Former OLG chief executive Kelly McDougald, right, seen in this 2007 photo with lawyer Greg Harris, was fired on Aug. 31 by Ontario Finance Minister Dwight Duncan. (Frank Gunn/Canadian Press)

The former chief executive of the Ontario Lottery and Gaming Corporation, who was ousted last month over an expense scandal, says she is taking legal action against the province.

Kelly McDougald was fired Aug. 31 over what Finance Minister Dwight Duncan deemed were a number of questionable expense claims filed by the corporation's executives and other senior staff.

Duncan also accepted the resignations of the entire board of directors "to ensure protection of taxpayers money." The expenses represented "symptoms of much larger problems" at OLG, he said at the time.

In a statement released Friday, McDougald acknowledged some of the expense claims were inappropriate.

Other expenses, however, were "consistent with the operation of a $6.5-billion revenue-generating corporation," she said, adding that some of the other claims were made before she was appointed in 2007.

Duncan said Friday the government would defend McDougald's firing in court.

"We've taken what we believe to be the appropriate steps and we will vigorously, vigorously fight on behalf of taxpayers," Duncan told reporters.

Duncan said he hadn't seen the actual statement of claim by McDougald because there's a 60-day notification period to sue the government. McDougald's lawyers did not immediately respond to requests Friday for copies of the statement.

Ontario actions 'severe and unjustified'

"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," she said.

McDougald did not specify what kind of legal action she would be taking.

When McDougald was fired, Duncan released a number of dubious expense claims.

They included evidence of deposit on a Florida condo by Michael Sharland, the OLG's former vice-president of security and surveillance, who took a paid leave of absence in 2007.

Another OLG executive charged the agency almost $500 for a nanny so that she could attend meetings during a four-month period in 2006. Other senior staff billed the agency for small items such as a $7 pen refill, a $1.12 cloth grocery bag and a $30 car wash.

"The expense information released by the Ontario government was done without effort by government to either seek or provide context," McDougald said in her release.

McDougald was hired in 2007 to fix OLG after the corporation was rocked by another scandal about too many insider wins by lottery. After McDougald was fired, the government ordered a full review of spending and expense claims at all provincial agencies.

with files from The Canadian Press