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Government-wide review ordered after OLG changes

TORONTO - A sweeping review has been ordered to root out any spending abuses at Ontario government agencies following revelations of questionable expenses at the province's troubled lottery and gaming corporation.

TORONTO - A sweeping review has been ordered to root out any spending abuses at Ontario government agencies following revelations of questionable expenses at the province's troubled lottery and gaming corporation.

Finance Minister Dwight Duncan announced the review after cleaning house at the Ontario Lottery and Gaming Corp., which has been mired in controversy for years over, among other things, insider wins.

The management team put in place to clean up the OLG is gone, including its six-member board of directors and its CEO, Kelly McDougald, Duncan said.

The agency's board resigned and was replaced temporarily by senior provincial bureaucrats, who fired McDougald as their first order of business, he said.

McDougald, who was hired in 2007 to fix the agency, was "dismissed with cause" and will not receive severance, Duncan added.

Bohodar Rubashewsky, an assistant deputy minister at the Ministry of Energy and Infrastructure, has taken on the position.

The auditor general has also been brought in to review "unacceptable" expenses at the OLG, which included expensive dinners, gym and golf memberships and even a $30 car wash.

Duncan, who took responsibility for the agency in June, said he was disappointed with the expenses, which are "a symptom of a much larger problem."

"I don't like this," Duncan said.

"I don't think taxpayers like this. The challenge for us is to ensure that we put an end to it in a responsible fashion, and that's what we're doing today."

Premier Dalton McGuinty will unveil a broader set of accountability measures on Tuesday, including details of the review of Ontario's agencies, boards and commissions.

The measures will likely include a "new mechanism for accountability" that would be able to detect problems early on with Ontario's many arms'-length bodies, Duncan hinted.

The OLG shakeup came after Duncan's office found questionable expense claims going back years.

The corporation has a "long history of issues," but he only became aware of the expenses "a day or so" after taking over responsibility for the agency in June, Duncan said.

They included $1,000 for the cancellation of a deposit on a Florida condo rental "due to work requirements" by Michael Sharland, the OLG's former vice-president of security and surveillance who took a paid leave of absence in 2007.

David Myers, vice-president of lottery operations, billed the OLG $3,713 for a business dinner for 38 people, which included 15 bottles of wine.

Another OLG executive charged the agency nearly $500 for a nanny so that she could attend meetings during a four-month period in 2006, which she repaid.

Senior staff also billed the agency for golf, gym and Weight Watchers memberships, as well as small items like a $7.70 pen refill and a $1.12 cloth grocery bag.

The claims were among hundreds of pages released by Duncan's office Monday which detailed expenses filed by OLG executives and senior staff since 2007.

Both the OLG and its former chairman Michael Gough acknowledged Monday that some of the expenses were clearly "unacceptable."

The OLG said it fully supported the auditor general's probe and the larger accountability review, but declined further comment.

Gough said in a statement that he was not asked to quit, but offered his resignation last Thursday after three years as chairman.

The OLG is the second Ontario government agency to get a major overhaul in the last few months.

EHealth Ontario CEO Sarah Kramer and board chairman Dr. Alan Hudson both left that troubled agency, which awarded lucrative contracts to consultants without competitive tenders.

Opposition parties say a similar scandal was brewing at the OLG and the governing Liberals moved to defuse it before their freedom of information requests brought it to light.

Only a minister's resignation will "bring an end" to the OLG's problems, said Progressive Conservative Leader Tim Hudak.

"We always suspected that McGuinty's eHealth scandal was simply the tip of the iceberg," he said.

"The minister came forward with his phoney remorse today simply because he got caught."

The OLG's problems were well known, yet two other cabinet ministers who were responsible for the agency failed to fix it, said New Democrat Michael Prue.

"Now you have a minister who says he only just found out," he said.

"To fire someone with cause ... There has to be huge amounts of wrongdoing to take such drastic action, and I do not believe for a minute that they didn't know about this."

Duncan defended his cabinet colleagues, saying they took steps to "enhance accountability" at the OLG over the last three years, including a new board and CEO.

"You have to give these things a chance to work and with two years under our belt ... we were not satisfied," he said.

The lottery agency has been dogged by troubles over the last few years, from questionable insider wins to botched scratch-and-win tickets and malfunctioning slot machines.

In March, OLG executives were lambasted by Infrastructure and Energy Minister George Smitherman for buying foreign cars as casino prizes at a time when thousands of Ontario auto workers were losing their jobs.

The agency has been trying to rebuild consumer confidence and enhance security since a scathing 2007 report by Ontario Ombudsman Andre Marin, who accused unscrupulous retailers of collecting tens of millions of dollars in "dishonest" winnings - and the lottery corporation of letting them get away with it.

Marin had given the agency 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.

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.

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