1 2 3 TORONTO COMPUTER LEASING INQUIRY 4 5 6 7 ******************** 8 9 10 BEFORE: THE HONOURABLE MADAM JUSTICE DENISE BELLAMY, 11 COMMISSIONER 12 13 14 15 16 Held at: East York Civic Centre 17 850 Coxwell Avenue 18 Toronto, Ontario 19 M4C 5R1 20 21 ******************** 22 23 24 April 1st, 2003 25

2
  1                        APPEARANCES
  2  
  3  Ronald Manes   (np)     )Commission Counsel 
  4  Patrick Moore           )
  5  Daina Groskaufmanis     ) 
  6  Linda Rothstein         )City of Toronto 
  7  Lily Harmer             )
  8  Robert Centa            )
  9  Gordon Capern  (np)     )
 10  David Moore             )MFP 
 11  Fraser Berrill  (np)    ) 
 12  Ken Jones      (np)     ) 
 13  Brian Heller   (np)     )Ball Hsu and Associates Ltd.
 14  Melissa Kronick (np)    )CUPE 
 15  Raj Anand               )Lana Viinamae
 16  Bay Ryley      (np)     )
 17  William Anderson        )Wanda Liczyk
 18  Edward Greenspan (np)   )Jeff Lyons
 19  Todd White (np)         )
 20  Hugh MacKenzie  (np)    )Jim Andrew
 21  Bryan McPhadden         )Brendan Power
 22  JL McDougall QC         )Brian Loreto
 23  Brian Leonard           )
 24  
 25  Joyce Ihamaki           )Registrar

1 TABLE OF CONTENTS 2 Page 3 4 Exhibits 4 5 6 David Beattie, Resumed, 7 Cross-Examination by 8 Mr. David Moore 5 9 Cross-Examination by 10 Mr. Bryan McPhadden 125 11 Cross-Examination by 12 Ms. Lily Harmer 146 13 Re-Direct Examination by 14 Mr. Patrick Moore 182 15 16 Brian Jerome Loreto, Sworn 17 Examination In-Chief by 18 Ms Daina Groskaufmanis 202 19 20 Certificate of Transcript 265 21 22 23 24 25

1 EXHIBITS 2 Exhibit No. Description Page No. 3 4 25 Unbound document "Statement 5 of Information from Bell 6 Mobility". 198 7 8 26 VOLUME I: Bound document titled "Brian 9 Loreto" tabs 1-45 and the 10 affidavit of Mr. Loreto 204 11 12 26 Volume II: Bound document titled "Brian 13 Loreto" tabs 1-17 204 14 15 16 17 18 19 20 21 22 23 24 25

1 --- Upon commencing at 10:00 a.m. 2 3 THE REGISTRAR: The Inquiry is now in session. 4 Please be seated. 5 MADAM COMMISSIONER: Mr. Moore, you won the 6 toss up, did you? 7 MR. DAVID MOORE: Yes, I did. 8 MADAM COMMISSIONER: All right. I might just 9 begin by saying now that we're starting -- we have this 10 affidavit evidence, we talked about how we would put that 11 into the transcripts because it may very well be that there 12 are things in the affidavit that do not show up in the 13 transcript at all but it is considered part of the evidence. 14 So for those of you who looked at the website 15 last night, you'll see that after the beginning of Mr. 16 Beattie's swearing-in, the Court reporters have basically 17 plugged in the affidavit and that's how it's going to be 18 done. 19 All right. Mr. Moore? 20 MR. DAVID MOORE: Thank you. 21 22 CROSS-EXAMINATION BY MR. DAVID MOORE: 23 Q: Mr. Beattie, I act for MFP and just a few 24 general questions I want to clarify. You've indicated that 25 you had no formal training in connection with leasing?

1 A: That's correct. 2 Q: And I take it to the extent you've had 3 training, it came about as a result of work experience and 4 learning on the job? 5 A: Yes and also taking various purchasing 6 courses. 7 Q: Oh, so there -- so you did take some 8 purchasing courses -- 9 A: Yes. 10 Q: -- during the course of your tenure with 11 the City? 12 A: Yes, that's correct. 13 Q: And I take it that some of those courses 14 would have had some reference to leasing included in them? 15 A: Not really, no. 16 Q: Oh. Well, I'm asking you then where you 17 would have learned about leasing. If not formally, if it was 18 an informal learning process. When you say courses then you 19 don't include that? 20 A: No. 21 Q: All right and was there anyone else in the 22 Purchasing Department or division who had experience to speak 23 of in connection with leasing? 24 A: Not to my knowledge, no. 25 Q: And was that something you inquired about

1 at the time or is that just looking backwards? 2 A: No, not really because normally the end 3 using department are the ones with the expertise and in the 4 past, anything that was done with leasing I believe there 5 were actually leasing experts involved with previous City of 6 Toronto leases and things like that. 7 Q: In the requesting departments? 8 A: That's correct. 9 Q: I see and were any of those people still 10 at the City of Toronto during the time period we're talking 11 about here? 12 A: No, they were hired as consultants. 13 Q: So these were consultants who were hired 14 at what point in time? 15 A: This was, I believe, years ago when they 16 were working on mainframe leasing. 17 Q: I see. So there was a past history at the 18 City where if they deemed it necessary, they would hire 19 consultants to specifically assist with leasing? 20 A: That's correct because they are the person 21 -- people that would have the expertise. 22 Q: All right and I take in describing your 23 involvement in potential lease transactions, I think your 24 affidavit made reference to photocopiers as well? 25 A: That's correct.

1 Q: Did that come in relation to the potential 2 photocopier transaction with MFP? 3 A: No, it was well before. 4 Q: So that was some additional leasing 5 experience independent of MFP? 6 A: It wasn't really leasing. It was 7 basically a rental agreement that we had. 8 Q: Well, rental leasing, sounds the same kind 9 of thing to me. 10 A: Not really. With the rental of the 11 earlier photocopiers, if the copy quality deteriorated we had 12 the option to return it to the vendors. With lease it's a 13 commitment for a dollar value. 14 Q: Depending upon the terms of the lease? 15 A: That's correct. 16 Q: And I take it from your evidence, you had 17 no involvement in any potential transactions or RFQ's or 18 RFP's in connection with the City's fleet? 19 A: That's correct. 20 Q: And did anyone ever suggest that there 21 should be training provided in connection with leasing, 22 starting with yourself? Did you ever suggest that to anyone 23 else in the Purchasing Department? 24 A: No, I didn't. 25 Q: And were you aware of anyone else in the

1 department making such a suggestion? 2 A: Not to my knowledge, no. 3 Q: All right. Now, I also want to ask you 4 just a few general questions about your views of the role of 5 the Purchasing and Materials Handling Division, specifically 6 and really purchasing in general. 7 As I understand your evidence, Purchasing had 8 a role in connection with the development of the RFQ in this 9 case? 10 A: That's correct. 11 Q: And Purchasing had some role during the 12 evaluation process? 13 A: Not during the evaluation process, no. 14 Q: Well, I don't want to take you to all the 15 documents but there were a series of e-mails and drafts back 16 and forth that occurred during the evaluation process, 17 correct? 18 A: Are you talking about the evaluation 19 itself or the actual report to Council? 20 Q: I'm talking about the process involving 21 evaluation leading up to the preparation of the report. 22 A: Evaluation basically was done through the 23 IT division and the Finance department. 24 Q: Yes and we saw the e-mail yesterday asking 25 that Purchasing confirm their agreement that MFP be selected.

1 This is a June 29th memorandum. I wasn't going to turn it up 2 right now but my understanding of your evidence was that Mr. 3 Spizarsky looked at that and concurred. 4 A: To my -- yes. To my knowledge, yes. 5 Q: All right. So whether or not Purchasing 6 had the primary role, Purchasing had some involvement in the 7 evaluation process. Is that fair? 8 A: I would say somewhat, yes. 9 Q: All right. 10 A: Very limited. 11 Q: All right and Purchasing -- but I'll come 12 back to that. Purchasing was copied on various drafts of the 13 report and was involved in suggesting changes to the report 14 that went to Council? 15 A: Yes, where -- where it applied to the PMMD 16 action. Yes. 17 Q: All right and then there was some meetings 18 after the fact in September and onwards that Mr. Anderson 19 referred you to involving the procedures to follow up after 20 the Council had dealt with the matter, correct? 21 A: Yes and as I mentioned yesterday, it was 22 basically from an SAP standpoint. 23 Q: Well, I'll come back to that too, but in 24 all of those functions, as I understand your evidence, you 25 didn't regard it as the Purchasing role to assess the

1 technical needs of the requesting department. Correct? 2 A: That's correct. 3 Q: In other words, it wasn't for you or 4 others in Purchasing to comment upon how many desktops were 5 needed? Correct? 6 A: That's correct. 7 Q: What kind of software might be 8 appropriate? 9 A: That's correct. 10 Q: What kind of configurations might be 11 necessary? That wasn't Purchasing's role because that was of 12 a technical -- that was a technical issue that was outside 13 the expertise of Purchasing? 14 A: That's correct. 15 Q: And so those kinds of determinations or 16 needs assessment, that was for the department and others 17 advising the department to look into and determine? 18 A: That's correct. 19 Q: All right but Purchasing's function, I 20 take it you would agree, is one really focussing on the 21 process. Is that fair? 22 A: That's fair to say, yes. 23 Q: And to be specific, it was Purchasing's 24 function in the various stages, I suggest to you, to make 25 sure that proper procurement practices and policies were

1 followed? Do you agree that that's a fair characterization 2 of what Purchasing's role is to be? 3 A: I believe that's a fair characterization, 4 yes. 5 Q: All right and in terms of those 6 functions... 7 8 (BRIEF PAUSE) 9 10 Q: ...that would involve adherence to the 11 applicable purchasing bylaw and policies? 12 A: That's correct. 13 Q: All right. Now, and I take it there 14 was a joint responsibility among several people in the 15 purchasing department to fulfill a role and that 16 responsibility, is that fair? 17 A: That's fair to say, yes. 18 Q: And the people involved would include 19 yourself? 20 A: Yes. 21 Q: And Mr. Spizarsky? 22 A: That's correct. 23 Q: And Mr. Pagano? 24 A: Yes, to a certain extent, yes. 25 Q: And to the extent that other was -- were

1 involved over time, from purchasing, they would have had the 2 same role and the same responsibility? 3 A: That's correct. 4 Q: And I take it that you tried to fulfill 5 that role and responsibility to the best of your ability at 6 the time, is that fair? 7 A: That's fair to say, yes. 8 Q: And I take it, to the best of your 9 knowledge the other individuals who were involved with 10 purchasing did the same thing? 11 A: Yes. 12 Q: I mean, you can't speak to exactly what 13 they did, but you're not aware of any reason to suggest that 14 Mr. Spizarsky, for example, didn't try to do his job to the 15 best of his ability? 16 A: That's correct. 17 Q: And similarly, Mr. Pagano, no reason to 18 believe that he didn't attempt to fulfill his 19 responsibilities to the extent possible? 20 A: Yes. 21 Q: All right. And sometimes that was in 22 difficult circumstances, given the volume of work and the 23 changes underway at the City, but everyone went, from a 24 purchasing standpoint, was to try and do the best they could. 25 A: Yes, that's correct.

1 Q: All right. And in order to do that, that 2 is to address the purchasing issues, the issues of process 3 and proper procurement practices, I take it, speaking of the 4 RFQ stage, it would be -- one of the things you'd have to do 5 -- purchasing would have to do, would be to familiarize 6 yourselves with the proposed terms of the RFQ, correct? 7 A: That's correct. 8 Q: In other words, not from a point of view 9 of determining have they got the right number of desktops, or 10 the right software, or the right configurations, but for the 11 purpose of determining from a purchasing standpoint whether 12 proper procurement practices and policies were reflected in 13 the RFQ? 14 A: Yes. 15 Q: And you'd have to read the RFQ, the draft 16 RFQ, to be aware of that, correct? 17 A: That's correct. 18 Q: And similarly, in connection with the 19 process involving the report that ultimately went to City 20 Council, once again, you wouldn't look at that from the point 21 of view of deciding or commenting upon the number of desktops 22 or the configurations, or that kind of technical 23 determination, correct? 24 A: That's correct. 25 Q: But, you would have to read it, and when I

1 say you, I'm meaning purchasing generally, the people 2 involved, you'd have to read it from a process standpoint, 3 correct? 4 A: That's correct. 5 Q: And one (1) of the functions of purchasing 6 from a process standpoint would be to do your best to ensure 7 that the information reasonably necessary for the 8 Councillors, was contained in that report? 9 A: Yes. 10 Q: You would accept and agree that that's a 11 process -- 12 A: Yes. 13 Q: -- issue that falls within the purview of 14 purchasing? 15 A: Yes, I would. 16 Q: And once again, as in the case of the RFQ, 17 in order to fulfill that responsibility, it would be 18 necessary for the individuals in purchasing to actually read 19 the report that was going to go to City Council, it was to 20 satisfy yourself that the proper disclosure, the proper 21 process was reflected in that document you'd have to read it, 22 correct? 23 A: That's correct. 24 Q: And so far as you know, the purchasing 25 individuals, including yourself, did that as best you could?

1 A: That's correct. 2 Q: All right. Now, when you received the 3 draft of the RFQ, I think you were asked some questions by 4 Commission Counsel reflecting the fact that there was no 5 specific dollar volume identified in that draft, correct? 6 A: That's correct. 7 Q: And I think you indicated that that was an 8 unusual state affairs, that there not be a specific dollar 9 volume? 10 A: Yes. 11 Q: And you were asked -- 12 MADAM COMMISSIONER: Sorry. I think -- were 13 you going to say something else Mr. Beattie? 14 THE WITNESS: I was just going to say that 15 after I started receiving calls from the bidders, that's when 16 we -- we started asking questions about the leasing volumes, 17 and then we put the addendum out. 18 MR. DAVID MOORE: All right. 19 20 CONTINUED BY MR. DAVID MOORE: 21 Q: I understand that, but when you first got 22 the draft and when the document was actually issued, there 23 was no specific dollar volume set up, correct? 24 A: That's correct. 25 Q: And I think you indicated yesterday that

17
  1  that was unusual correct?  And I think Commission Counsel
  2  asked you whether you could explain that, and you weren't
  3  able to offer any explanation, correct?
  4                 A:  Correct. 
  5                 Q:  But, let me suggest to you that there was
  6  a simple explanation for that.  And let me suggest that the
  7  simple explanation was that there was a part of what was
  8  contemplated by the RFQ, was for 1999, it had, in fact, been
  9  identified, had been ordered, was in the process of being
 10  ordered, did you understand that?
 11                 A:  No, I didn't. 
 12                 Q:  Well, what did you think the RFQ was
 13  about?
 14                 A:  It was for $43 million, for a three (3)
 15  year lease, with option at the end of the three (3) years. 
 16                 Q:  But, you understood, did you not, or
 17  didn't -- didn't Purchasing understand that the significant
 18  portion of the equipment for 1999, had already in fact been
 19  ordered?
 20                 I mean, that was plain from the RFQ, isn't
 21  that so?
 22                 A:  Not to my knowledge, no. 
 23                 Q:  Well, then let's look at the RFQ again and
 24  just see.  It's under Tab 23, of your book.
 25

1 MR. DAVID MOORE: And Commissioner, let me 2 just -- I intended to bring the index up with me so I could 3 give you these Begdoc numbers as we go along, but I've 4 misplaced -- 5 MADAM COMMISSIONER: 6104. 6 MR. DAVID MOORE: Perhaps I can ask Commission 7 Counsel if I can borrow one (1) of their indexes. 8 9 CONTINUED BY MR. DAVID MOORE: 10 Q: I mean, we've agreed that in order to 11 fulfill the Purchasing role in the issuance of this document 12 it was necessary to read it, correct? 13 A: That's correct. 14 Q: And presumably you read it, and Mr. 15 Spizarsky read it? 16 A: As I mentioned before, I took it as a 17 cursory glace through. 18 Q: Well, I recall you giving that evidence, 19 can you help me, why would it be a cursory glance that you 20 gave it; this was an important RFQ, was it not? 21 A: That's right, but you have to remember, it 22 was prepared from the IT Division, and it was prepared by, 23 supposedly, a consultant that had expertise in this area. 24 Q: Well, the consultant -- you're talking 25 about Mr. Power?

1 A: I believe so, yes. 2 Q: And Mr. Power, you understood, was -- had 3 expertise in Information Technology? 4 A: That's -- that's what I understood, yes. 5 Q: And in leasing? 6 A: That's what I understood, yes. 7 Q: And he was not a full-time employee, in 8 that sense, of the City, correct? 9 A: That's right. He was the consultant, from 10 what I gather. 11 Q: All right. And you well understood that 12 he was not a consultant who had particular expertise with the 13 purchasing practices and procurement practices, correct? 14 A: I didn't know that, no. 15 Q: Well, there's no suggestion that he had 16 that expertise, was there? 17 A: No, but I knew that he was from the Y2K, 18 you know, he had been hired as a Y2K consultant. 19 Q: No, I understand that, that was why I 20 asked you the questions earlier, that -- that it was not 21 purchasing's function to assess the IT needs and the Y2K 22 needs from a technical standpoint, and you understood that 23 that was Mr. Power's area of expertise? 24 A: Yes. 25 Q: But, you also understood that Mr. Power

1 didn't hold himself out, or report to be an expert in the 2 procurement practices or procurement policies of the City of 3 Toronto, correct? 4 A: I -- I guess, yes. 5 Q: Well, not -- I mean, you don't have to 6 guess about that; do you? I mean, didn't -- wasn't it quite 7 clear that Mr. Power was not there for that purpose? 8 A: I have no idea. 9 Q: You have no idea whether Mr. Power was 10 there for the purpose of adding expertise to the procurement 11 process? 12 A: From a leasing standpoint? 13 Q: No, from a purchasing standpoint? 14 A: Yes -- 15 Q: How -- 16 A: He had experience from the Provincial 17 Government. 18 Q: Well, the Provincial Government was not 19 the City of Toronto, was it? 20 A: No, it wasn't. 21 Q: And the City of Toronto had its own 22 procurement practices and policies, correct? 23 A: That's right. 24 Q: And we've established, ten (10) minutes 25 ago, that that was the function of Purchasing to be alive to

1 those issues and watchful of those issues, correct? 2 A: That's correct. 3 Q: All right. And so it would be important 4 and was important for the Purchasing personnel involved to 5 read the documentation with a view to being alive to the 6 procurement issues. Isn't that right? 7 A: That's correct. 8 Q: That was the whole point of Purchasing 9 being involved? 10 A: That's correct but IT were the using 11 department and they were the ones with the knowledge and 12 expertise of what they were looking for. 13 Q: That's right and Purchasing -- at the risk 14 of beating a dead horse here, Purchasing was the division or 15 department involved with the expertise and a specific mandate 16 to look at it from a procurement policy point of view? 17 A: Correct. 18 Q: Correct? And in a large RFQ like this, 19 whether it's 43 million as some have suggested or 80 to 85 20 million as others have suggested, it was a significant RFQ? 21 A: Yes. 22 Q: And it'd be reasonable for those in the 23 process to expect that Purchasing would be aware of the 24 issues, would pay some attention to the issues in the 25 development of these documents. Correct?

1 A: Correct. 2 Q: And when I say issues, I'm referring to 3 the Purchasing issues, the procurement issues. 4 A: That's correct. 5 Q: And in order to do that, you're not 6 suggesting that all Purchasing was expected to do was to give 7 it a cursory review, are you? 8 A: No. 9 Q: All right. So let's -- let's assume that 10 whether you gave it a cursory review or not, let's assume 11 that there was a reasonable expectation that someone at 12 Purchasing would give it more than a cursory review. 13 A: Okay. 14 Q: Can we proceed -- is that a fair 15 assumption to proceed on? 16 A: Yes. 17 Q: All right and then if we look at the RFQ 18 under Tab 23. That's Begdoc 6104 and if we go to the seventh 19 page, under Number 3 -- 20 A: Okay. I'm sorry, I'm not following. 21 MADAM COMMISSIONER: It's -- 22 MR. DAVID MOORE: It's Begdoc 6116. I think 23 is -- yes, that's what it is. It's faint at the top. 24 THE WITNESS: Okay. I've got it. 25

1 CONTINUED BY MR. DAVID MOORE: 2 Q: Do you have it? 3 A: It says "Hardware and Software Config". 4 Q: And you'll see it says "City hardware and 5 software configurations" typical new configurations already 6 purchased or to be purchased in 1999. 7 A: Yes. 8 Q: So clear from that that some of this 9 equipment had already been purchased? 10 A: That's correct. 11 Q: And more was in the process of being 12 purchased for 1999? 13 A: That's correct but I missed this one. I 14 first gave it a cursory glance. 15 Q: Well, whether you missed it as a result of 16 giving it a cursory glance or not, it was there for everybody 17 to see. Correct? 18 A: Correct. 19 Q: And so it would be relatively clear from 20 other than a cursory reading of this document that a 21 significant chunk of equipment had already been purchased for 22 1999 and more was in the process of being purchased. 23 A: Right. 24 Q: That would be clear from the document? 25 A: Clear from the document, yes.

1 Q: And indeed, did you have any knowledge 2 that, in fact, by this point in time, the Y2K Committee had 3 been involved in setting up plans for the roll out of the 4 desktop project? 5 A: From a leasing standpoint? 6 Q: No, from an acquisition standpoint. 7 A: I -- yes -- 8 Q: I'll use a neutral term. 9 A: I think I recall, yes. 10 Q: So Purchasing was aware of the fact that 11 for the purpose of the Y2K project, quantities of these 12 desktops had -- were in the process of being rolled out as 13 this process was underway? 14 A: Yes. 15 Q: And that knowledge was independent of what 16 we find written next to Item 3 on this page, correct? 17 A: Correct. 18 Q: And so there's a general understanding in 19 Purchasing that this equipment -- some of it had already been 20 acquired through prior processes? Correct? 21 A: Correct. 22 Q: And that's what this -- what this RFQ was 23 about was the method in which those acquisitions were going 24 to be financed? 25 A: Okay.

1 Q: Well, you don't have to agree with me. 2 Isn't that correct? 3 A: Yes. 4 Q: And that would have been evident to 5 everybody at the time, correct? 6 A: Yes. 7 Q: Independent of this Paragraph 3? 8 A: Yes. 9 Q: And so I come back and suggest to you that 10 there was a component, mainly the purchases that had been 11 made and which were in the process of being made for calendar 12 1999. That component was something that one could define. 13 Correct? 14 A: Correct. 15 Q: It was current. Some of it, in fact, had 16 already been ordered and one could place a dollar amount on 17 that, correct? 18 A: Correct. 19 Q: And however, the document made it clear 20 that there were other components that were not yet ordered, 21 that were not current, for which a dollar value couldn't be 22 placed. Isn't that correct? 23 A: That's correct. 24 Q: And that was evident from the document as 25 well. Isn't that right?

1 A: That's right. I remember the addendum 2 indicated that it was estimated volume. 3 Q: Well, I'm not talking about the addendum, 4 I'm talking about article -- a couple of things, Article 5 1.1.21, that's a few pages earlier, Begdoc 6107, I think. At 6 any rate, the lower -- Page 3 in the lower right-hand corner. 7 Do you have that? 8 A: Yes, I do. 9 Q: And so independent of the addendum, 1.1.2 10 clearly contemplated that there were going to be major 11 software or could be major software acquisitions in the 12 future? 13 A: It indicated, yes. 14 Q: And that was going to be the subject of or 15 could be the subject of a future lease agreement. Correct? 16 A: Correct. 17 Q: And obviously it wasn't possible -- since 18 it wasn't then known what those would be, it wasn't possible 19 to put a dollar figure on that, correct? 20 A: That's correct. 21 Q: And similarly, it's saying in this 22 document -- go past Paragraph 3 that I just asked you about 23 and go to Paragraph 4, the Usage Assumption paragraph at Page 24 8 in the lower right hand corner. Begdoc 6117. 25 A: Okay.

1 Q: You see and you were referred to this 2 yesterday, I believe. There were -- 3 "Nine thousand (9,000) desktops will be 4 installed in the calendar year 1999." 5 A: Right. 6 Q: And stopping there. Based upon Paragraph 7 3 and as well, based upon the general knowledge of purchasing 8 that this product was in the pro -- had been acquired or was 9 in the process of being acquired. That's the part that you 10 could put a dollar figure on, correct? The nine thousand 11 (9,000) desktops that would be installed in the calendar year 12 1999. Correct? 13 A: I don't believe so, no. 14 Q: What, you couldn't put a dollar figure on 15 those? 16 A: I don't believe so. 17 Q: All right. Well, if you couldn't put a 18 dollar figure on those, you certainly could -- it goes on to 19 say: 20 "It is anticipated that another four 21 thousand (4,000) desktops will be installed 22 during the term of an agreement resulting 23 from this RFQ." 24 That would be clear that's sometime subsequent 25 to 1999?

1 A: Yes. 2 Q: And clearly, one couldn't put a specific 3 dollar number on those because you're a year or more away, 4 perhaps. Correct? 5 A: Correct. 6 Q: All right. So when you're asked to offer 7 any explanation yesterday as to why the RFQ, both in draft 8 form and the form of which was issued, didn't have an all- 9 inclusive number defining the full extent of the RFQ and when 10 you said you couldn't give an explanation -- isn't it, sir, 11 the explanation that part of the equipment could be 12 ascertained and part of the project you could attach a dollar 13 figure to but the rest you couldn't? Isn't that the 14 explanation? 15 A: I don't think so, no. 16 Q: Why not? 17 A: Because I wasn't sure of the volume. 18 Q: I beg your pardon? 19 A: We weren't sure -- we weren't sure of the 20 volume. 21 Q: But that's my point and when you were 22 asked for an explanation yesterday as to why the RFQ didn't 23 have a specific dollar figure attached to it and you weren't 24 able to offer an explanation. 25 I'm suggesting to you, sir, today that the

1 explanation is precisely what we've just been through. Some 2 of it was ascertainable, the balance was not. Isn't that the 3 logical explanation for the absence of a specific dollar 4 number? 5 A: That would be the logical explanation. 6 Q: All right and indeed, the RFQ as issued 7 contemplated -- there's additional places that contemplate 8 change and future -- future quotes. 9 For example, if I can take you back in the 10 same Begdoc to Begdoc 6105 and that's the second page. 11 You'll see at the bottom Paragraph 1.1.6. That's a clause 12 that refers to an upgrade of products during the term of the 13 lease. 14 A: Okay. 15 Q: It appears to contemplate the possibility 16 of detailed changes to the lease schedule. So it was 17 contemplated that that would be one area of potential change 18 going forward? 19 A: Hmm hmm. 20 Q: Correct? 21 A: That's correct. 22 Q: And over in the next page, 1.1.16, and 23 there's reference to a lease schedule, and then it appears to 24 contemplate that installations are going to take place in 25 different quarters as this process unfolds, do you see that

1 clause, sir? 2 A: Yes. 3 Q: And there's -- there's contemplation of a 4 monthly lease rate for these different schedules, correct? 5 A: Correct. 6 Q: So, all of that is consistent with the 7 intention that there's going to be an ongoing process to 8 lease equipment and services over an extended period of time, 9 correct? 10 A: That's correct. 11 Q: And there was no secret about that, no 12 mystery about that, to anyone who read the RFQ, is that fair? 13 A: That's fair. 14 Q: And indeed, the concept that there be this 15 quarterly process, and that that would occur over time, 16 that's also consistent with Article 1.1.17, and the bottom of 17 that same Page 2. 18 That refers to the initial lease rate 19 remaining in effect for this ninety (90) day period, correct? 20 A: Correct. 21 Q: And so, this concept that there be 22 quarterly schedules and potential quarterly additions on an 23 ongoing process, that's consistent with the presentation that 24 Mr. Ashbourne gave to you as well, is that fair? 25 And to remind you of that, it's at Tab 33,

1 that's Begdoc 25387. 2 A: Okay. As I mentioned yesterday in my 3 testimony, this wasn't something that went into my memory 4 right away, it basically was filed off. 5 Q: No, no. I didn't ask you that. I'm just 6 -- I'm just trying to see if you'll agree with me, and this 7 is about ten (10) pages in, it's the page ... 8 MADAM COMMISSIONER: What does it start with 9 Mr. Moore? 10 MR. DAVID MOORE: It starts with Quarterly 11 Program Placing, it's the heading at the top that looks like 12 this. 13 MADAM COMMISSIONER: 25397. I think what 14 we'll do -- as I understand these documents, that when they 15 were first being copied from summation, Mr. Abella didn't 16 quite no how to make these numbers come out, and he now knows 17 how to do that, so I'm not quite sure why we have these ones 18 here. 19 I'm sure it's not his fault, maybe we're using 20 the old documents that had been done on the very first day, 21 but let's make it an agreement among us, that we won't do 22 that anymore because we're all too old to be able to see the 23 faintness of these numbers. 24 And the only way I can see this is because I 25 wrote it down when somebody said it once. Otherwise, I

1 wouldn't be able to see it at all. 2 So, Mr. Moore, could you bring that to Mr. 3 Abella's attention. I don't think this is his doing 4 actually, but whoever is responsible we old people need 5 brighter numbers. 6 MR. PATRICK MOORE: The short explanation for 7 this is that this was produced long ago, and distributed it 8 earlier on, relatively, so I don't think you'll see it on 9 more current -- 10 MADAM COMMISSIONER: Oh, okay. 11 MR. PATRICK MOORE: -- Books of Documents, but 12 in any event, I will take your concern up with -- 13 MADAM COMMISSIONER: Well, no need, I didn't 14 realize this was one of the ones that was produced quite a 15 long time ago, so no problem. All right. 16 So, 25397. 17 MR. DAVID MOORE: Yes. 18 19 (BRIEF PAUSE) 20 21 CONTINUED BY MR. DAVID MOORE: 22 Q: I was just, whether this was something you 23 committed to memory or not, the concept that there be 24 quarterly roll outs on an ongoing process over an extended 25 period of time. That -- it appears to be consistent with the

1 presentation you received from Mr. Ashbourne, correct? 2 A: I don't recall the presentation. 3 Q: No, but I think we established yesterday 4 when we looked at the entries in the diary and we looked at 5 you affidavit, I think we came to the agreement yesterday 6 that this document under Tab 33 of your book was in all 7 likelihood the presentation that Mr. Ashbourne gave to you? 8 A: That's correct but I don't recall it. 9 Q: All right but let's assume that that 10 conclusion is correct and that this document under Tab 33, 11 Begdoc 25387 was, indeed, in fact, the presentation that you 12 received from MFP. Can we proceed on that assumption? 13 A: Okay but if I don't recall, I don't 14 understand what you're -- 15 MADAM COMMISSIONER: I think in this affidavit 16 it says he recalls attending a meeting but doesn't recall any 17 of the material. 18 MR. DAVID MOORE: Well, I think he was asked 19 about this yesterday and I think when reference is made to 20 Mr. Ashbourne's diary and to the entry in there for the 21 apparent meeting with Mr. Beattie, the date of that entry 22 coincided with the date of this document, April 7th, 1998. I 23 think we -- I understood we got to the point yesterday in the 24 transcript where, allow the witness may not have specifically 25 recalled the document, he agreed that this was probably the

1 document that was presented. 2 MADAM COMMISSIONER: I guess I'm not as 3 comfortable coming to that conclusion as you are because in 4 Mr. Ashbourne's diary it was actually crossed out. So it 5 appears that there was a meeting that Mr. Beattie attended 6 with Mr. Ashbourne. I think he said there was one where two 7 (2) people in his office were supposed to go and he ended up 8 going but -- 9 MR. DAVID MOORE: All right. Well, why don't 10 I -- 11 MADAM COMMISSIONER: -- in any event, I think 12 it's clear from Mr. Ashbourne's evidence that he had given 13 this documentation to the City. 14 MR. DAVID MOORE: Yes. 15 MADAM COMMISSIONER: And we got this from the 16 City, I believe. Did we? 17 MS. LILY HARMER: No, the origin in summation 18 of this document is MFP. 19 MADAM COMMISSIONER: Okay. Do you know -- 20 MR. DAVID MOORE: Well -- 21 MADAM COMMISSIONER: -- Mr. Beattie, if this 22 was in your files? 23 THE WITNESS: I can't recall, but I don't 24 remember any of this. 25 MADAM COMMISSIONER: Yes, I understand that.

1 We seem to have that point. 2 MR. DAVID MOORE: Well, why don't I proceed 3 just on a hypothetical basis -- 4 MADAM COMMISSIONER: Okay. 5 MR. DAVID MOORE: -- and then at the end of 6 the day, findings may have to be made but let's -- 7 8 CONTINUED BY MR. DAVID MOORE: 9 Q: Without suggesting to you, sir, that you 10 have a recall of this document, let's proceed on the 11 assumption that this was part of a presentation provided by 12 MFP. 13 A: Okay. 14 Q: All right and acting on that assumption 15 with reference to this page that I've drawn your attention 16 to, you would agree that that presentation contemplates a 17 quarterly roll out, an ongoing process. Correct? 18 A: I still don't unders -- because I didn't 19 recall this, you're asking questions -- you're assuming -- 20 Q: No, I'm -- 21 MADAM COMMISSIONER: Mr. Beattie, just if I 22 might just assist here. We all recognize that you don't 23 remember -- 24 THE WITNESS: Okay. 25 MADAM COMMISSIONER: -- receiving any of this.

1 So now what Mr. Moore is asking you about is not that you 2 recall seeing this but, we're operating on the assumption now 3 that MFP did give this information at some time to somebody 4 in Purchasing. So he's just taking you to the document and 5 saying if that was the case, then this document does 6 contemplate some kind of a quarterly program. 7 THE WITNESS: Okay. 8 9 CONTINUED BY MR. DAVID MOORE: 10 Q: That's a fair conclusion? 11 A: Yes. 12 Q: And then that's consistent with the 13 clauses in the RFQ that was issued that appeared to 14 contemplate the same thing? 15 A: Yes. 16 Q: And -- 17 18 (BRIEF PAUSE) 19 20 Q: And during your involvement you were 21 obviously aware that the RFQ had been issued? 22 A: Correct. 23 Q: And you were aware that people in Finance, 24 Mr. Rabadi was one of them, had begun to do a financial 25 evaluation of the competing bids?

1 A: Okay. 2 Q: You were aware of that, right? 3 A: Yes. 4 Q: And one (1) of the documents we looked at 5 yesterday is under Tab 19 of your book, that's Begdoc 5788, 6 it's an e-mail from Mr. Rabadi, apparently to yourself and 7 Mr. Spizarsky. 8 A: Okay. 9 Q: Do you have that? 10 A: Yes, I do. 11 Q: And it appears that at that, or by that 12 point in time, from the second to last -- or really the last 13 paragraph, that the result of the analysis by Mr. Rabadi and 14 whoever else had been involved from Finance, was on a 15 tentative basis at least, that MFP would be the selected 16 bidder? 17 A: That's correct. 18 Q: And there was no suggestion in this draft 19 or this e-mail as I see it, as I read it, that there's going 20 to be two (2) or three (3) or four (4) approved leasing 21 providers? 22 A: That's correct. 23 Q: MFP appears to be the only one (1)? 24 A: That's correct. 25 Q: And there is a request to yourself and Mr.

1 Spizarsky, to quote: 2 "Evaluate the RFP's." 3 It should be RFQ's or responses, I guess: 4 "From the Financial viewpoint and confirm 5 that you are in agreement with the decision 6 to go with MFP." 7 Correct? 8 A: Correct. 9 Q: Now, as I understand your evidence, that's 10 not something that you did? 11 A: No. 12 Q: But you have an understanding that Mr. 13 Spizarsky did? 14 A: I believe he did, yes. 15 Q: And is that based upon a discussion with 16 Mr. Spizarsky at the time? 17 A: No. 18 Q: What's that based upon? 19 A: It's based upon assumption, I guess. 20 MADAM COMMISSIONER: I think Mr. Moore is 21 asking you, what's your assumption based on? 22 THE WITNESS: The assumption based on, I 23 remember that was two (2) -- he was asking for two (2) 24 things, first off he was also saying, this report has to be 25 finalized urgently, so there was an urgent request.

1 2 CONTINUED BY MR. DAVID MOORE: 3 Q: Yes. 4 A: On the second paragraph, he asked whether 5 it quoted firm or variable, because I recall that I answered 6 this question -- 7 Q: Yes. 8 A: -- and I'm assuming that because it went 9 to Frank, he would have answered the third question after 10 discussing it with us. 11 Q: Because -- because I haven't seen any 12 written response to this from Purchasing, saying for example, 13 Mr. Rabadi, it's not Purchasing's function to do any 14 evaluation of the RFP from a financial standpoint. I've not 15 seen any e-mail back saying that Purchasing was not going to 16 do that. 17 A: Okay. 18 Q: Well, I'm just going on the basis of the 19 documents that have been produced. Are you aware of any such 20 document? Now, in fairness, there's a lot of documents here, 21 and if there's something that -- that you need to reflect on, 22 by all means you should do so. 23 But I'm not aware of any document going back 24 from Purchasing to Mr. Rabadi, saying, we don't perform that 25 function?

1 A: No, neither am I. 2 Q: And this e-mail, you would agree, it's 3 asking for confirmation that Purchasing was going along with 4 that recommendation. And I take it to the best of your 5 knowledge, some kind of confirmation was given by Purchasing? 6 A: That would -- yes, I would say, yes. 7 Whether it be an e-mail or just a quick phone call. 8 Q: And I'm not aware, again, just as I'm not 9 aware of any e-mail from Purchasing, saying we don't do that 10 type of evaluation, nor am I aware of any e-mail from Mr. 11 Spizarsky or anyone else responding to this, providing any 12 written confirmation that was requested. 13 But -- but, so I take it, at least to the 14 extent you can comment, it would be fair to conclude there 15 must have been some kind of verbal discussion providing the 16 feedback requested? 17 A: That's what I would -- 18 Q: That's what you would expect? 19 A: That's what I would expect, yes. 20 Q: And you asked yesterday, whether -- by Mr. 21 Anderson, whether you -- whether there was any basis -- and 22 this is the gist of the question, as I recall it, to think 23 that Mr. Rabadi was under any particular pressure, or there'd 24 been any -- any undue influence or any influence brought to 25 bear upon him, in connection with his apparent recommendation

1 as at June 29th. Do you recall the answer to that question? 2 A: Yes. 3 Q: And I think you -- I think you indicated 4 that to the best of your knowledge, you were not aware of any 5 such pressure or undue influence? 6 A: That's correct. 7 Q: And then the Commissioner asked you, in 8 fairness, to clarify that, and I think you indicated, as a 9 result of that exchange, that you really didn't have any 10 direct knowledge; is that fair? 11 A: That's fair, yes. 12 Q: I just want to follow up on that, I take 13 it, you've got no reason to believe that Mr. Rabadi was doing 14 anything other than what you and the Purchasing people were - 15 - was doing, that is performing his function to the best of 16 his ability? 17 A: That's correct. 18 Q: Because you've got no information that 19 would suggest anything different? 20 A: That's correct. 21 Q: Now, Mr. Rabadi never said anything to you 22 in this process, that would indicate he felt he was under any 23 kind of pressure or constraint or undue influence or anything 24 like that; correct? 25 A: That's correct.

1 Q: And I take it in your involvement in the 2 process, you never observed anything. Apart from anything he 3 may have said, we've just established he didn't say anything, 4 but -- but you never observed anything in the way in which he 5 conducted himself -- 6 A: No. 7 Q: -- that would suggest anything out of the 8 ordinary; is that fair? 9 A: That's fair. 10 Q: And I have the same questions with respect 11 to the other people involved in the process, and there were a 12 number of other people, there was Mr. Altman, there was Mr. 13 Brittain, there was the other people at Purchasing, there was 14 some IT people involved. 15 I'm not going to go through each name 16 individually, but -- but would it be fair to say that -- that 17 no one in the evaluation stage or the report to Council 18 stage, none of the people involved ever said anything to you 19 that would indicate they'd been subjected to any pressure or 20 undue influence or anything of that nature? 21 A: No, that's correct. 22 Q: And you never observed any conduct or any 23 -- any sign that anything like that had happened? 24 A: No, I didn't. 25 Q: And so from your perspective, as at --

1 going back to this date as at June 29th, 1999, to the best of 2 your knowledge and belief, the recommendation that Mr. Rabadi 3 was apparently putting forward, was something that he arrived 4 at objectively, based upon what he considered the merits to 5 be of the competing proposals? 6 A: That's correct. 7 Q: Nothing unusual or untoward about that? 8 A: No. 9 Q: In fact, to the best of your knowledge, 10 that was exactly how the system was supposed to work? 11 A: Correct. 12 Q: And I take it based upon the answers 13 you've just given to me when I asked more generally, nothing 14 in the process ever caused you to doubt that that was what 15 was going on? 16 A: That's correct. 17 Q: And in the preceding tab, that's Tab 18, 18 Begdoc 5787, this is another document from June 29th, and 19 this, as I understand it, is a fax that you sent to Mr. 20 Rabadi? 21 A: That's correct. 22 Q: And on the face of it, would indicate that 23 there had been some discussion between yourself and Mr. 24 Rabadi? 25 A: That's correct.

1 Q: Do you recall the details of that 2 discussion? 3 A: No, I don't, other than the fact that it 4 was just the fact that we were going to make the changes and 5 send it back to him. 6 Q: All right, for -- 7 A: -- to corporate -- 8 Q: And I think that when your attention was 9 brought to this document yesterday, reference was also made 10 to Tab 25 in this book, which is Begdoc 12716, and I'm just 11 asking you to turn that up. 12 A: Okay. 13 Q: And -- and you'll see, this is marked 14 draft, and it's dated June 29th. 15 A: Hmm hmm. 16 Q: And this is the one (1) over on the second 17 page, which would be Begdoc 12717, there's a paragraph 18 entitled, Background. 19 MADAM COMMISSIONER: Are you there? 20 THE WITNESS: Yes. 21 MADAM COMMISSIONER: Okay. 22 23 CONTINUED BY MR. DAVID MOORE: 24 Q: And that paragraph has -- you referred to 25 the last paragraph under background, where it says:

1 "Considering the urgency to the Y2K 2 Project, equipment worth." 3 And then some writing is there, 15.1 million. 4 A: Right. 5 Q: "Has already been received by the City, if 6 the recommendation contained in this report 7 is adopted, the said equipment will be re- 8 invoiced by the vendor to the lessor and 9 then lease to the City" 10 And that would be a paragraph that would have 11 been read at the time? 12 A: Yes, it would have. 13 Q: All right and you indicated that the 14 writing of the 15.1 million was not Mr. Rabadi's -- or not 15 Mr. Spizarsky's handwriting? 16 A: No, it was not Mr. Spizarsky's. I know 17 that. 18 Q: All right and can I just ask you to go to 19 another document and that is in Mr. Pagano's book of 20 documents, Book 3. 21 22 (BRIEF PAUSE) 23 24 Q: Document 21 -- or Tab 21 which is 25 Begdoc --

1 MADAM COMMISSIONER: Tab 21. 2 MR. DAVID MOORE: Tab 21. Begdoc 20489. 3 4 (BRIEF PAUSE) 5 6 CONTINUED BY MR. DAVID MOORE: 7 Q: And do you have that tab, sir? 8 A: Yes. 9 Q: And I must say I'm a little confused about 10 the first page as to who was asking who what and what the 11 exact sequence was but if we go past the first page to Begdoc 12 20490. They appear to have the same or at least another copy 13 of this draft document of June 29, '99. 14 A: Okay. 15 Q: And over on the second page, someone else 16 -- or at least appears to be another version of the 15.1 17 million plugged in there. 18 A: Okay. 19 Q: Do you see that? 20 A: Hmm hmm. 21 Q: Is it possible that that's in a different 22 form than the 15.1 million that was under Tab 25 of the 23 document in your book, correct? 24 A: Correct. 25 Q: And is it possible that that 15.1 million

1 might be Mr. Spizarsky's writing. 2 A: I can't say for sure. 3 Q: All right. You can't exclude it in the 4 same way as you can the 15.1 million in the other document, 5 fair? 6 A: That's fair, yes. 7 Q: All right and in any event, it would 8 appear that regardless of whether the 15.1 million referred 9 to under Tab 21 of the third volume of Mr. Pagano's books -- 10 regardless of that, whether that's in fact Mr. Spizarsky's 11 writing or not, it appears -- there's at least two (2) people 12 who are writing in 15.1 million -- 13 A: That's correct. 14 Q: -- in that paragraph? Fair? 15 A: That's correct, yes. 16 Q: So there's a number of sets of eyes that 17 look at that paragraph? 18 A: Yes. 19 Q: And it's fair to say that that paragraph 20 doesn't use the term sale/leaseback, correct? 21 A: Correct. 22 Q: It's also fair to say that that paragraph 23 would make it clear that equipment had already been received 24 by the City and that there was going to have to be some 25 further transaction to put that equipment onto the lease,

1 correct? 2 A: Correct. 3 Q: And in effect, that's what we come to a 4 call a sale/leaseback in the course of this Inquiry, correct? 5 A: Correct. 6 Q: And that is not an overly complicated 7 concept for people to understand, fair? 8 A: I would say, yes. 9 Q: All right. 10 11 (BRIEF PAUSE) 12 13 Q: And if we go in your book to Tab 46, 14 Begdoc 5770. This is another version of the draft. This one 15 is dated June 30th and you'll see it has at the top: 16 "For Dave Beattie" 17 A: Yes. 18 Q: And I take it you'd agree that's -- that 19 is likely a document that would have been sent to you with 20 the expectation that you or someone else in Purchasing would 21 review it to keep track of the form that this report was 22 taking? Is that a fair conclusion? 23 A: Yeah, I think that this was one that Frank 24 asked me to get, if I'm not mistaken, because it came out 25 garbled and he wanted a clean copy.

1 Q: Well, I think we'll get to that one (1). 2 I think one is a little later in the chronology. There's 3 quite a number of these drafts that are going back and forth. 4 But as a general proposition, they're being 5 sent to purchasing so that purchasing could review it, 6 bearing in mind the focus of purchasing on the procurement 7 practices and policies, is that fair? 8 A: Yes, but, I think in this case, we were 9 reviewing it for the changes that were requested. 10 Q: All right. 11 A: To ensure that they had been made. That's 12 all. 13 Q: And, in fact, if we go to the second page, 14 we can see that this $15.1 million had been inserted? 15 A: Yes. 16 Q: All right. And then if we go back in the 17 book, your book, to the very first document, under Tab 1, 18 this is Begdoc 3887, there's another draft, July 2nd, 1999. 19 A: Okay. 20 Q: And if I can take you to the third page 21 in, well, before I do that, this is sent -- this is for -- at 22 the top of the first page, it says "for Lou Pagano/Dave 23 Beattie"? 24 A: Yes. 25 Q: By this point in the process, this is July

1 2nd, is it your recollection that Mr. Pagano was starting to 2 become directly involved in the process? 3 A: I believe so, yes. 4 Q: And that involvement, I take it, would 5 have been reviewing the form of this report, from time to 6 time? 7 A: That's correct. 8 Q: And that's because ultimately, Mr. 9 Pagano's name was going to go on the report as one (1) of the 10 contact people? 11 A: That's correct. 12 Q: And just as a general proposition, sir, 13 apart from the people who signed it, you would expect the 14 contact people named in a report, such as this, you would 15 expect that they would be familiar with the contents of the 16 report? 17 A: They should be, yes. 18 Q: As a normal practice, normal procedure, 19 it's not just the people who sign, but, the contact people, 20 as well -- 21 A: Definitely -- 22 Q: -- who are expected to have reviewed the 23 report and know and understand what it says? 24 A: Definitely. 25 Q: As a general proposition?

1 A: Yes. 2 Q: And you would expect that that general 3 proposition would apply in this case, as well? 4 A: That's correct. 5 Q: All right. And so, it appears then by 6 July 2nd, this is being sent, not just to yourself, but, also 7 Mr. Pagano, for that purpose? 8 A: That's correct. 9 Q: And I take it, there'd be in that context, 10 an expectation by the people involved in the process, that 11 purchasing would review it and continue to monitor it from a 12 process purchasing standpoint? 13 A: Yes, that's correct. 14 Q: All right. And this -- you'll see then in 15 this document at page 3, you have that last paragraph under 16 background. It's been modified somewhat -- 17 A: It's it page 2 or 3, because -- 18 Q: Page 3 at the top -- 19 A: Okay. 20 Q: -- I can't make out my Begdoc number on 21 this -- well, we can add it. It would be 3889. 22 A: And you say it's on the background part? 23 Q: Well, just -- if you go to page 2, just so 24 you can satisfy yourself -- 25 A: Okay. Yes, sorry --

1 Q: -- you see background as the heading? 2 A: Yes. 3 Q: And it carries over to the next page? And 4 you see the last paragraph, just before discussion? 5 A: Okay. 6 Q: You see the paragraph now reads: 7 "Considering the urgency with which the Y2K 8 Project is required to be implemented the 9 City has already ordered and received 10 significant quantities of equipment." 11 See the 15.1 million is gone and it's now more 12 general? 13 A: Yes. 14 Q: All right. Now, do you have any 15 knowledge, sir, as to what, in fact, was happening to keep 16 track of how much of the desktop and related peripherals had 17 been acquired, as the months went by? 18 A: No, I wasn't. 19 Q: I take it that's something you would 20 expect purchasing to have some record or, or be aware of? 21 A: Not really, no. It would have been the 22 end user department. 23 Q: Well, what -- what system was in place, as 24 at June 1999, this is one (1) of the areas that is not 25 currently in the document base and I've made some inquiries

1 and we hope to be able to sort this issue out, in terms of 2 where the documents are to reflect how much equipment, 3 whether it be Dell or Toshiba or whoever, how much had been 4 acquired from time to time. 5 I take it, there must have been some process 6 in place, within the City, to keep track of how much had been 7 ordered and purchased? 8 A: That's correct. It was either the old 9 legacy system, the Banner system from the City -- 10 MADAM COMMISSIONER: The what system? 11 THE WITNESS: I just called it a legacy 12 system, but, it was a banner system. 13 MADAM COMMISSIONER: Banner. 14 THE WITNESS: Or it would have been -- 15 previous to that, would have been the City APS system, or the 16 SAP, but the SAP, I think, just came into being at that time. 17 18 CONTINUED BY MR. DAVID MOORE: 19 Q: Well, the SAP wasn't functional at this 20 point in time, is that fair? 21 A: I can't recall, I think it was just being 22 rolled out. 23 Q: All right. But in terms of keeping track, 24 say, for the first six (6) months of 1999, of how much of the 25 desktop project had been rolled out, as you were, that --

1 that presumably would go to different sections in the 2 amalgamated City? 3 A: It was all handled through -- if it was 4 handled by Purchasing it would have been, like we were 5 amalgamated at that time. 6 Q: Well, I appreciate that, but I would -- 7 and I take it you weren't part of the Y2K Steering Committee? 8 A: No. 9 Q: And there's a Book that's going to be 10 filed in due courses and Exhibit, we don't have it available 11 yet, as I understand it, but I believe the documentation in 12 that Book will indicate that the rollout of the Y2K Desktop 13 Project started physically in January of 1999. 14 That would be consistent with your general 15 understanding? 16 A: I would say yes. 17 Q: All right. And that rollout would involve 18 the acquisition and delivery of desktops and peripherals to 19 various different locations in the amalgamated City? 20 A: That's correct. 21 Q: Whether it be the old City of Toronto, or 22 Scarborough, or Etobicoke or where ever, correct? 23 A: That's correct. 24 Q: And was there any single centralized 25 system in place at that point in time to keep track of how

1 much had been acquired and where it went from time to time? 2 A: As I mentioned earlier, it -- possibility 3 that it could have been under the Banner System, or the AS -- 4 APS System. 5 Q: Now, I don't know what those systems are, 6 but we've heard evidence, I believe, that the former 7 municipalities didn't have a common system for keeping track 8 of this kind of thing, is that -- 9 A: That's correct. 10 Q: And so what, is it possible that in the 11 first six (6) months of 1999, one (1) of the difficulties 12 that the amalgamated City was facing, that it's systems 13 didn't have a centralized way of keeping track of this? 14 A: Not really, because like I said, it was 15 one (1) of the two (2) systems that was in use, the Banner or 16 the APS, and that would have captured it. 17 Q: And that may be why, may be an 18 explanation, as to why we saw earlier the figure of 15.1, a 19 fairly specific number was in this report, but by July 2nd, 20 it's changed to refer to significant quantities of equipment. 21 That may reflect the difficulty in being 22 precise as to exactly how much has been rolled out, is that 23 fair? 24 A: That's fair, yes. 25 Q: All right. And again, that whole

1 situation would be known the people who received and read 2 this report -- I should say, draft report? 3 A: Yes. 4 Q: And that would include people in 5 purchasing, such as yourself and Mr. Pagano? 6 A: Yes. 7 Q: All right. 8 9 (BRIEF PAUSE) 10 11 And I'm not going to take you through -- 12 through all of the drafts, there's a Book that Commission 13 Counsel has prepared that -- that traces through probably 14 fifteen (15), or twenty (20), drafts that were circulated 15 from time to time. 16 I take it you recall generally receiving 17 drafts from time to time, of the report culminating in the 18 final report? 19 A: Yes. 20 Q: And one (1) of the documents in that 21 sequence or, in that process, was referred to yesterday, it's 22 Tab 7, of your material, which is Begdoc 3924. 23 A: Okay. 24 Q: And -- 25 MADAM COMMISSIONER: 24, or 23?

1 MR. DAVID MOORE: 3923. I'm sorry, 2 Commissioner. 3 MADAM COMMISSIONER: Three (3). Thank you. 4 5 CONTINUED BY MR. DAVID MOORE: 6 Q: And this is one of the documents we looked 7 at yesterday, I think this may be the one that you had in 8 mind a moment ago when you were referring to your being asked 9 to get a copy that -- because there was some problem one of 10 the e-mails being garbled? 11 A: That's correct. 12 Q: All right. And this is dated July the 13 9th, at 4:47 p.m. 14 A: Okay. 15 Q: And under the next Tab, 3924, we have the 16 July 9th report. And again, if we go to the end of that 17 report -- sorry, the end of the tested lease, five (5) pages 18 in, could I ask you to go there, sir? Okay. 19 20 (BRIEF PAUSE) 21 22 Q: We see there's -- there's a place for two 23 (2) people to sign, and there was some questions yesterday 24 about who actually physically signed, but the names there are 25 Wanda Liczyk and Jim Andrew; correct?

1 A: Correct. 2 Q: And then the contact means, and this -- 3 this is relative to the question I asked you earlier, there's 4 five (5) contact names there as well, Mr. Rabadi, Mr. Altman, 5 and Mr. Brittain are the first three (3) and it's your 6 knowledge those are Finance people? 7 A: That's correct. 8 Q: And Lana Viinamae, she would be a person 9 with some IT experience or expertise? 10 A: Yes. 11 Q: And then Mr. Pagano, the Purchasing 12 Director; correct? 13 A: Correct. 14 Q: And so when I asked you generally about 15 contact people and the expectation about such a report, to be 16 specific in this situation, you would expect that all those 17 contact people would have done whatever they needed to do to 18 familiarize themselves with the contents of this report? 19 A: That's correct. 20 Q: And they should be -- they should 21 understand what it says and be familiar with what it says? 22 A: Yes. 23 Q: And you would expect if any of those 24 people had any concerns or confusion about what was said on 25 the report, they would raise such questions?

1 A: That's correct. 2 Q: And indeed, we've -- I've not taken you to 3 it, and I don't propose to, it's clear that there's an 4 ongoing process leading up to this date, where various drafts 5 are sent back and forth, and people have a chance to ask 6 questions and add comments. That's exactly the process that 7 was followed; correct? 8 A: Correct. 9 Q: And on the first page of this report, 10 there's a paragraph, 11 "Funding sources, financial implications 12 and impact statement." 13 Do you see that? Do you have that handy? 14 A: Sorry, what page? 15 Q: This is the first page. 16 A: Okay. 17 Q: And so it's: 18 "1999 Operating Budget, Debt charges and 19 budget is based on ten (10) year term 20 debentures." 21 MADAM COMMISSIONER: Which page, sorry? 22 MR. DAVID MOORE: I'm sorry, this is the very 23 first page of the report. Begdoc 3924. 24 MADAM COMMISSIONER: Right. Okay. 25

1 CONTINUED BY MR. DAVID MOORE: 2 Q: And you'll see it starts out, in the: 3 "1999 Operating Budget, debt charges were 4 budgeted based on ten (10) year term 5 debentures for the purchase of computer 6 equipment and software." 7 Do you remember if you would have read that? 8 Just out of interest, do you know whether 9 Purchasing was involved in all or any analysis of whether the 10 ten (10) year debenture process for that 11 budget -- 12 A: I don't believe so. 13 Q: -- was inappropriate? You don't believe 14 so? 15 A: No. 16 Q: Do you know who was? 17 A: No, I don't. 18 Q: If anyone? 19 A: No, I don't. 20 Q: You don't know. Anyway, it goes on a 21 little further, four (4) -- four (4) lines down to say: 22 "For 1999, the implementation of the 23 recommended financing strategy or leasing 24 of computer equipment, estimated at 43 25 million, will result in a charge to the

1 operating budget and probably six -- of 2 approximately 6 million." 3 Do you see that sentence? 4 A: Yes. 5 Q: And then under recommendations, on the 6 next page, you'll see recommendation number 3. 7 A: Okay. 8 Q: Refers to that $6 million for 1999? It 9 refers to the: 10 "1999 Operating Budget, for debt charges to 11 be reduced by the estimated amount of 12 operating lease payments of up to 6 million 13 in 1999." 14 A: Okay. 15 Q: Do you see that? 16 A: Hmm hmm. 17 Q: And that would have been read by everybody 18 at the time; correct? 19 A: Correct. 20 Q: And then it says: 21 "If the Information Technology program's 22 gross operating budget for 1999 be 23 increased by 6 million, to provide for the 24 leasing charges." 25 Do you see that?

1 A: No, sir, I missed -- 2 Q: That's the balance of recommendation 3 number 3, there's -- 4 MADAM COMMISSIONER: The rest of the sentence, 5 Mr. Beattie. 6 THE WITNESS: Sorry. Okay. 7 8 CONTINUED BY MR. DAVID MOORE: 9 Q: All right. And that's referring to the 10 1999 leasing of computer equipment estimated at $43 million, 11 from the preceding page. That's what that's referring to; 12 correct? 13 A: Correct. 14 Q: And then it goes on in the next paragraph, 15 number 4, to recommend: 16 "The Chief Financial Officer and Treasurer 17 and Executive Director in Information and 18 Technology report back to Policy and 19 Finance Committee periodically --" 20 A: I'm sorry, I don't -- 21 Q: This is -- this is recommendation number 4 22 on the second page. Are you with me? 23 A: Yes. 24 Q: After referring to the $6 million charges 25 referable to the 43 million in 1999, item 4 goes onto refer

1 to the CFO and the Executive Director of Information 2 Technology, it says: 3 "To report back to the Policy and Finance 4 Committee [see it says] periodically on new 5 leasing proposals and financial impact for 6 the balance of equipment and software." 7 See that? 8 A: Yes. 9 Q: And that would have been evident to 10 everybody at the time? 11 A: Yes. 12 Q: Correct? So the balance of the equipment 13 and software, that's those other portions that couldn't be 14 ascertained at the time, correct? 15 A: Correct. 16 Q: It's referring to the four thousand (4000) 17 desktops and peripherals that are going to roll out sometime 18 after 1999, that's one (1) piece of it, correct? 19 MADAM COMMISSIONER: You have to say yes or 20 no, please. 21 THE WITNESS: Yes. 22 23 CONTINUED BY MR. DAVID MOORE: 24 Q: And it's referring to the prospective 25 major software acquisitions because the amounts weren't known

1 at the time. That's what that's referring to, correct? 2 A: Correct. 3 Q: And so I take it, there was no confusion, 4 or you weren't aware of any confusion on Purchasing's part 5 when this material was finalized, after about fifteen (15) 6 drafts, you weren't aware of any confusion on Purchasing's 7 part that there was going to be the defined amount of $43 8 million because that was ascertainable, then these future 9 amounts to come later? 10 A: That's correct. 11 Q: And no one to your knowledge, from 12 purchasing raised any question, we don't understand that, it 13 needs to be clarified, it's ambiguous, those are my words, 14 but, you're not aware of anyone from Purchasing raising any 15 process issues or concerns, about that part of the report? 16 A: No, I wasn't. 17 Q: All right. And I take it, I'll expand 18 that beyond Purchasing, you're not aware of any of the other 19 persons involved in the process, raising any such concerns or 20 issues about ambiguities or problems in the drafting, 21 correct? 22 A: Correct. 23 Q: And I take it as -- I'm going to ask this 24 question generally, drawing on your experience in the way 25 these things work.

1 When a report in connection with an RFQ goes 2 to City Council or a sub-committee of City Council, it's 3 important that people be prepared to answer questions about 4 that, correct? 5 A: Correct. 6 Q: And indeed, that's -- that's the reason 7 under that Tab 7 that we looked at, Mr. Spizarsky's 8 handwritten notes, this is Begdoc 3923, where you're being 9 asked to put together a package, a back-up package -- 10 A: Yes. 11 Q: And I think your evidence was, that's for 12 Mr. Pagano? 13 A: Right. 14 Q: And that's so that when Mr. Pagano goes to 15 the meeting, he's armed and available to answer questions if 16 there are questions from any of the people at the meeting? 17 A: Correct. 18 Q: Whether that be a sub-committee of City 19 Council or City Council, itself? 20 A: That's right. 21 Q: And so I take it, in that context, there's 22 an expectation on the part of the people who prepare these 23 reports, that if the persons who read them, whether it be 24 sub-committee members or City Council, if they have any 25 concerns or questions about anything that's confusing or

1 something they don't understand, there's an expectation that 2 those questions are going to be asked, correct? 3 A: That's correct. 4 Q: That's why you prepare Mr. Pagano in the 5 way that you did. And are you aware of any questions having 6 been asked? 7 A: No, not that I recall. 8 MADAM COMMISSIONER: I guess in fairness to 9 the witness, is it that there's an expectation that those 10 questions will be asked, or there's a possibility that those 11 questions will be asked and you want him to be as briefed as 12 possible? 13 Not necessarily, that there's an expectation 14 that those questions will be asked. 15 MR. DAVID MOORE: I perhaps should clarify my 16 question. 17 18 CONTINUED BY MR. DAVID MOORE: 19 Q: Not necessarily an expectation in every 20 case that there will be questions, but, an expectation that 21 if the readers of the document find it unclear or confusing 22 or ambiguous in some way, that if the readers, for whom this 23 is prepared, have some problems with it, there's an 24 expectation that a question will arise from that, that was 25 the purpose of my question?

1 A: Yes. 2 Q: Is that fair? 3 A: That's fair. 4 Q: All right. And I take it, as I understand 5 your evidence, you didn't go to the sub-committee meeting, 6 the Policy and Finance Committee meeting on July the 20th? 7 A: That's correct. 8 Q: And to the best of your knowledge, was it 9 Mr. Pagano who went, or do you know? 10 A: I don't know. 11 Q: All right. In any event the normal 12 practice I think we've heard was someone from Purchasing to 13 go? 14 A: Yes. 15 Q: And you're not aware that that practice 16 wasn't followed? 17 A: That's correct. 18 Q: All right. And I take it you never 19 received any feedback from that or after that meeting, from 20 whoever it was that went, that there were questions and the 21 Council members seemed to be confused about the report? 22 Nothing like that -- 23 A: No -- 24 Q: -- was ever drawn to your attention? 25 A: -- no it wasn't.

1 2 (BRIEF PAUSE) 3 4 Q: And just -- just as the draft 5 recommendation that Mr. Rabadi referred to in that e-mail of 6 June 29th, made clear. I'm not going to go back to it, but 7 we -- we looked at that. So too this report was only 8 recommending one (1) leasing provider; correct? 9 A: Correct. 10 Q: So, whether or not at the beginning of the 11 process, when the RFQ was in the draft stages and through the 12 various steps, whether anyone knew or expected at that point 13 in time that there was only going to be one (1) leasing 14 provider come through the process, through this report of 15 July the 9th, everyone who read and received that report, 16 would be aware that that was the recommendation; correct? 17 A: Correct. 18 Q: And I take it Purchasing, to the best of 19 your knowledge, didn't raise any issue about that? 20 A: That's correct. 21 Q: In other words, to be specific, no one 22 from Purchasing said, well, wait a minute, de facto what we 23 may end up with, a vendor or a lessor of record, whether it's 24 called that or not, we don't think that's appropriate. 25 There was no such issue raised by Purchasing,

1 to the best of your knowledge? 2 A: To the best of my knowledge, yes. 3 Q: And similarly, I asked you whether there 4 were any questions that came to your attention from the sub- 5 committee meeting, from the Councillors or anyone else, about 6 ambiguities or confusion in the report. 7 Let me ask you in the same context, were you 8 aware of any questions from the sub-committee or Policy and 9 Finance Committee, or from City Council, about the issue I 10 just asked you about, namely, there was only one (1) lease 11 provider being recommended here? 12 A: No. 13 Q: Was there any issue raised about that -- 14 A: No. 15 Q: -- to your knowledge? 16 A: To my knowledge, no. 17 Q: All right, and -- and it would be self 18 evident from this documentation that that was the 19 recommendation and that was the decision that was being made; 20 correct? 21 A: Correct. 22 23 (BRIEF PAUSE) 24 25 Q: And from where you -- from your

1 perspective, and I appreciate it's difficult to go back in 2 time, particularly with everything that's happened in the 3 meantime, and all of the issues and publicity and everything 4 else. 5 But if I can take you back, take your mind 6 back to the end of July 1999, when this matter ultimately 7 went to Council. From your state of mind there was nothing 8 unusual or untoward about the process at all; is that fair? 9 A: That's fair, yes. 10 Q: And spanning that to Purchasing, the 11 Purchasing Department generally, now based upon a reading of 12 this report, it would be known and expected that there was 13 one (1) leasing provider going forward? 14 A: That's correct. 15 Q: No one expected that this was going to be 16 an ongoing process? A portion of 1999 that was definable the 17 43 million, and more to come down the road, based upon a 18 reading of this material, that's what it says; correct? 19 A: Correct. 20 Q: And no one thought there was anything 21 unusual or inappropriate about that? 22 A: Correct. 23 Q: As far as you're aware? 24 A: Correct. 25 Q: And I take it if you'd thought there was

1 anything unusual or inappropriate about that, you wouldn't 2 have hesitated to point it out? 3 A: That's correct. 4 Q: And would it be a fair assumption, I know 5 you can't speak for these people directly, but based upon 6 your knowledge of these people, I take it you would expect 7 the same of Mr. Pagano, if he thought there was anything 8 untoward or unusual about what was going forward, he would 9 say something about it? 10 A: That's correct. 11 Q: And so, too, I take it you -- you would 12 say the same about Mr. Spizarsky? 13 A: Yes. 14 Q: All right. And what was also going 15 forward, of course, was, in effect, you had this -- everybody 16 knew that there was this equipment that had already been 17 acquired in 1999 that was going to be put on lease, correct? 18 A: Correct. 19 Q: And noone -- there was no secret about 20 that, noone thought there was anything unusual or untoward 21 about that? 22 A: No. 23 Q: All right. 24 MADAM COMMISSIONER: I just want to make sure, 25 Mr. Beattie, you know we're talking about the sale and

1 leaseback component here. 2 THE WITNESS: Yes. 3 MADAM COMMISSIONER: Okay. 4 5 CONTINUED BY MR. DAVID MOORE: 6 Q: And just before I leave this report, under 7 Tab 8, at the end of the document, page 5, under conclusion, 8 if I could just take you back there. 9 10 (BRIEF PAUSE) 11 12 Q: You'll see, among the conclusions is the 13 statement that: 14 "The Information and Technology division 15 will centrally manage the contract 16 administration." 17 Do you see that? 18 A: Yes. 19 Q: And that was referable to this reality 20 that this was not -- this was not a one (1) shot transaction 21 like, we're going to order fifty (50) tons of gravel and we 22 order it and it's done and finished, and that's the end of 23 it. 24 This contemplated an ongoing process going 25 forward, correct?

1 A: Correct. 2 Q: And part of that process, we've 3 established was going to involve, at least potentially the 4 acquisition and leasing of additional software and additional 5 hardware -- hardware after 1999, correct? 6 A: Correct. 7 Q: And so, I take it, that no one from 8 purchasing raised any issue about that, in terms of that's 9 not being appropriate, to have Information and Technology 10 take over the management of that function? 11 A: That's correct. 12 Q: All right. And did you turn your mind at 13 that stage, that is the end of July, as to what the role of 14 purchasing was going to be going forward, in terms of a 15 process? 16 A: Not really, no. 17 Q: All right. And that said, in relatively 18 short order, there was a series of meetings to discuss that 19 process, correct? 20 A: Correct. 21 Q: And Mr. Anderson took you -- to a number 22 of those meetings and if I could ask you to go to -- I just 23 have a few supplemental questions about what happened at 24 those meetings. 25 If I could ask you to go to Mr. Pagano's book

1 number 2, Tab 87. 2 3 (BRIEF PAUSE) 4 5 MADAM COMMISSIONER: 97? 6 MR. DAVID MOORE: 87. 7 MADAM COMMISSIONER: 87. Thank you. 8 9 CONTINUED BY MR. DAVID MOORE: 10 Q: I'm not sure if there's a Begdoc number -- 11 no, I think this is one (1) of the ones where we don't yet 12 have Begdocs. 13 14 (BRIEF PAUSE) 15 16 Q: But, the document, just -- and 17 unfortunately, we'll have to jump around a little bit in 18 these documents to go through the sequence of these meetings 19 and the follow up questions I have about them. 20 But, in this sequence, the document that 21 refers to the September meetings, is -- has 7 in the upper 22 right-hand corner, in the fax legend line. It's the one (1) 23 that Mr. Anderson asked you about yesterday. 24 It starts out with Mr. Spizarsky's writing -- 25 so you have that, sir?

1 A: It's -- 2 Q: Looks like this? 3 A: Yes. 4 Q: All right. And the date appears to be 5 16/9/99? 6 A: Yes. 7 Q: It would be September '99? September 8 16th, 1999, by my count. We can figure that out. It starts 9 out IT purchases, leasing, that appears to be a heading? Is 10 that right? 11 MADAM COMMISSIONER: Do you see that, Mr. 12 Beattie? 13 THE WITNESS: Okay, I'm not sure -- 14 MADAM COMMISSIONER: It's on -- 15 THE WITNESS: Does the fax at the top say 16 7/21? 17 MADAM COMMISSIONER: Yes, it does. 18 THE WITNESS: Okay. 19 20 (BRIEF PAUSE) 21 22 MADAM COMMISSIONER: I guess they all did. 23 It's at Number 7. 24 25 CONTINUED BY MR. DAVID MOORE:

1 Q: So it's the one -- just so we're all on 2 the page, it's the one in the upper right hand corner that 3 has 0007. 4 A: Yes. 5 Q: From the Paliare Roland fax line of 6 February 24. 7 A: Okay. 8 Q: In any event, This is the meeting that Mr. 9 Anderson asked you some questions about yesterday and you 10 went to this meeting? 11 A: Okay. 12 Q: Well, would this -- did you review this 13 document before finalizing your affidavit or testifying? 14 Just out of interest. 15 A: No. 16 Q: I see. In any event, it starts out: 17 "IT Purchases Leasing" 18 Is the heading. 19 A: Okay. 20 Q: And I'm not going to ask you to read all 21 the lines as Mr. Anderson took you to yesterday but in my 22 reading of them, that's exactly what it appears to be 23 referring to, the IT purchases and leasing. 24 A: Okay. 25 Q: Is what -- you don't have agree with me

1 but isn't that right? 2 A: Yes. 3 Q: I don't see any reference to SAP in that 4 document. Do you? 5 A: No. Although I think on -- one (1), two 6 (2), three (3), four (4), about the fifth line down it says: 7 "To explain how requisition --" 8 Q: Yes. 9 A: And it -- perhaps client services should 10 something -- 11 Q: My copy -- I don't have the original of 12 this but my guess is that the original will likely say should 13 be the contact, it seems we cut off in the right there. 14 After you look at Mr. Spizarsky's writing for a while, you 15 start being able to make some of it out or at least -- 16 A: Yes. 17 Q: It may say should be the contact? 18 A: Should be -- perhaps client services 19 should be in the contact. 20 Q: Because I think you indicated that client 21 services generally was the first point of contact between the 22 requisitioning or ordering department and Purchasing? 23 A: That's correct and as I mentioned this was 24 in reference to the SAP rollout and how it was going to be 25 handled.

1 Q: Well, I understand that was your evidence 2 but again, I don't see any reference in these notes to SAP, 3 do you? 4 A: To explain the new system? 5 Q: Well, wasn't the new system talking about 6 the leasing system and how this lease process was going to 7 work? Isn't that what this was all about? 8 MADAM COMMISSIONER: I think in fairness, Mr. 9 Moore, these notes are Mr. Spizarsky's notes so I don't know 10 that Mr. Beattie can help us to the extent that he can, but I 11 think on that particular question he might not be able to go 12 that far. 13 MR. DAVID MOORE: All right. All right. 14 That's fair. 15 16 CONTINUED BY MR. DAVID MOORE: 17 Q: Recognizing that these are Mr. Spizarsky's 18 notes and I don't know what he would say about them other 19 than what we may infer from these notes but it appears that, 20 at least in terms of what he recorded, it's all under the 21 heading IT purchases and leasing. Correct? 22 A: Correct. 23 Q: And it talks about a reserve fund to be 24 set up? You see that? I think Mr. Anderson directed that to 25 you yesterday. Just under the line you made reference to

1 about explaining the new system. He talked about reserve -- 2 A: Oh, yes. 3 Q: -- fund to be set up? 4 A: Yes. 5 Q: And the one big PO, I take it that's a 6 purchase order to MFP? The leasing company in brackets, do 7 you see that? 8 A: Yeah. 9 Q: It says: 10 "MFP will pay our suppliers then bill the 11 City quarterly." 12 A: Okay. 13 Q: And then: 14 "No more individual purchase orders for 15 computer equipment/services." 16 You know, I won't read it all but at least 17 judging by what Mr. Spizarsky recorded in his notes, he 18 appears to have recorded discussion about the leasing 19 program. 20 A: Okay. 21 Q: Fair? 22 A: Fair. 23 Q: All right and in terms of -- you have 24 indicated that you have a recollection of the SAP coming up 25 in this -- in this process or in this context.

1 MADAM COMMISSIONER: I'm sorry. Is that what 2 you said, Mr. Beattie? 3 THE WITNESS: Sorry, would you -- 4 MR. DAVID MOORE: Those are my words. 5 6 CONTINUED BY MR. DAVID MOORE: 7 Q: You made reference to the SAP system? 8 A: Yes. 9 Q: In this time frame? 10 A: Yes. 11 Q: And do you remember anything specific 12 being said about the SAP system in the context of this 13 meeting? 14 A: Not really, but I see where he's got "big 15 PO". 16 Q: Yes? 17 A: I would imagine because client services 18 were involved at that time, that he was talking probably 19 about blanket contracts. 20 Q: All right but let me ask you this. What 21 was going to happen going forward from this meeting? Because 22 we've seen that -- there was going to be this quarterly 23 process and beyond the specific equipment identifiable for 24 1999, there was additional equipment post-'99. There were 25 prospective software, major software acquisitions, and as the

1 record will indicate, all of those things happened in due 2 course. 3 What was your understanding of how that was 4 going to be managed, who was going to keep track of that 5 going forward, was that going to be an SAP function, or what 6 was going to happen? 7 A: I -- I'm not really sure. 8 Q: Would it be reasonable to believe that 9 that topic would be something that was discussed at this 10 meeting? 11 A: I think we were talking about how we were 12 going to set up the SAP and roll it out for this type of 13 process. 14 Q: And the use of the SAP for this type of 15 process, would that be with a view to keeping track of what 16 was put on lease from time to time? 17 A: That's correct. 18 Q: And as the person -- as I understand it 19 from Purchasing standpoint, SAP fell under -- under your 20 domain, or under your area? I mean, I don't know if I'm 21 putting it correctly, but that was something that you were 22 involved in? 23 A: Only as far as the rolling out of SAP. 24 Q: All right, well, what -- can you help us 25 at all, and again, I don't see anything in these notes, but

1 can you help us at all about your memory of what was going to 2 happen, going forward from the September meeting? 3 A: Not really. 4 Q: All right. 5 MADAM COMMISSIONER: Mr. Moore, is this a good 6 time to take a break? 7 MR. DAVID MOORE: It is a good time. 8 9 (BRIEF PAUSE) 10 11 MADAM COMMISSIONER: All right, we'll be back 12 at ten (10) to. 13 THE REGISTRAR: Order. The Inquiry is 14 recessed until 11:50. 15 16 --- Upon recessing at 11:30 a.m. 17 --- Upon resuming at 11:50 a.m. 18 19 THE REGISTRAR: The Inquiry will resume, 20 please be seated. 21 22 (BRIEF PAUSE) 23 24 MADAM COMMISSIONER: Mr. Moore...? 25 MR. DAVID MOORE: Thank you, Commissioner.

1 2 CONTINUED BY MR. DAVID MOORE: 3 Q: Just speaking -- before I leave the 4 September time frame, I anticipate, sir, there'll be some 5 evidence about some -- some meetings, and some review by the 6 City, in late September, about bearing upon the decision to 7 change the term of the lease, from thirty-six (36) to sixty 8 (60) months. 9 And as I understand your evidence, you weren't 10 involved in that process? 11 A: That's correct. 12 Q: And -- and without getting into the 13 details of that, I anticipate that some of the people who 14 were involved, may well include individuals from Finance, 15 who'd been involved in the evaluation and report process, 16 that -- that we've spoken of. 17 A: I'm not sure. 18 Q: All right, but I take it that -- that -- 19 that regardless of who was or was not involved in that 20 decision, you're not aware of anyone from Finance coming to 21 the Purchasing Department and raising any issue or concern? 22 A: No. 23 Q: Now, and -- and one (1) of the documents 24 that's been referred to is an October 1st memorandum, that -- 25 that is written by Lana Viinamae, and that document is at --

1 at Tab 15, in Volume 1 of Mr. Pagano's book, and actually it 2 may be in -- in your book too, but I -- that's the reference 3 I have, if I can just -- 4 MADAM COMMISSIONER: What's the Begdoc number? 5 MR. DAVID MOORE: 13065. Now, this is -- this 6 is in the first volume of Mr. Pagano's book, Tab 15. 7 8 (BRIEF PAUSE) 9 10 THE WITNESS: Now just -- 11 MADAM COMMISSIONER: Tab what? 12 THE WITNESS: 13065? 13 MR. DAVID MOORE: Yes, that's right. 14 Tab 15 -- 15 MADAM COMMISSIONER: Oh, Tab 15, sorry. 16 MR. DAVID MOORE: Yes, sorry. 17 18 (BRIEF PAUSE) 19 20 CONTINUED BY MR. DAVID MOORE: 21 Q: And you're not shown as having been copied 22 on this document, it appears to be dated October 1st, 1999. 23 And -- and it makes reference to a certificate of acceptance, 24 covering a majority of the hardware acquisitions to date for 25 1999, and then it goes on:

1 "As requested by Finance, the lease term of 2 sixty (60) months has been used for this 3 certificate." 4 Now, it appears that -- that Mr. Pagano and 5 Mr. Spizarsky were being kept in the loop at that -- at that 6 juncture; do you agree? 7 A: Okay. 8 Q: Sort of, that's what it appears? 9 A: Yes. 10 Q: And let me ask you, did -- did either Mr. 11 Pagano or Mr. Spizarsky raise any issue with you, subsequent 12 to this October 1 memorandum, raising any Purchasing 13 concerns? 14 A: No. As of this date, I was no longer in 15 Purchasing, I was in the client services unit. 16 Q: I understand, but, as we'll see you can -- 17 A: So I've never seen this before. 18 Q: Oh, I understand. But, you continued and 19 we'll see as we follow -- as we follow through the 20 chronology, as I say, I just have a few supplemental 21 questions to those that Mr. Anderson put. 22 It appears that you continued to attend 23 meetings relating to this leasing program. And I'm just 24 wondering whether or not, in that context, subsequent to 25 October 1, '99 either, Mr. Pagano or Mr. Spizarsky, ever came

1 to you and said, gee, Mr. Beattie, there's something going on 2 here that is not quite right, or we're concerned, or -- so I 3 take it nothing like that took place? 4 A: No, that's correct. 5 Q: And if I can just then carry forward with 6 the chronology and as I say, I have a few supplemental 7 questions about what Mr. Anderson directed to you yesterday, 8 sticking with the documents under Tab 87 of Mr. Pagano's 9 Book 2. 10 And this again is a set of documents without 11 Begdocs, but, as the very last document, the agenda for the 12 December 9th, 1999 meeting and this is one (1) of the 13 documents that Mr. Anderson directed you to yesterday. Do 14 you have that document, sir? 15 A: Yes. 16 Q: And I think you indicated you were at that 17 meeting? 18 A: I believe, I was, yes. 19 Q: All right. And it's evident that the 20 purpose of the meeting, at least judging by the agenda is the 21 leasing program review, correct? 22 A: That's correct. 23 Q: And there's a -- there's a wide range of 24 people, it appears eleven (11) people who were invited to the 25 meeting, correct?

1 A: That's correct. 2 Q: From Finance, from Purchasing division of 3 Finance, from IT, it's quite a wide spectrum of people 4 invited to the meeting? 5 A: That's correct. 6 Q: And if we can hold that document, sir, and 7 at the same time, if I could ask you to turn up in the first 8 Volume of Mr. Pagano's book, just hold that -- hold that 9 agenda, the first Volume at Tab 44. 10 And this too Commissioner is another recently 11 produced document for which we don't have Begdocs. 12 And the page -- yes -- you have the right Tab, 13 sir. If I could ask you to go to the second page in, and 14 that page at the upper half of that page, that appears to be 15 Mr. Spizarsky's handwriting once again? 16 A: Okay. 17 Q: You agree with that? 18 A: Yes. 19 Q: All right. And it appears to be the note 20 directed to Paul, Dave and Lou? You see that? 21 A: Yes. 22 Q: And the Dave would be yourself? 23 A: That's correct. 24 Q: All right. And it says: 25 "Attached is the draft procedure from IT

1 re: computer hardware and software. IT 2 wants us to attend a meeting this Thursday, 3 December 9th, 10:00 a.m." 4 Have I got that right? 5 A: That's correct. 6 Q: And so it appears that the materials -- 7 there's certain materials that are provided to you as part of 8 the invitation to the meeting. You're given certain 9 documents, correct? 10 A: Correct. 11 Q: And that's, I take it, to be able to 12 participate on an informed basis in the meeting? 13 A: Yes. 14 Q: All right. And did you read those 15 documents? 16 A: No. 17 Q: You didn't read them? 18 A: No. 19 Q: Why not? 20 A: Because we were there only on behalf of 21 client services, with the introduction of the SAP. 22 Q: But, wouldn't you want to inform yourself 23 about what the meeting was about? I mean wasn't that why you 24 had been given the documents? 25 A: Yes.

1 Q: So I'm still puzzled as to why you 2 wouldn't even read the documents, given the purpose of 3 getting the documents was to be informed for the meeting? 4 A: That's right. 5 Q: So, why wouldn't you read them? 6 A: As I mentioned, we were there, Paul and I 7 were there on the basis of the client services, with the roll 8 out of the SAP and how it would be handled through them. 9 Q: See, well, it was connected to the leasing 10 program, correct? 11 A: Correct. 12 Q: And we've established that client services 13 was generally speaking the first point of contact between the 14 initiating department and Purchasing? 15 A: That's correct. 16 Q: So Purchasing to client services was going 17 to have or at least potentially going to have some ongoing 18 contact or role in that leasing program, isn't that right? 19 A: Only as it relates to the SAP rollout, 20 server. 21 Q: Well, and the SAP rollout was a system 22 designed to keep track of what was going on in broad terms, 23 correct? 24 A: Correct. 25 Q: All right. So -- and so, coming back, I'm

90
  1  having some difficulty as to why you wouldn't bother reading
  2  the material.  Did you ever read the material?
  3                 A:  I probably cursory glanced through, yes.
  4                 Q:  The cursory glance through.  Well, then
  5  let me just take you to the material.  The third page in  is
  6  the le