January 2001
Financial Malfeasance: Medicare's Infectious Disease?
Disturbing recent revelations of the tragedy of gas-sniffing Innu children and the scandal of gross financial mismanagement at a native-run Manitoba substance abuse treatment centre have one important common characteristic: misused government health spending. In both situations, enormous infusions of federal money are correlated with horrific results. Reflection on this correlation suggests that it may be no accident. Rather, financial malfeasance may well be an endemic characteristic of the limited oversight and monitoring of government funding.
Both stories are unquestionably tragic: both concern local populations with profound substance abuse problems. While those of the Innu children have been the more graphically reported, and are truly heart-rending, the focus on the overt corruption in Winnipeg has diverted attention from the tragedy of the centre's neglected patients. In both cases, effective and compassionate treatment of substance users seems to have been an afterthought.
Concerns in Manitoba emerged after federal Health Minister Allan Rock's decision to launch a forensic audit of the Virginia Fontaine Memorial Treatment Centre. The audit is intended to probe the Fontaine Centre's week-long $115,000 Caribbean cruise enjoyed by the staff and spouses of the Centre, a "professional retreat" in Cozumel and Playa Del Carman (Mexico), Grand Cayman Island, New Orleans, and Tampa. The consequences of taking the Centre's staff on a cruise were considerable. According to recently-resigned six-year Centre employee Barb Gervais, "Before we went on the cruise, all the clients just got sent home."1 Other dubious Fontaine Centre expenses and practices have since come to light:
- the use of "project funds" to travel to Las Vegas, Hawaii, and Australia;
- overbilling of Health Canada by almost $1 million in a single year;
- retention of an unauthorized $840,000 surplus;
- a $3 million contract, paid to one of the Centre's directors, to lease trailers which supposedly already belonged to the Centre (Roberts, 2000b).
It is unlikely that any of these decisions pass a cost-benefit test, with the costs falling on the neglected and abandoned patients of the Centre, and on taxpayers.
Nor should we expect them to pass such a test, given the woeful limits on accountability which exist for such publicly-funded ventures. After questioning by Health Canada, the Fontaine Centre initially denied that the cruise was financed by budgeted funds, but instead claimed that the cruise's funding came from bingo profits. Once this story was contradicted by the bingo organizers, the Centre's lawyer, Martin Tadman, admitted that "staff used the facility's money for [the] . . . Caribbean junket" (Roberts, 2000b). But, according to Tadman, these were not "public" funds, and no audit was justified:
When you have an agreement that designates one party as an independent contractor... then once the monies are paid they're not public monies... If there's a cruise to be taken, whose responsibility is it to decide? Not the Department of Health. (Roberts, 2000c)
Despite Tadman's subsequent claim that the Centre's financing agreement precluded its $7.2 million per year of federal funding from being suspended, Rock has done just that, and has ordered a forensic audit not only of the Fontaine Centre but also of Health Canada's own First Nations and Inuit Health Services Branch, which has a $1 billion annual budget. The Centre has appealed the suspension and audit. Most recently, the federal government has filed a $5 million suit against the Centre and its directors.
One tragic aspect is, of course, that the Fontaine Centre has been the largest native substance abuse treatment centre in Canada,2 and as such, passes for the means of salvation for people such as the gas-sniffing Innu children in Newfoundland. The desperate importance of such salvation has been underlined by recent video images of these addicted children, "the most horrifying thing that's been seen in the country," according to Davis Inlet Chief Simeon Tshakapesh, who estimates that 52 percent of Davis Inlet residents between 9 and 20 are "chronically addicted" gas sniffers (Cox, 2000a).
A reflexive response to the Innu calamity has been to invoke the potential of government solutions, with Jean Chretien promising funds for a new detoxification centre, and the Newfoundland government "vow[ing] to protect Innu children in Labrador from substance abuse and addiction" (Cox, 2000b). And Chief Tshakapesh concurs, maintaining that the gas-sniffing occurs "because of the conditions we live in," and that, "The government has neglected its responsibilities to the community" (Cox, 2000a). But echoes of the Fontaine Centre debacle murmur the false hope of government rescue.
A recent routine annual audit of the finances of the Sheshatshiu Innu First Nation discovered that over $10 million in federal funds had been transferred to the community of Sheshatshiu in the last year (Lindgren, 2000). The abundance of this transfer was noted by the auditor, who commented: "How many communities in Canada with a population of 1,200 received more than $10 million last year? Not many." Although he found "no evidence" of fraud, he raised concern in regard to the granting of $750,000 in "mostly unrecoverable" loans and advances to community members (Lindgren, 2000). But Sheshatshiu chief Paul Rich was "unapologetic" regarding this revelation: "If we had the proper money, people wouldn't be asking for money from the band council." This defensiveness is perhaps understandable in that "Rich is also in the process of constructing a new home for himself, a spectacular residence with soaring ceilings and banks of windows offering a magnificent view of Lake Melville" (Lindgren, 2000). The utility of that particular project for the Innu children was left unexplained.
Are the Fontaine and Innu catastrophes aberrations, or just the tip of the iceberg? Further careful study is necessary to elucidate the lessons to be learned. But one cannot help but fear that the fate of substance-abusing natives is in the hands of a government better equipped to write blank cheques than to ensure that they are well spent.
Notes
1Gervais subsequently resigned after receiving death threats from another Centre employee. See David Roberts, 2000a.
2"The facility... is the largest of its kind in Canada." See David Roberts, 2000d.
References
Cox, Kevin (2000a). "Innu to Show Video of Gas-Sniffers in Agony." The Globe and Mail. November 25, p. A12.
Cox, Kevin (2000b). "National Report: Newfoundland Vows to Help Innu Children." The Globe and Mail. November 25, p. A12.
Lindgren, April (2000). "Addicted Innu Village Flowing with Money." The Vancouver Sun. December 2, p. A4.
Roberts, David (2000a). "Native-Clinic Worker Arrested in Threats to Whistle-Blowers." The Globe and Mail. October 19, p. A7.
Roberts, David (2000b). "Grits Hobble Rehab Centre Audit," The Globe and Mail. November 15, p. A3.
Roberts, David (2000c). "Ottawa May Cut Off Funds to Clinic." The Globe and Mail. November 18, p. A3.
Roberts, David (2000d). "Ottawa Sues Heads of Abuse Centre." The Globe and Mail. December 9, p. A3.
Martin Zelder (martinz@fraserinstitute.ca) is Director of Health Policy Research at The Fraser Institute. He has a Ph.D. in economics from the University of Chicago.
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