Report into AHS contracts finds conflicts widely known

EDMONTON – A report into allegations of corruption in Alberta Health Services contracts says it was widely known two employees were in conflicts of interest, but no steps were taken by senior officials.

Former Manitoba judge Raymond Wyant writes in his report, released Friday, that he found no evidence of wrongful interference from premier Danielle Smith (pictured), her ministers, or staff.

He was not made available for questions.

The investigation stemmed from allegations in a wrongful dismissal lawsuit filed earlier this year by a former chief executive officer of AHS, the provincial health authority.

Athana Mentzelopoulos has alleged she was fired in January for looking into the questionable contracts, while the government claims she was fired for incompetence. The allegations have not been proven in court.

The allegations also sparked investigations by the RCMP and Alberta’s auditor general, which are ongoing.

The government ordered the Wyant investigation in March.

Wyant’s report contained 18 recommendations. These include a centralized system for conflict of interest declarations tied to AHS or the agency responsible for procurement; implementing a vendor code of conduct; creating whistleblower protection for AHS employees; mandatory training on conflict of interest declarations and disclosures; and a requirement that all contracts with a value over $10 million be reviewed by the procurement lawyer.

The report notes cases of “real or perceived” conflicts of interest involved in procurement of children’s pain medication from Turkey and chartered surgical facility contracts.

“Most people seemed to have assumed that those in charge were aware of and had dealt with (or were dealing with) these matters, but this does not appear to have been the case. This demonstrates the need for having processes that would allow people to bring matters such as this to the attention of others without fear,” wrote Wyant.

On the pain medication procurement, he said “decision makers in this case should have exercised greater due diligence to ensure that AHS procurement policies were followed.” He said AHS should’ve had the contracts reviewed by its legal team.

Lori Williams, a political professor at Mount Royal University, said the judge faced some restrictions in his investigation and there are still some outstanding questions.

“We don’t have any answer to the central question which is, were surgical procedures and medical equipment, was there overpayment for those things? And did some people profit inappropriately at the expense of taxpayers?” she said.

That sentiment was seconded by Gilles LeVasseur, a law and business professor at the University of Ottawa.

“It raises questions about who was involved, who got the benefits and are there other things we should know that are not there right now in the actual report that should be actually looked at.”

At a news conference Friday, the premier said AHS officials “skipped steps” and said the report made it clear there was no wrongdoing by anyone in government.

Wyant interviewed 26 people, including a businessman at the heart of some of the allegations and the two former AHS employees found in conflicts of interest, Jitendra Prasad and Blayne Iskiw.

“The situations … where both Mr. Prasad and Mr. Iskiw were in real or perceived conflicts of interest, were widely known by many people at AHS, and yet no steps were taken by senior officials to deal with the situation with either person,” Wyant writes.

The Opposition NDP, which has called for a full public inquiry, dismissed the report as a whitewash.

Deputy leader Rakhi Pancholi said Wyant was clearly handcuffed and his report doesn’t exonerate anyone in the government.

“What the report does not answer is the question of who in the UCP directed or encouraged the conflict of interests and that those (AHS) procurement policies shouldn’t be followed,” she said.

“This report does not answer that question because the premier never intended it to.”

One of the contracts under the microscope, for children’s pain medication, was announced by the government in late 2022. The United Conservative government has long stood by the decision to import the medication during a countrywide shortage.

Wyant found Prasad was negotiating contracts on behalf of AHS while in a business relationship with an individual at MHCare Medical, the company awarded the $70-million contract to import the medication.

Almost $50 million in product wasn’t delivered, and Wyant says much of what was received remains in storage despite government attempts to off-load it.

The second was a contract for a private surgical company Iskiw worked for as a consultant after leaving AHS, the report says.

Wyant says there was concern over Iskiw’s ability to use his AHS knowledge to negotiate on behalf of vendors.

“There would be a perceived conflict,” says Wyant.

Prasad and Iskiw could not be reached for comment.

Mentzelopoulos said in a statement that even with Wyant’s limited mandate, he identifies many of the same concerns she tried to investigate as CEO.

“His report confirms that these were very legitimate issues that AHS was continuing to investigate when I was terminated two days before my meeting with the auditor general to discuss many of these same issues,” she said.

MHCare, in a statement, welcomed the report, saying it found no evidence of political intervention, an allegation in the lawsuit from Mentzelopoulos.

The company says the report also makes no findings against MHCare, its subsidiaries or its CEO, Sam Mraiche.

“This confirms our organization’s long-stated position that, whether it concerns the emergency procurement of analgesics or matters related to Chartered Surgical Facilities (CSFs), we have acted always in full compliance with all applicable policies, procedures, regulations and laws.”

Wyant’s investigation looked at more than two million documents.

He made 18 recommendations for the government and health agencies, including improving conflict and procurement policies and better whistleblower protection.

AHS, in a statement, said it accepts the findings and will cooperate fully to implement the recommendations. It said it has already been working to strengthen internal controls.

Smith said she has directed her top bureaucrat, Dale McFee, to work with ministries to implement the recommendations.

Source: CBC and The Canadian Press.