McGuinty directly tied to hiring of ex-eHealth CEO: auditor

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Ontario's Auditor-General has directly linked Premier Dalton McGuinty to the hiring of former eHealth Ontario chief executive officer Sarah Kramer, whom he says wielded considerable power and ignored the agency's own policies in doling out lucrative contracts to consultants.

Under Ms. Kramer's watch, two thirds of the dollar value of contracts at eHealth were awarded without competitive tenders, Jim McCarter says in a report on the embattled provincial agency released Wednesday. eHealth's board of directors felt it had little power over Ms. Kramer because chairman Alan Hudson hired her "with the support of the Premier," the report said.

The Globe and Mail has reported that Dr. Hudson told the Premier he would take the job of chairman on the condition that he could hire his protégé as CEO. The auditor confirms that the Premier directly intervened in Ms. Kramer's appointment.

Ms. Kramer and Dr. Hudson resigned from eHealth in June over the contracts, and Mr. McGuinty has been under siege ever since in the most politically damaging episode of his six years in office.

The government took extraordinary steps Wednesday to put the scandal behind it. The Health Ministry unleashed three bankers' boxes full of thick binders in an effort to come clean on dozens of contracts awarded to consultants. The documents also contained an internal audit of Cancer Care Ontario that showed that it repeatedly broke its own rules in awarding contracts, and raising new questions over just how rampant this practice is in government.

Mr. McGuinty endured one of the most raucous Question Periods in recent memory as opposition members yelled "blah, blah, blah" over his attempts to explain why Health Minister David Caplan resigned from cabinet while his predecessor in the portfolio, Deputy Premier George Smitherman, got to keep his job.

Mr. Caplan had been health minister since July, 2008. The lion's share of the problems revealed by the auditor happened while Mr. Smitherman served in the portfolio.

Mr. McGuinty said it is in keeping with parliamentary tradition that whoever is "up to bat" accepts responsibility.

"I believe Minister Caplan did the responsible thing and the honourable thing by accepting responsibility for what happened within his ministry," he said at a news conference. "It's my judgment call. I stand by that."

The Premier's office sent an e-mail to reporters highlighting Mr. McCarter's comments that the health minister was responsible for making sure the eHealth program had proper oversight.

This did little to quell calls by the opposition for Mr. Smitherman's resignation from cabinet.

"More and more, it looks like David Caplan was caught carrying George Smitherman's dirty laundry," Progressive Conservative Leader Tim Hudak said.

While the auditor singles out Ms. Kramer for criticism, Dr. Hudson, a neurosurgeon and former hospital CEO renowned for fixing health-care problems, emerges unscathed. The auditor said the doctor accepted the position of chairman in good faith and his sole interest was to help the province modernize its medical records.

Ms. Kramer issued a statement yesterday, saying she disagrees with many of the auditor's findings and notes that both the Premier and Dr. Hudson conveyed a strong sense of urgency to her.

"Although the Auditor-General acknowledges my good faith in the exercise of my authority as CEO, he refuses to accept that the urgency of the situation 'justified and warranted' the direct action I took to turn around the disastrous eHealth situation in Ontario," she said.

Mr. McGuinty said his government did not create this sense of urgency. He said it is no secret that he wants to see progress on a number of fronts, including health care, education and climate change.

"I'm impatient for all of that," he said. "I never said anything about breaking the rules."

As The Globe previously reported, the auditor found plenty of problems within the Health Ministry itself. The ministry, he said, awarded contracts without a fair and open process and on the basis of favouritism.

Consultants not only managed other consultants, but had the authority to hire, sometimes from their own firms. Over a four-month period, an unnamed consultant holding a key management position at the ministry was involved in awarding five additional contracts valued at $1.3-million to his own firm, the report said.

The auditor said he questioned this because at a minimum it created a "perceived conflict of interest" between the individual's role in representing the province's interests and those of his own firm.