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Ontario Health Minister Deb Matthews answers question following the Auditor General's special report on Ornge air ambulance operations Mar. 21, 2012 at Queen's Park.

Health Ministry officials raised red flags about questionable financial transactions and shrinking cash reserves at Ontario's embattled air ambulance service six months before their boss says she first became aware of problems at Ornge.

An internal ministry document dated June 29, 2011, warns that Ornge insiders appeared to have engaged in money transfers that have stripped value from the publicly funded service for the benefit of new, for-profit business ventures. But Health Minister Deb Matthews said she saw the document for the first time on Tuesday, when Progressive Conservative MPP Frank Klees dropped it "like a big bombshell" at an all-party legislative committee hearing.

The committee is looking into problems at Ornge, which was created in 2005 to manage all aspects of the province's air-ambulance service. Ms. Matthews is on the defensive about the government's oversight of Ornge, which started for-profit entities that are now at the centre of an Ontario Provincial Police probe.

The eight-page document prepared by the ministry's finance and administration branch was in response to a request from Malcolm Bates, director of the ministry's emergency health services branch. He requested an analysis of Ornge's finances to help the ministry respond to a report on the air-ambulance operator from provincial Auditor-General Jim McCarter.

"This could be viewed very negatively by the public if public funds are perceived to have been used to enrich [anyone] other than the taxpayers of Ontario," the document says.

The ministry document highlights two transactions: an "unauthorized" transfer of $4.8-million from Ornge to the Ornge Foundation, a charity created in 2007 that has since been wound up, and a $4.3-million loan to an unidentified entity.

"This is a concern as Ornge is not in the business of advancing monies and, these are taxpayer dollars that have been lent," the document says. Ornge's financial statements do not disclose enough to determine who received the loan, the document says, noting that Ornge's cash balance declined significantly to $11.8-million in the fiscal year ending March 31, 2011, from $113-million a year earlier.

Although the document is stamped "Confidential Advice to Minister," Ms. Matthews said it is not routine practice for her to see all reports bureaucrats prepare. "The document was never intended personally for me," she said.

Testifying for the second time at the committee, she reiterated that she became aware of problems at Ornge for the first time last December, when media reports revealed that now ousted chief executive officer Chris Mazza was earning $1.4-million a year.

"That's when I said the party is over," Ms. Matthews said.

New Democratic Party MPP France Gélinas accused the minister of not paying attention to warning signs at Ornge until the problems became front-page news. Mr. Klees said at the conclusion of three hours of often heated questioning that the bureaucrats should be given their "walking papers," along with the minister.

"You fired Mazza. You fired the board," Mr. Klees said, referring to the house-cleaning at Ornge that Ms. Matthews orchestrated. "It's time to fire yourself."

For her part, Ms. Matthews used her time in the witness chair to challenge the testimony of Dr. Mazza, who said he had always been willing to co-operate with the government and would have responded "yes, ma'am" if only Ms. Matthews had asked him to make any changes. That's "pure nonsense," Ms. Matthews said, adding that Dr. Mazza declined to meet with her on two separate occasions. "I think we can agree that was not a 'yes, ma'am,' " she said.