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K-Bro Linen announced a 10-year linen supply and services contract with Alberta Health Services Monday, May 7, 2012.iStockphoto/Getty Images/iStockphoto

A former executive ousted by Alberta's health authority will not receive a severance package after his expenses were made public last week, a reversal of position by the provincial government and its health board.

Allaudin Merali, who was hired in May as the chief financial officer for the provincewide Alberta Health Services (AHS) board, had been at the centre of a controversy since it was revealed that he'd claimed $346,208 in expenses from 2005 to 2008 while serving as CFO for the now-defunct Capital Health Authority, which was rolled into AHS. The expenses included thousands in repairs for Mr. Merali's Mercedes Benz and regular meals at some of Edmonton's priciest restaurants.

They were made public after a freedom-of-information request by the CBC, leaving Alberta's Health Minister and AHS in damage control, announcing the immediate "departure" of Mr. Merali (calling it mutual) and accepting the resignation of a board member, Sheila Weatherill, who had approved many of the expenses. AHS launched a forensic audit Monday and had pledged earlier to post all executive expenses online.

But officials said last week Mr. Merali would likely be entitled to 12 months' severance pay, a six-figure sum. He's not accused of breaking rules, but rather of racking up bills that would otherwise "detract from his ability to act" as the CFO of AHS, said a written AHS statement. Officials have said the expenses were in keeping with Capital Health policy at the time. On Monday, however, they backtracked, saying no severance would be paid.

"I think it reflects the [AHS] board actually listening to the outrage Albertans feel about this whole matter," Health Minister Fred Horne said.

Severance is typically worded clearly in contracts, labour lawyers say, and is paid out unless an employer strikes a deal or can prove the terms of the contract were violated. Mr. Horne had no details about the change, why Mr. Merali would quickly relinquish several hundred thousand dollars or whether the province struck a deal with him. "I'm certainly not aware of any deal," Mr. Horne said.

Official Opposition Leader Danielle Smith has said the case is symptomatic of government-wide entitlement. She called for a full investigation that would deliver a report to the legislature, not Mr. Horne, who was among the people Mr. Merali took to dinner on taxpayers' money.

"They're trying to put the blame on Merali, while we know where the blame lies. It lies with cabinet, it lies with [Premier Alison] Redford and it lies with Horne himself," Ms. Smith said, adding she doesn't believe Mr. Merali should receive severance. "Whether he was fired with cause, or whether he quit before the scandal was public – in the private sector [in such cases], you don't get severance."

Mr. Merali was also among the consultants whose lofty expenses were scrutinized during Ontario's eHealth scandal. He worked there after receiving a $1.027-million severance from Capital Health when it was merged with other regional boards to create AHS. As part of that deal, he also receives an additional $13,303 in monthly retirement payments, and will until 2018.