Alberta auditor general investigating AHS contracts following firing of CEO

Alberta's auditor general will examine procurement and contracting after the former CEO of AHS claimed she was fired for launching an internal investigation.

Alberta’s auditor general is examining the procurement and contracting processes at the Department of Health and Alberta Health Services (AHS), after the former CEO of AHS claimed she was fired before a meeting about the review.

In a letter originally obtained by the Globe and Mail, Athana Mentzelopoulos, the former CEO of Alberta Health Services, said her contract was terminated two days before she was allegedly going to meet with the province’s auditor general.

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The contents of the letter, sent Jan. 20. from Mentzelopoulos’ lawyer to AHS’s interim general counsel, also alleged Premier Danielle Smith’s then-chief of staff had interfered in AHS contract negotiations.

Alberta’s auditor general Doug Wylie sent out a release Thursday noting that he recently commenced an examination.

“At this time, the examination pertains to chartered surgical facilities, medication (ibuprofen or acetaminophen), and COVID-19 personal protection equipment,” Wylie’s statement read.

“The examination is looking at the effectiveness of management and control processes— including governance and oversight—ensuring value for Albertans while addressing concerns or allegations related to contracting and potential conflicts of interest.”

Wylie adds that, if necessary, the examination may extend to other organizations and results of this work will be made available to all Albertans when the report(s) are tabled in the Legislative Assembly.

‘Subject to interference and pressure’

Mentzelopoulos had her contract terminated as AHS’s chief executive officer on Jan. 8., at which point she was replaced with Andrew Tremblay, the deputy minister of health.

The Globe and Mail has reported that the letter alleges she was fired because she launched “an internal investigation and forensic audit” into AHS contracts and procurement processes.

Mentzelopoulos' contract says that if she is fired without just cause, after serving one year, she would be entitled to 12 months of severance pay.

Mentzelopoulos’ letter states she is now prepared to sue for wrongful dismissal, demanding Alberta pay her roughly $1.7 million, which is the amount she would have made had she been able to serve out the rest of her contract.

Her legal counsel, which has yet to be made public, additionally outlined concerns that members of the Alberta government received gifts from a company that imported generic pain medication from Turkey for the health authority.

Mentzelopoulos dug deeper into that company, known as MHCare, and its CEO, Sam Mraiche. Her letter indicated she investigated AHS’s relationship and contracts with the company that facilitated Alberta’s $75 million deal to import generic children’s pain medication from Turkey in 2022.

Only 30 per of the children’s medication was received despite paying up front. The rest of the order is not likely to be received and AHS stopped using the supply for safety reasons.

The letter obtained by the Globe and Mail noted that Mentzelopoulos was additionally facing pressure to sign new deals for chartered surgical facilities, which are considered private outfits that perform operations paid for by the government as part of the public health care system.

The Globe and Mail says Mentzelopoulos’ letter noted she was pressured to extend a contract for the Alberta Surgical Group.

“Throughout 2024, Mentzelopoulos had been repeatedly subject to interference and pressure from various Government of Alberta officials – including the premier’s then-chief of staff, Marshall Smith – to sign off on commitments for the new CSFs, and approve a contract extension for ASG, despite significant concerns within AHS around the true ownership and potential costs of the CSFs, and concerns over the significantly increased costs of a proposed new ASG contract,” the letter states.

Mentzelopoulos took office as AHS chief executive in December 2023 as part of the UCP government’s plans to revamp the organization and reduce costs. She had also previously served as the executive director of the Alberta Medical Association and as Alberta’s deputy minister of finance.

Senior government officials allegedly ‘aware’ of allegations

The Globe and Mail report uncovered in Mentzelopoulos’ letter that senior government officials, including Health Minister Adriana LaGrange, were made aware of several issues at Alberta Health Services.

The letter went on to say that on Dec. 23, Alberta’s health department allegedly instructed Mentzelopoulos to wind up her investigation and turn over files to the government.

In an emailed statement, the office of the minister of health said the recent personnel and board changes at AHS were part of the planned Feb. 1 transition into a service provider under the newly minted Acute Care Alberta.

“As to the allegations made by the outgoing CEO, Alberta Health Services is reviewing them, but the interpretation that her termination was due to AHS’s review of certain procurement decisions are false,” the statement reads.

“We understand that AHS has been reviewing these procurement decisions and processes and that work will continue until it is completed.

“We also welcome the auditor general’s review into whether AHS procurement practices were properly followed in these matters and will fully cooperate with that office as they do so.”

The minister’s office said it would not comment further on the matter until the review is complete.

Late Thursday afternoon, AHS provided the following statement to CTV News.

“We can confirm that AHS is conducting a review of our procurement procedures and processes related to the matters raised by the former CEO, and in the interim, we have paused the awarding of any contracts involving the parties that are involved in that review.

“Until this review and the auditor general’s review have been completed, we will not be commenting further.”

CTV News has also since reached out to Alberta Surgical Group for comment but has not received a response.

The office of Alberta Premier Danielle Smith has not returned a request from CTV News for comment.

In an updated statement Thursday afternoon, Alberta RCMP said it has received a letter regarding the situation at AHS and is reviewing its contents.

‘We demand an immediate internal investigation’: HSAA

The Health Sciences Association of Alberta (HSAA) is calling for an immediate, independent investigation into the contracts awarded to private surgical facilities under the Alberta Surgical Initiative (ASI), following reports of new allegations of political interference in for-profit health-care contracts.

HSAA president Mike Parker says Mentzelopoulos’ dismissal prior to an alleged meeting with Alberta’s Auditor General ‘asserts undue pressure from the Office of the Premier and senior government officials to approve costly private contracts, despite warnings about their financial impact and lack of transparency.’

“We’ve been suggesting that these actions of government to deconstruct our health-care system opens the opportunities to maximize profits and not care for patients,” Parker said.

“What we’ve seen is some very serious allegations. They’re very concerning, and we demand an immediate internal investigation. Albertans deserve to know what’s going on, and that means the auditor general needs to quickly move forward with his investigation.”

Parker went on to say that the investigation will also need to have unimpeded access to records and documents shared with the RCMP to ensure full accountability.

“What we need to start talking about here is, why is it that all of a sudden there’s no money to pay living wages for folks, yet we can harvest portions of our health care system off for a private industry? It doesn’t make sense to me.”

Meanwhile, health experts with the non-profit organization Friends of Medicare are also sounding alarms.

Executive director Chris Galloway says political interference in medical contracts comes at an enormous cost to taxpayers.

“These are multi-million-dollar contracts, whether it’s for a surgical centre, Tylenol, or PPE, or, you know, we have other privatization happening for recovery centres, for all sorts of things,” Galloway said.

“We should know how these decisions are being made. We should know that politicians or folks in the Premier’s office aren’t making the decisions or setting the terms of those contracts, but there’s actually proper procurement happening with proper processes, and we’re concerned that that’s not what’s been happening.”

The Alberta Medical Association (AMA) posted a letter on social media Thursday afternoon addressing the situation, adding the statement that “Government must ensure that the health budget improves access to services, patient outcomes, healthy work environments and a well-paid, valued health workforce, adhering to best practices for procurement that give full effect to competitiveness, transparency and value for money.”

Alberta NDP leader calls for premier’s resignation

Naheed Nenshi, the leader of Alberta’s opposition NDP, spoke to reporters Thursday to address allegations that the UCP government fired Mentzelopolous amid a probe into medical contracts.

“These are the most shocking allegations I have ever seen,” Nenshi said.

“We will call for these investigations and a judicial-led public inquiry. We need to hear from Smith and LaGrange today, they must step down while they are investigated.”

Nenshi also spoke about Marshal Smith, the premier’s former chief of staff who allegedly was putting undue pressure potentially for personal gain on the CEO of an arm’s-length organization.

“There’s only two answers here; number one is that the premier knew, and if she knew, she has to resign,” Nenshi said.

“Number two, she didn’t know. If she didn’t know what her own right hand was doing, that means she’s incompetent even more so than we thought she was, and she has to resign.”

‘There’s a conflict of interest’: political scientist

Lori Williams, a political scientist with Mount Royal University, says questions are swirling, in particular, over the timing of Mentzelopoulos’ firing given that she was alleged to have a meeting with the auditor general just two days later.

“There’s a conflict of interest. The entire AHS board was fired, and we now have everything being done in the health portfolio being run not by a board of independent experts but by the deputy minister of (health),” Williams said.

“We also have staff working in procurement for the government in health care, also apparently being paid by some of the companies that are supplying goods to the government or to the health system.”

Williams noted that attempts to thwart an investigation blocking taxpayers from knowing where their money is spent could also come with major consequences for government trust.

“The auditor general had an opportunity to come clean and say, ‘Look, we’ve discovered these problems; we’re going to fix them. Instead, they decided to hide what was going on, and now they look like they’re complicit.

Letter uncovers more than $600 million allegedly awarded to MHCare

Mentzelopoulos’ letter from the Globe and Mail report also revealed that Alberta Health had purchased about $614 million in supplies and services from MHCare and companies associated with Mraiche.

CTV News reached out to Mraiche for comment, but a response was not received.

A CTV News report from July 2024 revealed that Mraiche, who owns MHCare, had provided luxury tickets to NHL games for Premier Danielle Smith and multiple members of her staff in 2024 and 2023.

Smith says there was ‘no wrongdoing’ after the United Conservative Party eased provincial ethics rules to make it easier for politicians to accept gifts.