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Ex-CFO files suit against health minister, Alberta Health Services for breach of contract, defamation

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Allaudin Merali

Allaudin Merali filed a statement of claim today in the Alberta Court of Queen's Bench against Alberta Health Services and Alberta Health Minister Fred Horne.

"The statement of claim includes claims for a breach of contract, defamation and loss of income," Mr. Merali said in a carefully worded email sent to media and bloggers.

Since the former Capital Health Region and Alberta Health Services CFO's expense account became a cause célèbre and a political embarrassment to the Redford Government after CBC investigative reporter Charles Rusnell broke a story about it in August 2012, the message to Mr. Merali from the government has always been that he will have to go to court if he wants to try to get his half-million dollars in severance.

Mr. Rusnell had filed a Freedom of Information search of Mr. Merali's expense claims and discovered, in the reporter’s words, "how he spent tens of thousands of dollars on lavish meals at high-end restaurants, bottles of wine, even a phone for his Mercedes Benz car." Mr. Merali left the employ of AHS soon thereafter.

But the real problem was never that Mr. Merali spent the money after he returned to Alberta Health Services from a job in Ontario -- it was all properly submitted, signed off and approved. It was that Alberta Health Services signed such generous contracts with its senior executives in the first place.

That is the true source of the embarrassment to the government -- but to admit that, it would have had to concede it signed a lousy deal, and not just with Mr. Merali but likely with every executive in AHS and the CHR before it.

Back in May 2013, Premier Alison Redford told Calgary Sun columnist Rick Bell that "if people think they are entitled to something in a contract and other people don't think they're entitled to it I guess they can hire lawyers and take legal routes and go to court."

She added: "We are not going to simply sit back and take a look at what he may or may not feel he’s entitled to without resisting that."

How can this mean anything but that the word of this government cannot be trusted? As I wrote at the time, there are four problems with this government's approach:

1.    Alberta Health Services signed a contract with the guy that says he’s owed the money

2.    Outrageous as his expenses may have seemed, all of them appear to have met the lax the rules for executive expenses in effect at the time he was a Capital Health Region employee

3.    He was rehired and then fired by another employer, AHS, and there’s no evidence his expenses at that organization broke any rules

4.    Canada, even the part governed by Ms. Redford’s Progressive Conservative Party, still has an independent and impartial judiciary

No surprise, the Redford Government didn’t take my advice about this, I guess, so now we’re going to get to see the proof of Point 4.

In his statement today, Mr. Merali said he joined AHS in good faith after personally being encouraged by the minister of health. He noted that AHS, moreover, understood his expenses had been properly incurred and said so in a news release on Aug. 1, 2012.

"What is apparent from widely publicized statements by the minister and other government representatives is that my expense claims were spun by the defendants to make me a scapegoat and to distract the media and the public from issues with other AHS executives," he said in the statement.

"I have filed a claim because the minister and AHS have failed to meet obligations clearly given to me by a signed employment contract," he said. In addition, "defamatory statements were made which questioned my integrity and have damaged my ability to work in a senior management capacity in Canada.

"I have no choice but to file a claim to seek compensation for my loss of employment and damage to my reputation," Mr. Merali concluded, saying he will have no further comment until the court proceedings are concluded.

Alberta taxpayers stand to be double losers -- we will have to pay for a politically motivated legal case that surely stands little chance of success, and have to pay Mr. Merali what he was promised as well.

He is said in a media report to be seeking more than $6 million in damages.

Most likely he will settle out of court and no one will ever know how much he was paid in compensation for his claims.

The conduct of the Alberta government from start to finish is the real shame of this sorry affair.

This post also appears on David Climenhaga's blog, Alberta Diary.

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