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 December 9th, 2002 25

2
  1                        APPEARANCES
  2  
  3  Ronald Manes            )Commission Counsel 
  4  Patrick Moore           )
  5  Daina Groskaufmanis     ) 
  6  
  7  Linda Rothstein         )City of Toronto 
  8  Lily Harmer (np)        )
  9  Robert Centa            )
 10  David Moore             )MFP 
 11  Fraser Berrill          ) 
 12  Ken Jones (np)          ) 
 13  Brian Heller            )Ball Hsu and Associates Ltd.
 14  Melissa Kronick (np)    )CUPE 
 15  Raj Anand               )Lana Viinamae
 16  Bay Ryley               )
 17  William Anderson        )Wanda Liczyk
 18  Valerie Dyer            )Dell Computers
 19  Jennifer Lynch (np)     )
 20  Edward Greenspan (np)   )Jeff Lyons
 21  Todd White (np)         )
 22  
 23  Joyce Ihamaki           )Registrar
 24  
 25

1 TABLE OF CONTENTS 2 Page 3 MICHAEL GARRETT, Resumed 4 5 Cross-Examination by Mr. William Anderson 8 6 Cross-Examination by Mr. David Moore 131 7 8 Certificate of Transcript 225 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

1 --- Upon commencing at 10:02 a.m. 2 3 THE REGISTRAR: The inquiry is now in session, 4 please be seated. 5 6 MICHAEL GARRETT, Resumed 7 8 MR. RONALD MANES: Good morning. 9 MADAM COMMISSIONER: Morning. All right. 10 Who is -- Mr. Anderson? 11 MR. RONALD MANES: Before Mr. Anderson starts, 12 I understand Mr. Anderson -- that he is filing a binder of 13 documents this morning. 14 MADAM COMMISSIONER: Yes. 15 MR. RONALD MANES: And I understand from Ms. 16 Rothstein, that they're going to be filing some documents, as 17 well. 18 I've talked to Mr. Garrett. Mr. Garrett 19 hasn't had a chance to review any of these documents, except 20 I guess a brief skim, and I think it would be helpful if Mr. 21 Garrett had an opportunity to review those documents before 22 he's examined on them. 23 I don't know how many of those documents he 24 would be personally acquainted with, if any, but I think it 25 would be of more assistance to you if he were acquainted with

1 the documents he's looking at. 2 MADAM COMMISSIONER: Mr. Anderson, are these 3 documents that were available last Friday when we left? 4 MR. WILLIAM ANDERSON: Most of them were, 5 however, I finished by book of documents on the weekend. 6 After hearing the evidence of Mr. Garrett, I 7 wanted to compile to make sure that I had a complete set of 8 documents for Mr. Garrett and not put them in piecemeal. 9 I have provided Mr. Garrett with a copy this 10 morning and I've asked him to the best of his ability, given 11 he only had ten (10) minutes to take a look at the documents, 12 but I'm certainly prepared if Mr. Garrett requires more time. 13 Or, if he would like to stop when referred to 14 a document and then review it, I'm quite prepared to allow 15 that, with your indulgence. 16 MADAM COMMISSIONER: Well, let me tell you my 17 concern. 18 There are a lot of documents, I appreciate 19 that. What we have tried to do is to put in all the 20 documents that we anticipate that Commission Counsel will be 21 referring to. 22 And our Rules ask that -- it's mandate 23 actually, is that if anyone has any additional documents that 24 they wish to put to the witness, that they be given to us in 25 advance, so that we can copy them, make the gazillion copies

1 that are required for every else. 2 And that the witness then has an opportunity 3 to review all of the documents before coming here to testify. 4 In other Inquiries, the rule was that there 5 was a twenty-four (24) hour notice period. And we chose not 6 to put that in because we didn't want to limit Counsel and 7 also recognize that sometimes things come up in the 8 examination that no one had anticipated. 9 However, I'm a little concerned. Here's our 10 second witness and we're now getting bunches of documents 11 that have been served so late in the day that they have a 12 potential to result in delay of the Inquiry being able to 13 proceed in an expeditious fashion. 14 I gather that the City also has some documents 15 that they're going to be putting to Mr. Garrett. 16 So, I'll just say now that I would ask 17 Counsel, as much as possible, to have these done in advance 18 so that we can put them all into these rather large tomes 19 that exist already. 20 And that the witness then has an opportunity 21 to at least look at them for more than just three (3) nano 22 seconds before being called to testify. 23 So, with that, why don't I find out from Mr. 24 Garrett. 25 Mr. Garrett, do you want to take some time to

7
  1  take a look at these documents or do you want to do it on a
  2  case by case basis?   We're not -- this an Inquiry, it's not
  3  trial by ambush, and so you're not expected to be able to
  4  know exactly what is in these documents that you haven't seen
  5  before.
  6                 THE WITNESS:  Well, it might be useful to take
  7  a few minutes to review them --
  8                 MADAM COMMISSIONER:  All right.
  9                 THE WITNESS:  A little more than just tabbing
 10  through them quickly.
 11                 All right.  Well, why don't we do that and you
 12  let me -- you let me know when you're ready.
 13                 THE WITNESS:  Thanks.
 14                 MADAM COMMISSIONER:  All right.   
 15                 THE REGISTRAR:  The Inquiry is in recess.
 16  
 17  --- Upon recessing at 10:07 a.m.
 18  
 19  ---  Upon resuming at 10:20 a.m.
 20  
 21                 THE REGISTRAR:  The Inquiry is in session,
 22  please be seated.
 23                 MADAM COMMISSIONER:   Have you had an
 24  opportunity to read the documents?  
 25                 THE WITNESS:   Yeah.

1 MADAM COMMISSIONER: If you need more, let me 2 know, okay? Because like I said, this is not trial by ambush 3 and we want you to have the opportunity to read the material. 4 MR. WILLIAM ANDERSON: I'm requesting that 5 the Commission receives this binder as Exhibit 3C. 6 MADAM COMMISSIONER: 3C? 3 -- how are we 7 doing this now? 8 MR. RONALD MANES: We are going to, with your 9 permission, change it from alphabetical to numbers so this 10 would be Volume 3. 11 MADAM COMMISSIONER: So this is Exhibit 3, 12 Volume 3? All right. Thank you. 13 14 CROSS-EXAMINATION BY MR. WILLIAM ANDERSON: 15 Q: Good morning, Mr. Garrett. 16 A: Good morning. 17 Q: I want to start briefly and talk about 18 task at hands with respect to the amalgamation of the seven 19 (7) jurisdictions. 20 I think we're all in agreement and I think 21 your evidence the other day established that the amalgamation 22 was an enormous undertaking. 23 A: Yes. 24 Q: And your evidence, I believe, the other 25 day was that all senior staffs were working exceptionally

1 hard in accomplishing the goal of amalgamation without a 2 disruption of service and with a zero (0) tax increase. 3 A: Yes. 4 Q: And I take it that Ms. Liczyk was no 5 exception to that effort? 6 A: That's correct. 7 Q: She, like many of the other senior 8 members of management, were working twelve (12) to fifteen 9 (15) hours a day regularly? 10 A: Yes. I believe so, yes. 11 Q: She was working on weekends with other 12 people. 13 A: Yes. 14 Q: And she, as well as the other members of 15 senior management, were tak -- weren't taking a lot of 16 vacation time during this period? 17 A: I don't -- no, I don't believe so. 18 Q: It's fair to say that people were working 19 around the clock to ensure that amalgamation went smoothly? 20 A: Yes. 21 Q: And I don't believe this was your 22 philosophy, but would it be fair to say that Council's 23 philosophy was that you produced or you were gone? 24 A: I wouldn't want to make that assessment. 25 Q: Isn't that precisely what happened to Ms.

1 Rodrigues? 2 A: No, not exactly. 3 Q: Ms. Rodrigues was accused of not putting 4 in sufficient effort to get the job done and so she was 5 replaced. 6 A: No, I don't recall it that way. 7 Q: Do you recall what motivation was -- or 8 what the reason was why Ms. Rodrigues was terminated? 9 A: It's a little bit vague in my mind at 10 this point, but it -- it came about as a dispute between the 11 Commissioner and the Budget Committee chair. Mr. -- 12 Q: Mr. Jakobek? 13 A: Mr. Jakobek. In some of the discussions 14 on budget, I believe and that lead to a pretty serious public 15 hanging-out of -- of Ms. Rodrigues, which ultimately led to a 16 number of other events to her departure. 17 Q: Why was she hung out? 18 A: I don't remember this -- the particular 19 circumstances. 20 Q: The main goal of senior management -- the 21 senior management team was to get the job done as quickly and 22 efficiently as possible. 23 A: Yes. 24 Q: In order to accomplish the goal of 25 amalgamation, you set up a team model for the administration

1 of the City. 2 A: Yes. 3 Q: I believe that you referred in your 4 evidence the other day to having the Commissioners act as 5 deputy CAOs. Do you recall that? 6 A: Yeah, they were like that. Yeah. 7 Q: Yeah. 8 A: Yeah. On many occasions because of the 9 scale of the City. 10 Q: Exactly and one of your mantras was, let 11 the managers manage? 12 A: Yes. 13 Q: The Commissioners were not expected to, 14 nor could they, micro-manage their departments. 15 A: No, that's true. They also relied on 16 delegation and capable technical staff, as did I. 17 Q: And in the Finance Department, there were 18 capable technical staff. 19 A: I believe so. 20 Q: And you tended to work with the 21 Commissioners on broader policy issues? 22 A: Generally, that was true. Although, from 23 time to time there were specific undertakings where there was 24 a closer connection with lower-level staff, as well as the 25 Commissioner on particular projects.

1 For example, establishing Toronto Hydro, 2 setting up Toronto Hydro. Working with a number of the 3 finance staff and the legal staff on that. 4 Q: But the Commissioners would be assigned a 5 task. You and the Commissioner, with responsibility for that 6 task, would strategize how to implement the task and then the 7 Commissioner would delegate the task to the appropriate 8 people to accomplish that task. 9 A: To get the job done. 10 A: Right. 11 Q: One of the larger issues that you dealt 12 with with Ms. Liczyk, was the budget process? 13 A: Yes. 14 Q: And I understand from Ms. Liczyk that the 15 budget process was incredibly grueling? 16 A: It was. 17 Q: And went on for months? 18 A: Yes. 19 Q: And that Tom Jakobek and some of the other 20 Councillors that sat on the budget committee would go through 21 the budget items, line by line? 22 A: Yes. 23 Q: And they would call people to account for 24 all of those line items? 25 A: That's correct. Not necessarily all the

1 line items, but, they would -- that would be the approach -- 2 some areas would be not in their line-by-line review. 3 They would decide on which particular 4 activities under which particular programs they decided to 5 concentrate on. 6 But, if they decided to concentrate on one (1) 7 heavily, that's a fair statement, that they would go through 8 line-by-line. But I wouldn't want to represent it that 9 budget committee went through every program and every 10 activity on a line-by-line basis. 11 Q: But the review as thorough and it was 12 exacting? 13 A: I'm not sure I would agree with that. I 14 think that you can get buried in detail -- that you can't see 15 the forest for the trees. 16 And in the early days, I'm not -- I'm not 17 convinced that the approach that Councillor Jakobek used in 18 budgeting was the most appropriate approach for a City the 19 scale of Toronto because you got buried in detail and 20 counting cars, when you should have been dealing with what is 21 the cost of delivering a service on a unit basis and looking 22 at it at a higher level. 23 And then where you see there's some problems, 24 ferreting out the problems with efficiency or whatever. And 25 having a more targeted approach.

1 So, I'm not -- you were asking the question, 2 if I heard you right, was the process perfect? It wasn't 3 perfect by -- 4 Q: No not perfect, but it was thorough? 5 A: It was thorough in a lot of areas, but it 6 was less than thorough in others. 7 Q: And Mr. Jakobek specifically and 8 particularly was thorough with respect to his review of the 9 budgetary process? 10 A: In the areas he chose to concentrate on. 11 Q: I understand that many of these budget 12 committee meetings were absolutely brutal on staff? 13 A: Yes, they were. 14 Q: And you? 15 A: Depending on the issue, but particularly 16 the finance staff. Particularly, the Treasurer and the 17 Budget Director and his or her staff. 18 Q: And, of course, by the Treasurer you're 19 referring to Ms. Liczyk? 20 A: Commissioner, yes. 21 Q: And you personally witnessed Mr. Jakobek 22 having serious conflicts with the CFO Treasurer regarding 23 budget items? 24 A: Yes, in the early days. 25 MADAM COMMISSIONER: When you say, Mr.

1 Garrett, in the early days, is that because it only happened 2 in the early days or that was -- 3 THE WITNESS: I would have -- 4 MADAM COMMISSIONER: -- when you were there 5 and when you saw it? 6 THE WITNESS: -- no, I would have observed it 7 in the later years of the four (4) years that I was there. 8 It was less problematic as it was in the first year. 9 And so I was -- there seemed to be a lot of 10 tension with a number of us, including the Treasurer and 11 myself with the approach that Councillor Jakobek was using on 12 this. 13 As time went on, I would have said that that 14 conflict between the Commissioner of Finance and the -- and 15 the Budget Chief was less fractured. 16 MADAM COMMISSIONER: Thank you. 17 18 CONTINUED BY MR. WILLIAM ANDERSON: 19 Q: Okay. Is it fair to say that Ms. Liczyk 20 was very knowledgeable with respect to the finance issues 21 that she brought to the budget committee? 22 A: Yes, she had a pretty good mind for the 23 detail of departmental budgets. 24 Q: Fair to say -- 25 A: I was impressed.

1 Q: Right -- is it fair to say that over the 2 course of time Mr. Jakobek would have been impressed by the 3 way that she was conducting herself? 4 A: Yes, that could have been. 5 Q: And while Mr. Jakobek was hard on staff, 6 in fact, brutal at times, he was also complementary when the 7 job was done properly? 8 A: I'm not sure I'd agree with that. 9 Q: I'm going to take you then to Tab 22, of 10 my brief of documents. 11 A: 22? 12 Q: 22 and that's document number 34364. If 13 you could turn to Page 12. 14 Q: Commissioner, I didn't read all this 15 report in the time I was given. 16 A: No and that's fine. Take a look at 17 Clause -- 18 A: 12? 19 Q: A2. Page 12, clause A2. 20 21 (BRIEF PAUSE) 22 23 A: Yes. 24 Q: That's Mr. Jakobek's motion to convey 25 City Council's appreciation to the members of the Budget

1 Advisory Committee, the Chief Administrative Officer, you, 2 the Chief Financial Officer and Treasurer, Ms. Liczyk, staff 3 of the Finance Division and the Administrator the Budget 4 Advisory for their efforts in preparing the 2000 capital 5 budget. 6 A: Hmm hmm. 7 Q: So while Mr. Jakobek may have been hard 8 on people, he also recognized achievements and 9 accomplishments and then would ask City Council to actu -- to 10 also recognize those accomplishments. 11 A: Yes, from time to time. 12 Q: I'd like you now to go to Tab 89 of 13 Volume 2 of the documents that you had before you the other 14 day. 15 16 (BRIEF PAUSE) 17 18 Q: And you went through this document with 19 Mr. Manes the other day. 20 MADAM COMMISSIONER: 35674. 21 22 CONTINUED BY MR. WILLIAM ANDERSON: 23 Q: When you look at Ms. Liczyk's objectives 24 for the year '99/2000 you don't see any mention of Y2K there, 25 do you?

1 A: What page are the objectives on? 2 Q: It's the first and second page of that 3 tab, sir. 4 A: I think it's noted in the achievements -- 5 Q: Sir, you drafted the objectives for Ms. 6 Liczyk for '99/2000 and that's the first two (2) pages of 7 that tab? 8 A: The objectives were drafted by the 9 Commissioner for review with me. 10 Q: And you approved these objectives for the 11 year '99 -- 12 A: Yes. 13 Q: -- 2000? 14 A: Yes. 15 Q: And no where in those objectives does it 16 mention the Y2K project? 17 A: No, it's not here. No. 18 Q: Right. It's not one of -- it was not one 19 of Ms. Liczyk's primary objectives for the years '99/2000. 20 A: Yes, it was. It was one of her ongoing 21 responsibilities to be a member of the Steering Committee. 22 Not every activity that a Commissioner undertakes in the year 23 was put in their objectives. 24 These were often the highlights that we were 25 dealing with or perhaps even new initiatives that were coming

1 to the table. There would be things that would be initiated, 2 perhaps in 1998, like Y2K, that would carry on through the 3 year as a normal administrative matter. 4 Y2K, by this point, might have been seen to be 5 in the mill, a normal administrative matter, a different kind 6 of -- a different kind of issue. So I -- to say that it 7 isn't here doesn't mean that she didn't have responsibility. 8 Q: Absolutely, I'm not disagreeing with you, 9 sir. There were responsibilities that she had. My point is 10 that the Y2K program as not one of her top priorities nor was 11 it mentioned in her objectives for the year 1999 and 2000 by 12 you. 13 A: I wouldn't have put it that way. It was 14 one of her top priorities. It was an ongoing administrative 15 responsibility that she had on the Steering Committee to 16 have, as a member of that Steering Committee, to have some 17 oversight to the Y2K project. 18 Q: So your evidence is that was one of her 19 top priorities because she chaired the Y2K Steering 20 Committee? 21 A: She was a member of it. Yeah. 22 Q: She was a member of it? 23 A: I think Dick Cobine was the Chairman, 24 wasn't he? 25 Q: I understood your evidence from the other

1 day that Ms. Liczyk was the Chair of the Y2K Steering 2 Committee. She was -- 3 A: She was -- 4 Q: -- firstly, with Ms. Rodrigues as a co- 5 chair, and then following the departure of Ms. Rodrigues, as 6 the Chair of the Y2K Steering Committee? 7 A: I think there's some confusion there in 8 the days leading up to, I believe, it was the November 9 report, first as Co-Chair with Margaret and then Wanda alone, 10 were the Chair -- was the Chair of the Y2K effort and then 11 Council assigned a Councillor to be a member of the Y2K 12 Committee. And at that point, I believe, that person became 13 the Chair. 14 Q: You believe that -- 15 A: There was a transition, but I stand to be 16 corrected by the record. 17 18 (BRIEF PAUSE) 19 20 Q: If you could turn to page 3 of the same 21 Tab, that's document 35657. 22 MADAM COMMISSIONER: Tab 3? 23 MR. WILLIAM ANDERSON: No, same Tab, page 3. 24 MADAM COMMISSIONER: I'm sorry. What was that 25 Tab again?

1 MR. WILLIAM ANDERSON: It's Tab 89. 2 MADAM COMMISSIONER: Thanks. 3 4 CONTINUED BY MR. WILLIAM ANDERSON: 5 Q: This is the performance appraisal that you 6 drafted in respect of Ms. Liczyk? 7 A: Yes. 8 Q: No where in that performance appraisal is 9 there any mention of any achievements with respect to the Y2K 10 project? 11 A: No, typically the policy on reporting on 12 achievements was to report on when things were finished. 13 Y2K, I think, in this case -- Y2K was wrapped up -- let's 14 see, when was this done; this was done in the year 2000 -- 15 Q: August the 31st, 2000. 16 A: -- so I think, for example, in one (1) of 17 the specific objectives, I comment on the water billing 18 system. 19 Q: Yes. 20 A: Being Y2K compliant in the specific, one 21 (1) of the examples of the elements of the Finance Department 22 responsibilities that appeared to be working at least from an 23 outcome basis, was providing satisfactory results. But, it 24 wasn't -- 25 Q: Sir --

1 A: -- it wasn't without mention. 2 Q: The water billing? 3 A: Yes, the Y2K. 4 Q: And I understand that there were certain 5 Y2K issues that were relevant with respect to the Finance 6 Department specifically, such as the SAP and the water 7 billing? 8 A: Hmm hmm -- 9 Q: And Ms. Liczyk was responsible or oversaw 10 the implementation of those computer processes? 11 A: Yes. And she was the Commissioner that 12 was on the Y2K Steering Committee. 13 Q: From its inception? 14 A: From its inception. 15 Q: Sir, this performance appraisal, is 16 relevant with respect to the period April 1st, 1999, to March 17 the 31st, 2000, correct? 18 A: Yes. 19 Q: And that was the period of time, when the 20 Y2K project and program was struck and then achieved its 21 goals of Y2K compliance, correct? 22 A: No, it began in '98. 23 Q: The most relevant period with respect to - 24 - 25 A: The clock turned during this -- the period

1 of this appraisal. 2 Q: Exactly. 3 A: Yes. 4 Q: And no where in Ms. Liczyk's performance 5 appraisal, is there any mention of any accomplishments or 6 problems with respect to the Y2K program? 7 A: That would -- without reading it again in 8 detail, other than the specific elements that related to 9 Finance, that would appear to be correct. 10 Q: Perhaps you could take a quick moment 11 then, sir, to review that document, because when I review the 12 document, I see no reference in the performance appraisal to 13 any Y2K program involvement. 14 A: Well, it acknowledges the -- it certainly 15 acknowledges the attachment and the achievements that have 16 been laid out in the attachments. 17 So, one (1) should first look at the 18 attachment to see if it refers to Y2K and there's a number of 19 references in some of the detail about Y2K and the SAP 20 implementation, the water billing implementation and those 21 specific elements that related to -- to Finance. 22 And let's just check here -- 23 24 (BRIEF PAUSE) 25

1 A: There's reference in -- in the overview 2 of the critical challenges on the -- on the last page, or on 3 -- on 35666, to: 4 "Extended continuing amalgamation issues in 5 getting Y2K ready. Efforts were focussed 6 on implementing new consolidated solutions 7 that were higher risk, given the Y2K 8 immoveable deadline." 9 So there's a mention of it there. 10 11 (BRIEF PAUSE) 12 13 A: So other than that it doesn't seem to be 14 -- it doesn't seem to be highlighted. 15 Q: Right. 16 A: It may be mentioned, I might have -- I've 17 been scanning here, I might have missed it. But it certainly 18 mentions Y2K in a number of items specifically, but not the 19 -- it appears not to mention the Steering Committee. 20 Q: My understanding is that the SAP Program, 21 was a Finance specific program, and that was dealt with by 22 the Finance -- 23 A: That's correct. 24 Q: -- Department? 25 A: Yeah.

1 Q: As other departments would have had 2 specific Y2K issues which they were required to accomplish 3 during that period? 4 A: Yes, right. 5 MADAM COMMISSIONER: Mr. Anderson, can you 6 remind me what SAP stands for? 7 8 CONTINUED BY MR. WILLIAM ANDERSON: 9 Q: Mr. Garrett, can I put it to you -- 10 A: It's a -- an accounting system, a 11 financial information system. 12 MADAM COMMISSIONER: Okay. 13 MR. WILLIAM ANDERSON: And it processes the -- 14 THE WITNESS: It -- it does all your accounts 15 payable, receivables, it's a -- it's a financial management 16 system. 17 MADAM COMMISSIONER: Thank you. 18 19 CONTINUED BY MR. WILLIAM ANDERSON: 20 Q: I believe that -- 21 A: We didn't have a common system at the 22 City, and so one (1) of the things that Finance had to do was 23 build a -- a -- first a system that was Y2K compatible, and 24 also could handle all the accounts. The different 25 Municipalities had different systems.

1 MADAM COMMISSIONER: Thank you. 2 3 CONTINUED BY MR. WILLIAM ANDERSON: 4 Q: So six (6) different Municipalities had 5 different systems and Ms. Liczyk consolidated those systems 6 into one (1) system for the amalgamated City? 7 A: Oh, yeah, the project, it was a multi- 8 year project, yes. 9 Q: And that was a high risk project? 10 A: Yes. 11 Q: And Ms. Liczyk chose, instead of 12 remediating six (6) different systems, she decided that it 13 would be preferable and to the taxpayer's interest to 14 consolidate six (6) different systems into one (1)? 15 A: There's seven (7) I would have said, into 16 one (1). Etobicoke had SAP, I believe, it was the only 17 Municipality that had SAP and there was an evaluation done of 18 the different systems, People Soft being an example, and the 19 Treasurer and her team made the recommendation decision that 20 SAP was -- was the one (1) to go with. 21 Q: Right. And again, that was a finance 22 specific directive? 23 A: Hmm hmm. 24 Q: In the six (6) pages that are entitled, 25 Achievement Highlights for May '99/2000, there is not one (1)

1 mention of the global Y2K program? 2 A: What page is it you're on? 3 Q: Six (6) pages that commence with, 4 Achievement Highlights for May 1999/2000, 660 and beyond, 5 5660? 6 A: Well, I take your word for it. 7 Q: Okay. And in fact when you talked about 8 the critical or the overview of critical challenges for 9 1999/2000 in your evidence the other day, and the reference 10 to Y2K, you referred to that as honorary mention. Do you 11 remember saying that? 12 A: No. 13 Q: In fact, the Y2K Project, was not part of 14 Ms. Liczyk's primary duties and responsibilities during this 15 time period? 16 A: No, I disagree. It was an ongoing 17 function, it began in 1998, it wouldn't have necessarily 18 consumed a lot of her time, which is why I expect that it 19 wasn't highlighted here, especially in the spring of 2000, 20 when the -- the problem was over, the issue had been solved, 21 the main workload for Y2K -- I don't want to have anyone 22 misunderstand, didn't fall on Ms. Liczyk, it fell on Lana 23 Viinamae as project director to implement it. 24 But in terms of ongoing responsibilities, 25 Commissioners sit on a variety of different administrative

1 committees in the course of running the City. 2 Y2K, by that point in time, would have been 3 seen as an ongoing operational committee and not something of 4 particular highlight and -- but it was something where you 5 sit on a committee, you're assigned to it, you provide some 6 oversight but the -- I wouldn't have portrayed Ms. Liczyk as 7 the daily working -- working on Y2K on a daily basis. 8 Yeah, you're quite right in saying that her 9 focus would have been, as any Commissioner, would have been 10 focused on the systems that her department had direct 11 responsibility for. 12 But then the administrative role, and I see 13 that there's some minutes from the Y2K Steering Committee in 14 here, would be to have some corporate oversight as to the 15 risks that the City was facing and making sure that those 16 problems were being attended to and making further 17 recommendations to the senior management team. 18 So, I -- I would expect that what happened 19 here is that this had fallen off the high-priority list after 20 the clock had ticked over into the Year 2000. 21 By the time that this appraisal was done, 22 which was probably May of 2000, was when this performance 23 appraisal was done and we'd finished clapping ourselves on 24 the back and saying that it worked and -- and we were moving 25 on to other things and other pressures.

1 Q: Mr. Garrett, it's fair to say, though, 2 that it wa -- the Y2K project was not a highlight with 3 respect to Ms. Liczyk's duties and responsibilities during 4 that period? 5 A: She was concentrating her efforts on the 6 budgetary process and on downloading and other strategic 7 initiatives -- 8 Q: Those -- 9 A: -- of the Finance Department. 10 Q: -- those would have used more time. 11 A: Is that what you're asking? Which would 12 have consumed her more? 13 Q: Yes. 14 A: Definitely. Those fi -- those other 15 things that you just mentioned would have consumed more time. 16 But -- but no less important is the continuing 17 participation in guiding the corporation in a number of other 18 areas. 19 Q: And this would be one of them? 20 A: Often, Commissioners might sit on issues 21 dealing with Human Resources, for example. It might not 22 stand out as a highlight within their own department but 23 they're acting in their corporate role. 24 So, these things tended to focus on the 25 specific objectives that related to the department and some

1 of the -- some of the corporate things might not be 2 highlighted as much. 3 MADAM COMMISSIONER: You mean, in the 4 performances appraisals? 5 THE WITNESS: In the performance appraisals. 6 The performance appraisals too, I should to be 7 clear, never are intended to cover every function, every 8 duty, every -- everything that a Commissioner or person does 9 in a year. They would take far too long to do. They would 10 take far too much time to complete. 11 The idea here was to focus on dealing with the 12 -- reviewing the -- the principal, top-of-mind issues from 13 the past year and then focus on setting what the priorities 14 were given the budget process that we'd just been through for 15 the subsequent year and having some consensus on moving ahead 16 with those. 17 CONTINUED BY MR. WILLIAM ANDERSON: Yeah, you 18 focussed on the principal priority issues with respect to Ms. 19 Liczyk's duties and responsibilities. 20 A: And -- and often it was -- you know, the 21 review was something in terms of -- providing for merit, but 22 often the discussion focussed on what we had to do in the 23 next year, in the year 2000 and 2001 to move the yardsticks 24 ahead. 25 Q: If there was some corrective action that

1 had to be taken? 2 A: In the performance appraisal, if there 3 were some things that weren't going right that was a time to 4 identify them and so often the performance appraisal time was 5 if things weren't -- weren't working in a particular area 6 that was the primary emphasis as opposed to reviewing in 7 detail every undertaking of the past year or eighteen (18) 8 months. 9 Q: Sir, it's fair to say that Y2K project 10 was an enormous undertaking on behalf of the City of Toronto? 11 A: That's right. 12 Q: Also -- 13 A: For all departments, yeah. 14 Q: -- and fair to say that the Commissioner 15 of corporate services would have been reviewed and her 16 performance appraisal would have been based on the 17 accomplishments of the Y2K project? 18 A: Well, in this case, the -- yeah, Y2K 19 initially started off in corporate services but then the 20 Commissioner, as you indicated earlier, had left and we 21 assigned the Y2K Steering Committee member -- Commissioner 22 membership, it fell to Ms. Liczyk as she was already there 23 and there was essentially one less person on the Steering 24 Committee from the staff side. 25 Q: I want to turn to that issue because I

1 want to clear up Ms. Liczyk's involvement with the Y2K 2 Steering Committee. 3 I understand from your evidence today, that 4 you have now suggested that Councillor Dick O'Brien was the 5 Chair of the Y2K Steering Committee? 6 A: I believe that to be the case and I'm sure 7 there is some evidence here that will clear that up for you. 8 I don't have it on the tip of my tongue. 9 Q: So the other day when you were giving your 10 evidence and said that Ms. Liczyk was the Chair of the Y2K 11 Steering Committee, that was incorrect? 12 A: There was a period of time -- the reason 13 for the confusion, is there was a period of time, when it was 14 a staff-led undertaking, from the beginning of 1998, when the 15 problem had first surfaced. 16 And there's some evidence in these tabs, I 17 don't know which one, that talked about me getting 18 information from the Commissioner of Corporate Services, 19 Margaret Rodrigues, that action had to be taken corporately 20 about the problem and what we must do to deal with it. 21 And the need to set -- and senior management 22 decided to set up the Steering Committee. And they were co- 23 chairs at that time, but it was a staff-led Steering 24 Committee, I believe. 25 Q: You could be incorrect?

1 A: Well, it's possible, but both of them were 2 on it, both of them had expressed significant interest. The 3 Finance systems were, as I recall, 50 percent of the systems 4 that were in jeopardy, in those early discussions, and so 5 Wanda herself was interested in playing a key role in the 6 steering of whatever action had to be taken. 7 So two (2) Commissioners were put on it. She 8 was an obvious person to be the senior person, at least -- 9 senior staff person on that committee, when Margaret left in 10 the summer of -- I don't remember the exact month, the summer 11 of '99. 12 Q: Is it your evidence, sir, that Ms. Liczyk 13 was on the Y2K Steering Committee from its inception? 14 A: From -- yes, from the period that it 15 became, there was a year 2000 committee, that existed that I 16 think I gave some evidence of that pre-dated amalgamation and 17 carried on into 1998 and got replaced in about June or July 18 of 1998 by the Steering Committee. 19 Now, there's some overlap in names. The 20 people that were on that committee, I believe, it was -- the 21 person that was the lead of that was either Jim Andrew or the 22 name that appears on a number of memos is Frank Vizzaccharo 23 or who was the IT Director from North York. 24 Q: And so that I understand this, is it your 25 evidence then that Ms. Liczyk, was a Co-chair of the Y2K --

1 A: Initially a Co-chair when Margaret was 2 around. 3 Q: And in June or July of 1998, was Ms. 4 Liczyk on the Y2K Steering Committee? The new birth of Y2K 5 Steering Committee? 6 A: Yes. 7 Q: She was? 8 A: Yes. 9 Q: And you're sure about that? 10 A: Yes. 11 MADAM COMMISSIONER: Sorry, what was that Mr. 12 Anderson? You're sure about -- 13 MR. WILLIAM ANDERSON: You're sure that Ms. 14 Liczyk was on the Y2K Steering Committee in June or July of 15 1998? 16 MADAM COMMISSIONER: Okay. 17 THE WITNESS: If you note all the purchase 18 forms that you gave me in this book, I just scanned -- 19 20 CONTINUED BY MR. WILLIAM ANDERSON: 21 Q: Yes -- 22 A: -- her name is there as one (1) of the 23 signing authorities. 24 Q: In June or July of 1998? 25 A: The -- well, you're being specific as to

1 the month -- I stand to be corrected on the month. 2 Q: During that period around June or July of 3 1998, Ms. Liczyk, according to you was on the Y2K Steering 4 Committee? 5 A: She was on a Y2K Steering Committee. 6 Q: I understand from Ms. Liczyk, that she 7 didn't join the Y2K Steering Committee until after Ms. 8 Rodrigues left, in June or July of 1999? 9 A: No, my -- my understanding was that it was 10 Margaret and herself that co-led that. It was a more 11 informal group until the report went forward to Council. 12 Lana became the Project Director, in June or so of 1998 and 13 the Steering Committee was one of the formal structures that 14 the Project Director reported to. 15 Q: And the Steering Committee was struck by 16 City Council? 17 A: The Steering Committee -- I'm not exactly 18 positive of that. It was either then -- we had a Steering 19 Committee in June and we also had the report in November that 20 had the $150 million amount allocated to it. 21 And that was -- I can't remember the date to 22 which -- Councillor O'Brien was added to that staff 23 committee. So, it was either the June or July period, or it 24 was the November period. 25 Q: Can you tell me, who were the staff --

1 the City staff representatives on Y2K Steering in March of 2 1999? 3 MADAM COMMISSIONER: Who were the City staff? 4 MR. WILLIAM ANDERSON: City staff that were 5 on the Y2K Steering Committee in March of 1999? 6 THE WITNESS: I would have said it would have 7 been Lana Viinamae, Jim Andrew, and Wanda Liczyk. 8 9 CONTINUED BY MR. WILLIAM ANDERSON: 10 Q: In March of '99? 11 A: In March of '99. 12 Q: Okay. Ms. Rodrigues also presumably 13 would have -- 14 A: And Ms. Rodrigues -- 15 Q: -- been on that? 16 A: -- sorry. 17 Q: Okay. So four (4) people, Lana, Jim, 18 Wanda, and Margaret? 19 A: That's my recollection. 20 Q: Okay. Could you turn to tab 12 of the 21 third volume of documents please? 22 23 (BRIEF PAUSE) 24 25 Q: Could you identify this letter, sir?

1 MADAM COMMISSIONER: It's 1099. 2 3 CONTINUED BY MR. WILLIAM ANDERSON: 4 Q: Sorry, 01099. 5 A: It's a letter to what appears to be a 6 member of the public. 7 Q: About Y2K? 8 A: About the communication plan for Y2K. 9 Q: Sir, who did you copy on that letter? 10 A: It says here, Lana Viinamae, Jim Andrew, 11 Margaret Rodrigues, and Councillor Dick O'Brien. 12 Q: Right, and that was the Y2K Steering 13 Committee? 14 A: I would have thought it would have 15 included Wanda. 16 Q: But your letter didn't copy Wanda did it? 17 A: Not here. 18 Q: No. 19 A: Not this letter. 20 Q: Well, let's look at another letter then. 21 If you could turn to the next tab 13, document number 01301. 22 Can you identify that correspondence, sir? 23 A: This is a letter to Councillor Miller. 24 Q: Right, and you're the author of that 25 letter?

1 A: Yes, it would have been written for me, 2 but I signed it. 3 Q: And the letter is with respect to the Y2K 4 Program, telling the public what the City is doing about it? 5 A: Yes. 6 Q: And again, sir, who did you copy on that 7 correspondence? 8 A: The same people. 9 Q: Right, the Y2K Steering Committee, and 10 someone from Corporate Communications? 11 A: Yes, the Director of Corporate 12 Communications. 13 Q: And again, Ms. Liczyk isn't copied on 14 that letter is she, as a member of the Y2K Steering 15 Committee? 16 A: No. 17 Q: Right. If you could turn now to tab 11 18 in the same book of documents. 19 MADAM COMMISSIONER: Mr. Garrett, can you 20 just help me with this? 21 I'm just wondering what the City's internal 22 policies were with respect to it. When I look at the cc's 23 and who was copied, the font is a smaller size than the 24 actual letter. So is this something, do you know, that is 25 put on at the time the letter is sent, or is it put on

1 afterwards, or do you know? 2 THE WITNESS: I -- I don't know, I'm sorry. 3 MADAM COMMISSIONER: All right, thanks. 4 5 CONTINUED BY MR. WILLIAM ANDERSON: 6 Q: Tab 11 is document number 00927. 7 A: Hmm hmm. 8 Q: And can you identify that document, sir? 9 A: It's a memo to file from me. Let's see, 10 what is it doing? At -- I guess it looks to me like I had a 11 meeting with the Steering Committee on April the 27th, and I 12 had some comments on the Steering Committee meeting. 13 Q: Right, and you met with the Steering 14 Committee from time to time? 15 A: Yes. 16 Q: Your name shows up in the minutes from 17 time to time-- 18 A: Just to -- when I was invited, where there 19 were critical meetings either starting up or progress -- 20 progress meetings. 21 Q: All right, and the first line says: 22 "A number of points were raised regarding 23 our progress." 24 And you include yourself with respect to the 25 progress of the Y2K Project --

1 A: Sure, yes. 2 Q: -- because you were involved with the Y2K 3 Project? 4 A: It was a major project for the City -- 5 Q: Right. And that the CAO -- 6 A: -- and its progress. 7 Q: -- right. 8 A: Yes. 9 Q: And your progress with respect to the 10 progress, as a participant in the Y2K process? 11 A: Yeah, I was tracking it care -- I was 12 trying to track it reasonably carefully. 13 Q: All right. 14 A: Making sure we met our -- our objectives. 15 Q: Okay. If you could read the handwritten 16 note at the bottom of that page, I take it that's your 17 handwriting? 18 A: No. It's not. 19 Q: Whose handwriting is that? 20 A: I don't know. 21 Q: Can you -- 22 A: It might be Wanda's. 23 MADAM COMMISSIONER: There -- there seems to 24 be two (2) different handwritings, Mr. Anderson. 25 MR. WILLIAM ANDERSON: Yes. There's the

1 actual note itself and then a response that says, yes please. 2 THE WITNESS: It's not my writing, anyway. 3 My writing you can barely read. 4 5 CONTINUED BY MR. WILLIAM ANDERSON: 6 Q: I'm going to suggest to you, sir, that 7 it's not Ms. Liczyk's handwriting either. 8 And the letter say -- the note says: 9 "I thought you should see this before I 10 sent it off. Do you want it distributed to 11 Jim, Lana and Dick?" 12 Correct? 13 A: That's what it says. 14 Q: Right. So the people who are receiving 15 this memo were Jim Andrew, Lana Viinamae, Dick O'Brien, and 16 Margaret Rodrigues, correct? 17 A: I don't know that for su -- it doesn't 18 say that here. 19 Q: Well -- 20 A: It asks a question but I don't know what 21 happened to it after that. 22 Q: It asked a question whether or not it 23 should be distributed to Jim, Lana, and Dick and was going to 24 Margaret Rodrigues as a cc and those four (4) people were the 25 members of the Y2K Steering Committee. Correct?

1 A: It's -- that's what it says here. 2 Q: Right, and there's no mention of Ms. 3 Liczyk -- 4 A: I would have said -- I would have thought 5 -- I still would have thought Wanda would have been 6 associated with it. 7 Q: Right, but she's not mentioned in that 8 note at all. 9 A: She's not mentioned there. 10 Q: Right. If you could turn to Tab 51 of 11 your set of documents and I believe it's the second volume. 12 13 (BRIEF PAUSE) 14 15 Q: This is Document 15898 and this is your 16 report of November 3rd, 1998, to the Strategic Policies and 17 Priorities Committee, correct? 18 A: It's our report. It's from three (3) of 19 us. 20 Q: So you, Jim, and Lana? 21 A: If you look at the first page from the 22 CAO, CFO and the Commissioner of Corporate Services. 23 Q: Okay. 24 A: Not Lana. 25 Q: If you could turn to Document 015903.

1 A: So say the number again? 903? 2 Q: 15903. There's a page number 6 at the 3 bottom of the page. 4 A: Yes. 5 Q: Could you read the last paragraph of that 6 -- 7 A: "Councillor O'Brien has been appointed to 8 represent Council in Steering Committee 9 with the Commissioner of Corporate Services 10 and the Executive Director of Information 11 and Technology. The Steering Committee 12 reports to the Strategic Policy and 13 Priorities Committee on a regular basis." 14 Q: Your report, joint report, dated November 15 the 3rd indicates that Dick O'Brien, Jim Andrew, and Margaret 16 Rodrigues are on the Y2K Steering Committee, correct? 17 A: Yes. 18 Q: And there's no mention there with respect 19 to the appointment of Ms. Liczyk on the Y2K Steering 20 Committee. 21 A: No, there isn't. 22 Q: Thanks. Sir, I'm going to suggest to you 23 again that Ms. Liczyk's evidence that she didn't join the Y2K 24 Steering Committee until Ms. Rodrigues left in the middle of 25 1999, is actually correct.

1 Could you be mistaken, sir? 2 A: It's possible that I could have been 3 mistaken but I would have said that the -- Ms. Liczyk had an 4 association with the Steering Committee prior to that date. 5 Q: All the departments had -- 6 A: In 1998, when we were talking about it 7 initially, there was an interest by Commissioner Liczyk in 8 being actively involved in that -- in that committee. 9 Q: Sir, in fairness, all department heads 10 had contact with Y2K Steering Committee during this time 11 period. They were reporting on the accomplishments and the 12 goals of their various departments, weren't they? 13 A: Well that's true too. 14 Q: Right. 15 A: But there was also significant 16 involvement by the Treasurer because of the number of 17 financial systems involved. 18 Q: You'd agree with me, sir, that it appears 19 as though from the documentation that I've shown you that Ms. 20 Liczyk wasn't on the Y2K Steering Committee prior to July of 21 1999? 22 A: That appears to be the case. 23 Q: Right. And you've over -- 24 A: From what you've shown me. 25 Q: -- and you've overemphasized her

1 responsibilities with respect to Y2K Steering, prior to that 2 period? 3 A: No, I don't think so. 4 Q: Okay. I'd like to turn now to the issue 5 of the Y2K funding, okay? If you could turn to Tab 57 of the 6 same book of documents, and it's document 01854. 7 If you could turn to page 19 of that document. 8 9 (BRIEF PAUSE) 10 11 That would indicate that Ms. Viinamae was 12 primarily responsible for drafting the report and that the 13 report was signed off by Ms. Rodrigues and Mr. Andrews? 14 A: Yes. 15 Q: And this is the first report that went 16 forward with respect to the Y2K project funding and 17 responsibilities, correct? 18 A: I believe that's true, yes. 19 Q: If you could turn to page 2 of the report. 20 A: Hmm hmm. 21 Q: Actually, if you could look at page 1 22 first, we'll establish the amount of money that the Corporate 23 Services Commissioner was asking for. At that point, they 24 were looking for $85 million for the project, right? 25 A: Yes, it says so here.

1 Q: Okay. And on page 2, paragraph 4, they 2 were asking for a Year 2000 office to be open and directed to 3 implement the necessary financial controls for managing the 4 project? 5 A: Yes. 6 Q: They were also asking that the City 7 Treasurer issue a report on the financing of the $85 million? 8 And that's at paragraph 9 of page 2? 9 A: Yes. 10 Q: And at paragraph 10 of page 3, the report 11 requested that you be granted one (1) time extraordinary 12 authority to act on behalf of Council to acquire the 13 necessary goods and services to remedy the Year 2000 problem? 14 A: That's what it says. 15 Q: All right. And then the report goes 16 through to analyze what the problems were with respect to Y2K 17 and what some of the solutions were to be implemented with 18 respect to those problems? 19 A: Yes. 20 Q: If you could turn to page 9, paragraph 8: 21 "The CAO and the Commissioners are fully 22 aware of the seriousness of the Year 2000 23 issues, but senior management has been pre- 24 occupied with the amalgamation and the day 25 to day operations of the City."

1 And that's true, right? 2 A: Hmm hmm, right. 3 Q: Your priorities, Ms. Liczyk's priorities 4 and the other Commissioners priorities, up until November of 5 this year, were with respect to amalgamation issues? 6 A: I think that's fair to say. 7 Q: And the IT Department said, wake up, this 8 is a serious problem that needs to be addressed? 9 A: And they drew it to the attention of the 10 Commissioner of Corporate Services, earlier than -- well 11 leading to this. 12 Q: And this report is dated June the 8th, 13 1998? 14 A: Hmm hmm -- 15 Q: Again, well prior to Ms. Liczyk forming 16 part of any Steering Committees with respect to Y2K? 17 A: Yes. 18 Q: If you could turn to page 14 of the same 19 report, technology infrastructure, it indicates $52 million 20 for infrastructure is broken down into $2 million for net 21 worth, $10 million for mainframe, $10 million for other 22 server platforms, and $30 million for desktops; right? 23 A: That's what it says. 24 Q: And then it says: 25 "Leasing will be utilized as a method of

1 reducing the cash flow impact on the City." 2 A: It says that. 3 Q: Right? 4 A: Yeah. 5 Q: And this is a recommendation that was 6 being put forward by the IT Department, right; Viinamae, 7 Andrews, Rodrigues? 8 A: Yes. 9 Q: Right. So that Department, as early as 10 June of 1998, was suggesting that the City use leasing in 11 order to finance the Y2K Project? 12 A: I think some of the four (4) 13 Municipalities had used leasing. 14 Q: Like Scarborough used leasing? 15 A: Yeah. 16 Q: The Province of Ontario used leasing? 17 A: I don't know that. 18 Q: You don't know that? Okay. And it 19 seemed to the IT Department a feasible way of financing the 20 Y2K Project in order to reduce overall borrowing and cash 21 flow problems? 22 A: Yeah. 23 Q: Okay. 24 A: And as I gave evidence the other day, the 25 Treasurer also thought that way.

1 (BRIEF PAUSE) 2 3 Q: I think that's fair. 4 A: Yeah. 5 Q: If you could turn now to tab 55, in the 6 same book of documents, and it's document number 01118. 7 8 (BRIEF PAUSE) 9 10 Q: This is a communication from a joint 11 meeting of Corporate Services Committee and Budget Committee? 12 13 (BRIEF PAUSE) 14 15 Q: Is that right? 16 A: Yes. 17 Q: Okay, at page 4 of that document they 18 recommend to Council to adopt that report of June the 8th, 19 1998, with the exception of recommendations number 9 and 10; 20 correct? 21 A: Yes. 22 Q: And 9 and 10 were the funding paragraphs, 23 the $85 million and how -- whether or not that was 24 appropriate, and your exceptional authority to spend on 25 behalf of the City of Toronto for Y2K requirements?

1 A: Okay. 2 Q: So what the Joint Committee did was to 3 say we recognize and are approving the principles that you've 4 brought forward, but we're not recognizing the spend of $85 5 million or any financing for the projects; right? 6 A: I believe that's a correct 7 interpretation, without reading this over in detail. 8 Q: Okay. If you could turn now to tab 52 of 9 the brief of documents. And this was the resolution that was 10 approved by City Council in a session July 29, 30, and 31, 11 1998? 12 A: Hmm hmm. 13 Q: Okay. And during that session, Council 14 approved interim financing with respect to Y2K; correct? 15 Approximately $5 million? Right? 16 A: Correct. 17 Q: Okay. And you were given the authority 18 with respect to the payment of the $5 million -- 19 A: The expenditures. 20 Q: -- par -- the expenditures? 21 A: Yes. 22 Q: Right. Paragraphs 1 through 4, and then 23 you were to report on the expenditures to Strategic Policies 24 and Priorities in November; right? 25 A: Yes.

1 Q: The $5 million, that was financing that 2 was going to the IBM consultants that were in the Y2K office 3 primarily? 4 A: I don't know the consultants but it was 5 specifically for purposes of inventorying the extent of the 6 problem. 7 It was trying to scope the problem accurately 8 with the report coming to the November meeting on the 9 magnitude of the expenditures that would be required and so 10 the November 3 report outlines that in some considerable 11 detail. 12 And the money -- this money was used to 13 provide the research and the surveys that had to be done with 14 all the departments to quantify the magnitude of the problem. 15 Q: And it's fair to say, what Council was 16 saying to you was, here's some interim financing to find out 17 truly what the problems are and develop some type of a budget 18 process to establish the need for the $85 million? 19 A: That's right. Yeah. 20 Q: Okay and if you could turn to Page 4 of 21 that document just to clarify and confirm that earlier issue 22 with respect to Councillor O'Brien. At Paragraph 2, which is 23 the second last paragraph at the bottom, that: 24 "A member of the Council recommended by the 25 Striking Committee be appointed as a lead

1 for the year 2000 project." 2 That was Councillor O'Brien, right? 3 A: Yes. 4 Q: And he became the lead. 5 A: Yes. So he was the chair. 6 Q: Thank you. 7 A: Not Ms. Liczyk as I said before. 8 Q: Thank you. Tab 51 of the same book. 9 10 (BRIEF PAUSE) 11 12 Q: This is Document 15898. This is the 13 report November 3, 1998 that was adopted by Council. 14 A: Yes. 15 Q: Right and that was in their session 16 November 26, 27, 28 of 1998. I can take you back to that, 17 sir. I don't think that's a controversial issue. 18 A: Sorry, what? 19 Q: I'll take you back to the date of the 20 actual adoption of this by Council, if you'd prefer because 21 it doesn't say on the document. 22 A: No. I -- 23 Q: But this is the document -- 24 A: -- I assume you're right. 25 Q: -- this is the document that was approved

1 and adopted by Council. 2 A: Yeah. 3 Q: And at this point, the Committee is 4 coming forward and saying it's not $85 million anymore. It's 5 $149.6 million, correct? 6 A: Yes, that's correct. 7 Q: Okay. 8 MADAM COMMISSIONER: What's that number 9 again? One hundred (100) and what? 10 MR. WILLIAM ANDERSON: $149.6 million. 11 MADAM COMMISSIONER: Thanks. 12 13 CONTINUED BY MR. WILLIAM ANDERSON: 14 Q: If you could turn to Page 2 of that 15 report. The paragraph that starts: 16 "The year 2000 Business Continuity Plan 17 estimate of $149.6 million can be financed 18 through various means." 19 Right? 20 A: Yes. 21 Q: Now, 22 "The total year 2000 program cost $12.4 23 million associated with water supply and 24 water pollution control will be funded by 25 water revenues.

1 Borrowing for the entire program is within 2 the corporation's updated Debt and 3 Financial Obligations Limited and can be 4 financed by the issuance of debentures if 5 required for a term of up to ten (10) 6 years." 7 And then -- 8 A: That's what it says. 9 Q: -- the paragraph goes on: 10 "It was in -- if the program was financed 11 entirely through debentures, it would add 12 approximately $20 million in debt charges 13 beginning in 2000/2001." 14 A: Yes. That's what it says. 15 Q: If you could look at the recommendations 16 at the bottom of Page 2. The recommendation for the $149.6 17 million. Paragraph 2, the CFO and Treasurer is supposed to 18 come up with a strategy for financing. 19 A: Hmm hmm. 20 Q: In November of 1998. 21 22 (BRIEF PAUSE) 23 24 Q: In paragraph number 12, this is an 25 important paragraph for you, that gave you the authority to:

1 "Enter into an agree -- into agreements in 2 support of the above, for the full amount 3 of expenditures until June year 2000, 4 reporting on a regular basis to the 5 Strategic Policies and Priorities 6 Committee." 7 A: Yes. 8 Q: Right? And you did that, I'm correct in 9 saying you did that? 10 A: We spent money, yes. 11 Q: And you monitored the spend of money 12 didn't you? 13 A: We had a monitoring system -- 14 Q: Yeah. 15 A: -- put in place. 16 Q: And I'm not suggesting, it's not my 17 position that there was anything inappropriate with respect 18 to the monitoring of the spend of that money. 19 A: Hmm hmm. 20 Q: You monitored that and reported to the 21 appropriate people; right? 22 A: Yes. 23 24 (BRIEF PAUSE) 25

1 Q: If you could go to -- this will be a 2 little more difficult, tab 90 of Mayor Lastman's documents. 3 4 (BRIEF PAUSE) 5 6 A: Which volume is that? 7 Q: I believe it's volume 2. 8 9 (BRIEF PAUSE) 10 11 Q: And it's document number 01409. 12 13 (BRIEF PAUSE) 14 15 Q: Can you tell me what that document is and 16 who the author was -- 17 A: It looks like -- 18 MADAM COMMISSIONER: Just in case anyone 19 cares, I have asked for the heat to be turned up. But we 20 seem to be having problems with this room. I'll try not to 21 draw any sort of adverse inference about that, but it sure is 22 cold. 23 Yes, sorry. 24 THE WITNESS: I'm reading a media release of 25 November the 26th, is that the one (1) you're referring to,

1 sir? 2 3 CONTINUED BY MR. WILLIAM ANDERSON: 4 Q: That's correct. 5 A: Which says that the Council approved the 6 expenditures to -- 7 Q: Of a hundred (100) and -- 8 A: -- deal with the Y2K problem. 9 Q: -- a $149 million? 10 A: Yes. 11 Q: And that's dated November the 26th, 1998, 12 and that's the first day of that Council meeting? 13 A: I'm assuming you're right about that. 14 Q: If you could turn to tab 1 of the Mayor 15 Lastman documents, which is in the other volume of documents. 16 17 (BRIEF PAUSE) 18 19 Q: This is a -- it's document number 01096, 20 that's a document from Lana Viinamae to the Deputy Mayor? 21 A: Yes. 22 Q: Dated March the 10th, 1999. 23 A: It's a breakdown of costs. 24 Q: Right. So again, it indicates that 25 funding -- or that the project has a budget of $149.6

1 million, and the Deputy Mayor had requested more information 2 about the breakdown of the costs in relation to the 149.6 3 million? 4 A: Yes. 5 Q: You're aware from your discussions with 6 people, that the $149.6 million was with respect primarily to 7 Priority 1 issues within the City of Toronto? I believe 8 there were eighty-four (84) of them? 9 A: My recollection, it was for those things 10 that had to be fixed to make us operational when the clock 11 ticked over. I can't be sure -- you may be right, but I 12 can't be sure that it didn't include the Priority 2 or 3 for 13 that matter. 14 15 (BRIEF PAUSE) 16 17 Q: The document at page 2 that I was 18 referring to does talk about contingency for the project, and 19 refers to Priority numbers 2 and 3, but it was always 20 contemplated that the Y2K program office would be requesting 21 further funding for Priority 2 and 3 items, which in fact 22 happened in January of 2000; right? 23 A: I -- I -- 24 Q: Do you recall that at all? 25 A: -- I don't recall that.

1 Q: Okay. 2 A: I don't recall that. 3 Q: I'm going to take you to tab 22 of the 4 thinner brief of documents, the third volume. 5 MADAM COMMISSIONER: Of whose -- whose -- 6 MR. WILLIAM ANDERSON: Mine. 7 MADAM COMMISSIONER: Yours. 8 MR. WILLIAM ANDERSON: No, Mr. Garrett's 9 documents, my production. 10 THE WITNESS: Which number? 11 12 CONTINUED BY MR. WILLIAM ANDERSON: 13 Q: Tab 22. 14 15 (BRIEF PAUSE) 16 17 Q: I understand document number 034364, no, 18 no, it's actually 34364, was a special meeting of Council. 19 If you could turn to page 2, report number 1 of the Policy 20 and Finance Committee, clause number 1, with respect to 2000 21 to 2004 capital programs, was -- 22 MADAM COMMISSIONER: I'm not quite where you 23 are. 24 MR. WILLIAM ANDERSON: Sorry, page number 25 2 --

1 MADAM COMMISSIONER: Yes, I'm there. 2 MR. WILLIAM ANDERSON: -- item number 2.5. 3 MADAM COMMISSIONER: 2.5, thanks. 4 5 CONTINUED BY MR. WILLIAM ANDERSON: 6 Q: The capital programs for the years 2000 7 to 2004; right? 8 A: That's what they are, yes. 9 Q: And at page 3 at the top it indicates 10 that: 11 "Transition projects, Y2K, was one (1) of 12 the items where spending was approved 13 during the January 27th, 2000 meeting." 14 A: Yes. 15 Q: I have not been provided with a copy of 16 this report, so I don't know what it looks like. I am 17 advised that at that meeting $12.1 million was approved with 18 respect to transition projects, Y2K. 19 Do you have any independent knowledge of that, 20 do you remember getting $12.1 million for Y2K projects in 21 January of 2000? 22 A: No, I don't recall that. 23 Q: If I told you that that was the case, 24 would you have any reason or knowledge to disagree with me? 25 A: That the estimate for the work had

1 changed, is that essentially what you're saying? 2 Q: That there were priority 2 and 3 issues 3 which were being funded with the $12.1 million, which was 4 approved in January of 2000. 5 And I'll show you a document later which 6 establishes the actual amount of the Y2K Project. My 7 information is that Council approved an extra $12.1 million 8 in January of 2000 for Y2K? 9 A: I don't recall that. 10 Q: Okay. 11 MADAM COMMISSIONER: Mr. Anderson, the way in 12 which you put the question made it sound like -- I'm not 13 quite sure whether the document was being withheld from you, 14 or it is -- 15 MR. WILLIAM ANDERSON: No, no, I'm not -- I'm 16 not suggesting that at all, there are eleven thousand 17 (11,000) documents in the data base, at some point I'm going 18 to -- I would expect to receive this, because I think it's 19 critical information with respect to this Hearing, that we 20 know all of the approvals for spending with respect to the 21 Y2K Projects. 22 MADAM COMMISSIONER: Well, if that's the 23 case, we are waiting for another document, as far as I 24 understand it and Ms. Groskaufmanis can help me here, but as 25 far as I understand it, you have everything that we have been

1 given by the City. So if it's not in that document base, it 2 means we don't have it. 3 Now, maybe at the break you can speak with Ms. 4 Groskaufmanis and Ms. Rothstein, to see whether there's 5 another document somewhere that you need. But -- or else you 6 just haven't found it, I'm not sure. 7 MR. WILLIAM ANDERSON: It may very well be 8 that it's in the database, however, we looked for it and 9 couldn't find it. It's report number 1 of the Policy and 10 Finance Committee -- 11 MADAM COMMISSIONER: Well -- 12 MR. WILLIAM ANDERSON: -- at that time. 13 MADAM COMMISSIONER: -- why don't I leave 14 that with you and Commission Counsel to see if you can find 15 where that is, and we'll take the morning break now, in any 16 event -- 17 MR. WILLIAM ANDERSON: Right, thank you. 18 MADAM COMMISSIONER: -- okay. 19 THE REGISTRAR: Order. This Inquiry will 20 recess until ten (10) to 12:00. 21 22 --- Upon recessing at 11:30 a.m. 23 24 --- Upon resuming at 11:50 a.m. 25

1 THE REGISTRAR: The Inquiry will resume, 2 please be seated. 3 MADAM COMMISSIONER: Mr. Anderson...? 4 5 CONTINUED BY MR. WILLIAM ANDERSON: 6 Q: Mr. Garrett, we were looking at Tab 22 of 7 my documents. Now, I've indicated -- thank you -- I've 8 indicated my understanding that Council approved spending of 9 $12.1 million in January for Y2K. 10 We already know that $149.6 million was 11 approved in spending for Y2K, correct? 12 A: Yes. 13 Q: And if you add that to $12.1 million and 14 I've asked, Mr. Garrett, to get his pen out so he can do this 15 for us -- 16 MADAM COMMISSIONER: I do have a calculator if 17 anyone wants it. 18 19 CONTINUED BY MR. WILLIAM ANDERSON: 20 Q: I think I know the answer, $149.6 and 21 $12.1 million equals how much? 22 A: 161.7. 23 Q: Million dollars, in approved spending for 24 Y2K, correct? 25 A: Assuming your assumption is correct, the

1 12.1. 2 Q: Okay. If you could turn to Tab 33 of my 3 book of documents, that is document 31992, this document is 4 entitled, Appendix G, Summary of Y2K Project Costs and 5 Financing. 6 I'm advised that this was an appendix to a 7 report that went to the budget committee in March of 2000. 8 That was after, what I expect the evidence to be, that 9 Council approved $12.1 million extra financing for Y2K, and 10 I'd like you to look at the first line, the Y2K project, 11 revised -- total revised budget 1999/2000 and what's that 12 number, sir? 13 A: 161.7 million. 14 Q: And that document indicates to you, that 15 City Council approved spending for Y2K in the amount of one 16 hundred and sixty one million, seven hundred thousand dollars 17 ($161,700,000), correct? 18 A: This implies that's the budget, the 19 assumption is that it's been approved, if you take your 20 earlier assumption. 21 Q: And I understand that the Y2K Steering 22 Committee monitored the spend for the Y2K project on a month 23 to month basis? 24 A: Yes, I believe that's the case. 25 Q: All right. And that was reported back to

1 Strategic Planning? 2 A: Or SNT, I'm not -- it was reported out. 3 There were many reports on Y2K progress, I don't remember the 4 specific details. 5 6 (BRIEF PAUSE) 7 8 Q: During that period, sir, you were 9 approving the purchase of assets for the Y2K project? 10 A: Yes. 11 Q: We saw one (1) the other day, it was the 12 Oracle contract? 13 A: Yes. Purchasing on the basis that either 14 it went through the normal purchasing process or if it 15 couldn't because of -- it needed to be a specific supplier or 16 it couldn't be done in time, it was done on a sole source 17 basis. 18 Q: If you could turn to Tab 16, of the same 19 book of documents, that's document 16780. This was the type 20 of document that you would execute to approve purchasing for 21 the Y2K project? 22 A: Yes that's right. The -- I was looking 23 for the sign-offs from the experts, absolutely. 24 Q: And you would have signed hundreds of 25 these documents?

1 A: I don't know. I can't recall, but, there 2 were many. 3 Q: And -- 4 A: At least several. 5 Q: -- to be fair, the Y2K Steering Committee 6 was monitoring the spend of the budget for the Y2K Program? 7 A: Yes, I would imagine it occurred in a 8 couple of places. It may have been the Y2K Steering 9 Committee, but it would have also been tracked in the 10 financial variance reports, as well. 11 Again, my recollection is a bit foggy on that, 12 but you'll -- there is some evidence in one (1) of these 13 binders that talks about my interest in making sure we were 14 on budget and as I recall, at the end of the piece, the 15 general reporting was we were more or less on budget. 16 Q: That's right. If we could now flip back 17 to Tab 33 that we were looking at -- 18 A: 33? 19 Q: -- 33 -- 20 MADAM COMMISSIONER: Are you saying that you 21 were more or less on budget for Y2K spending -- 22 THE WITNESS: Yes -- 23 MADAM COMMISSIONER: -- is that what you're 24 saying? 25 THE WITNESS: -- that was my recollection

1 after -- in 2000 in the report out -- 2 3 CONTINUED BY MR. WILLIAM ANDERSON: 4 Q: Right. 5 A: -- on the summary of expenditures that -- 6 Q: And we will come to that document. 7 A: Okay. 8 MADAM COMMISSIONER: Sorry, tab what? 9 THE WITNESS: Hope I'm right. 10 MR. WILLIAM ANDERSON: Thirty-three (33), you 11 are right, sir. 12 13 CONTINUED BY MR. WILLIAM ANDERSON: 14 Q: So the Y2K Project budget was a $161.7 15 million? 16 A: That's what it says here. 17 Q: Right. Now we're going to look at the 18 right hand side of this chart. And it indicates the 19 financing for the spending on the Y2K project; correct? 20 A: Yes. 21 Q: Right. Operating leases forty-three one- 22 five-zero (43,150). And that's the 43 million everyone's 23 talking about; right? 24 A: Yeah, and that -- that's the -- the 25 magnitude of the asset that was being leased --

1 Q: Exactly. 2 A: -- as opposed to the lease payment. 3 Q: Exactly, $43 million under lease asset 4 management. And then there was also funding that was going 5 to come from reserve, 16.711 million. Other revenues, 6 nineteen point four-zero-zero (19.400), and those are cash 7 spending; correct? 8 A: Sorry, say that again? 9 Q: That's cash spending, that's money that's 10 coming out of the budget in the current year? 11 A: Yes. 12 Q: Right. And then net debt charges of 13 82.439 million? 14 A: Yeah, but sorry, just the other revenues 15 could also mean grants, but I'm not sure if that applies in 16 that particular area. 17 Q: Okay. 18 A: I don't think it's just cash, but you'd 19 have to ask the Finance people about that specifically. And 20 debt is borrowing, yes, sorry to carry on with your column. 21 Q: So, the left hand side of the chart is 22 the approved spending, the right hand side of the chart is 23 how you're going to finance that spending? 24 A: That's correct. 25 Q: Right. And if you add up the forty-three

1 (43), the sixteen (16), the nineteen (19) and the eighty-two 2 (82) -- 3 A: You should get one sixty-one seven 4 (161.7). 5 Q: Exactly. 6 A: But it's more than two (2) numbers, so I 7 have to have a calculator to do that. 8 Q: That's fair. I'm sure that counsel will 9 correct us if we're wrong. 10 11 (BRIEF PAUSE) 12 13 MR. RONALD MANES: Commissioner -- 14 MADAM COMMISSIONER: Yes. 15 MR. RONALD MANES: -- I wonder whether Mr. 16 Anderson would have any information as to when this 17 particular document was prepared, as we've been unable to -- 18 City Council and -- and Commission Counsel haven't been able 19 to determine from our computer here, when that document was 20 prepared. 21 MADAM COMMISSIONER: Mr. Anderson, are you in 22 the position to help us there? 23 MR. WILLIAM ANDERSON: My understanding, 24 Madam Commissioner, is that this document was prepared in 25 advance of and for a March 2000 Budget Committee meeting. I

1 do not have the entirety of that document, and again, I have 2 looked for it. 3 And if the City of Toronto could assist us in 4 that regard, it would be quite helpful to everyone, I assume. 5 MS. LINDA ROTHSTEIN: Commissioner, this is 6 an opportune time for me to apologize for my late entry and 7 that of Mr. Centa. I apologize to you, but we were 8 attempting to identify the documents that Mr. Anderson had 9 asked Mr. Garrett about before the break, we are hopeful that 10 we'll have that over the lunch hour and give it to him. 11 And absolutely, we will make inquiries about 12 this document. And if I can simply tell all counsel, that if 13 they can let us know by e-mail in advance of their 14 examination of a witness, we'll do everything we can to 15 identify the document through the Clerk's Office, in 16 particular. 17 But they might as a -- just -- just a fallback 18 mechanism, if I can just tell everyone this, go to the 19 website and they will often be able to find more 20 documentation with respect to the background minutes and so 21 on for meetings than might be in the data base. 22 MADAM COMMISSIONER: You mean the City of 23 Toronto's website? 24 MS. LINDA ROTHSTEIN: That's correct. 25 MADAM COMMISSIONER: Okay, all right, thank

1 you. 2 Well, certainly from my perspective, I want 3 the witnesses to have information in advance, and I 4 understand that sometimes it's difficult for Commission 5 Counsel to give you the documents in advance, or for you to 6 give them quickly enough. 7 But my big concern is to make sure that 8 witnesses are not taken by surprise and then therefore can 9 give us more -- proper answers. Especially witnesses who 10 haven't seen documents for quite some time. 11 MR. WILLIAM ANDERSON: That's absolutely 12 fair. 13 MADAM COMMISSIONER: Okay. Okay -- 14 MR. WILLIAM ANDERSON: I'm -- 15 MADAM COMMISSIONER: -- thanks. 16 17 CONTINUED BY MR. WILLIAM ANDERSON: 18 Q: If you could turn to tab 20 of the same 19 brief of documents, that's document number 39673. These are 20 minutes from the Steering Committee. If you could turn to 21 Page 3 of that document. This is the type of report I was 22 alluding to earlier. 23 At Paragraph B, Financial Expenditure: 24 "$109 million is committed at this point. 25 Wanda requested that an additional column

1 be added showing the projected to project 2 end." 3 MADAM COMMISSIONER: I don't know where you 4 are. 5 MR. WILLIAM ANDERSON: Page 3 of the same 6 document, top of the page there is a letter B beside the 7 paragraph. 8 MADAM COMMISSIONER: Okay. Thank you. 9 10 CONTINUED MR. WILLIAM ANDERSON: 11 Q: So, as of November 4, 1999 the Steering 12 Committee was aware that $109 million had been spent towards 13 Y2K. Correct? 14 A: Committed. 15 Q: Committed to spending. 16 A: Not spent yet but -- 17 Q: Fair enough. 18 A: -- committed. 19 Q: Committed to be spent -- 20 A: Yeah. 21 Q: -- with respect to Y2K -- 22 A: Yes. 23 Q: And that was -- one of the mandates of 24 the Steering Committee was to track the spend on Y2K. 25 A: Yes and it was the subject of a much

1 earlier memo, for me, to make sure they were tracking their 2 expenditures. 3 Q: And I believe, sir, that the evidence 4 will indicate that they did track the spend. 5 A: I believe they did. 6 Q: Yeah. I'm going to take you now, then, 7 and we'll see that they have. Tab 9 of your document. 8 9 (BRIEF PAUSE) 10 11 Q: This is March 15. It's Document -- 12 MADAM COMMISSIONER: Tab 9? Tab 9, did you - 13 - 14 MR. WILLIAM ANDERSON: Tab 9 of Mr. Garrett's 15 documents. 16 17 (BRIEF PAUSE) 18 19 MADAM COMMISSIONER: Yes. 20 21 CONTINUED BY MR. WILLIAM ANDERSON: 22 Q: This is a memo from the CFO to the Budget 23 Advisory Committee dated March 15, 2001, document 31894. 24 MADAM COMMISSIONER: Yes. Thank you. 25 MR. WILLIAM ANDERSON: I understand the

1 evidence will be from Ms. Liczyk and other people in the 2 Finance Department that they learned that the assets on lease 3 were greater than $43 million in around December of the year 4 2000. 5 You're not aware of that one way or another, I 6 take it? 7 A: No. 8 Q: Sir, in your involvement with this piece, 9 did you ever see a document that indicated the total quantum 10 of assets on lease with MFP prior to the end of the year 11 2000? 12 A: The only one that I va -- that we've gone 13 over is the July report on the assets to be leased under MFP, 14 which is the forty (40) -- 15 Q: The forty-three (43). 16 A: -- that's the forty-three (43). 17 Q: Right. 18 A: But do I recall another report -- 19 Q: Do you -- 20 A: That -- that -- 21 Q: Do you recall ever seeing any 22 documentation with established the quantum of assets under 23 lease from MFP at the end of the year 2000? The actual 24 assets under lease? 25 A: Not offhand, no.

1 Q: No. My understanding is that Ms. 2 Liczyk's evidence is going to be they found out, the Finance 3 Department, in around December of the year 2000, that the 4 assets under lease were greater than $43 million and they 5 reported that in this report dated March 15, 2001 to the 6 Budget Advisory Committee and I'd like to take you to Page 2 7 of that report. 8 9 (BRIEF PAUSE) 10 11 Q: Page 2 of the report. Paragraph 4, 12 Computer Leases 2001 Recommended Budget. 13 "The increase in the 2001 Budget relates to 14 software licenses for the existing and new 15 applications that were not included in the 16 2000 budget, which -- but which became 17 necessary as Y2K compliant hardware was 18 implemented throughout the City. 19 Under the City's Y2K project, $43 million 20 [the number everyone had been talking 21 about] of hardware and software, was 22 acquired with leasing costs totaling $13.5 23 million and budgeted in 2000." 24 That was the original plan, right? 25 A: Right.

1 Q: Right. 2 MADAM COMMISSIONER: And this -- as I 3 understand it, Mr. Garrett said before in questioning by Mr. 4 Manes, that that $13.5 maybe was supposed to be $18 million, 5 to jive with another report. 6 THE WITNESS: Yes, I think the -- the 7 difference as I recall in the non-program budget related to 8 them adding in maintenance contracts of two and a half (2.5) 9 million. 10 And there's some dispute, the other numbers as 11 I recall, Commissioner, added up to $14 million, the eight 12 (8) and six (6) in the previous years, non-program budget 13 they had $6 million and then an additional $8 million for a 14 total of $14, and another two and a half (2.5) for the 15 maintenance contracts which took it up to sixteen and a half 16 (16.5). 17 MADAM COMMISSIONER: I just want to make sure 18 nothing is turning on whether it's 13.5 as opposed to 18 -- 19 MR. WILLIAM ANDERSON: It's not. 20 MADAM COMMISSIONER: Okay. 21 22 CONTINUED BY MR. WILLIAM ANDERSON: 23 Q: If you could turn to the next page, page 24 3: 25 "In order to support the expanded

1 infrastructure, software licenses for 2 products such as office automation tools, 3 on-line report viewing, testing data bases 4 and desktop management were required as 5 part of the Y2K platform. 6 The cost for these software products 7 totaled $24.3 million, with total leasing 8 costs of $5 million required, bringing the 9 2001 request to $18.5 million." 10 In this report, Ms. Liczyk is reporting to the 11 budget committee, that the lease expenditures have exceeded 12 $43 million, the assets under lease have exceeded $43 13 million, by $24.3 million, correct? 14 A: It's saying there's an additional $24 15 million of -- of software products, it says here. 16 Q: Under lease? 17 A: With total leasing costs of $5 million. 18 Q: Right, that's the annual leasing costs for 19 an extra $24 million of software products under lease? 20 A: Correct, that's what it says. 21 Q: Right. So she's disclosing to the budget 22 committee, we've got an extra $24 million under lease, right? 23 A: Yes. 24 Q: Right. And then she goes on to say: 25 "A report is being prepared on the closure

1 of the City's Y2K project that identifies 2 these costs. A cost allocation algorithm 3 will be developed in 2001, so that these 4 costs can be allocated to the programs." 5 Right? 6 A: I'm not sure what that means, sorry -- I 7 don't -- 8 Q: The important point here is that a report 9 is being prepared for the budget committee? 10 A: On the closure of the project. 11 Q: Right. 12 A: Yes. 13 Q: I'd like you now to go to Tab 29 of my 14 book of documents. 15 MADAM COMMISSIONER: Mr. Anderson, just on 16 your last point, I'm not sure that I understand it, so I'd 17 like to have that cleared up. 18 You're saying that -- I'm just not sure where 19 it says in this document that this $24 million is in addition 20 to the $43 million. 21 MR. WILLIAM ANDERSON: The first -- or sorry - 22 - the last paragraph on page 2 -- 23 MADAM COMMISSIONER: Yes -- 24 MR. WILLIAM ANDERSON: -- indicates $43 25 million --

1 MADAM COMMISSIONER: Was acquired -- 2 MR. WILLIAM ANDERSON: -- of leased assets. 3 So, those are the $43 million under lease with MFP. And that 4 was the planned, and this report indicates that that would 5 cost the City $13.5 million in leasing operation costs, 6 right? 7 She then goes on in the report to indicate 8 that there were extra software expenditures, and the cost for 9 these software products totaled $24.35 million increasing the 10 total leasing costs $5 million, bringing the 2001 request to 11 $18.5 million, which is the $13.5 and the $5. 12 MADAM COMMISSIONER: I guess that it's not 13 clear to me on reading this, maybe it is to people who read 14 these reports all the time, but it's not immediately clear to 15 me on reading this, that what she's saying here is that 16 we're, by the way folks, we're $24 million over budget. 17 Is that how you're asking me to read this? 18 MR. WILLIAM ANDERSON: Ms. Liczyk's evidence 19 will be that when she found out that the leasing costs had 20 exceeded $43 million, she reported back to the Budget 21 Advisory Committee, that the $43 million had been exceeded by 22 $24.35 million, which brought leasing costs up $5 million per 23 annum. 24 MADAM COMMISSIONER: Well what -- okay, well, 25 maybe we'll wait for Ms. Liczyk's evidence, but I'm just not

1 sure when I look at this, and I try to picture myself as a 2 Councillor sitting there, this is going to Council, to the 3 Budget Advisory Committee, whether I would know just by 4 reading this that she's sounding the alarm bells that they're 5 now 24 million over budget. 6 And I'm quite prepared to wait until she says 7 that. But I wouldn't mind hearing from Mr. Garrett, whether 8 or not that's something that an informed reader of documents 9 like this would immediately pick up? 10 THE WITNESS: No, you wouldn't immediately 11 pick that up from there. 12 And in any event, the 24 million, if they're 13 saying that there's an additional -- I would have originally 14 read that as that the software, a little different than -- 15 than Mr. Anderson is that the additional software products 16 were required to make the hardware functional, is the way I 17 read that, Mr. Anderson, is another 24 million for software 18 to make the hardware that was already leased, functional. 19 MR. WILLIAM ANDERSON: That could very well 20 be true. 21 THE WITNESS: Is the way that I interpret 22 that. And that that in itself would have to be an approved 23 -- a separately approved project. 24 When it's in the budget it doesn't mean that 25 it doesn't have to go through purchasing processes to be

1 acquired, so if 24 million had to be acquired, it would be 2 subject to a separate report somewhere for that software, I 3 would imagine. 4 5 CONTINUED BY MR. WILLIAM ANDERSON: 6 Q: Do you have any information or knowledge 7 that the $24 million that was being referred to as software, 8 wasn't approved by the Year 2000 Steering Committee as part 9 of the 161 million? 10 A: I -- no, I don't know. 11 Q: Right. 12 A: Or I can't recall. What you're 13 suggesting is that that amount was already in the 160 or 150 14 million? 15 Q: That's correct. 16 17 (BRIEF PAUSE) 18 19 Q: Ms. Liczyk indicated that a report would 20 be forthcoming with respect to the Y2K closure? 21 A: Yes. 22 Q: Right. To clarify the issue with respect 23 to the $24 million, if you could turn -- you were at tab 29, 24 but if you could go to tab 30 of my brief of documents, 25 document number 31986.

1 (BRIEF PAUSE) 2 3 Q: There's a Y2K Status Report. 4 This document is actually a two (2) page 5 document with a series of appendices. We've advised 6 Commission Counsel that the document was not scanned 7 properly, and pages were missing from the document. 8 So what I have done is to reproduce at tab 29, 9 tab 34 from my client's production of documents, which 10 contains this report. And I've been advised that Commission 11 Counsel will be re-entering this document into the database 12 in its completed form. 13 MADAM COMMISSIONER: Thank you. 14 MR. WILLIAM ANDERSON: Okay. 15 16 CONTINUED BY MR. WILLIAM ANDERSON: 17 Q: If you could turn to tab -- or sorry, 18 page 2 of tab 29. Paragraph 1: 19 "Status of Y2K Project, the Y2K Project is 20 officially complete, the attached report 21 provides a summary of all of the 22 expenditures in the departments to which 23 they were allocated." 24 Paragraph 3 of the report: 25 "The attached report indicates one point

1 (1.)[ -- or sorry] $149.6 million [and we 2 know that that was the original amount 3 approved for Y2K] which was committed and 4 spent on all Priority 1 business functions. 5 $12.1 million which was committed and spent 6 on Priority 2 and 3 business functions, 7 resulting in a total of $161.7 million." 8 That's that number again, right? 9 A: Yes. 10 Q: "A total of $160.9 million has been spent 11 in the Y2K project. The majority of these 12 expenditures were for resources, hardware, 13 software, service and network equipment." 14 And that confirms your understanding the the 15 Y2K program of $161 million -- $161.7 million came in under 16 budget? 17 A: Yes, it does. 18 Q: Right and then it goes on to indicate 19 that there was an operating impact on leasing, which showed 20 an unfavourable variance. See that? 21 A: Yeah. I'm -- I'm just reading it. This 22 is not in millions, this is thousands. 23 Q: And my understanding is that one of the 24 finance people is going to describe for us how they came up 25 with the calculation of the variant. I can't give that

1 evidence. If you understand what that means, then by all 2 means you can explain it to us. The point is that it was an 3 unfavourable variance in respect of leasing for the program. 4 A: That was -- 5 Q: We know that. 6 A: Hmm hmm. 7 Q: We know that too, right? We know, from 8 the information that we've heard is going to be called, that 9 there was, in fact, $40 to $60 million. $40 million of asset 10 that went under lease with MFP greater than $43 million 11 right? 12 A: $43 million went under lease. 13 Q: Well -- 14 A: I would have read this, though, just if I 15 can pause, Mr. Anderson, as relatively minor amounts. This 16 is sixty-seven thousand dollars ($67,000) in an annual 17 variance of lease amounts that are in the millions so I would 18 have read that as not a serious variance in the operating 19 budget, frankly. 20 Q: Well, I'll defer to the people that 21 drafted the report to describe how they came up with the 22 variance amounts and whether or not that's a percentage of 23 something that means something to them. 24 A: Yeah, I see. Yeah, you'll have to do 25 that.

1 Q: If you could to turn then to the third 2 page of this document, Operating Budget Impact, Computer 3 Leases. The total for the planned spending December 31, 4 1999, was $43 million; that's the $43 million that we're 5 talking about. 6 A: Sorry, I must be on the wrong page. What 7 -- 8 Q: Sorry, Page 4. 9 A: What page are you on? 10 Q: Page 4 of the Project Summary. 11 A: There isn't a number on it. Is that the 12 one that's the one that had planned and actuals on the -- on 13 the left side? 14 Q: That's it. 15 A: Half a page? Sorry, go -- carry on. 16 Q: Far right-hand side of the page there's a 17 number forty-three one five zero (43,150). That's the 18 original amount that was supposed to go under lease. 19 A: Under lease. Yes. 20 Q: Right and then there's the twenty-four 21 three five zero (24,350). That was what was indicated by Ms. 22 Liczyk was the extra software that went under lease. All 23 right. $24 million is the extra software that went under 24 lease. 25 A: That's the amount from before but it was

1 approved to go under lease, I can't answer. 2 Q: It wasn't -- 3 A: You were just asking does the number jive 4 with the number you gave us earlier and it does. 5 Q: Right and I'm not suggesting to you, sir, 6 that the $24 million was approved to go under lease. 7 A: Okay. 8 Q: Okay. I'm suggesting to you, sir, that 9 $24 million did go under lease and it was reported as part of 10 this project summary. 11 A: Yes. 12 Q: Okay and it was an extra $5.5 million 13 which went under lease but that was allocated out to 14 department budgets which were funded by the programs and you 15 see that at Item 4 in the actual spending. Add hardware 16 funded by programs, that's the $5.5 million there. 17 My understanding is that wasn't part of the 18 Y2K funding -- or spending. It was program spend that went 19 under lease. Do you have any knowledge of that? 20 A: Not specifically, though I would 21 acknowledge that there was other IT spending going on outside 22 of Y2K, that's correct. I don't know. I can't speak to the 23 amounts. 24 Q: It's my understanding -- 25 A: In the departments.

1 Q: -- this report acknowledges that there was 2 an over commitment of assets to leases to MFP during the year 3 2000; that's fair to say? 4 A: Yes, unless there had been a separate 5 approval. 6 Q: Right and there was no approval, we're in 7 agreement on that. Now, I'd like you turn back to Tab 33 of 8 the document that I referred to earlier which showed the 9 project budget of 161.7 and then the financing for that 10 budget. Are you on Tab 33? 11 A: Yes. 12 Q: Okay. So, we know at this point, that the 13 $161,700,000 that was committed to Y2K spending was spent and 14 came in under budget. There was no overspending for Y2K? 15 A: Based on the 161.7? 16 Q: Exactly? 17 A: Yes. 18 Q: So, that was the total amount of spending 19 for Y2K? 20 A: Yes. 21 Q: Now, let's look at the financing element 22 of this, and this is the financing mix. Let's assume for our 23 purposes that the $16 million and the $19 million, which are 24 current spending, remain constant, okay? 25 A: Hmm hmm --

1 Q: So those are monies that are committed to 2 be spent for Y2K at the current time. And the only way you 3 can fund these projects is either to pay for it, or lease for 4 it, right? 5 A: Yes. 6 Q: Let's assume the pay for it, stayed the 7 same, because there wasn't money in the budget to increase 8 that amount; is that fair to say? 9 A: Yes. 10 Q: If the $43 million of leasing payments 11 goes up by $40 million -- 12 A: Those aren't payments -- 13 Q: That's right -- 14 A: -- those are -- that's the total asset 15 value. 16 Q: Under lease? 17 A: Yes, different than payments. 18 Q: Exactly. That's the $61 million that we 19 just looked at earlier. Those are the payments? 20 A: That's correct. 21 Q: Okay. So, if the $43 million is increased 22 by $40 million -- 23 A: From your previous -- </