Wrongful dismissal suit calls the decision to fire former CEO McDougald 'severe and unjustified'
The fired chief executive of the Ontario Lottery and Gaming Corporation is seeking $9 million from taxpayers in a wrongful dismissal suit for her lost $400,000-a-year job, sources say.
Kelly McDougald, dumped last week over widespread expense account irregularities by staff at the Crown agency — including one employee's $30 car wash without an official receipt — has filed a notice in a case that, critics warn, could cost far more than the $317,000 severance given to departed eHealth Ontario boss Sarah Kramer after a spending scandal there.
The government would have been wiser to settle than risk an expensive case in a public relations effort to convince voters it's taking a hard line on abuse, said NDP Leader Andrea Horwath.
"People want a government that is judicious with their dollars and prepared to make wise decisions," she told the Star. "What they don't want is a government that's going to waste money on grandstanding to gain political points."
Such cases are not easily or inexpensively settled.
The Ontario government's most high-profile wrongful dismissal suit — a $30 million claim filed by former Hydro One CEO Eleanor Clitheroe, who was fired by the Progressive Conservative administration in 2002 — remains before the courts after seven years as legal bills pile up.
McDougald's lawsuit comes as Premier Dalton McGuinty's Liberals brace for the fall session of the Legislature beginning Monday, when opposition attacks will continue over the scandals at OLG and eHealth, where consultants making $3,000 a day expensed cups of tea and cookies to taxpayers.
The government is also facing a by-election in the Toronto riding of St. Paul's on Thursday.
McDougald was fired with cause on Aug. 31 and given no severance as the government released binders of information detailing questionable expenses submitted by staff at OLG. As first revealed in the Star two weeks ago, the move was a pre-emptive strike to dampen any scandal because the details had been requested by the Tories under freedom of information legislation.
Finance Minister Dwight Duncan said yesterday the province would defend itself from McDougald's case "vigorously in court."
But he struggled to explain why McDougald was fired with cause while ousted eHealth chief executive Kramer received $317,000 in severance after similar expense account concerns at her agency.
"Every situation is different," Duncan told reporters, saying he was "not surprised" by the legal action, but emphasizing that the government has to protect the interests of taxpayers.
He also said the lawsuit would have no impact on the Liberals' plans to tackle spending excesses in other government agencies subsequent to a warning from McGuinty that all expenses must pass a "sniff test" with ordinary Ontarians.
In a statement yesterday, McDougald acknowledged some of the expenses at OLG "were indeed inappropriate" but added "the actions taken against me by the Ontario government were severe and unjustified and I must therefore seek legal action to establish the facts and restore my reputation."
Information on expenses at the corporation was released by the government "without effort ... to either seek or provide context," added McDougald.
She and her lawyer, Brian Grosman, who is out of town until Monday, could not be reached for comment.
McDougald contends in her statement that her firing did not take into account that OLG's net profit to the province rose by $73 million last year and that some of the expenses highlighted were legitimate costs of doing business, or occurred before she took the top job.
She was hired to clean up at OLG after the corporation came under fire for too many lottery wins by insiders, such as store clerks selling tickets. McDougald was called on the carpet last spring when OLG gave away 20 foreign-made cars as casino prizes at a time when Queen's Park was bailing out local automakers GM and Chrysler.
Among spending abuses highlighted by the government when McDougald was fired was a dinner for 38 employees in 2008 that included more than 10 bottles of wine and mixed drinks for almost $3,800. Another employee billed about $8 for a pen refill.
(Click for full-size; opens in new window)Kelly McDougald, hired by the Liberal government two years ago to reform the Ontario Lottery and Gaming Corp., has stepped down as CEO, along with the board of directors.