judgeclearswayforauditmanitobaclinic

Judge clears way for audit of clinic
By DAVID ROBERTS-- Globe and Mail---Friday, February 09
Winnipeg - The federally funded Virginia Fontaine native treatment centre played "fast and loose" with public funds by taking staff on a Caribbean junket last fall, a judge found Thursday, upholding Ottawa's right to a full forensic audit of the controversial facility.
Mr. Justice Jeffrey Oliphant, Associate Chief Justice of the Manitoba Court of Queen's Bench, ordered that no further money can flow to the native-run treatment foundation, which has received at least $30-million from Health Canada in the past five years. He further ordered that the clinic's directors must comply with a complete examination of all financial and other records by government-appointed auditors.
In a decision from the bench, which he said would not be followed by any further written ruling, Judge Oliphant said that a forensic audit must take place as soon as possible at the Virginia Fontaine Addictions Foundation Inc., located 125 kilometres northeast of Winnipeg on the Sagkeeng reserve.
"I have no hesitation in saying the Caribbean cruise was paid for with public funds," he said after reviewing 2,500 pages of evidence since December and holding three days of hearings.
"In light of the fast and loose manner in which public monies were expended by the foundation within 3� months of receiving new funding from Health Canada," the judge said, noting that the clinic then refused to submit to an audit, "the Minister of Health was, in my opinion, fully justified, if not duty-bound, to suspend payments."
Health Canada cut off funds to the facility Dec. 1.
Judge Oliphant did not place any restriction on which fiscal years could be audited. The last audit, of the 1994-1995 period, found numerous irregularities, with trips to Las Vegas, Hawaii and New Zealand, along with suspect payments to clinic directors and vast overbillings for patient care.
In December, Ottawa filed a $5-million lawsuit against the foundation and its directors, alleging misuse of public funds. This week's court case sought to force a complete forensic audit of the centre's books, as ordered by Health Minister Allan Rock Oct. 18.
In November, auditors had complained that they were being stymied in their attempts to examine the centre's records.
Martin Tadman, the centre's lawyer, would not say Thursday whether the facility would now co-operate with a full-scale audit, or whether a legal appeal or other plans were in the works.
"Our next step will be to obtain a copy of the written reasons of His Lordship and to review them with the board of directors of the foundation and to determine whether they want to go forward or to simply accept the trial judge's decision," he said.
He said in court Wednesday that at least six senior Health Canada officials, including associate deputy minister Marie Fortier, knew beforehand that staff from the facility were going on the cruise, but did nothing to prevent it.
Federal lawyer Duncan Fraser addressed that allegation Thursday, noting that Health Canada had been told that the cruise was to be paid for by employee payroll deduction, and that no public funds were to be used.
Among those on the controversial Caribbean junket were former assistant deputy minister of health Paul Cochrane and his assistant, Aline Dirks. They said they paid their own way.
Officials at the treatment centre have offered various explanations for how the cruise was financed: bingo money, payroll deduction, and other outside sources. Their lawyers argued that even if Health Canada funds were used for the cruise, that money ceased to be public once it had been given to the centre.
The judge said he did not buy the centre's argument that public funds take on a "chameleon-like" appearance, and are no longer public once the cheques have been cashed.
Under continued questioning from opposition MPs in the Commons Thursday, Mr. Rock insisted that his department "will not rest until we trace every dollar and account for it publicly."
During the hearing, Judge Oliphant noted that Mr. Cochrane, who signed last year's $30-million-plus funding deal with the centre, was actually aboard the ship with the Virginia Fontaine staff in the Western Caribbean, and had recently resigned from government service.
It has since been revealed that Mr. Cochrane and Virginia Fontaine president Perry Fontaine are the owners of nine condominiums at Quebec's exclusive Mont Tremblant ski resort. Land registry documents show that Mr. Cochrane's wife had been given power of attorney by Mr. Fontaine, and had bought four condominiums on his behalf in 1996. That matter is under review by the RCMP, and an internal Health Canada probe is examining how certain projects, including the Virginia Fontaine centre, were funded by Mr. Cochrane's branch.
Officials from the centre have admitted they paid $3,700 for a trip to Hawaii last September for Mr. Cochrane, ostensibly for research.
During the three-day hearing, which heard cross-applications from Health Canada and the treatment centre, Mr. Tadman argued that the cruise was taken for the purposes of staff training and to help avoid staff burnout.
"I guess, following that argument, if the foundation wanted to help the burnt-out staff, they could buy a condominium in Hawaii," Judge Oliphant replied. "A place on the beach on Maui where burnt-out staff could go and relax."
The centre was shut down for renovations when the cruise took place last October, but has since reopened. Foundation officials have said they can't afford to keep operating for much longer but Mr. Tadman could not say Thursday when the centre would run out of funds.