Pubdate: Mon, 03 Jan 2005
Source: Winnipeg Free Press (CN MB)
Copyright: 2005 Winnipeg Free Press
Contact:  http://www.winnipegfreepress.com/
Details: http://www.mapinc.org/media/502
Author: Paul Samyn and Mike McIntyre

HEALTH CANADA OFFICIALS LINKED TO FRAUD PROBE

Accused In Manitoba Addiction Centre Scandal

OTTAWA -- Key officials at the Virginia Fontaine Addictions Foundation are 
now alleging that two senior Health Canada employees were part of a 
conspiracy to misuse millions of tax dollars.

The court documents obtained by the Free Press mark the first time that 
senior staff from the treatment centre north of Winnipeg have fingered Paul 
Cochrane, the ex-Health Canada assistant deputy minister, Aline Dirks, his 
executive assistant, and VFAF president Perry Fontaine for alleged 
financial irregularities that are the subject of a massive RCMP fraud probe.

The pleadings, recently filed in Manitoba Court of Queen's Bench, claim the 
three were part of a scheme to convert Health Canada funding into cash for 
their personal use.

The latest twist in the ongoing scandal comes from the amended statements 
of defence from Lana Daniels, Keith Fontaine and Ken Courchene, who were 
among the defendants named in a multi-million-dollar civil suit the federal 
government launched in December 2000 in hopes of recovering misspent tax 
dollars.

"From in or about 1999 to in or about October 2000, (Perry) Fontaine, 
Cochrane and Dirks conspired with each other to convert public monies... 
for their own personal use or the use of third parties," alleges Daniels, 
who was the VFAF's finance officer.

In defending herself, Daniels also claims Cochrane and Dirks were 
"recklessly indifferent" to the damages their conduct would cause to Health 
Canada and the treatment centre. In his amended defence, Keith Fontaine 
claims the conspiracy of Perry Fontaine, Dirks and Cochrane was "unlawful, 
planned and deliberate."

Like Daniels, Keith Fontaine also claims that Perry Fontaine used 
intimidation to get him to approve certain dealings.

"At all material times, Keith Fontaine was belittled and intimidated by 
Perry to the extent that Keith Fontaine did not believe he was in a 
position to deny requests that Perry made of him," says the court pleading 
from the former VFAF director.

When the federal government initially launched its civil suit, Daniels and 
Courchene, along with Keith and Perry Fontaine, all filed a joint statement 
of defence. But that unity has now disappeared as Daniels, Courchene and 
Keith Fontaine have turned against Perry Fontaine by countersuing him. At 
the same time, Perry Fontaine is countersuing them.

All the allegations in the court pleadings remain unproven.

The amended statements of defence also have Daniels, Courchene and Keith 
Fontaine taking legal aim at the federal government. They are suing Ottawa 
for what they claim is its failure to protect the trio of natives from the 
harmful actions of Cochrane and Dirks. 'Ought to have known'

In her pleading, Daniels says Health Canada "knew or ought to have known 
that Cochrane's and Dirks' dealings with public funds required adequate 
monitoring and that their failure to do so could result in the loss of 
public funds and damage to the defendant (Daniels)."

Cochrane and Perry Fontaine are denying the claims even as they, in turn, 
sue each other.

"The defendant Cochrane denies that he ever participated in any conspiracy 
to convert public monies for his own personal use or for the use of third 
parties," Cochrane pleads in his statement of defence, filed last month.

Cochrane also states that Perry Fontaine is to blame for any inappropriate 
spending at the VFAF, saying he failed to exercise "due care in his 
functions as a director" and "derived personal benefits" that were 
inconsistent with the terms of federal funding deals.

For his part, Perry Fontaine "denies public funds were used negligently or 
in a manner that willfully undermined the purposes and intent for which the 
funds were advanced."

In his amended statement of defence, Perry Fontaine also argues he cannot 
be liable for the return of any misused funds because at "no time did 
Health Canada, Cochrane, or Dirks express any objections or concerns."

Cochrane, Perry Fontaine and Dirks are currently facing a number of 
fraud-related charges arising out of the RCMP investigation of the VFAF. 
Both are innocent of all charges unless convicted in court.
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