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'Big changes' in store for problem-plagued OLG, sources say

TORONTO - Finance Minister Dwight Duncan will announce "big changes" at the problem-plagued Ontario Lottery and Gaming Corp. early this week, sources say.

TORONTO - Finance Minister Dwight Duncan will announce "big changes" at the problem-plagued Ontario Lottery and Gaming Corp. early this week, sources say.

"The government feels (the OLG) needs to change its ways," a senior government source told The Canadian Press. "The OLG will have to clean up its act."

There are reports that OLG CEO Kelly McDougald, who was hired in 2007 after stints at Bell Canada and Nortel Networks, is fighting to keep her job and that other executives may be on their way out.

But government sources wouldn't elaborate on whether a management shakeup is in the works, saying things are still in a "state of flux."

"We will make whatever changes are necessary to ensure taxpayer interests are protected," said another source.

They say there have been ongoing concerns about the OLG, which seems unable to shake off troubles that have plagued it over the last few years.

The government may also be trying to stave off another potential embarrassment in the wake of the eHealth Ontario spending scandal, and before voters in the Toronto riding of St. Paul's head to the polls Sept. 17.

"It seems to me that the government doesn't have a grip - and hasn't for some time - on the agencies and some of their ministries," said NDP Leader Andrea Horwath.

"It seems to me that there's likely a scandal brewing there, and they're trying to get ahead of it to try to head off any damage that might be done leading up to the byelection."

Over the last two years, the OLG has been sharply criticized for questionable insider wins, botched scratch-and-win tickets, malfunctioning slot machines, even buying foreign cars as casino prizes at a time when thousands of Ontario auto workers were losing their jobs.

The OLG is also facing a $3.5-billion lawsuit from a gambling addict who claims gaming staff allowed him to keep gambling even though he had authorized them to keep him out of the casino.

In March, McDougald and other executives were reprimanded by Infrastructure and Energy Minister George Smitherman for their "crappy decision" to buy foreign cars, but no resignations were demanded.

Since then, the Ministry of Finance has taken over responsibility for the agency.

Duncan's announcement will also pre-empt a deadline set by the Ontario ombudsman for the OLG to crack down on insider wins.

Ontario Ombudsman Andre Marin had given the OLG until early September to report back to him about cleaning up its act.

Unless the OLG could show him that "rampant fraud" was purged from the system, Marin said he was prepared to press the government to ban all retailers and lottery insiders from playing.

He imposed the deadline after a sweeping forensic audit in February revealed lottery insiders in Ontario won prizes totalling $198 million over the past 13 years.

At the time, Marin said he was stunned by the "astronomical" sum revealed by the audit and that the OLG still had a problem with dishonest lottery insiders that must be addressed.

The agency has been trying to rebuild consumer confidence and enhance security since Marin's 2007 report accused unscrupulous retailers of collecting tens of millions of dollars in "dishonest" winnings - and the lottery corporation of letting them get away with it.

All insider wins have been directly investigated by the police branch of the Alcohol and Gaming Commission of Ontario since Jan. 1, 2008, and they have since laid several charges.

Linda Williamson, a spokeswoman for Marin, said the ombudsman was unaware of any executive shakeup at the agency.

"It's not part of the Ombudsman's role to get involved in personnel changes in the organizations we investigate," she said in an email.

The government had two years to clean up the OLG, said Horwath.

Health Minister David Caplan, who landed in hot water over the eHealth scandal, was supposed to fix the OLG when he held the infrastructure portfolio, she said.

"The government seems to be incapable of putting its agencies on the right track," Horwath said.

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