Winnipeg Free Press - PRINT EDITION

CEO's contract illegal: province

NDP orders deal terminated after audit; board 'shocked'

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The provincial Health Department has ordered a Winnipeg personal-care-home group to terminate what the government believes is an illegal contract with its chief executive officer.

Health Minister Theresa Oswald said Thursday her department is demanding the contract be voided and any illegal payments returned to the government.

But it's not clear whether Bethania Group Personal Care Homes intends to comply with the order.

Bethania Group Personal Care Homes, which operates facilities on Pembina Highway and Concordia Avenue, has until April 2 to comply with the order issued Thursday. If it fails to do so, the province could replace its board of directors.

The order was made following an audit of Bethania Group in December. Investigators found a new contract between the group and CEO Ray Koop violated a government-imposed pay freeze as well as legislation passed last year. The home's board released a two-page response to the order Thursday, defending its actions.

The board ticked off its objections to the order point by point and took issue with the way the province put the care home under a public microscope.

"The board is very shocked," the statement read. It expressed the board's "disappointment," and contended the contract the province called illegal is common practice in health care everywhere in the province.

The letter ends with the board's suspicions the province is singling out the home for public rebuke out of an ulterior motive -- because it is faith-based.

"This begs the question whether the province has other motivations in releasing confidential information and failing to attach the board's response to the audit, given the disputes raised against new legislation related to the control over faith-based care facilities by the province," the letter said.

The audit found:

-- Bethania's board of directors allowed Koop to retire from his $160,000-a-year position last July 31, collect a pre-retirement payment worth nearly half his annual salary on Aug. 1, and start a new contract in the same position on Aug. 2 with a salary increase;

-- This occurred while a government-imposed executive salary freeze was in place; and

-- The CEO was actively involved in advising the board on the structure of his new remuneration package and therefore in a conflict of interest.

Oswald said Bethania currently receives annual funding of $9.5 million to operate its two care homes, which have a total of 200 residents.

"In this circumstance, there seemed to be a very clear and deliberate flouting of the law, which just cannot be abided by Manitoba Health nor, I would think, by the taxpayers of Manitoba," Oswald said in an interview.

The audit also raised concerns the two personal-care homes under Koop's supervision contracted out $20,500 in services to Koop's brother during a three-year period. And it noted his expense claims and credit card expenses are approved by an underling and not Bethania's board chairman.

In its initial dealings with auditors, Bethania argued Koop's new contract is legal. It said the previous contract was between the CEO and Bethania Mennonite Personal Care Home Inc., while the new one was with Bethania Housing and Projects Inc. However, overseeing the two homes continued to take up 70 per cent of the CEO's time.

Manitoba Health imposed a wage freeze on senior managers in 2009 -- the freeze also included senior management of personal-care homes. A provincial law enacted last spring also prevents a health organization from entering into an employment contract with a CEO within one year of his or her employment termination.

The Free Press was unable to reach Koop Thursday. Members of Bethania's 12-person board issued their statement through lawyers.

Oswald said Manitoba has high standards for transparency and accountability in health care.

The government said CEOs of personal-care homes are already required to publicly disclose their salaries and recent amendments to the Regional Health Authorities Act will strengthen the transparency and accountability of public funding in the health-care sector by:

-- implementing tighter controls on executive compensation in regional health authorities (RHAs), hospitals and other health corporations;

-- requiring the expenses of CEOs of RHAs, hospitals and personal-care homes be posted online; and

-- ensuring that if a health organization has a surplus of public funds, there is improved accountability and transparency for how those funds are used.

The government audit is available at

-- with files from Alexandra Paul

Republished from the Winnipeg Free Press print edition March 22, 2013 B5

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