ORNGE is the company that provides, on contract, Ontario’s air ambulance services, including paramedics and emergency medicine transport. It has aggressively pursued an expansion strategy that would take it into additional high value markets, and has structured itself a little unusually in order to do this.
ORNGE created additional companies, which also employed some of its senior executives, and with their own boards, and entered into contracts that were designed to create additional opportunities for itself. In one reported example, of non-arms-length dealing, ORNGE hired its managers out (through another company) as consultants to provide marketing assistance to the company selling helicopters to ORNGE. The Consulting fee was reported to be 6.7M. In the meantime the new helicopters were configured poorly, making it hard for paramedics to perform CPR throughout the flight.
Through all of this the salary paid to the CEO was 1.4M, and not disclosed until it became a political firestorm. That lack of salary disclosure was the first signal that got the media hunting and the province responding. A team of provincial forensic auditors have been called in.
The Board has been fired. Some top managers have been put on leave or fired. The allied companies have been put in bankruptcy. The province has stepped in and appointed a senior bureaucrat to take over and clean up the mess.
Most boards and executive teams strive for good governance – in this case the Board seems to have been either not watching, not competent or actively involved. On the edge of the Public Sector there is both a need and a desire to discover new business models. At one level, that’s the direction in which ORNGE was pushing, which is why it had so much manoeuvring room. At another level, when doing that, it’s even more critical to be able to withstand a high level of scrutiny.
A solid ERM (Enterprise Risk Management) program is one strategy to ensure that organizations can continue to keep tabs on their evolving challenges.
To read more about the story click on the following links:
> Ontario auditor to dig deeper into air ambulance executive salaries
> ORNGE spinoff lands rich payout from same firm that sold Ontario its air ambulances