Toronto Computer Leasing Inquiry
Encyclopedia
The Toronto Computer Leasing Inquiry was a judicial inquiry
into allegations of conflict of interest
, bribery
and misappropriation of funds around computer
leasing
contracts entered into by Toronto
, Ontario
's municipal government in 1998 and 1999. It was held concurrently with the Toronto External Contracts Inquiry
.
, North York, Etobicoke, East York
and York
) were amalgamated into the single "megacity"
of Toronto. In one of the new city's first official acts of business, computer equipment was leased for city councillors' offices from MFP Financial Services, at a value of $
1,093,731. City staff have not been able to produce any documentation to prove that this contract was awarded through proper procedures.
In May, 1999, the city issued a Request For Quotations for its new computer acquisition needs. MFP was one of the bidders, and was awarded the contract in July of that year. MFP was contracted to provide $43 million of computer equipment to the city on a three-year lease agreement. However, the final lease agreement was not signed until after the 90-day price guarantee had expired.
That fall, the city sold its owned computer equipment to MFP, and then leased it back as well.
Over the duration of the agreement, the city paid $85 million to MFP, rather than the original $43 million approved by city council. As well, many of the equipment schedules were for five-year leases rather than three. Some of these leases were later restructured to extend the lease terms even further, resulting in additional costs.
In December of that year, the city acquired 10,000 Oracle database
licenses, again through an MFP lease. This turned out to be a serious overestimate of the city's actual needs.
These issues came to light in late 2001, after an investigation by Toronto city councillors David Miller
and Bas Balkissoon
. In February, 2002, the Toronto Computer Leasing Inquiry was established by city council. The commissioner of the inquiry is Madam Justice Denise Bellamy
of the Ontario Superior Court of Justice
.
player Tie Domi
. Much of the testimony presented to the inquiry alleged an improper financial relationship between Domi and former city councillor Tom Jakobek
, the city's budget chief at the time of the contracts.
The inquiry was presented with evidence that Jakobek's name, along with other city staff, was on the passenger manifest for a flight, paid for by MFP, to a Leafs game in Philadelphia
. For several weeks, witnesses testified that they could not recall whether Jakobek was actually on the flight, but Jakobek eventually admitted that he had been present, and apologized for lying under oath.
Some of Jakobek's office staff have testified that Dash Domi was granted special access to Jakobek's office, although other staff members have denied this.
The inquiry also investigated possible connections between a $25,000 withdrawal from Domi's bank account on November 1, 1999 and $21,000 in payments on Jakobek's credit card two days later. Witnesses have testified that Domi called Jakobek and then parked for thirteen minutes in the underground parking garage at Toronto City Hall
barely minutes after the bank withdrawal, although Jakobek has testified that he was not at city hall at all that day.
Both Dash and Tie Domi testified that the $25,000 withdrawal was a birthday gift for Tie (whose birthday is on November 1), and Jakobek has testified that the $21,000 payment on his credit card came from his father-in-law, former Metro Toronto councillor Ken Morrish
, to cover a family trip to Disney World.
A forensic review of Jakobek's financial statements found that only a portion of the money actually came from Morrish, and the remainder in fact came from several family accounts Jakobek controlled, all of which had unexplained patterns of deposits in denominations of $100. This also included $11,000 from Jakobek's grandmother, who has a declared income of less than $15,000 per year.
Members of Jakobek's family testified that the money they deposited in his bank accounts was connected to a real estate investment Jakobek and his brother Joseph made in the 1990s. Due to Joe Jakobek's financial circumstances, the money was being repaid to Tom Jakobek through an arrangement in which the brothers' parents made regular payments to Tom and were subsequently reimbursed by Joe whenever he could afford it. They have also testified that family members, including the grandmother, regularly kept unusually large amounts of money in their homes due to their mistrust of bank
s.
Ontario Provincial Police launched an investigation in 2005 at the request of the City of Toronto. The OPP decided there are no reasonable grounds to lay any criminal charges.
convened on October 18, 2004, after the Computer Leasing Inquiry ended.
In a press conference the same afternoon, Miller (who was later elected the city's mayor) welcomed the findings, and indicated that he would refer the matter to the Ontario Provincial Police
for further investigation.
In response to a recommendation that that Mayor report one year after the Inquiry's final report on the progress the City is making, Miller submitted a progress report in September 2006.
Inquiry
An inquiry is any process that has the aim of augmenting knowledge, resolving doubt, or solving a problem. A theory of inquiry is an account of the various types of inquiry and a treatment of the ways that each type of inquiry achieves its aim.-Deduction:...
into allegations of conflict of interest
Conflict of interest
A conflict of interest occurs when an individual or organization is involved in multiple interests, one of which could possibly corrupt the motivation for an act in the other....
, bribery
Bribery
Bribery, a form of corruption, is an act implying money or gift giving that alters the behavior of the recipient. Bribery constitutes a crime and is defined by Black's Law Dictionary as the offering, giving, receiving, or soliciting of any item of value to influence the actions of an official or...
and misappropriation of funds around computer
Computer
A computer is a programmable machine designed to sequentially and automatically carry out a sequence of arithmetic or logical operations. The particular sequence of operations can be changed readily, allowing the computer to solve more than one kind of problem...
leasing
Lease
A lease is a contractual arrangement calling for the lessee to pay the lessor for use of an asset. A rental agreement is a lease in which the asset is tangible property...
contracts entered into by Toronto
Toronto
Toronto is the provincial capital of Ontario and the largest city in Canada. It is located in Southern Ontario on the northwestern shore of Lake Ontario. A relatively modern city, Toronto's history dates back to the late-18th century, when its land was first purchased by the British monarchy from...
, Ontario
Ontario
Ontario is a province of Canada, located in east-central Canada. It is Canada's most populous province and second largest in total area. It is home to the nation's most populous city, Toronto, and the nation's capital, Ottawa....
's municipal government in 1998 and 1999. It was held concurrently with the Toronto External Contracts Inquiry
Toronto External Contracts Inquiry
The Toronto External Contracts Inquiry is a judicial inquiry into allegations of conflict of interest around contracts entered into by Toronto, Ontario's municipal government in 1998 and 1999....
.
Background
On January 1, 1998, the Municipality of Metropolitan Toronto and its six lower-tier cities (Toronto, ScarboroughScarborough, Ontario
Scarborough is a dissolved municipality within the city of Toronto, Ontario, Canada. Geographically, it comprises the eastern part of Toronto. It is bordered on the south by Lake Ontario, on the west by Victoria Park Avenue, on the north by Steeles Avenue East, and on the east by the Rouge River...
, North York, Etobicoke, East York
East York
East York can refer to:*East York, Pennsylvania, United States*East York, Ontario, Canada...
and York
York, Ontario
York is a dissolved municipality in Toronto, Ontario, Canada. Geographically, it is located northwest of Old Toronto, southwest of North York and east of Etobicoke, where it is bounded by the Humber River. Formerly a separate city, it was one of six municipalities that amalgamated in 1998 to form...
) were amalgamated into the single "megacity"
Metropolitan area
The term metropolitan area refers to a region consisting of a densely populated urban core and its less-populated surrounding territories, sharing industry, infrastructure, and housing. A metropolitan area usually encompasses multiple jurisdictions and municipalities: neighborhoods, townships,...
of Toronto. In one of the new city's first official acts of business, computer equipment was leased for city councillors' offices from MFP Financial Services, at a value of $
Canadian dollar
The Canadian dollar is the currency of Canada. As of 2007, the Canadian dollar is the 7th most traded currency in the world. It is abbreviated with the dollar sign $, or C$ to distinguish it from other dollar-denominated currencies...
1,093,731. City staff have not been able to produce any documentation to prove that this contract was awarded through proper procedures.
In May, 1999, the city issued a Request For Quotations for its new computer acquisition needs. MFP was one of the bidders, and was awarded the contract in July of that year. MFP was contracted to provide $43 million of computer equipment to the city on a three-year lease agreement. However, the final lease agreement was not signed until after the 90-day price guarantee had expired.
That fall, the city sold its owned computer equipment to MFP, and then leased it back as well.
Over the duration of the agreement, the city paid $85 million to MFP, rather than the original $43 million approved by city council. As well, many of the equipment schedules were for five-year leases rather than three. Some of these leases were later restructured to extend the lease terms even further, resulting in additional costs.
In December of that year, the city acquired 10,000 Oracle database
Oracle database
The Oracle Database is an object-relational database management system produced and marketed by Oracle Corporation....
licenses, again through an MFP lease. This turned out to be a serious overestimate of the city's actual needs.
These issues came to light in late 2001, after an investigation by Toronto city councillors David Miller
David Miller (Canadian politician)
David Raymond Miller is a Canadian politician. He was the 63rd Mayor of Toronto and the second since the 1998 amalgamation. He was elected to the position in 2003 for a three-year term and re-elected in 2006 for a four-year term...
and Bas Balkissoon
Bas Balkissoon
Bas Balkissoon is a politician in Toronto, Ontario. Formerly the Toronto city councillor representing Ward 41 in northeast area of Scarborough, Balkissoon won election to the Legislative Assembly of Ontario on November 24, 2005 as the Liberal Member of Provincial Parliament for Scarborough—Rouge...
. In February, 2002, the Toronto Computer Leasing Inquiry was established by city council. The commissioner of the inquiry is Madam Justice Denise Bellamy
Denise Bellamy
Denise Bellamy is a Canadian judge.Bellamy obtained a B.A. in Political Science from Carleton University, then obtained her law degree from Osgoode Hall Law School....
of the Ontario Superior Court of Justice
Ontario Superior Court of Justice
The Superior Court of Justice is the superior court of general jurisdiction for the Province of Ontario, Canada. It is the successor to the former Ontario Court of Justice , and was created on April 19, 1999...
.
The Inquiry
MFP's lead salesman on the city contract was Dash Domi, the brother of former Toronto Maple LeafsToronto Maple Leafs
The Toronto Maple Leafs are a professional ice hockey team based in Toronto, Ontario, Canada. They are members of the Northeast Division of the Eastern Conference of the National Hockey League...
player Tie Domi
Tie Domi
Tahir "Tie" Domi is a retired Canadian professional ice hockey player. During a sixteen-year NHL career when he was known for his role as an enforcer, he played for the Toronto Maple Leafs, New York Rangers and Winnipeg Jets....
. Much of the testimony presented to the inquiry alleged an improper financial relationship between Domi and former city councillor Tom Jakobek
Tom Jakobek
Tom Jakobek is a former member of the Toronto City Council. He was first elected to council in 1982 after serving as a school trustee, and remained a member until 2000....
, the city's budget chief at the time of the contracts.
The inquiry was presented with evidence that Jakobek's name, along with other city staff, was on the passenger manifest for a flight, paid for by MFP, to a Leafs game in Philadelphia
Philadelphia, Pennsylvania
Philadelphia is the largest city in the Commonwealth of Pennsylvania and the county seat of Philadelphia County, with which it is coterminous. The city is located in the Northeastern United States along the Delaware and Schuylkill rivers. It is the fifth-most-populous city in the United States,...
. For several weeks, witnesses testified that they could not recall whether Jakobek was actually on the flight, but Jakobek eventually admitted that he had been present, and apologized for lying under oath.
Some of Jakobek's office staff have testified that Dash Domi was granted special access to Jakobek's office, although other staff members have denied this.
The inquiry also investigated possible connections between a $25,000 withdrawal from Domi's bank account on November 1, 1999 and $21,000 in payments on Jakobek's credit card two days later. Witnesses have testified that Domi called Jakobek and then parked for thirteen minutes in the underground parking garage at Toronto City Hall
Toronto City Hall
The City Hall of Toronto, Ontario, Canada is the home of the city's municipal government and one of its most distinctive landmarks. Designed by Finnish architect Viljo Revell and landscape architect Richard Strong, and engineered by Hannskarl Bandel, the building opened in 1965...
barely minutes after the bank withdrawal, although Jakobek has testified that he was not at city hall at all that day.
Both Dash and Tie Domi testified that the $25,000 withdrawal was a birthday gift for Tie (whose birthday is on November 1), and Jakobek has testified that the $21,000 payment on his credit card came from his father-in-law, former Metro Toronto councillor Ken Morrish
Ken Morrish
Ken Morrish , nicknamed "Mr. Highland Creek" was a Metro Toronto politician. He served the Scarborough, Ontario community as councillor, deputy Metro Toronto Chair and mayor of Scarborough...
, to cover a family trip to Disney World.
A forensic review of Jakobek's financial statements found that only a portion of the money actually came from Morrish, and the remainder in fact came from several family accounts Jakobek controlled, all of which had unexplained patterns of deposits in denominations of $100. This also included $11,000 from Jakobek's grandmother, who has a declared income of less than $15,000 per year.
Members of Jakobek's family testified that the money they deposited in his bank accounts was connected to a real estate investment Jakobek and his brother Joseph made in the 1990s. Due to Joe Jakobek's financial circumstances, the money was being repaid to Tom Jakobek through an arrangement in which the brothers' parents made regular payments to Tom and were subsequently reimbursed by Joe whenever he could afford it. They have also testified that family members, including the grandmother, regularly kept unusually large amounts of money in their homes due to their mistrust of bank
Bank
A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...
s.
Ontario Provincial Police launched an investigation in 2005 at the request of the City of Toronto. The OPP decided there are no reasonable grounds to lay any criminal charges.
Followup
On October 1, 2002, an additional inquiry was authorized to investigate a related matters regarding other city consulting contracts. The Toronto External Contracts InquiryToronto External Contracts Inquiry
The Toronto External Contracts Inquiry is a judicial inquiry into allegations of conflict of interest around contracts entered into by Toronto, Ontario's municipal government in 1998 and 1999....
convened on October 18, 2004, after the Computer Leasing Inquiry ended.
Final Report
Justice Bellamy released her final report on September 12, 2005. She found that the testimony of Jakobek and Domi was not convincing. She made 241 specific recommendations, which included the following:- The city should set out its own code of conduct for lobbyists and identify mandatory minimum standards.
- The city should have a gift registry for items received by staff and councillors and the information should be available on a searchable database.
- City staff who leave the public service should not be permitted to become lobbyists for the city for at least 12 months after they leave.
- Politicians who leave office should not be allowed to lobby on matters they worked on.
- The city should expand its current code of conduct for councillors and its conflict of interest policy for staff to include broader ethical considerations.
- Establish a full-time integrity commissioner.
- City staff should have more latitude to speak at council meetings.
- The mayor should report to the public annually on the city's budget, audited financial statements and major contracts or tenders awarded.
In a press conference the same afternoon, Miller (who was later elected the city's mayor) welcomed the findings, and indicated that he would refer the matter to the Ontario Provincial Police
Ontario Provincial Police
The Ontario Provincial Police is the Provincial Police service for the province of Ontario, Canada.-Overview:The OPP is the the largest deployed police force in Ontario, and the second largest in Canada. The service is responsible for providing policing services throughout the province in areas...
for further investigation.
In response to a recommendation that that Mayor report one year after the Inquiry's final report on the progress the City is making, Miller submitted a progress report in September 2006.