Winnipeg Free Press - PRINT EDITION

Native health scandal widens

Tax dollars used to buy resort condos: Mounties

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OTTAWA -- The RCMP yesterday charged two more people in a widening fraud investigation of native health spending in Manitoba that they allege involves tax dollars being used to pay for resort condominiums, exotic travels and SUVs.

The latest charges came as the Mounties unsealed hundreds of pages of court documents detailing the extent of their probe spanning three provinces and the cases being built against key players involved with Manitoba's Virginia Fontaine Addictions Foundation (VFAF).

The documents include reports from a forensic auditor criticizing Health Canada for sloppy management and information the RCMP used to conduct searches of banks, trust companies, government offices and even the YMCA.

Jointly charged yesterday with fraud over $5,000 was Paul Cochrane, the former head of a federal native health program, and his executive assistant Aline Dirks, both of Ottawa. Also charged was Cochrane's 28-year-old son Jeremy.

Earlier this month, the elder Cochrane, 56, an Ottawa resident, was charged with several bribery-related offences.

The latest charges centre on what the RCMP allege was the use of federal dollars earmarked for a native organization in Northern Ontario to pay Jeremy a salary for services never provided.

Earlier this month, the RCMP laid seven charges against Paul Cochrane -- the ex-assistant deputy minister at Health Canada who oversaw a $1.2 billion budget -- for fraud against the government.

He also faces one count of breach of trust.

Also charged earlier with fraud related to inflated travel claims was Perry Fontaine, the former president of the native addictions foundation at Sagkeeng First Nation.

The court documents show the RCMP believe Cochrane used his position as head of the First Nations and Inuit Health Branch to illegally obtain five condominiums in the chic Quebec ski resort of Mount Tremblant.

The RCMP claim that Cochrane purchased five condos worth $897,000 between 1994 and 2001 and that Fontaine owned four condos in Mount Tremblant worth $606,000.

The court documents also allege that Cochrane received a blue 1997 Jeep Grand Cherokee from Dolores Fontaine, Perry's wife, while his sons Lucas and Jeremy also received SUVs from Perry Fontaine and Vera Bruyere, Fontaine's daughter and former chief executive officer of the treatment centre.

"I verily believe that the dates of the acquisitions of condominiums and vehicles by Cochrane coincide with the dates of agreements signed under Cochrane's authority where excessive government funds were allocated to the Manitoba centres," RCMP Cpl. Stephane Bonin of the Mounties' commercial crime unit says in the documents which had been kept from the public for two years to protect the secrecy of their investigation.

The RCMP allege that Dolores Fontaine gave a jeep to one of Cochrane's sons on March 28, 1998 -- three days before Cochrane signed a five-year-deal worth $7.6 million in funding for the VLAF. The forensic auditor, Kroll Lundquist Avey, brought in by Health Canada, points out that funding agreement witnessed by Dirks did not come with a clause allowing the Health Minister to audit the agreement.

"It is clear Cochrane was not protecting the interests of his department and continually favoured the Manitoba centres," Bonin alleges in the court documents.

The RCMP investigation also includes a paper trail for travels that Cochrane and his family as well as Dirks allegedly took on the VFAF's tab.

Cochrane had travel totalling $28,924 while Dirks' globetrotting was worth $14,316.

Among the trips paid for by taxpayers, the RCMP claim, was a December 1999 trip to Orlando, Fla. worth $5,762 in which Cochrane was accompanied by his wife Joan, sons Lucas and Jeremy and one of his son's friends, Krista Carroll.

Other travel bills included $2,425 for Bermuda in January 2000 and $1,630 for a cruise from Tampa, Fla. for Cochrane, his wife Joan and VFAF staff.

What stands out about their travels is that the VFAF was the only native treatment centre to have a budget for staff and client travel in the country. Its travel budget, approved by Cochrane, totalled $785,240.

Cochrane's lawyer, William Vanveen, said his client plans to enter a not guilty plea on Sept. 11 when he, Dirks and Jeremy are due in court.

"There is not a lot you can say at this stage," Vanveen said.

Vanveen said he will likely also represent Jeremy, adding it is his understanding that Cochrane's son did not receive a salary for a phony job.

All of those charged are considered innocent of all charges unless convicted.

Among the new allegations in the court documents are:

Federal funding for the VFAF was well in excess of that paid to other native treatment centres. For instance in 2000/2001, it received $3.1 million in funding for 40 beds at a cost per bed of $77,830. That cost per bed was $43,365 more than the national average -- a 125 per cent hike.

According to Kroll Lundquist Avey's forensic audit report in March 2001, "the decision making and management within the FNIHB was deficient."

The RCMP had the Corel Centre under surveillance and obtained pictures of Cochrane, Dirks and their spouses watching the Ottawa Senators 13 times during the 2001 season. The RCMP say Fontaine provided Cochrane with four sets of season tickets paid for by the Virginia Fontaine Memorial Centre's credit card.

In July 1999, Dirks signed an agreement providing $100,000 for the VFAF to purchase 30 computers that were year 2000 compliant. All other centres across Canada received about $3,000 each, or about enough money to buy one Y2K-compliant computer.

Cochrane received $665 from another Manitoba native health organization for a family membership at the YMCA near his home.

The RCMP allege that Cochrane and Dirks had "close inappropriate relationships" with native health centres in Manitoba.

The Mounties are pursuing a fraud charge against Dolores Fontaine for the SUV given to Cochrane for what the RCMP allege was a bribe.

"The investigation is still ongoing so it may or may not result in additional charges being laid," said RCMP spokeswoman Const. Nathalie Deschenes.

The charges against Cochrane and his son as well as Dirks and Fontaine come nearly three years after a Caribbean cruise involving himself and 70 treatment centre staff touched off an accountability scandal which made front-page news across the country.

The outcry over the taxpayer-funded cruise was followed by more revelations of suspicious spending involving the delivery of native health care on Manitoba reserves.

When the matter first became public in October 2000, then health minister Allan Rock cut off funding to the treatment centre and ordered a forensic audit which sparked a lengthy court battle as the centre fought an order to release documents.

Republished from the Winnipeg Free Press print edition July 30, 2003 $sourceSection$sourcePage

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