Alberta Health ignored the concerns of its staff and failed to follow its formal grant processes when it awarded a $10-million grant in 2013 to Pure North, a private alternative-health foundation offering a program the department had determined was not adequately supported by science, Alberta's auditor general has found.

The department further lacked a proper process to manage a potential conflict of interest when three years later — under current Health Minister Sarah Hoffman — it granted a further $4.2-million grant to Pure North. That grant was signed by Alberta Health's then-deputy minister, Carl Amrhein, who was at that time a participant in the Pure North program.

Auditor General Merwan Saher singled out former Progressive Conservative health minister Fred Horne for approving the $10 million in funding against the advice of his department.

"The evidence flowing from the department up through the chain was that, 'This is not a good investment to make,' " Saher told reporters Thursday.

But Saher said ultimately, "oversight was voided. There was override. So the minister of the day (Horne) chose to override the advice that he was given, (which was) his prerogative."

Horne now works as a health consultant. He has not responded to several interview requests from CBC News over the past year.

In his report released Thursday, Saher confirmed much of what has already been reported by CBC's ongoing investigation of Pure North.

"Albertans expect government to adhere to the highest ethical standards," the auditor general's report stated. "If department grant processes are not followed, public resources could be wasted and program objectives not achieved."

Pure North was founded, and is funded, by wealthy Calgary philanthropist and Canadian Natural Resources Ltd. (CNRL) co-founder Allan Markin. The non-profit foundation focuses on vulnerable populations such as the homeless, addicted and elderly, and operates free clinics in such places as homeless shelters and on Indigenous reserves.

As CBC News reported in April, Alberta Health gave Pure North a $10-million grant in December 2013 to expand its alternative-health program, which featured high doses of vitamin D and the removal of mercury dental fillings. Ultimately, more than 7,300 mostly low-income seniors took part in the program.

CBC News reported the department approved the grant against the advice of senior officials, who had previously determined the Pure North program was not adequately supported by science, could not produce the incredible health and economic outcomes the foundation claimed, and could pose a health risk to participants.

Hoffman has refused to answer questions related to Pure North for nearly a year, including what, if anything, she has done to determine if any of the seniors who participated in the program were harmed.

Liberal MLA Dr. David Swann, a former medical officer of health, requested the auditor general review both the 2013 and 2016 grants to Pure North following a series of reports last year by CBC News. He said the report released Thursday provides some answers but Hoffman has a duty to address the issue of potential harm.

"This is up to the minister now to do her due diligence on this program," he said.

Not only is Hoffman responsible for ensuring the health and safety of the population, Swann said, but she has a responsibility "to assess whether any harm is continuing or has been done by this program."

Hoffman did not respond to an interview request Thursday.

Pure North spokesman Stephen Carter declined an interview request, saying "it sounds like a government issue." Carter had previously said he welcomed the auditor general's review because he believed it would find the contracts were awarded through a normal process and that the auditor general would find no problems.

$10-million grant abruptly changed

The auditor general stressed that his audit did not look at "the rationale for awarding the grants, such as the medical merits of the programs." But the audit found health department staff had concerns about the initial $10-million grant to Pure North.

"In particular, they concluded there was insufficient scientific evidence to support the program, especially around vitamin D supplementation. The department refused multiple times in 2012 and 2013 to fund the Pure North seniors' wellness program because of these concerns."

The report stated Alberta Health also realized there could be potential cost savings to the health-care system if the Pure North program was as successful as the foundation claimed. The department continued to discuss the program with Pure North and created a draft grant agreement, dated Oct. 28, 2013, "that would obtain the scientific evidence the department determined was missing."

The proposed grant had specific research deliverables and Pure North would be paid in instalments.

But as CBC News reported last year, the proposed grant agreement changed dramatically in mid-December 2013. Internal Alberta Health documents show that, without explanation, the purpose of the grant was changed from funding scientific research to simply funding an expansion of the existing Pure North program, which eliminated the need for ethics approval.

"This direction changed the purpose of the grant – it was no longer for research," the auditor general confirmed. "This new agreement, with an effective date of Dec. 23, 2013, no longer required research ethics screening or oversight, and did not require specific research deliverables. Also, the payment structure changed so that Pure North received all $10 million immediately.

"So the original purpose of the grant – to obtain research to support the benefits of the program – was negated," the report stated.

Officials' concerns ignored

The auditor general report found Alberta Health's legal team reviewed the new grant agreement a few days before it was signed and identified "concerns with the grant deliverables and funding arrangements." The department's financial team raised the same concerns.

"Despite these concerns, the grant agreement was sent to Pure North to sign," the report said, and it was finalized on Dec. 20, 2013.

Alberta Health policy stipulates that the deputy minister must sign any grant agreement worth more than $1 million. But instead, the department's chief strategy officer signed the $10-million grant and "it is not clear whether this individual had the signing authority" to do so.

The auditor general found other "deviations" from Alberta Health's grant policy.

The grant agreement did not include a budget that was sufficiently detailed or reasonable. And a briefing note template that contained the "purpose, deliverables, and rationale" for awarding the grant was not updated following the change from a research grant to an operating grant.

Further, the auditor general found the reporting requirements Pure North had to meet under the new grant were so vague that they "would not allow the department to determine if the program was successful." Alberta Health's legal and financial teams advised the department that "there was no certainty on what the (Pure North) program was expected to achieve."

The auditor general concluded Alberta Health had monitored the Pure North grant, for example, by following up if the foundation was late in submitting its quarterly report. But Saher found the usefulness of this monitoring "questionable, as the reporting requirements were poorly designed."

After the Pure North grant expired, the foundation requested more ministry funding to continue its wellness program.

"The department obtained independent assessments of the program and, after evaluating them, determined there was still not sufficient evidence to support the merits of the program." Alberta Health declined all future funding requests for the Pure North seniors program.

Call to improve conflict-of-interest policies

But as CBC News revealed last year, Alberta Health signed a $4.2-million grant with Pure North in October 2016. This funding was part of a pilot project that established a Calgary nurse-practitioner clinic operated by Pure North.

The auditor general found Alberta Health followed its internal policies in awarding the grant. But Saher highlighted deficiencies with the department's conflict-of-interest policies as they related to former deputy minister Amrhein.

As CBC News reported, Amrhein participated in Pure North's alternative-health program while deputy minister and, in his previous role as official administrator of Alberta Health Services, he had lobbied Alberta Health for funding for the foundation.

The auditor general found Amrhein signed the $4.2-million agreement with Pure North on Oct. 28, 2016 but he did not "disclose this potential conflict of interest" to the department until March 28, 2017, 11 days after CBC News interviewed Hoffman for its first story about Pure North.

The auditor general noted Amrhein had disclosed his relationship with Pure North to the province's ethics commissioner when he became deputy minister in 2015. Saher said his audit found no evidence that Amrhein influenced the awarding of the 2016 grant.

Alberta Health cancelled the remaining funding to the Pure North clinic in July a few hours after CBC News revealed a 74-year-old patient had twice been prescribed vitamin D in single doses of 50,000 IU.

The Auditor General determined the contract with Pure North had been ended "without cause."

In a report released in September, the ethics commissioner determined Amrhein did not have a conflict of interest when he signed the Pure North agreement.

The ethics commissioner also had determined the department's rules surrounding disclosure were not clear. The auditor general agreed, but said "processes should require a deputy (minister) to disclose potential conflicts at the department level so that any risks can be proactively managed or mitigated."

In September, about six weeks before the ethics commissioner issued her report, Amrhein announced he was resigning to become provost and vice-president of academics at the Aga Khan University, which is based in Karachi, Pakistan.

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