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EDMONTON — Alberta’s front-line health provider says it will stop awarding contracts to firms at the centre of an auditor’s investigation into what the Opposition NDP calls unprecedented allegations of corruption surrounding health procurement contracts and sweetheart deals for private surgery providers.
Alberta Health Services announced the change Thursday in a statement.
It comes a day after the Globe and Mail newspaper published excerpts of a letter from a former AHS leader detailing the allegations of corruption, arm-twisting and conflicts of interests reaching the highest levels of Premier Danielle Smith’s government.
Alberta’s auditor general Doug Wylie said he’s looking into contract and procurement processes and his probe may extend beyond AHS and the health department.
AHS said it’s conducting a review of its procurement procedures related to the matters raised by its former CEO.
“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.”
It didn’t specify which companies are part of the temporary ban on new contracts.
The developments stem from a letter sent two weeks ago to AHS by a lawyer for Athana Mentzelopoulos, who was head of the agency until she was fired Jan. 8.
In excerpts of the letter quoted in the Globe and Mail, Mentzelopoulos alleges she was dismissed because she was looking into questionable contracts.
She had been on the job for about a year, and the letter says she’s preparing to sue for wrongful dismissal.
The letter says at one point the AHS board recommended Mentzelopoulos take her concerns to the RCMP. The rest of the board has since been fired by the government.
RCMP say they are reviewing a complaint related to the allegations.
In the letter, Mentzelopoulos alleges that throughout 2024 she was pressured by various provincial officials, including Marshall Smith, then the premier’s chief of staff, to sign off on contracts for private surgical facilities despite concerns over how much was being paid and who was benefiting.
The letter says Mentzelopoulos had concerns with “significantly increased costs” on a contract with the firm Alberta Surgical Group.
The letter also raises allegations of conflict of interest surrounding an AHS staffer who also had an email account with MHCare Medical. It says the medical supply company and other firms associated with its CEO, Sam Mraiche, have done $614 million in business with the province.
MHCare made headlines after it was awarded a $70-million contract to procure children’s pain medication from Turkey in 2022.
Alberta received about 30 per cent of the order despite paying the full cost, and AHS later stopped using the medication that was received because of safety concerns.
Following the medication contract, Mraiche also provided multiple cabinet ministers and government staff with luxury box tickets to Edmonton Oilers playoff games.
NDP Leader Naheed Nenshi said the allegations demand multiple investigations, including one by the RCMP.
He said the premier, Health Minister Adriana LaGrange and Andre Tremblay, the deputy minister of health and the new head of AHS, must all step down while investigators get to the bottom of the scandal.
“This is about sheer corruption,” Nenshi told reporters in Calgary.
“This is the first time we’ve seen in black and white allegations that, not only do they apply pressure to supposedly independent organizations, but they’re using taxpayer money to enrich their friends in ways that do not meet the needs of Albertans.”
The Canadian Press has not seen the Mentzelopoulos letter, but Nenshi said he has seen relevant parts.
“What I have seen was the most shocking stuff I’ve ever seen,” he said.
Mentzelopoulos, the premier and Alberta Surgical Group did not immediately respond to requests for comment. Marshall Smith also did not return a request for comment. He left government last fall.
LaGrange’s office said in a statement the dismissal of the AHS board and Mentzelopoulos were part of the province’s health-care restructuring plan. It stressed: “The interpretation that (Mentzelopoulos’s) termination was due to AHS’s review of certain procurement decisions is false.”
It said it’s reviewing the allegations and procurement decisions. It added that it welcomes the auditor general’s review and will co-operate but won’t be commenting further until that’s complete.
A lawyer for MHCare said in a statement that he couldn’t provide details because of the auditor general’s investigation and any future legal proceedings.
“Based on what our client has learned, the claims and insinuations made against them are based on a flawed perspective, is without merit, and contrary to substantiated evidence. We are confident that, as the process unfolds, the full facts will come to light and demonstrate that our client has acted properly at all times,” said Greg Bentz.
Health-care unions also called for action.
United Nurses of Alberta president Heather Smith said the allegations demand a formal investigation followed by a public report that includes the true cost of the contracts and who profited.
The Health Sciences Association of Alberta said the Globe report validates concerns that the government’s restructuring effort is being done to increase political influence and increase for-profit care.
“This isn’t just mismanagement — it’s a scandal,” said president Mike Parker in a statement.
The Alberta Medical Association, which represents physicians, called the allegations serious and expressed hope there would be a thorough and independent investigation, with the results made public.
Smith’s government is in the midst of dismantling AHS, which was once responsible for overseeing the entire provincial health system.
Four new public health organizations are being created by the government, with each responsible for a certain sector of services and AHS reduced to a hospital services provider.
This report by The Canadian Press was first published Feb. 6, 2025.
— With files from Matthew Scace in Calgary
Lisa Johnson and Jack Farrell, The Canadian Press