Culture of Scandalous Spending

ANNA MEHLER PAPERNY From Tuesday's Globe and Mail Last updated on Wednesday, Sep. 02, 2009 02:56AM EDT

The beleaguered Ontario Lottery and Gaming Corp.'s controversial expenses, which Finance Minister Dwight Duncan called a disappointment and that Opposition leader Tim Hudak condemned as indicative of a "culture of scandalous spending," fill five hefty black binders, each several centimetres thick with claim sheets and photocopied receipts.

The expenses, covering a two-year period starting in January, 2007, run the gamut from payment to a nanny to condominium cancellation fees to $3,000 meals. The documents do not indicate what was permitted under company policy and which expenses were not.

It's evident, too, that OLG policy wasn't always clear to those approving expenses: notes attached to at least one of the numerous reimbursement claims for health-club fees question what interpretation of company policy would qualify them as work-related.

In at least one case, expenses were submitted several times, so employees were reimbursed twice and then docked the extra cash. Bills from business-meeting dinners were sometimes split among employees, several expenses are filed without receipts, and thousands of dollars are claimed in liquor costs - violating government rules on alcohol-related spending.

Mr. Duncan has promised an auditor's report on the spending records and a review of expenses-approval policy, and he has suggested more unpleasant financial surprises are in store. At a press conference yesterday he called for a government-wide review of the accountability of agencies, boards and commissions to "determine what additional steps must be taken to ensure respect for taxpayers money."

The expenses, he said, "are symptoms of a larger problem" - one he admitted the provincial Liberals have so far been unable to fix.

"We have been trying to create change in this place for some time. I'm frankly not satisfied with performance to date at OLG."

Among the expenses that were claimed and reimbursed are:

Dave Myers

Vice-president, lottery operations

2008 salary: $203,827.66

Hard Rock Cafe dinner: $2,337

Dinner at The Superior on Yonge Street: $3,713 ($1,862 for 38 prix fixe meals and $885 for alcohol)

Wendy Montgomery

Vice-president, lottery marketing

2008 salary: $201,943.46

Nanny fees: $487.50 for 32.5 hours between September and December, 2006 (repaid)

Extreme Fitness membership: $250

Child-seat charge on rental car: $40

Keg dinner for 19 people: half of a bill for $1,600, including $299 in alcohol (a colleague expensed the other half)

Richard Campbell

Senior vice-president, human resources

2008 salary: $199,752.06

Clublink membership: $323.85

Michael Sharland

Senior vice-president, corporate security and surveillance (no longer with OLG)

2007 salary: 118,055.61

$100 deposit and $900 cancellation fee for condo rental in Florida, cancelled due to work requirements

Randy Hubbard

Key account manager

2008 salary: $103,376.24

Obus backrest: $170.99

Pen refill: $15.71

Back support: $28.49

Sobey's cloth bag:

$1.12 Subway tokens: $5.50

Cameron Uhren

Vice-president, gaming operations

2008 salary: $203,898.22

Reading material: $104.59

Suit for meeting: $1,151.04 (and $75 for 12 bottles of water and a pot of coffee)

Tokens for subway/team building: $52.50

Out-of-country medical insurance: $122

Doughnuts for meeting: $7.20

Car detailing: $135.60

Internet use on train: $9.40

Visa fee: $120

Walter Fioravanti

Vice-president, legal

2008 Salary: $196,502.74

Credit card membership: $120

Larry Flynn

Senior vice-president, gaming

2008 Salary: $291,974.26

Weight-watchers membership: $250

Ink cartridge for home printer: $82.22

Karl Gagesch

Senior vice-president, development

2008 Salary: $152,780.31

Long-distance calls from Loews New Orleans Hotel, Louisiana: $300.32


OLG just can't get a break. The lottery corporation has been plagued with scandal and embarrassment in the past few years. Some examples:

October, 2006: Ontario's ombudsman launches a probe into OLG after the CBC reports too many lottery "insiders" are winning big. More than 200 ticket sellers are alleged to have landed jackpots worth more than $50,000 in seven years. CEO Duncan Brown apologizes and promises new security measures.

March, 2007: Mr. Brown steps down just before the ombudsman releases a report that says OLG paid millions of dollars in suspect claims and "turned a blind eye" to theft and fraud by retailers. It calls for an independent regulator to oversee OLG. Other senior executives soon step down as well.

December, 2007: Police charge a Mississauga convenience store owner who claimed $5.7-million on a ticket that was not his. The rightful owners are given their prize money.

January, 2008: The OPP begins investigating insider wins at OLG. Police lay several charges in the following months.

February, 2009: An audit of OLG's winner database reveals insiders took home almost $200-million over a 13-year period through ticket tampering. CEO Kelly McDougald insists changes have been made: "This is a very different OLG."

March, 2009: George Smitherman, Ontario's Infrastructure Minister, slams OLG's "crappy decision" to feature foreign cars as prizes instead of cars made in Ontario, showing a lack of support for the auto sector during a recession.

June, 2009: OLG shuts down all 296 of its video poker machines after terminals in Ottawa show winner messages far exceeding the $40,000 limit.

July, 2009: A man threatens a $3.5-billion class-action lawsuit against OLG, saying he visited casinos and racetracks hundreds of times in a three-year period even after registering with the corporation's self-exclusion list. He says he gambled $500,000 and lost his job. OLG says it is not responsible for detecting problem gamblers.

August, 2009: Reports surface that a shakeup of OLG is once again in the works.

Susan Krashinsky



Kelly McDougald, CEO

Appointed September, 2007

Previous experience: Allstate Canada Group, Bell Canada, Nortel Networks.

Michael Gough, Chairman of the board

Appointed May, 2006

Former partner in the law firm Osler, Hoskin & Harcourt, worked for provincial ministries including Consumer and Commercial Relations, Treasury, Economics and Intergovernmental Affairs.

Ronald Fotheringham, Director

Appointed August, 2004

Consultant specializing in strategic planning and marketing, partner with management consultancy Tandem International prior to the firm's merger with Towers Perrin in 1998.

Marlene McGraw, Director

Appointed February, 2006

Partner of the Brantford, Ont. accounting firm Millard, Rouse & Rosebrugh, former director of Via Rail Canada.

Debi Rosati, Director

Co-founder/CFO of TimeStep Corp. with experience at Celtic House, Tundra, Cognos and BDO Dunwoody. Director, Sears Canada, neuroLanguage Corporation and Distil Interactive. Former chair, Canadian Internet Registration Authority

Michelle Samson-Doel, Director

Appointed July, 2004

Chief Investment Officer for Gestion Groupe Samson Inc., former executive chair of the board of Multi-Marques Inc., a manufacturer of bakery products

Beverly Topping, Director

Appointed July, 2004

President and CEO of the Institute of Corporate Directors. Creator of Today's Parent Group, former director of Canada Trust and CT Financial


Bohodar Rubashewsky, acting CEO

Assistant deputy minister, corporate development division, Ontario Ministry of Energy and Infrastructure

Peter Wallace, Chairman of the board

Deputy minister of finance and Secretary to Treasury Board

Greg Orencsak, director

Assistant deputy minister of finance

Phil Howell, director

CEO and Superintendent of Financial Services, Financial Services Commission of Ontario

George Ross, director

Deputy minister of research and innovation

Carol Layton, director

Deputy minister of revenue