Two more Ottawa Hospital construction contractors are denying any wrongdoing in their legal defences filed this week responding to allegations made in a lawsuit launched by the hospital earlier this year, CBC reports.
The Ottawa Hospital in January alleged that five contractors and two former employees conspired in a kickback scheme to defraud the hospital on construction contracts. The lawsuit, which has not been tested in court, asserted the kickbacks included lavish trips, construction work on personal residences, and employment of hospital employees’ family members. In return, the hospital alleges the contractors received procurement advantages and were allowed to inflate their bills.
Federal Electric (1976) Limited and its owner Larry St. Pierre, and Pro Management and Diamond Construction, both owned by Roch St. Louis, assert in their statements of defence that they did not participate in fraudulent activities.
CBC says Federal Electric continues to work at the Ottawa Hospital General campus as a subcontractor under PCL which won the contract to build the $135-million expansion of the University of Ottawa Heart Institute.
Pro Management owner St. Louis declared bankruptcy for that company in April 2015 and declared bankruptcy for Diamond Construction in October 2015 before the hospital filed its lawsuit in January, CBC reported.
The hospital lawsuit said Frank Medwenitsch, its former director of capital projects and one of the co-defendants, accepted hospitality from Federal Electric and another defendant, GAL Power, with luxury fishing trips and flights to Vancouver and California.
Federal Electric said in its defence that the gifts were “part of business development activities customary in the industry” but denied it did anything “wrong or illicit.”
“Federal Electric says that any obligation to report hospitality received by Medwenitsch is an internal and private matter between him and the hospital,” according to the statement of defence.
The original hospital lawsuit also alleged Federal Electric hired one of Medwenitsch’s daughters and paid her by padding invoices to the hospital, CBC reported.
Federal Electric acknowledged hiring her in its statement but said she was “a proper and bone fide employee” paid legitimately by the company.
The original suit also alleged Medwenitsch instructed Federal Electric to “inflate” a quote for a subcontract to work on a parking rehab project at the Civic Campus.
The Federal Electric defence explained the additional money was a legitimate addition and had been approved by others at the hospital.