltzner.

 

The contract between ORNGE PEEL and Augusta was signed by Mazza and Renzella and Augusta executive vice-president Louis Bartolotta.

 

The Star called and emailed Bartolotta, a company lawyer and the public relations official at head office in Italy. It has not yet received a response.

 

According to the offering memorandum, the publicly funded ORNGE is an “essential Ontario-wide service” that will serve as a model internationally for the profit-driven firm.

 

The for-profit company will “leverage ORNGE’s intellectual property and core competencies” in transport medicine, the offering memorandum states.

 

The non-profit ORNGE, publicly funded by taxpayers, will receive 3 per cent of the for-profits gross revenues beginning in 2014, the documents show.

 

Kevin Donovan can be reached at [email protected] or (416) 312-3503

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I thought everyone already knew that ORNGE was just a really good way for a few people to make a LOT! of money and have capital to startup their own private ventures at the partial expense of the taxpayers. I think most of the employees know that too.

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Exactly '3-per,' and Ornge has no monopoly on 'entrepreneurship' in this industry. We've seen some real plums come and go - because the fruit is never very long for the picking. If you'll pardon the pun, a lot of sour grapes result, though. B)

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It might be a good time to throw a medical interior in a good old reliable IFR platform, hire some stretcher fetchers, base it somewhere in Ontario and call it a standby Air Ambulance. It certainly would not be hard to be competitive.

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ORNGE president was paid $1.4 million per year

 

Published On Thu Dec 22 2011Email

 

Kevin DonovanStaff Reporter

 

 

ORNGE president -- paid $1.4M a year -- steps down

More on The Star's investigation into ORNGE

 

 

ORNGE air ambulance boss Dr. Chris Mazza was paid $1.4 million a year, making him the highest publicly paid official in Ontario.

 

The Star is revealing this after two weeks of stonewalling by the air ambulance service.

 

Health Minister Deb Matthews called Mazza’s salary and others at the non-profit ORNGE “outrageous, shocking and unacceptable.”

 

That salary puts him $600,000 ahead of the highest paid hospital chief in the province and almost $65,000 ahead of the president of Ontario Power Generation. Mazza left his post on indefinite medical leave Thursday, departing from the “crystal palace,” the Toronto airport area headquarters where he once enjoyed a cold smoothie delivered to him at 3 p.m., fitness facilities and fine meals paid for by ORNGE.

 

Forensic auditors from the province, with orders from the health minister to “follow the money,” have been sent in to his well-appointed ORNGE offices to find out if public dollars were misspent at the agency created to help sick and injured Ontario residents.

 

“When you consider the financial pressures in health care and the pressures on health-care workers, it is very hard to see taxpayers’ money spent on outrageous salaries,” Matthews said in an interview.

 

The Star obtained Mazza’s current annual salary, but was unable to discover the salaries of at least five other top ORNGE officials. None is listed on the province’s Sunshine List. ORNGE said Thursday it has provided information to the province, but due to privacy laws cannot release the information.

 

Matthews, asked to comment on the salaries, would only say that, as of Thursday, she has all of the executive pay packages (including bonuses) at ORNGE, but privacy rules forbid her from releasing them. She would not provide Mazza’s salary, but did say his was the most “outrageous.”

 

The forensic auditors from the Ministry of Finance have been asked to determine how much of the executive compensation at ORNGE comes from public sources and how much from private. One former board member, who now works internationally for ORNGE, designed the compensation package.

 

Two weeks ago, the Star launched a series of stories on ORNGE, its founder, Mazza, and the level of care it is providing. The first story dealt with a spider web of for-profit companies that the non-profit ORNGE had created. In short, those companies had the effect of shielding top salaries from the public eye of the Public Sector Salary Disclosure List. The Star has also revealed that this web of companies created by Mazza has received $6.7 million from the Italian company that sold helicopters to ORNGE.

 

ORNGE, in its defence, maintains that no public money has been used on any of its for-profit initiatives. It says it is not required to disclose salaries for that reason. A spokesperson said the money was raised by issuing bonds. What ORNGE will not discuss is where the interest payments to investors in those bonds are coming from. The forensic auditors will be looking to see if any of the $150 million that taxpayers contribute to ORNGE each year pays that interest.

 

One of the for-profit companies Mazza created was called ORNGE PEEL. Wednesday, the peel began to unravel at a late-night meeting at the “crystal palace.” Board members of the profit and non-profit (some people sit on both boards) met. Mazza had given talks via webcam and in a town hall during the week, telling employees that his attackers were jealous of him and that people were just not ready for the type of revolution in emergency medicine he wanted to bring Ontario. By late Wednesday evening, a decision was made that Mazza would take medical leave.

 

Information in this story comes from documents and also interviews with ORNGE officials, pilots and paramedics. All are required to sign nondisclosure agreements. For that reason, the Star has provided them with anonymity. Thursday, at a town-hall meeting, ORNGE employees were once again reminded they must not talk to outsiders.

 

Once, Mazza was a simple emergency room doctor at Sunnybrook Hospital. He fell in love with the concept of the air ambulance and did some work for one of the small companies that provided medical flights to the Ministry of Health in those days. He told people there was a better way to provide air ambulance service.

 

By 2005, Mazza had convinced Liberal Health Minister George Smitherman to turn over the province’s air ambulance system to him as a non-profit. All provincial assets were transferred to Mazza’s non-profit (eventually called ORNGE because air ambulances are often orange) for a nominal fee of $1.

 

In the words of provincial conservative critic Frank Klees, Mazza was an “empire builder.” Klees raised the issues of lack of oversight on ORNGE over the past eight months in the legislature.

 

“(Premier) Dalton McGuinty and (Health Minister) Deb Matthews defended Mazza. They defended what was indefensible. Now it is time for Dalton McGuinty to take control of an out-of-control agency,” Klees said Thursday.

 

The Star’s investigation has found an organization in chaos. Well-meaning employees — from doctors to pilots to paramedics — are unhappy. Much of the focus is now on their for-profit business. A corporate plan describes how the for-profit companies will “leverage” the assets and success of the non-profit ORNGE. For using the publicly funded ORNGE, Mazza said he planned to pay back to the province 3 per cent of gross profits.

 

Middle managers, paramedics and pilots at ORNGE call the newly purchased office building near Pearson International Airport the “crystal palace.” It has luxurious offices. At times there has been a personal chef to provide meals, sources have told the Star. And, for the finicky Mazza, an ice-cold smoothie at 3 p.m. There is a private gym for executives. Executive travel of late has included trips to Italy and Brazil.

 

The provincial auditor general is nearing the end of a year-long value-for-money audit of ORNGE. Among the issues he has been encouraged to look at is the blending of private and public funds at ORNGE.

 

In one case, an ORNGE charity purchased a high-end wakeboard boat, an Air Nautique. Mazza, whose 14-year-old son died in a ski accident in 2006, created a charity to help reduce injuries in extreme sports. ORNGE briefly considered purchasing a large, water-filled quarry near Kitchener and the boat was to be used for water sports for youth. The boat was put in storage for two years. ORNGE spokesman James MacDonald said the boat was hardly used and no public money was expended on its purchase.

 

The Star has tried for months to interview Mazza. He cancelled a recent plan for an interview Monday.

 

In an internal memo to staff Thursday morning from ORNGE chair Rainer Beltzner, the publicly funded air ambulance agency announced that president and CEO Dr. Chris Mazza has taken an “indefinite medical leave.”

 

“The board of directors for ORNGE and ORNGE Global met last night and I am writing to inform all staff that Dr. Mazza will be on indefinite medical leave,” the chair said in his memo to ORNGE employees.

 

In Mazza’s absence, senior executive Tom Lepine will be interim president of the non-profit ORNGE, and an ORNGE vice-president, Maria Renzella, will be interim president and CEO of ORNGE Global, the for-profit entity.

 

“I ask that everyone respect his privacy and that of his family during this time,” the chair said in the memo.

 

Kevin Donovan can be reached at (416) 312-3503 or [email protected]

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