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Liberals feel heat as Ontario Power executives fired over auditor's report

The Ontario Power Generation's Darlington nuclear facility near Oshawa, Ont.

Fred Lum/The Globe and Mail

Ontario's Liberal government, long plagued by accusations of financial mismanagement over the costly cancellations of gas-fired power plants and attempts to create electronic health records, has been hit by revelations a provincial electricity agency doled out big bonuses and hired employees' family members.

Premier Kathleen Wynne's administration fired three top executives at Ontario Power Generation Tuesday hours after an audit criticized the agency's spending. "Ontarians can and should expect better," Energy Minister Bob Chiarelli said. "The OPG...understands that these findings are not acceptable."

But Official Opposition Leader Tim Hudak charged OPG's problems are symptomatic of the Liberals' constant fiscal profligacy.

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"We've seen this over and over again," said the Progressive Conservative leader. "The government spends more of your money and gets less in return."

New Democratic Leader Andrea Horwath said it made no sense for Ontarians struggling to pay rising electricity bills to see public servants getting large payouts.

"While families are scrambling … they see the number of managers and executives at our hydro agency have doubled," she said.

Auditor-General Bonnie Lysyk's annual report also revealed that, despite spending $3.5-billion over the past six years on doctors, the Liberals failed to ensure there are enough doctors in the right places, particularly Northern Ontario. She also showed that dozens of private high schools may have handed out fraudulent graduation diplomas by awarding higher grades than merited, and that many municipal ambulance services were not responding to calls quickly enough. and that government-imposed healthy food in schools were sending kids flocking to fast-food restaurants.

But the financial ramifications of these matters paled compared to the OPG.

Ms. Lysyk revealed the ranks of OPG executives and senior managers increased by more than 50 per cent, even as the organization shed 1,200 jobs. Roughly two-thirds of executives and managers received top performance bonuses – up to $1.3-million – compared to just 24 per cent of more junior staff, she said.

Overall, 62 per cent of OPG's employees earned more than $100,000 last year. The number of employees taking in more than $200,000 ballooned to 448 from 117 in 2003.

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The audit found that more than 1,000 OPG employees shared addresses and are likely related to one another. In some cases, Ms. Lysyk said, there was no evidence they were hired through the correct process. Some of these employees, for instance, had apparently not been shortlisted for a job interview but were hired anyway.

The agency's workers also have far more generous pensions than other public-sector employees, contributing just one-quarter of the cost. Top executives contribute 7 per cent of salaries to pensions and get payouts of $180,000 to $760,000 per year on retirement. The rest is paid for by the OPG and, by extension, ratepayers. The fund also has a $555-million shortfall.

Some OPG employees retired, received lump-sum pension payments, then went back to work for OPG on contract.

Employees also received other benefits, Ms. Lysyk wrote, including moving costs. One OPG employee transferred between offices was handed $392,000. Another transferred from Toronto to nearby Pickering and got $80,000, even though the employee actually moved further from the Pickering site.

OPG chair Jake Epp said the ousted trio – the chief financial officer, the executive vice-president of strategic initiatives and the vice-president internal audit – had "not been as active … as they should have been" auditing and overseeing company expenditures.

Mr. Epp said OPG is downsizing the entire organization, including the executive suite. Performance bonuses will be cut by 10 per cent and then reviewed further, he said. The government, meanwhile, has appointed pension expert Jim Leech to review OPG's pensions.

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In the case of the agency hiring family members, Mr. Epp said, the problem was that the hiring process was not documented correctly. OPG is centralizing hiring to fix this problem.

Mr. Chiarelli and Mr. Epp did not name the executives shown the door. OPG's website last week listed Donn W. J. Hanbidge as CFO and John D. Murphy as executive vice-president, strategic initiatives. Their biographies had been erased from the site Tuesday. Mr. Hanbidge's bio had said that he had been OPG's CFO since 2005.

Neither Mr. Hanbidge nor Mr. Murphy could be reached for comment late Tuesday. OPG declined to give The Globe their contact information.

The name of the vice-president internal audit did not appear to be listed on OPG's website.

With a report from Karen Howlett

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About the Author
Washington correspondent

Adrian Morrow covers U.S. politics from Washington, D.C. Previously he was The Globe's Ontario politics reporter. He's covered news, crime and sports for The Globe since 2010. He won the National Newspaper Award for politics reporting in 2016. More

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