Hefty salaries for some of Ontario's highest paid civil servants – including the deputy health minister, who earned nearly $500,000 last year in salary and taxable benefits – are being channelled through hospitals to skirt government pay guidelines, the Star has learned.

As Premier Dalton McGuinty's administration clamps down on untendered contracts and consultants' meal expenses in the wake of the eHealth Ontario spending scandal, salaries for top bureaucrats are being buried in hospital budgets.

The premier's hand-picked climate change adviser, Hugh MacLeod, was paid $320,695.60 last year by University Health Network, according to the government's public sector salary disclosure documents.

Deputy health minister Ron Sapsford earns a salary of $433,611.55 plus $64,781.35 in taxable benefits through the Hamilton Health Sciences Centre.

Gail Paech, an associate deputy minister of economic development and trade and a former senior health bureaucrat, was paid $291,997.20 by University Health Network last year.

The salaries are well above the maximum $220,150 recommended for deputy ministers and the range of $146,700 to $188,950 for associate and assistant deputies.

By comparison, Premier Dalton McGuinty earned $207,427 and Health Minister David Caplan made $164,623 last year.

The practice is used as a means to attract top talent to the bureaucracy, said Kevin Finnerty, a spokesperson for the health ministry.

"We need to pay them comparable salaries. ... This is a longstanding practice back to 1994," he said.

MacLeod is listed in salary documents as a deputy director of special projects at UHN. Asked Monday if he ever worked at the hospital network, which includes Toronto General, MacLeod replied, "No."

He was previously an assistant deputy minister in the health ministry and has reported directly to the premier as associate deputy minister responsible for the climate-change secretariat since March 2008.

MacLeod confirmed in a telephone interview that his paycheque comes from the hospital network.

"It was part of the contract I entered into when I came here from B.C ... in 2003," he said, adding he is unaware of the reason for the arrangement. "I don't know."

At UHN, vice-president of public affairs and communications Gillian Howard confirmed MacLeod and Paech are both being paid through the hospital. "We're asked to put them on our payroll, so we do," she said. "The answer to why, you're going to have to talk to the (health) ministry."

UHN and other hospitals are fully compensated for the salaries paid through them to non-staffers like MacLeod, health ministry spokesman Finnerty said.

"The individual is on secondment from whatever organization (pays the salary). The organization pays that individual salary and the ministry reimburses that salary at the end of the year," he said.

"The UHN has agreed to be a sponsoring organization for this arrangement and did so at the request of the ministry."

He said the reason for shifting the money around is simple.

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"At Ontario public service salary scales we could not attract these people to work in the Ontario government," he said. The practice is transparent, Finnerty said, because all Ontario civil service and Crown agency employees who make more than $100,000 have their salaries disclosed online each year.

But anyone looking for Sapsford's salary, for example, would have to look for his name under the hospital section of the disclosure documents, because he is not listed under the Ministry of Health and Long-Term Care.

Salary ranges for deputy ministers and assistant and associate deputy ministers in the Ontario Public Service are established by the Ministry of Government Services as guidelines rather than hard-and-fast rules.

Executives at government boards, agencies and commissions, such as eHealth, where former CEO Sarah Kramer was hired at an annual salary of $380,000, and the Ontario Lottery and Gaming Corp., where former CEO Kelly McDougald earned $411,437 in salary and benefits last year, are not subject to the guidelines.

Deputy health minister Sapsford, who was paid nearly $500,000 in salary and benefits by the Hamilton Health Sciences Centre last year, is a former chief operating officer of the group of six Hamilton hospitals and a cancer treatment centre.

But that posting was "five years ago, maybe," said Hamilton Health Sciences Centre spokesperson Jeff Vallentin.

He declined to answer any questions about the deal and referred queries to health ministry officials in Toronto, where Sapsford, who declined comment, is the boss.

Finnerty insisted it is not a conflict of interest for Sapsford to be in charge of a health ministry that makes decisions affecting the hospital that pays his wage.

"Every civil servant, whether on secondment or not, has an oath of allegiance to the Crown and is bound by that," he said.

One former government official, who asked for anonymity, said pay arrangements like Sapsford's and others are put through hospitals because they have "enhanced pensions" for senior executives.

Sapsford's pay packet is higher than that of his boss, cabinet secretary Shelly Jamieson, who earned $327,953 in salary and $10,079 in taxable benefits.

She is the province's most powerful public servant in charge of 65,000 employees.