Health authority CEO out after report into alleged misspending

The head of a health authority in British Columbia is no longer with the organization following allegations related to misspending on various items including $7 million for respirators that didn't meet provincial standards.

Benoit Morin's departure was announced by the Provincial Health Services Authority on Tuesday, hours after the government released a report it commissioned by Ernst & Young.

Health Minister Adrian Dix said Morin was dismissed without cause and will get nine months' severance pay in keeping with his contract, adding that interim CEO David Byers has been appointed to the position.

Dix said he received a report from his deputy health minister about allegations of misspending late last year and a series of recommendations were made about those concerns, especially related to renovations of executive offices.

"On Dec. 3 we made strong recommendations about what needed to happen about spending that I considered to be not appropriate and that action was taken. And now we've had this report that lays out other concerns. It puts some concerns to rest, it should be said very clearly with respect to Mr. Morin, but raises some other concerns."

The Provincial Health Services Authority is in charge of several health-care programs including BC Cancer and the B.C. Centre for Disease Control, which Dix noted plays a key role in the response to the COVID-19 pandemic.

Ernst & Young says in its report that it looked into allegations of a conflict of interest due to a possible relationship between Morin and a Montreal company that sold respirators last spring.

It says some of the respirators were deemed "counterfeit" but its findings suggested there was no pre-existing relationship between Morin or anyone at the company, identified by the Health Ministry as Luminarie, which could not be reached for comment.

The original order for personal protective equipment last March was outside of the health authority's normal practices, which would have included due diligence procedures on the vendor, the report says.

"The unusual nature of the procurement resulted from global challenges in sourcing (personal protective equipment) at the time and the CEO's involvement in the original purchase, including directing staff to issue a multimillion-dollar deposit to the Montreal vendor."

After the orders were placed, a document within the health authority identified an individual with the same name as the CEO and the name of the founder of the company that sold the respirators, leading to rumours within the health authority about a conflict of interest, the report says.

Staff attempted to negotiate with the supplier and wanted to start legal action shortly after problems with the respirators were discovered but the health authority's board and Morin supported negotiations instead, it says.

But when negotiations failed, other executives decided to pursue legal action without informing Morin or the board of directors, the report says, adding the company filed for bankruptcy in January.

The report says Morin did not agree with his finance staff on whether a writeoff of about $7 million should be recorded in its financial statements for the fiscal year ending March 31, 2020.

He decided to dismiss three members of the executive team and the chief internal auditor last year because they raised concerns about the failed transaction with the company, it says.

"All of the employees' departures were at least in part related to a perceived lack of loyalty to and/or friction with the CEO," the report says.

— By Camille Bains in Vancouver.

This report by The Canadian Press was first published Feb. 9, 2021.