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The RCMP are alleging a senior health bureaucrat and a technology contractor schemed to defraud the British Columbia government as it moved to implement its eHealth initiative.

In a 99-page search warrant application, the RCMP allege former assistant deputy health minister Ron Danderfer committed breach of trust by approving inflated invoices from contractor Jonathan Burns, and accepted benefits from Jan. 13, 2006, to July 13, 2007.

The warrant, which was made public this week, also alleges Dr. Burns and Mr. Danderfer planned to set up a joint business after Mr. Danderfer retired, an allegation based on a cryptic e-mail sent in April, 2007, titled "Splitting of the last chicken."

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In the e-mail quoted in the search warrant, Dr. Burns writes "24 percent me, 50 percent you, 24 percent my wife … and ken (my right hand guy) 2 percent. For your half the chickens would you like me to name a few percent to your kids…The taste will blow your mind."

The warrant asserts that those percentages refer to ownership stakes. According to the search warrant, Mr. Danderfer replied, "Yeah ok - 3 percent Kimberly, 3 percent Gregg, 14 percent Joan and 30 percent Ron."

Police further allege Dr. Burns provided a number of benefits for Mr. Danderfer - a senior and long-serving bureaucrat in charge of B.C.'s electronic health initiative - including a four-night stay in Dr. Burns's Kelowna condominium, and employment for his daughter and his wife, Joan Danderfer, also a veteran provincial civil servant. In the February warrant, the RCMP allege Mr. Danderfer committed breach of trust.

The RCMP allege in the warrant Dr. Burns double-billed the B.C. government with Mr. Danderfer's knowledge, and that the senior bureaucrat counselled the consultant to inflate invoices and pushed for the acceptance of a $3.75-million contract with the University of British Columbia that would benefit Dr. Burns's company.

John Waddell, the special prosecutor in the case, said the complex investigation, which initially focused on non-tendered contracts involving Mr. Danderfer and Dr. Burns, eventually led to a separate probe into another component of eHealth involving Dr. Burns, the Fraser Health Authority and the work of James Roy Taylor, an IT manager with Fraser Health. The warrant alleges Mr. Taylor and Dr. Burns defrauded Fraser Health of $251,348.40 from 2003 to 2006 through fraudulent invoices submitted by Dr. Burns's company.

The RCMP allege Dr. Burns allowed Mr. Taylor and his family to use the Kelowna condominium, and also employed Mr. Taylor's wife and daughter.

Mr. Taylor is alleged to have committed fraud. Dr. Burns is alleged to have committed a total of four fraud and influence-related offences from his interactions with Mr. Danderfer and Mr. Taylor.

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The RCMP's allegations have not resulted in charges, nor have the allegations been proven in court. Mr. Waddell, a Victoria lawyer who was appointed as the special prosecutor 18 months ago, said the investigation is "virtually complete" and he will likely decide within a month whether charges should be laid.

Mr. Danderfer retired in October, 2007, shortly after he and his wife were placed on mandatory leave after the Health Ministry said it discovered an e-mail in the summer of 2007 asking about a $10,000 cheque written by Dr. Burns to Ms. Danderfer.

The eHealth initiative is a federal-provincial program meant to create electronic health records across Canada. Mr. Danderfer was heading the B.C. portion, which has a budget of $200-million.

Although he stressed the allegations are unproven, B.C. Health Minister Kevin Falcon said the ministry has frozen the contracts detailed in the RCMP documents and ensured that the key players are no longer working for government.

Mr. Falcon could not say how much has been spent so far on eHealth, and said there is no need to freeze the rest of the program.

He said the program as a whole is helping develop technology to improve health care, for example, to give doctors access to lab diagnostics online instead of relying on transfers of handwritten documents.

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Asked whether the overall program will be tainted as a result of these developments, and a scandal unfolding in Ontario, Mr. Falcon said: "It's a possibility it could taint it across the country."

But he added that he's satisfied B.C. will come out better than Ontario, where David Caplan resigned as health minister in an unrelated eHealth contracting scandal.

New Democratic Party Health critic Adrian Dix said the entire program should be subjected to an independent inquiry.

"It raises serious questions on the whole eHealth project to the government," he said. "It is shown to be a fiasco."

He said the RCMP's information, even if it does not lead to charges or convictions, still leaves the government's handling of contracts under a cloud.

The allegations are also subject to probes by B.C.'s Auditor-General and the Comptroller-General.

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With a report from The Canadian Press

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