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 13th, 2002 25

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

1 TABLE OF CONTENTS 2 Page 3 4 5 6 Bas Balkissoon, Resumed, 7 Continued Cross-Examination by 8 Mr. Fraser Berrill 4 9 Re-Cross-Examination by William Anderson 151 10 Cross-Examination by Mr. Linda Rothstein 157 11 Re-direct Examination by Mr. Ronald Manes 183 12 13 Certificate of Transcript 217 14 15 16 17 18 19 20 21 22 23 24 25

1 --- Upon commencing at 10:00 a.m. 2 3 THE REGISTRAR: This Inquiry is now in 4 session, please be seated. 5 MADAM COMMISSIONER: Yes, Mr. Berrill? 6 MR. FRASER BERRILL: Good morning. 7 MADAM COMMISSIONER: Good morning. 8 9 BAS BALKISSOON, Resumed: 10 11 CONTINUED CROSS-EXAMINATION BY MR. FRASER BERRILL: 12 Q: Good morning, Mr. Balkissoon. 13 A: Good morning. 14 Q: We left yesterday, we were talking about a 15 pricing mechanism and I just want to review a couple of 16 things and get your view of them. 17 I understand it was your position that the MFP 18 response to Section 1.1.17 was vague and should, therefore, 19 be disqualified; is that your view? 20 A: That's my view. 21 Q: Okay. And do I take it then that the 22 Compaq and the Dell Financial Services, or DFS as Ms. Dyer 23 wants it referred to, it was vague as well, and should have 24 been disqualified? 25 A: I would have to say the way you described

1 the last sentence, it would be considered in the same vein 2 probably. 3 Q: All right. 4 A: But, it was a lot more descriptive than 5 MFP. 6 Q: So, it would be a judgment call, even 7 though it referred to leasing rates being affected by the 8 equity determination nine (9) months later or 90 (ninety) 9 days later, rather, it was still vague? 10 A: If the way you explained it, I would -- I 11 would have to consult with someone who is -- 12 Q: I see -- well, I didn't really explain it, 13 I just read it, but, in any event, I won't take it any 14 further. 15 But, from your point of view, it's only the 16 numerical and I see that the City -- City has provided now, I 17 hadn't seen them before the IBM and the Compaq -- or rather 18 the IBM and the -- I'm not going to bother with them. 19 MS. LINDA ROTHSTEIN: It's actually Commission 20 Counsel, Commissioner, who has provided the additional 21 documents for this morning. 22 MR. FRASER BERRILL: Thank you. 23 MADAM COMMISSIONER: Thank you. 24 25 CONTINUED BY MR. FRASER BERRILL:

1 Q: They're the other bids and they don't 2 refer to the equity calculation, if you will, of the pricing 3 mechanism and they're more, I guess you would say, numeric 4 and you would say that that would be the requirement to have 5 certainty to make a bid qualify? 6 A: I would say they're more descriptive as to 7 what, in my opinion, the City was seeking under 1.1.17, and 8 would have satisfied the City of Toronto purchasing policies 9 that are established at the City, at the present time. 10 Q: Okay. Two (2) things emerge from that. 11 What the RFQ required was a complete description, not being 12 more descriptive, but, complete description. 13 A: Well, I -- I view the RFP -- there was in 14 the preparation of the RFP document that the City staff in 15 preparing it, had some vision that they may not be able to 16 acquire all the equipment at once, and there may need to be 17 purchases beyond the ninety (90) days and they need to have 18 some form of information to -- to comfort themselves as to 19 what is the interest rate beyond the ninety (90) day point. 20 Because if you're securing $43 million worth 21 of equipment, at no time you would believe yourself that you 22 would be able to secure $43 million worth of equipment in 23 ninety (90) days. 24 Especially when you're going after equipment 25 from many, many suppliers. And I don't think any supplier

1 would have $43 million worth of equipment on the shelf 2 waiting for someone to purchase it. 3 So, there would be delay in delivery time, 4 there would be all kinds of delays you could expect and based 5 on the fact that they were looking at leasing arrangement 6 that would have schedules attached to it, at various times, 7 you need to know the interest rates when ever each schedule 8 would take effect. 9 And you need to know to calculate that, so you 10 can assess the bid for comparative purposes. You just cannot 11 compare for the first ninety (90) days and be completely 12 satisfied one (1) is better than the other. 13 So, I would say the fact that MFP did not go 14 beyond the ninety (90) days and the other person gave me some 15 comfort level beyond the ninety (90) days, I would qualify 16 the other bids and I would disqualify the ones that didn't 17 give me the comfort level beyond ninety (90) days. 18 Q: I think we agreed yesterday, did we not, 19 that there are two (2) elements though to the pricing of the 20 lease? That's both the interest rate as well as the equity 21 portion, in other words, the value of the equipment at any 22 given time? 23 A: Can depend on if the RFP was seeking to 24 have a residual value and quantified. 25 Q: Well, I think it did, didn't it? That's

1 how you get a lower price? 2 A: Well, I'm not sure how you look at it, 3 but, I think you could look at it in several ways. 4 Q: All right. So, you're just looking at it 5 from an interest rate point of view, and you don't know about 6 the other things that I'm talking about per se? 7 A: Well, the report that was placed in front 8 of Council was just on an interest rate point of view, and I 9 have to deal with it from that perspective. 10 Q: That's your position, the report was just 11 with respect to interest rates? 12 A: The way it was -- 13 Q: That's the way you read it? 14 A: That's the way it was put to me. 15 MADAM COMMISSIONER: Wait. Slow down a little 16 bit, I think you're both going so quickly that -- 17 MR. FRASER BERRILL: I'm sorry -- 18 MADAM COMMISSIONER: -- we're having a nice 19 little banter between the two (2) of you. 20 MR. FRASER BERRILL: Well, I'm going to move 21 on to another -- another topic. 22 MADAM COMMISSIONER: Maybe just before you 23 move on. 24 MR. FRASER BERRILL: Yes. 25 MADAM COMMISSIONER: Councillor Balkissoon,

1 the document that we've been talking about is an RFQ and you 2 keep referring to it as a RFP, and I'm wondering if -- 3 THE WITNESS: Combined document that Mr. 4 Berrill has focused on. And I think he tried to clarify that 5 in the beginning. 6 That the MFP document, the RFP that was placed 7 before the City, has both the information that was on the RFQ 8 and his RFP. So this is why it's -- I believe -- 9 MADAM COMMISSIONER: As I understand it, the 10 City put out, what they called an RFQ and we hear talk about 11 and RFP and I wanted to ask you, do you see a distinction 12 between an RFQ and an RFP? 13 And if you do, what is it; and if not, don't 14 worry, because I'm sure we'll have somebody else explain that 15 to us. 16 THE WITNESS: Well, -- well -- I see it as the 17 City's requesting a quote and MFP provided their proposal -- 18 MR. FRASER BERRILL: That's not my 19 understanding, but unlike anything, in terms of -- 20 THE WITNESS: -- the questions that were going 21 on it, because you were trying to refer to a combined 22 document. 23 MADAM COMMISSIONER: Okay. 24 25 CONTINUED BY MR. FRASER BERRILL:

1 Q: Well, okay -- that wasn't what I was 2 trying to do. I was making the analogy to it -- or rather 3 the comparison of an RFP and an RFQ but I was just having the 4 RFQ in one -- in the same document as the response to the 5 RFQ -- 6 A: Okay. 7 Q: -- is what I was trying to do. 8 A: All right. 9 Q: I want to turn you, and this is my last 10 question in respect to the RFQ for now and that is 2.6 of the 11 RFQ and that's at Tab 16. 12 MADAM COMMISSIONER: We're at Tab 16, did you 13 say? 14 MR. FRASER BERRILL: Yes. 15 MADAM COMMISSIONER: Thank you. 16 MR. FRASER BERRILL: And it's Page 14 of the 17 MFP response -- 18 MADAM COMMISSIONER: 234 -- 19 MR. FRASER BERRILL: And that's -- 20 MADAM COMMISSIONER: -- 13. 21 MR. FRASER BERRILL: And that's Begdoc 23429. 22 THE WITNESS: Sorry, it was 2 point -- 2.6? 23 24 CONTINUED BY MR. FRASER BERRILL: 25 Q: And oddly enough, it's disqualification

1 of quotes and I just ask you to read it. I don't think it's 2 necessary for you to read it in the record but maybe just 3 familiarize yourself with it if you're not already. 4 5 (BRIEF PAUSE) 6 7 Q: And just as you're reading it, my 8 question is going to be: Is there anything about vagueness 9 in that disqualification section? 10 A: I believe this is disqualification of 11 quote based on deadline of submission. 12 Q: So there's nothing about vagueness in 13 there? 14 A: The purchasing policy of the City 15 clearly -- 16 Q: I'm sorry, my question is quite specific. 17 I'm sorry to interrupt but we'll go a lot faster if you just 18 really do respond to my question. 19 A: With regards to the submission date, 20 there's no vagueness there, as far as I can see. 21 Q: All right and if it was the policy of the 22 City to reject bids for vagueness, would it have been fair, 23 in your view, to the bidders to put that policy somewhere in 24 the document? 25 A: It's probably not a bad idea.

1 Q: Probably and I -- I don't want you to 2 take my word for it but I'm going to ask you to take my word 3 for it right now. 4 I've read the document quite carefully over 5 the past -- past year and there's nothing about vagueness in 6 it and you would think that if, because that is an overriding 7 policy of the City, that that -- that's unfair to the 8 bidders. 9 A: Sorry, would you repeat that? 10 Q: If there is no vagueness in the document 11 and that is an over -- 12 A: In -- in -- in which document? 13 Q: In the RFQ. 14 MADAM COMMISSIONER: I think the question is 15 if the RFQ doesn't say that you will be disqualified if your 16 application is vague, should the City be putting into the RFQ 17 the City's policies that if the application is vague it will 18 be automatically disqualified. 19 Is that it fair, Mr. Berrill? 20 MR. FRASER BERRILL: That -- that's it very 21 well. Thank you. 22 THE WITNESS: Well, I -- I -- I think what 23 Mr. Berrill is trying to say that I read 1.17 that the 24 response is vague but I -- I mean, the policy of the City 25 says if -- if your submission is incomplete, it will be

1 rejected. 2 And I read -- my opinion of 1.17 is MFP did 3 not comply with that clause in its totality because the 4 clause requires you to give a clear, precise mechanism of how 5 you will calculate interest beyond ninety (90) days and, in 6 my view, if I was assessing that clause and the MFP bid, I 7 would have rejected the bid as being incomplete. 8 MR. FRASER BERRILL: That's not exactly 9 responsive to my question but I'm -- I'm going to move on in 10 any event. 11 12 CONTINUED BY MR. FRASER BERRILL: 13 Q: I'm going to suggest to you, sir, that - 14 - that the MFP bid was superior in a number of -- of ways 15 that they didn't have to comply with -- in the first -- the 16 first way I'm -- I'm going to suggest to you that the bid was 17 superior, that they were holding the price, and that's the 18 lease rates, until October 1 by virtue of that Section 1.1.17 19 because what they were saying is that they would set them 20 every quarter beginning October 1. 21 So that by definition, from the time the RFQ 22 was issued in July -- or rather, in June, they were holding 23 the same rate for longer than ninety (90) days. In fact, 24 twenty (20) days longer. 25 A: Oh.

1 Q: Do you agree with that or do you -- 2 A: I -- I haven't read it to be sure of that 3 but if you say so. 4 Q: All right. I'm also going to suggest to 5 you that the 1.1.17 response by MFP was more advantageous to 6 the City, that is, the pricing mechanism was more 7 advantageous because what they would do is they would publish 8 their rate every quarter and hold it for a quarter -- for 9 ninety (90) days. So that you knew, at any point in time, 10 during that ninety (90) days exactly what the price would be. 11 Whereas with the other submissions, you had to 12 calculate what the interest rate was on any given day and do 13 the calculation on that day and it would fluctuate and depend 14 on interest rates over ninety (90) days and, therefore ,you 15 would have a variable price? 16 A: Well, Mr. -- 17 Q: Is that an advantage? 18 A: Mr. Berrill, if you say so and its 19 advantage to the City, why was the current grid that was in 20 place at the time not included? 21 Q: I believe it was. The prices were there 22 for ninety (90) days to be read and that every ninety (90) 23 days a new grid would be set and you would know for ninety 24 (90) days exactly what your price was. 25 A: Well --

1 Q: And that was a complete description and 2 the City evaluators thought it was fair and thought it was 3 advantageous. 4 A: Well, I don't see how that compare to some 5 of the other bids that it's, in your opinion, superior. 6 Q: All right. I want to make a further 7 suggestion, if we can't come to agreement on that either. I 8 want to make a further suggestion why this bid was better 9 than the others. For example, the Dell bid, if you study it 10 and I ask you to take my word for it and I -- I assure you 11 that this is correct. 12 They wouldn't contemplate -- they wouldn't 13 give a price for a sale and leaseback. In other words, 14 product that had been purchased by the City, prior to the bid 15 date, they wouldn't give you the full credit for that, when 16 it came time to execute the lease. 17 They wouldn't commit to a price for that 18 equipment and we know when it came time to execute the lease 19 they wouldn't commit to a price for that equipment and we 20 know that that is most of the equipment. 21 MFP was prepared to honour a sale and 22 leaseback and said in their bid that they would and, in fact, 23 did give full value to nine (9) month old equipment when they 24 signed the bid. 25 Now, would you call that an advantage?

1 A: My assessment of the sale leaseback turned 2 out to be not the way this -- in my mind, that the City 3 benefitted. 4 Further, Council was unaware that the staff 5 was pursuing a sale leaseback and I also understand on the 6 sale leaseback, the City didn't get the funds on time, so, I 7 can't see how it's advantageous to us. 8 Q: Did you understand my question, Mr. 9 Balkissoon? 10 A: I understand what you're saying, but, I -- 11 Q: Would you like to answer my question? 12 A: As far as I know, Council was unaware of 13 any sale leaseback requirement. So, if you're telling me 14 Compaq did not comply with the bid request or said that they 15 would not support a sale leaseback, that may be so. 16 MADAM COMMISSIONER: He said Dell. 17 THE WITNESS: Or Dell -- 18 19 CONTINUED BY MR. FRASER BERRILL: 20 Q: And therefore, it was an advantage that 21 MFP was prepared to lease up to nine (9) month old equipment 22 at its full value? 23 A: That may be so I -- 24 Q: You might agree with that? 25 A: If it's there -- I --

1 Q: Very good. Thank you. Now, I want to move 2 to a different subject matter and that's authority. 3 And several days ago now, I'm sorry to say, in 4 our class in municipal law 101, which I'm sure Ms. Rothstein 5 hasn't deal with in that detail since she went to law school, 6 seven (7) or eight (8) years ago, we learned that there are 7 basically two (2) -- basically two (2) -- 8 MADAM COMMISSIONER: I don't know what you 9 mean by that, that she's not very experienced or that she 10 looks so young. 11 MR. FRASER BERRILL: The latter is what I'm 12 alluding to. I think her experience speaks for itself. 13 14 CONTINUED BY MR. FRASER BERRILL: 15 Q: We learned that, in any event, from Ms. 16 Rothstein that there are two (2) -- two (2) levels of 17 authority that the City has to go through. 18 One is the budget authority and the other is 19 the actual expenditure or commitment authority. Do you agree 20 with that, conceptually? 21 A: Correct, yes. 22 Q: And insofar as budget is concerned, we 23 have capital on one side and we have operating on the other? 24 A: Correct. 25 Q: Okay. And originally the Y2K budget, as I

1 understand it in any event, from afar, was in the capital 2 budget? 3 A: Correct. 4 Q: And it was $150 million for Y2K approved 5 in the business continuity plan, under a Tab number that I 6 just now forgot? 7 A: Yes. 8 Q: All right. 9 A: That's the way I understood it. 10 Q: Okay. And then under this scheme, or at 11 least what happened here, is that when a lease was entered 12 into with respect to some of that equipment, it was moved to 13 the operating budget? 14 A: I'd have to refer back to the document to 15 really explain exactly what happened. 16 Q: All right. Well, I -- I think we're all 17 going to have to get into it in some more detail and we don't 18 have all of the facts right now, but, I'm just talking 19 conceptually, that if you moved part of what was in the 20 capital budget and decided to lease it, it would then go into 21 the operating budget? 22 A: That's correct. 23 Q: Right. And that when you signed a lease 24 for three (3) or five (5) years, whatever, you were 25 committing yourself to expenditures over a three (3) or five

1 (5) year period from the operating lease -- or from the 2 operating budget, rather. 3 A: No, that's not accurate. 4 Q: All right. Please explain. 5 A: Let's assume what we acquire in 1999. In 6 an operating budget we will budget the debt costs or the 7 recent costs, if you want to put it that way and, therefore, 8 the value of equipment that generates that leasing cost is 9 what you secure in that year through leases. 10 The following year, you would have to budget 11 an incremental amount of leasing costs because you will have 12 an incremental amount of acquisitions and that would have to 13 go through the budget approval process and it would have to 14 go through the tendering process. 15 Q: What I'm confused about, though, is that 16 you've signed a lease for equipment that you're going to pay 17 for over three (3) or maybe five (5) years. 18 A: Based on the value of acquisition for a 19 certain year. 20 Q: Right but -- 21 A: The block of the lease is three (3) years 22 because that is the length of the life of the equipment that 23 the City is intending to hold on to it. 24 Q: So as a base line for the next year's 25 budget you will have to include operating costs --

1 A: For that -- 2 Q: -- for that portion. 3 A: -- that portion. 4 Q: So you are committing yourself for a 5 number of operating budget years when you do sign a lease for 6 three (3) or five (5) years. 7 A: That's true, in a sense, yes. But it has 8 to go back to Council every year for approval. 9 Q: Well this is what I'm -- we continue -- 10 A: We -- we -- under the Municipal Act we 11 cannot have those multi-year commitments, firm, it may be in 12 a legal agreement, but it comes back to Council for re- 13 approval. 14 Q: Are -- are your vendors generally aware 15 of that requirement? 16 A: I couldn't tell you but that's the way 17 legislation is in place? 18 Q: Is -- is this what we call Fiscal Fund 19 Out clauses? 20 A: I -- you know, I heard several 21 interpretations but my understanding is one (1) Council 22 cannot commit a future Council and operating budgets are 23 dealt with on a yearly basis. 24 Q: But isn't that what's happened here, Mr. 25 Balkissoon? The -- the -- the City is signing an agreement

1 to pay lease payments -- to make lease payments over a three 2 (3) to five (5) year period. 3 A: That's a legal agreement and we're bound 4 by the legal agreement but the financing of it receives 5 annual approval in the budget. 6 Q: Do you know if vendors are generally 7 aware of this? 8 A: I -- I said I wouldn't know. 9 Q: Probably? 10 A: I mean I -- I wouldn't know at all. 11 Q: Would you think that they should be 12 concerned? 13 A: I don't think they should be concerned 14 that they have a legal agreement that is a binding agreement 15 that ha -- that can be enforced against the City. 16 Q: All right. 17 A: This is just a City operational issue 18 that we conform with legislation in this manner. 19 Q: So as far as MFP is concerned, they have 20 a legal agreement and they can go to bed at night and sleep 21 easily? 22 A: I -- I would -- I mean, that would be my 23 best guess. 24 Q: All right and so when we talk about the 25 two (2) levels of authority that are required, it seems that

1 in this particular agreement with the MFP leases there was a 2 third. 3 Now, will you agree with me and -- and if you 4 don't, please don't, but, there seems to have been $150 5 million of authority for budgeting, and you were taken 6 through this yesterday, in the business continuity plan? And 7 it seems to me that the evidence so far is that the authority 8 to spend that money was delegated under Section 12 of that 9 document to the CAO. 10 A: I'd have to read the document to refresh 11 my memory. 12 Q: I -- I -- I think that'll be the evidence 13 and I think it's approaching common ground. It may not be, 14 but we'll get there eventually. 15 MS. LINDA ROTHSTEIN: Well, Commissioner, the 16 general principle isn't untrue except that the evidence we've 17 heard, I think clearly establishes that that authority that 18 was given -- that exceptional authority that was given to the 19 CAO was to be exercised on certain conditions and that's what 20 critical, I think, in any statement that's put to sum up the 21 evidence this far. 22 MADAM COMMISSIONER: Thank you. 23 24 CONTINUED BY MR. FRASER BERRILL: 25 Q: All right. Let's accept that. Let's

1 accept that. I don't believe that one of the conditions, now 2 correct me if I'm wrong and Ms. Rothstein will correct me if 3 I'm wrong, I believe as well, that if you were to lease this 4 equipment, in other words to pay for it a certain way that 5 you required specific authority? 6 At least under the documents that Ms. 7 Rothstein is referring to. 8 MS. LINDA ROTHSTEIN: I don't know that 9 anyone has been asked that question specifically. I don't 10 actually recall that Mr. Garrett was asked that question but 11 I would have drawn a different implication from the evidence 12 that he gave, that to lease you need separate Council 13 approval and that the particular authority he was given to 14 make exceptional Y2K related expenditures with clear advice 15 to him that it was necessary because there wasn't time to run 16 a proper competitive process, would not necessarily allow him 17 to just opt for leasing, as a way of achieving that 18 objective. 19 I think it's debatable. I don't think we have 20 evidence on that point yet, Commissioner, specifically. I 21 may be in error, I don't know. 22 MR. FRASER BERRILL: Okay, well the only point 23 I want to make on this, through the witness, is that it's not 24 free from doubt, whether or not, subsequent authority to 25 lease is even required.

1 Because we have the two (2) elements of 2 authority that Ms. Rothstein took us through. We have the 3 budget and we have expenditure -- sorry, we have expenditure. 4 MS. LINDA ROTHSTEIN: Except that, 5 Commissioner, the problem is that what I took Mr. Garrett 6 through was an analysis in which he made very clear, that 7 once Council had been engaged to lease for $43 million, any 8 future leasing, indeed any further acquisition beyond the $43 9 million, did require express Council authority. 10 And he didn't say that the $150 million 11 exceptional authority that he'd been provided could be used 12 to circumvent that proposition. 13 MR. FRASER BERRILL: All right. I'm not going 14 to take it any further, I think this is an issue that we have 15 to obviously clear up. 16 MADAM COMMISSIONER: Well, Mr. Manes -- I 17 think Mr. Manes has something that he wants to -- 18 MR. FRASER BERRILL: Sorry Mr. Manes. 19 MR. RONALD MANES: As I understood the 20 evidence, it's consistent with what Ms. Rothstein is saying. 21 That the $150 million budget, insofar as it 22 may or may not relate to this particular leasing of $43 23 million, the leasing of it was a financial arrangement that 24 had to be approved by Council. 25 That's why it went to Policy and Finance, in

1 the first place and the issue then is that being in place, 2 was staff bound by that approval, or was this some kind of 3 broader leasing approval, where staff could lease beyond that 4 $43 million that was approved? 5 MR. FRASER BERRILL: Well, in Mr. Manes' 6 statement, he's referring to another authority and that's the 7 financial authority, I think, were the words he used. 8 And I just don't know where that finds its 9 prominence, if you will, in Ms. Rothstein's analysis. That's 10 the only thing I'm confused about. 11 MADAM COMMISSIONER: It may be that whichever 12 way it is that this is not the witness who can answer the 13 question that you have. 14 MR. FRASER BERRILL: And that's why I was 15 prepared to move on. 16 MADAM COMMISSIONER: Okay. Well, why don't we 17 do that. 18 19 CONTINUED BY MR. FRASER BERRILL: 20 Q: And the point -- the point in all of this 21 that I'm trying to make, Mr. Balkissoon, is that you -- you 22 would agree with me, if we can't seem to come to a common 23 ground today, after seven (7) or eight (8) days of Hearing, 24 it would be tough for a vendor, like MFP to know whether or 25 not there was authority?

1 A: I wouldn't draw that conclusion. 2 Q: You wouldn't draw that conclusion? 3 A: Not if -- in my view, if you're doing 4 business with the City, you would become familiar with our 5 purchasing policies our procedure bylaws of Council and our 6 Council operations. 7 Q: Well, Mr. Balkissoon, I've struggled here 8 for seven (7) days and I still don't understand it. I still 9 don't understand how it works. 10 MADAM COMMISSIONER: Well, Mr. Berrill, with 11 all due respect, you're not giving evidence. 12 MR. FRASER BERRILL: No, that's a good point. 13 MADAM COMMISSIONER: And I guess the real 14 question, to a certain extent is, how much does any vendor 15 have to know about the City's authority once the vendor 16 actually has a contract? 17 And is the vendor, or the lessor or whomever, 18 entitled to assume that if they're dealing with the City, 19 that the people that they're dealing with are operating with 20 the appropriate authority. 21 And if that -- 22 MR. FRASER BERRILL: We'll be getting into 23 that -- 24 MADAM COMMISSIONER: -- is that really what 25 you're --

1 MR. FRASER BERRILL: That's really what I'm 2 getting at. 3 MADAM COMMISSIONER: Okay. 4 MR. FRASER BERRILL: And I plan to expand on 5 that, as we go. But, that was the first point that I wanted 6 to make. That insofar as the labyrinth within the City, if 7 one is to try to trace through it from afar, as a vendor, 8 it's difficult to do. 9 MADAM COMMISSIONER: Right. And I think Mr. 10 Balkissoon, do you understand what it is that he's saying? 11 Basically, that let's leave MFP right out of 12 the picture. But, if any -- anyone who is doing business 13 with the City, who has a contract with the City, as I 14 understand what Mr. Berrill is saying, that entity should be 15 entitled to assume, that if they're dealing with a City 16 person or a department, that that person or department has 17 the authority, the City authority, to do whatever it is that 18 they're doing. 19 That the outside person should not be the 20 person to have to try and figure out what the authority is, 21 it should be up to the City. 22 THE WITNESS: I would agree with him to a 23 point, that in my opinion, based on -- in this particular 24 situation, the RFQ went out with certain criterias, and I 25 believe the criteria on the RFQ indicated an equipment value

1 to the amount estimated at $43 million. 2 So, if you're a vendor that bid on $43 3 million, beyond $43 million you would certainly question 4 yourself as to, am I getting outside my agreement or am I 5 within my agreement and you would tend to ask some questions 6 of the people that are requesting for the equipment. 7 MR. FRASER BERRILL: All right. So insofar 8 as the specific -- 9 MADAM COMMISSIONER: Thank you. 10 11 CONTINUED BY MR. FRASER BERRILL: 12 Q: -- authority is concerned, I think you 13 would agree with me but insofar as the RFQ is concerned you 14 would agree with me and that's a good segway because I want 15 to go there now. 16 A: I would agree with you on what statement? 17 Q: When one reads the RFQ that one should 18 know as a bidder that they are restricted to $43 million? 19 A: I would as -- 20 Q: Is that what you were trying to say? 21 A: That's why I -- my assumption of the RFQ 22 and interpretation of the RFP, I should say -- RFQ, I should 23 say, is that it was a value somewhere in the approximate 24 figure of $43 million. 25 Q: Okay. Now, before we get into that

1 because I want to get at -- in to some detail. I want to 2 take you briefly to the exchange that you had with Mr. 3 Lenczner. 4 A: Yes. 5 Q: To -- to sort of set that up and, first 6 of all, I ask you to -- if you know whether or not Mr. 7 Lenczner is an experienced solicitor and a barrister? 8 A: So I've been told. 9 Q: And you had no objection to his being 10 retained to act on the part of the City? 11 A: I was not involved in his retention. 12 Q: My question was: Did you have any 13 objection to his retention? 14 A: Well, again, I'm aware of Mr. Lenczner 15 being retained long after he was retained. I don't know what 16 you're trying -- 17 Q: I'm not trying to do anything but ask you 18 a simple question. 19 A: Do I have an objection to it? I don't 20 have an objection to anyone as a legal person representing 21 the City. I expect them to do the job they're retained for. 22 Q: All right. You -- you express no view 23 one way or the other that you were in good hands having Mr. 24 Lenczner represent you? 25 A: I wouldn't draw any conclusion.

1 Q: Very good. Okay. Now he retained KPMG 2 in the course of his -- his actions on behalf of the City? 3 A: So I understood. 4 Q: Okay and he retained them at -- over a 5 period of four (4) or five (5) months, I understand? 6 A: That could be true. 7 Q: And at great expense to the City. I'm 8 told as much as five hundred thousand dollars ($500,000). 9 A: I'm not sure what the bill is, but I 10 understand it will be a phenomenal bill. 11 Q: All right. I'd like to take you to Tab 12 24. 13 14 (BRIEF PAUSE) 15 16 Q: Now, this doesn't have a Begdoc number. 17 I think it's been scanned in. Ms. Groskaufmanis will -- will 18 know but it's, in any event, at Tab -- 19 MADAM COMMISSIONER: 24. It -- 20 MR. FRASER BERRILL: Tab 24. 21 MADAM COMMISSIONER: It seems to be a 22 transcript of some sort? 23 MR. FRASER BERRILL: Yes, it's a -- I have a 24 videotape as well. It's the Council meeting of December 20. 25 MADAM COMMISSIONER: Okay.

1 MR. FRASER BERRILL: And Victory Verbatim did 2 a transcript of the portion -- of the whole meeting. 3 MADAM COMMISSIONER: So that transcript would 4 have just been made up a couple days ago? 5 MR. FRASER BERRILL: Right. 6 MS. DIANA GROSKAUFMANIS: That's right. 7 Well, this transcript has been provided to us by MFP and was 8 sent to Platinum Legal for scanning and is not yet in the 9 database. 10 MR. RONALD MANES: What is it? December 11 what? 12 MR. FRASER BERRILL: It was December 20 of 13 last year. Almost a year ago. 14 MADAM COMMISSIONER: December 20, 2001? 15 MR. FRASER BERRILL: That's right. 16 MADAM COMMISSIONER: Thanks. Are you wanting 17 to show a video tape? 18 MR. FRASER BERRILL: No. No, no, I won't 19 bother to do that. I think rather than set that up, I am 20 going to ask the witness to read four (4) pages of the -- the 21 transcript and I will be asking you questions, Mr. Balkissoon 22 at various points through it. 23 So, I'm going to ask you to read it and then 24 I'm going to stop you at various points to ask you questions. 25 THE WITNESS: You want me to read all four

1 (4) pages? 2 3 CONTINUED BY MR. FRASER BERRILL: 4 Q: If you wouldn't mind but I have one (1) 5 or -- one (1) or two (2) questions first. 6 The December 20 meeting, I understand, was a 7 special meeting of Council that was called by the Mayor, I 8 understand, to understand what has colloquially called the 9 MFP issue; is that correct? 10 A: I believe there was -- the meeting was 11 called by the Mayor because there was a -- 12 Q: Settlement negotiation? 13 A: -- an offer of settlement, if I recall 14 correctly? 15 Q: Well, I don't think it was an offer of 16 settle to -- to be precise. It was a settlement agreement 17 that had been negotiated between Mr. Lenczner and lawyers for 18 MFP, there was no offer. 19 A: Okay. 20 Q: It was just an agreement. 21 A: All right. 22 Q: And you asked a question -- and -- and it 23 was quite a long meeting. I think it was about three (3) 24 hours and, in fact, didn't -- didn't even complete, as I 25 understand it.

1 MADAM COMMISSIONER: His question was three 2 (3) hours? 3 MR. FRASER BERRILL: No, the meeting was three 4 (3) hours. 5 MADAM COMMISSIONER: That's a long question. 6 MR. FRASER BERRILL: That's like one (1) of my 7 questions. 8 9 CONTINUED BY MR. FRASER BERRILL: 10 Q: I understand it was three (3) hours and it 11 didn't even complete the topic? 12 A: I'm trying to remember if this was a 13 meeting that started in the afternoon. 14 Q: It started in the afternoon and I think -- 15 to refresh your memory, Mr. Moscoe wanted to break for dinner 16 and there were lots of objections about that and then finally 17 the meeting broke -- 18 A: Yes -- 19 Q: -- and Mr. Lastman went back to Florida, 20 does that help you at all? 21 A: -- I believe this is the meeting. 22 Q: All right. Could you read then from where 23 you're -- you're quoted at the top where you say, 24 "Thank you, Mr. Deputy Mayor." 25 And I would like you to read down to the end

1 of Mr. Lenczner's first response. 2 3 (BRIEF PAUSE) 4 5 Q: Read that into the record, if you don't 6 mind, Mr. Balkissoon. 7 A: Mr. Lenczner's comments? 8 Q: No, from where it begins, thank you Mr. 9 Mayor -- Mr. Deputy Mayor, from you -- 10 A: Okay -- 11 Q: -- down to the end of Mr. Lenczner. 12 A: Okay. 13 "Thank you Mr. Deputy Mayor. My first 14 question is of Mr. Lenczner. Mr. 15 Lenczner, if I hear you correctly when you 16 answered Councillor Miller, you said that 17 if we were able to provide that MFP was 18 aware that our employees were acting 19 without authority, there is a possibility 20 that we could get out of these agreements, 21 did I hear your correctly? 22 Mr. Lenczner's response: 23 "I think you went further than that. I 24 think what Councillor Miller put to me was, 25 if they were misleading Council, if we were

1 aware that our employees were deliberately 2 misleading Council, then you could. There 3 is a good chance you could get out of it." 4 Q: Now, just stopping there. Do you have any 5 facts now, that have come in -- come to your knowledge since 6 the beginning of this Inquiry -- or rather investigation, up 7 until today, that there are any facts as Mr. Lenczner refers 8 to? 9 A: There are any facts in what regard? 10 Q: That Council or that staff was 11 deliberately misleading Council? 12 A: Well, I believe that is why this Inquiry 13 is being conducted, because in reading some of the material 14 that was in front of us over the course of this contract and 15 everything we dealt with, there is a lot of questionable 16 areas and there is a lot of issues to be dealt with. 17 Q: Mr. Balkissoon, I'm asking you, if you 18 have any facts that could assist the Commissioner in coming 19 to the determination, if there was -- if employees were 20 deliberately misleading Council? 21 A: I don't have any hard, firm evidence -- 22 Q: That's very good. Thank you. 23 A: -- that -- 24 MADAM COMMISSIONER: Wait, wait, wait. If 25 you ask him a question and then he replies, you can't cut him

1 off at the part where you want to cut him off, you have to 2 let him give the whole answer. 3 MR. FRASER BERRILL: I may have to adjust my 4 time here, Madam Commissioner. I just didn't anticipate -- 5 MADAM COMMISSIONER: Well, Mr. Berrill, you 6 have to give -- he's answering a question. And any witness 7 has the right to answer the question. They don't get cut off 8 just because they might go a little further than you want. 9 MR. FRASER BERRILL: No, I'm just -- I just 10 alerting you that I was anticipating direct answers to my 11 questions and that was the basis of my time estimate. 12 MADAM COMMISSIONER: Well, Mr. Berrill, he is 13 giving you direct answers to the questions. He may not give 14 you the answers that you would like him to give to you, but, 15 he is giving you, as far as I can see, direct answers. 16 I would just say this to you and all Counsel, 17 that as far as I'm concerned, if a witness is here, they're 18 under subpoena and they're required to give evidence, if they 19 are answering the question, I'm letting them continue with 20 the answer to the question. 21 And then that -- if he had finished his 22 answer, I don't have any problem with him finishing, but, he 23 hadn't finished and he was still in the process of talking. 24 Now, I don't know if he remembers what he was 25 going to say, but, I say this to all Counsel, that -- and you

1 just happen to be the first one (1) I'm saying it to, that I 2 want witnesses to have the opportunity to answer the question 3 and not to be cut off from what they are -- what they're 4 saying when they're in the midst of saying it. 5 MR. FRASER BERRILL: My apologies to the 6 witness and to the Commissioner. 7 8 CONTINUED BY MR. FRASER BERRILL: 9 Q: Mr. Balkissoon, do you recall the question 10 and do you recall where you were when I interrupted what you 11 were saying -- 12 A: I think I still have a large portion of my 13 thought. As I stated, I don't have any single hard piece of 14 evidence to provide to this Inquiry. 15 But, I believe, in my opinion and in the 16 efforts that have been put forth, to this point and what I've 17 read, I think with looking at cumulative effects of several 18 issues and several documents, this inquiry may or may not 19 draw some conclusion. 20 I can't provide you with any single one (1) 21 piece of hard evidence to this point but I think if -- if 22 there is accumulated effort to put together some of the 23 evidence, there may be some possibilities. 24 Q: About deliberately misleading Council? 25 A: That's what I said. Yeah, maybe.

1 Q: Okay. Could you carry on then, What 2 if -- 3 A: What if? What about if? 4 MADAM COMMISSIONER: He's wanting you to 5 continue with the transcript, reading the transcript. 6 THE WITNESS: Oh, sorry. 7 "'My -- my next question was, what about if 8 they were acting without authority?' 9 Mr. Lenczner says, 'I don't think so. I 10 don't believe so and I don't think you 11 would get,' he paused, 'you -- the -- the 12 flip-side of that is this,' pause. 'This is 13 only a partial answer,' pause, 'is if a 14 judge was to say, Look MFP you knew that 15 there were no -- there was no authority and 16 yet you went ahead with these deals. You 17 knew that the individuals involved had no 18 authority, but nevertheless, you have had 19 the benefit of all of this over all this 20 period of time. 21 And the judge would look at that and say, 22 Well, what are you complaining about? 23 You've had these leases. You have been 24 paying the payments on a monthly or 25 quarterly basis on all these years. How do

1 you now turn back the clock and get out of 2 them. You know? Where you were in 2000, 3 the summer of 2000, in the fall of 2000.'" 4 MADAM COMMISSIONER: It's, "where were you". 5 THE WITNESS: Sorry, "where were you". 6 MADAM COMMISSIONER: It's okay. 7 8 CONTINUED BY MR. FRASER BERRILL: 9 Q: Did -- did you agree with that analysis 10 of Mr. Lenczner? 11 A: Well, Mr. Lenczner's answer there, 12 because of all the pauses and stuff. I wasn't too sure what 13 he was trying to tell me. 14 Q: Are you now? 15 A: And to be honest with you, I had the same 16 problem with him at the Audit Committee meeting that is not 17 recorded. 18 Q: Are you, having had an opportunity to 19 stud -- study it, are you in agreement with it now, that 20 analysis? 21 A: He has a couple of points. Yes, we've 22 had the equipment and I think the City is probably prepared 23 to pay fair value for the equipment but it's whether we'll 24 pay in fair value is the question mark in my mind at this 25 point.

1 Q: Okay. We'll -- we'll get into that by 2 the way. So I ask you to -- to save your answer. 3 The next question -- or the next phrase, would 4 you read that? 5 A: The next question reads: 6 "But we were not aware of our staff acting 7 without our authority, that is what I'm 8 asking, if MFP was aware but we weren't." 9 Q: All right. Let me stop you there. Are 10 -- do you have any facts today to tell the Commissioner as to 11 whether MFP was aware that staff was acting without 12 authority? 13 A: Again, I go back to the value of the 14 tender. The value of the tender was approximately $43 15 million so acquisitions beyond $43 million is where my 16 question is coming from. 17 Q: All right. We're going to get into that, 18 so I'm cutting you off now. 19 MADAM COMMISSIONER: Mr. Berrill, this is -- 20 this is my point. He's -- 21 MR. FRASER BERRILL: I -- I just didn't want 22 him to repeat himself. 23 MADAM COMMISSIONER: Well, why don't -- why 24 don't you let me decide whether he is -- 25 MR. FRASER BERRILL: All right.

1 MADAM COMMISSIONER: -- he is repeating 2 himself. 3 THE WITNESS: So my line of question in here 4 is on the basis that equipment beyond $43 million was 5 acquired and this is what I was trying to gain out of Mr. 6 Lenczner. If they're beyond $43 million where staff had no 7 authority, in my opinion, at that time, if that was the case, 8 I was seeking his answer. 9 MR. FRASER BERRILL: All right. 10 11 CONTINUED BY MR. FRASER BERRILL: 12 Q: Then I would just ask you to read Mr. 13 Lenczner's response to your question and that'll be the end 14 of my -- 15 A: His -- his answer reads: 16 "I don't think it will get you anywhere. I 17 mean, they don't -- courts don't make nice 18 distinctions like that between staff and 19 City Council. You are all together one 20 body. You take responsibility for your 21 staff as long as there is --" 22 And he ends. 23 Q: He ends because he was cut off like I cut 24 you off. 25 A: I'm not sure.

1 Q: All right. Now, I want to get to the 2 point that you're making about MFP having to know or being 3 deemed to know, by reading the RFQ that the -- that the 4 authority was limited to $43 million and to that end, I want 5 to refer you to the RFQ again and I think we've been 6 referring to Tab 14. 7 A: No, 16. 8 Q: 16. Excuse me. Thank you. Now, in the 9 RFQ as we see it, and you've obviously studied it, because 10 you make the statement that it's limited to $43 million. 11 Can you tell me, where in the RFQ, you rely on 12 the fact, that it is limited to $43 million? 13 A: Well, okay, I'm saying the RFQ is $43 14 million because that is the authority given by Council. If 15 it's not stated in the RFQ, you continue to say, I've studied 16 it; I haven't. I had a limited time to read it with Mr. 17 Griffiths and I'll repeat that again. 18 So, I couldn't pull off the top of my head, 19 where in the RFQ it had $43 million. But, certainly the 20 reports that was placed in front of Council was to lease $43 21 million worth of equipment. 22 Q: Was MFP present at Council? 23 A: I'm not sure. 24 Q: You're not sure. I'm going to refer you, 25 to be fair, to addendum number 1 to the RFQ or -- RFQ. And

1 that's at Tab 196 in the Mayor's volume 2. 2 3 (BRIEF PAUSE) 4 5 A: Sorry, what was the Tab number again? 6 Q: 196. Perhaps in the volumes that you have 7 the Tabs don't say 196, but, they're -- 8 A: I think I found it. 9 10 (BRIEF PAUSE) 11 12 Q: Now, the evidence will be that it's -- 13 MADAM COMMISSIONER: Is this 3902? 14 MR. FRASER BERRILL: Yes. 15 16 CONTINUED BY MR. FRASER BERRILL: 17 Q: That it's not clear whether or not MFP 18 ever received this addendum, because when one refers to the 19 following Tab and I'm just saying this for the record, they 20 don't appear to be on the mailing list. 21 And I'm not going to ask you questions about 22 that, but, assuming that they did, I'm referring you to the 23 last page, where it refers to estimated leasing volumes. 24 And you add up the numbers in the right-hand 25 column --

1 MADAM COMMISSIONER: Second to last page, I 2 think on this. 3 MR. FRASER BERRILL: I guess the next page I 4 thought was on the next tab, but, that is the mailing list 5 that I was referring to Madam Commissioner, so, it is the 6 second last page. 7 When you add up those numbers, it does come to 8 $43 million approximately. So a reader of the addendum would 9 know the estimated leasing volumes were $43 million, but, I 10 want to refer you to two (2) additional sections of the RFQ. 11 The first one (1) is section 4, this is back at Tab 16 then. 12 13 (BRIEF PAUSE) 14 15 MR. FRASER BERRILL: And it's Begdoc 23435 and 16 it's page 20 of the response. 17 MADAM COMMISSIONER: Thank you. 18 THE WITNESS: Okay. 19 20 CONTINUED BY MR. FRASER BERRILL: 21 Q: All right. And under "usage assumptions", 22 it says, approximately nine thousand (9000) desktops and if 23 you want to refer back, or take my word for it, that is -- 24 that is referred to in the nine thousand (9000) in the 25 addendum number 1, the fourteen thousand dollars ($14,000) or

1 $14 million. 2 A: Yes. 3 Q: The four thousand (4000) that is 4 contemplated here is in addition to what is addendum -- in 5 addendum number 1. 6 A: Sorry, you've lost me there because you 7 referred to nine thousand (9000) desktops and you've referred 8 to $14 million. 9 Q: That is nine thousand (9000) desktops that 10 will be -- that will be installed in 1999, but, in -- and 11 that is referable back to addendum number 1, as to what is 12 contemplated in 1999. 13 But, what is contemplated by this clause, as 14 well, is an additional four thousand (4000) desktops? 15 A: I don't -- where is the four thousand 16 (4000) you're referring to -- you're losing me. 17 Q: I'm sorry -- look under "usage assumption" 18 in paragraph 4. 19 A: Okay. 20 Q: So, the RFQ here, contemplates more than 21 just the $43 million. It contemplate another four thousand 22 dollar ($4000) -- four thousand (4,000) desktops. 23 A: It seems that way. 24 Q: Okay, that's the first thing I wanted to 25 refer you to. Then I'd ask you to refer to Section 1.1.21.

1 (BRIEF PAUSE) 2 3 Q: And that's at page 12 of the response, 4 Begdoc 23427 and I ask you to read 1.1.21 into the record, 5 please. 6 A: It says: 7 "The City may, from time to time, negotiate 8 separate corporate license agreements for 9 major software acquisition and expects the 10 respondents to incorporate these costs into 11 a lease agreement. The respondents must 12 indicate a willingness and ability to 13 comply with these requirements." 14 Q: Now, my suggestion to you, Mr. 15 Balkissoon, is this is in addition and that the bidder had to 16 stand ready to finance future unknown major software 17 additions, which in fact we know occurred, and that the -- 18 any reader of this bid would expect that they were going to 19 have to lease more than what was originally contemplated, as 20 you say, or as Council authority was given? 21 A: Possibly, I -- I'm not sure how they 22 interpret this. 23 Q: All right. Would you agree and do you 24 know now that the $43 million was the first tranche, if you 25 will, of the first slice of equipment that was contemplated

1 to be leased under the $150 million Y2K plan? 2 A: I would say based on this value list 3 here, that's probably true. 4 Q: Right. And that that was to happen 5 within ninety (90) days, that was the plan? 6 A: At -- at no time was -- was I ever told 7 that it would all happen in ninety (90) days. 8 Q: All right. Do you recall Mr. Rabadi 9 saying to you at one point in time that -- that that's why he 10 wasn't concerned about lease rates beyond ninety (90) days, 11 because he expected it all to be done within ninety (90) 12 days? 13 A: I don't believe that's what I understood. 14 I -- I -- I think what he said was his financial calculation 15 was to do with the interest -- the interest rates that were 16 quoted for the ninety (90) day period. 17 But he did express some concerns about an 18 issue that he didn't understand, and he was give -- given 19 assurance at the time that he questioned things, that there's 20 no need to worry beyond the ninety (90) days, because the 21 majority of acquisitions will be completed. 22 Q: Let me refer you briefly to tab 23 at 23 Begdoc 19134. 24 25 (BRIEF PAUSE)

1 MADAM COMMISSIONER: Is that the second page 2 then? 3 MR. FRASER BERRILL: Mr. Balkissoon's set of 4 documents. 5 MADAM COMMISSIONER: Hmm hmm. 6 7 (BRIEF PAUSE) 8 9 CONTINUED BY MR. FRASER BERRILL: 10 Q: And this is from Mr. Rabadi, after the 11 fact if you will, in November of 2001 to Mr. McAuley, who I 12 will inform you is a KPMG investigator. 13 And Mr. Rabadi writes, on page 2 at the fourth 14 paragraph, and about halfway through that paragraph, and the 15 beg -- the sentence beginning most, is what I'm going to 16 refer to, and I ask -- I ask everyone to find it. 17 A: You're going to have to help me find it. 18 Q: That's okay, take -- take your time, it's 19 the one (1), two (2), three (3), fourth (4th) paragraph, not 20 -- not the full paragraph. It's right in the very middle of 21 the page, it's the last sentence. 22 MADAM COMMISSIONER: What does it -- what -- 23 oh, most of the items? 24 MR. FRASER BERRILL: Most of the items, yes. 25 MADAM COMMISSIONER: Okay.

1 THE WITNESS: Okay. 2 3 CONTINUED BY MR. FRASER BERRILL: 4 Q: Maybe you could just read that into the 5 record so we're all -- 6 A: "Most of the items out of the 43 million 7 equipment were already received when the 8 report went to Committee, and everything 9 was expected by September 1999. So it was 10 reasonable to expect that leases will be 11 executed by September 30th, 1999 for items 12 already received by that date." 13 Q: All right. So, does that help you at all 14 in your -- or is this brand new to you? 15 A: This statement is brand new to me, 16 because my recollection of answers received from Mr. Rabadi 17 at previous meetings; my -- my recollection it was his 18 concern was the interest beyond the ninety (90) days, and so 19 this is -- this is something a little bit -- 20 Q: Okay, my -- my -- 21 A: -- different. 22 Q: -- sorry, my suggestion to you was that 23 that was the contemplation, that it would all be leased 24 within the ninety (90) days, because it in fact -- most of it 25 had, in fact, been received and that -- and the complaint is

1 that that didn't happen? 2 A: I believe there is another e-mail, Mr. 3 Rabadi to someone else, that I had seen. My interpretation 4 of that other e-mail is what I'm recollecting to be slightly 5 different. 6 Q: Well, perhaps at the break you can -- you 7 can find that e-mail, and -- and -- and enlighten us further. 8 A: Well I -- I don't have it, but I -- I do 9 recall the e-mail being in either an audit meeting or a 10 Council meeting. 11 Q: If -- if there was such an e-mail and I 12 was aware of it, I -- I would put it to you, and I -- I'm 13 sorry, but that's certainly my understanding. 14 A: There was a current e-mail that I'd seen 15 during the assessment of the RFQs, the submissions, that Mr. 16 Rabadi was questioning somebody and there was a handwritten 17 note of him -- of his on that e-mail, either to his boss or 18 somebody in purchasing, if I recall. 19 Q: All right, well, let's assume then, 20 subject to that e-mail or subject to further evidence, that 21 that was the contemplation of staff, that it would all happen 22 within ninety (90) days, and I -- I ask you to assume that. 23 It's -- it's kind of ironic, isn't it, because 24 the reason that all of the equipment wasn't put on leases in 25 that first ninety (90) days is, I think the evidence will be,

1 the City couldn't really get its act straight, if you will. 2 It didn't have the computers to count the computers that it 3 was going to lease? It -- it didn't know where the gear was 4 and it couldn't really put it on the schedules -- 5 A: Well -- 6 Q: -- would that surprise you? 7 A: -- if -- if you are correct, Mr. Berrill, 8 I guess I'd have to say that -- to myself, why would the City 9 staff put out an RFQ and they know they didn't have their act 10 together? 11 Q: Well, that -- that -- we'll -- we'll find 12 out about that. 13 I think the evidence will be as well, that the 14 delay was not on the part of MFP, and that in fact MFP helped 15 to a great degree in trying to -- to get all of the equipment 16 on lease in that first ninety (90) days, but the City wasn't 17 able to do it? 18 A: I -- 19 Q: Would that surprise you or do you know? 20 A: I -- if you are correct, I would still 21 say to myself, if the staff could not meet the obligations of 22 the RFQ and -- and the report they had previously put in 23 front of the Council, they are well aware of their 24 responsibilities to come back and make Council aware of it, 25 and seek direction.

1 Q: All right. Now, I want to focus again on 2 the point that you were making, that MFP should have known 3 that the RFQ was restricted to $43 million. 4 And I ask you that, in light of the fact that 5 it was anticipated, the evidence seems to be thus far anyway, 6 that it was anticipated that all of the computer equipment 7 would be leased by the end of the first ninety (90) days, why 8 would you bother having a pricing mechanism to set prices 9 beyond ninety (90) days? That is Section 1.1.17, the one (1) 10 we're talking about. 11 A: I -- I can't explain the staff's 12 thinking. 13 14 (BRIEF PAUSE) 15 16 Q: I'm going to -- I'm going to move on from 17 that topic and ask you these questions, that at the end of 18 the day, and in any event, would you agree that from MFP's 19 point of view, when it is dealing with the fifth largest 20 Government in Canada, and the fifth largest City in North 21 America, I think we have in evidence and it was -- the City 22 was represented insofar as the negotiation of the master 23 lease, we are concerned with, was represented by Fasken 24 Campbell, which I -- I believe is one (1) of the largest 25 firms in -- in Canada.

1 And it has a large Financial Department, its 2 own legal staff and fifty (50) odd Councillors at the time, 3 looking over it shoulder, that a vendor would think that they 4 were dealing with someone that knew what they were doing? 5 A: I -- I really would prefer to offer no 6 comment on that, because I really don't know what vendors 7 think. 8 Q: Well, if you were a vendor, putting your 9 shoes -- self in the shoes of MFP, if you're able to do that? 10 A: I have no experience as a vendor to speak 11 as a vendor. 12 Q: So you wouldn't have any comment 13 whatsoever on that? 14 A: No I wouldn't, sir. 15 Q: We'll take it down one (1) step further 16 that when you signed myriad packing slips and certificates of 17 acceptance, I received from the City, that they agree that 18 the equipment is received and being used, and that there is a 19 master lease signed and program agreements entered into and 20 equipment schedules entered into, and Solicitor opinion 21 letters signed, that you would think the City would know what 22 it's doing? 23 A: Well, you would have to assume that. 24 25 (BRIEF PAUSE)

1 Q: Mr. Doyle has been referred to as the big 2 gun, I think by others in testimony. Would you respect Mr. 3 Doyle's opinion as senior City Solicitor, at the time? 4 A: If he gave an opinion and I felt 5 satisfied, I would respect it. If he gave an opinion and I 6 felt different, I would disagree, because I've seen in my 7 career that lawyers can disagree and lawyers can give several 8 opinions on the same issue. 9 Q: If he give a -- gave a written opinion as 10 to the authority of the City to do something, would you rely 11 on that? 12 A: Not a hundred (100) percent. Again, 13 because I've seen people give opposing opinion. One -- you 14 know, as I'm told by lawyers, opinions can always be 15 challenged because it's left to interpretation and intent. 16 Q: Would you say that he knew his way around 17 the intricacies of approvals and authority being a long-term 18 employee of the City? 19 A: I wouldn't say he does. I would say he 20 depend on a lot of people giving advice and him drawing 21 conclusions at times. It's a big City to be able to know all 22 the intricacies, I would think it's not possible. 23 Q: Do you know if Mr. Doyle received favours 24 from anyone? 25 A: I can't say I do.

1 Q: Does he report to anyone that, in staff, 2 that you believe is culpable in respect to the issues 3 regarding this Inquiry? 4 A: Mr. Doyle reports to Council per bylaw. 5 Q: There is a logical conclusion that one 6 could draw from your answer, but, I won't. The opinions -- 7 he gave an opinion at Tab 37, maybe we should just turn it 8 up. 9 A: Are we finished with Mr. Mayor's book? 10 Q: Yes, we are because it's pretty big. 11 12 (BRIEF PAUSE) 13 14 A: Tab 37. 15 Q: Tab 37. 16 A: Okay. Now, my colleague, Mr. Moore, took 17 the Mayor and Mr. Garrett through some of the wording in the 18 opinion, and I don't propose to do that, but, I -- I will ask 19 you to agree, if you know that this document -- 20 MADAM COMMISSIONER: I don't think anyone has 21 taken him to this opinion. 22 MR. FRASER BERRILL: I believe Mr. Moore asked 23 the Mayor to read -- 24 MADAM COMMISSIONER: Oh, the Mayor -- sorry, I 25 thought you meant Mr. Balkissoon.

1 MR. FRASER BERRILL: I'm sorry. 2 3 CONTINUED BY MR. FRASER BERRILL: 4 Q: So, I won't put that into the record 5 again, but, have you had an opportunity now that you've had 6 this book to read the opinion? 7 A: I -- I read this document before. It was 8 provided to me by the press. 9 Q: All right. 10 A: Because it was not given to Council 11 Members, again denial of access, but, I found out the press 12 had it and I obtained a copy. 13 Q: And do you know in the vernacular that 14 lawyers speak of that this would be called a relatively clean 15 opinion. Is that something you're familiar with? 16 A: Maybe lawyers call it that way, but, when 17 I read it, I read the portion that says assumptions and 18 reliances and that raised my concern. 19 Q: Raised your concern, do you think it would 20 raise a concern on the part of a reader that just received 21 this on his desk from the City solicitor, that he would not 22 be concerned about what the solicitor was saying? 23 A: It depends on what the person receiving it 24 is expecting out of it. 25 Q: Do you know if these documents are relied

1 on in the ordinary course of -- of business, in your 2 financial history? 3 A: I -- I can't say I do. 4 Q: So your experience in the financial world 5 doesn't extend to -- 6 A: Not -- not getting into agreements, et 7 cetera, no. 8 Q: Were you aware that the stream of 9 payments that were obliged under the leases, were in fact 10 sold to what we call downstream financial institutions, like 11 insurance companies or banks? 12 A: I -- I'm now aware of that, I wasn't 13 aware of that previous to this whole issue. 14 Q: And would you expect those banks or 15 downstream lending institutions to take some solace or some 16 -- some reliance on this -- this opinion? 17 A: If that's the way they conduct business, 18 then I -- I guess they would. 19 Q: And it wouldn't necessarily be fair for 20 them to have to go back to Council and ask Council, are you 21 sure that staff knew what it was doing when he entered into 22 these agreements? 23 A: I would -- I would expect that if someone 24 is asking Mr. Doyle to provide that type of assurance, that 25 Mr. Doyle would make sure that it was.

1 Q: So there's -- there's nothing nefarious 2 in these opinions, there's -- if -- if MFP asked for this 3 opinion, there's -- there's nothing untoward about that, or 4 nothing suspicious about that? 5 A: No, if -- if MFP's asking the City for 6 it, there's nothing untoward about it, but I think it's the 7 responsibility of Mr. Doyle, if he's providing a document, to 8 provide it with -- with that information that is being sought 9 from him, but when I read assumption and reliances, I see 10 that Mr. Doyle provided it by making certain assumptions, and 11 he clearly states that he spoke to certain people and they 12 gave him the assurance and I -- I have my reservations of how 13 that was done. 14 Q: All right. I want to refer you to a 15 document that wasn't put to the Mayor or Mr. Garrett, and 16 that's at tab 31. 17 18 (BRIEF PAUSE) 19 20 Q: And this is the same line of questioning. 21 Are you familiar with this Certificate of Encumbancy -- 22 A: No, I'm not. 23 Q: -- Mr. -- if I told you that this was a 24 document that -- that people who sign contracts rely upon, to 25 make sure that the person signing the contract was authorized

1 to do it, would that help you in -- 2 A: Well, if -- 3 Q: -- understanding the document? 4 A: -- if you tell me that, I'd have to 5 accept that. 6 Q: All right. And someone reading the 7 words: 8 "Signing of the master equipment lease 9 agreement 8.38, and program agreement, PA- 10 1, between the City and MFP, dated July 30, 11 and associated equipment schedules, 12 collectively the lease documents, are 13 within the purview and authority as an 14 officer of the City, and within the scope 15 of the designated responsibilities of the 16 City." 17 And if you saw one (1) of those signatures or 18 several of those signatures or any of those signatures 19 attached to a document, you would think that that person had 20 authority to sign it and to bind the City? 21 A: You would have to assume that. 22 Q: All right. 23 24 (BRIEF PAUSE) 25

60
  1                 Q:   Now, I want to take you just very briefly
  2  to the sale and leaseback issue, which -- which we've heard
  3  some evidence about, and I -- I want you to comment on
  4  whether or not you are aware, or have an opinion on the
  5  spirit of the requirements in the legislation, the Municipal
  6  Legislation, with respect to sale and leaseback?  
  7                 Do you know why that legislation is there,
  8  with respect to the requirement of Council to sell an asset?
  9                 A:   Without reading the legislation, I -- you
 10  know, I wouldn't want to offer an opinion.
 11                 Q:   All right, let me make a suggestion to
 12  you as to why you need public notice of a sale of Municipal
 13  assets, and why there is specific authority for that?  And
 14  Ms. Ross -- Rothstein will correct me, I'm sure, at any point
 15  in time.
 16                  My understanding is that when the City has a
 17  valuable permanent asset, like a piece of land or a building,
 18  or something of enduring value, it requires specific Council
 19  authority to sell that, because it is a permanent asset, and
 20  that public notice usually has to be given with respect to
 21  that.  
 22                 So that everyone knows that you're -- you're
 23  doing this, and so it's above board and transparent, and that
 24  relates to permanent worthwhile lasting assets.
 25                 And my suggestion is that it doesn't refer to

1 wasting assets or depreciating assets or assets like 2 computers that are obsolete after a period of time, would 3 that -- would that be correct? Does that seem reasonable? 4 A: It seems reasonable the way you're putting 5 it. 6 Q: That's my understanding of the spirit of 7 the sale legislation. And would you agree with me that it's 8 kind of ridiculous to have to go through that step, if you 9 will, even though it may be required by Council -- Council 10 authority and by law, with respect to this kind of asset, to 11 go through that one (1) other layer of bureaucracy to get the 12 job done? 13 A: Well, I'm not sure, you know, I understand 14 what you're trying to get at, but, I'm not sure the 15 legislation is strictly that one (1) portion. There's -- 16 does it contain values? 17 Like, I mean, an asset can be looked at both 18 in terms of value and life, or just life alone, so I'm not -- 19 you know -- at this present time, I'd have to read the 20 legislation to understand. 21 Q: At the end of the day, the point is and 22 I'd ask you to agree with me on this, that it's not up to MFP 23 to determine whether or not, there's authority for a sale and 24 leaseback? 25 A: No, I don't expect that to be your

1 requirement. It's the City staff requirement to follow 2 procedure established by legislation or by-laws of the City. 3 Q: Now, I want to take you to your 4 conversation with Mr. Domi, on the phone, after you had held 5 the matter of the photocopier lease? 6 A: I spoke to Mr. Domi after the whole issue 7 was debated by Council and a decision was made. 8 Q: Right. And you spoke from -- with him 9 from your home -- 10 A: No, it was my cell phone. 11 Q: Your cell phone, okay. And I suggest to 12 you and I anticipate the evidence will be that it was a 13 relatively cordial call? 14 A: Oh, absolutely. 15 Q: And that Mr. Domi wanted the business 16 because he had been working on this account for a long time 17 and he'd been working on it very hard? 18 A: Well, I didn't get it that he wanted the 19 business. He was out to inform me or educate me or make me 20 aware, that there is a master agreement and that he is 21 entitled to this business, by agreement and that my 22 interpretation of what went on at Council, was not as I see 23 it, but, in his opinion that you know, that business should 24 have gone to MFP and they should not have been a 25 re-tendering.

1 And that, you know, this is why I said to him, 2 if you -- if you really feel that you have an agreement with 3 the City and that the City lawyer has given me wrong advice 4 in this particular instance, then take the City to Court. 5 Get your lawyers to sue them, because you have 6 an agreement, but, he subsequently accepted that he would 7 follow the re-tendering process and he made it quite clear to 8 me that, you know, we'll win the bid. 9 Q: Okay. And that was a relatively amiable 10 discussion? There was nothing -- 11 A: Absolutely. There was no harsh words, no 12 nothing. It was a -- I would say a business interaction 13 conversation on a business-like basis. 14 But, he did make reference that he had a 15 similar contract at the Province and that the architecture 16 developed at the Province, that network, anything that has to 17 be connected to the network, MFP gets the business. 18 And he saw the same in his master agreement 19 that he had those same privileges with the City. And I said 20 to him, well, I'm sorry, if you explain it to me this way, 21 then you would be at the City for life because we will not be 22 able to get out of this unless we scrap the entire network 23 and start it from scratch and rebuild. 24 And I didn't view leasing that way because to 25 me, as I said yesterday, if I purchase a car or obtain a car

1 on a lease, I would at least have the opportunity to provide 2 attachments to this at my cost and if the vehicle is taken 3 back, I've lost those investments. 4 That's the way I would see it. And I -- you 5 know, I felt that if the City had a network and we wanted to 6 attach a peripheral piece of equipment as long as that 7 equipment is compatible by specification and engineering 8 standards, the City should have the option to attach that 9 piece of equipment, but he did not view it that way. 10 Q: Should MFP have the option to take that 11 further equipment back, when it takes its own equipment back; 12 is that what you're saying? 13 A: I -- I mean that's up for negotiation. 14 Q: I see, okay. I -- I was a little 15 disturbed, and I want to move on from that -- that phone 16 call, but I was disturbed with sort of the -- the tone of 17 your voice at the end, and I -- it doesn't entirely show up 18 on the record, but I -- I got the impression from listening 19 to you, that -- that you thought that Mr. Domi was very 20 confident that he would get the business when he re-tendered? 21 A: In his tone of voice in our conversation, 22 I would have to say the words that he used and the tone that 23 he used, I was left with the impression that he was very sure 24 in the re-tendering process, he would get that business. 25 Q: Is that because he was confident that --

1 that MFP had the best price? 2 A: He did not make that statement, so I 3 don't know. But I would have to say, my perception of the 4 tone of voice and the words used, is that he felt comfortable 5 that he could win the business again. 6 And his tone of voice would be equally 7 consistent with the view that he thought he had the best 8 price, and would, therefore, get the business. 9 Q: And I take that from him? 10 A: I mean, if -- if that was his feeling, 11 he's entitled to that, I'm entitled to my feelings. 12 Q: And -- and your feeling is, other than -- 13 he was just confident he had the best price? 14 A: I -- I -- I thought he was just very sure 15 of himself that he would get the business. How he would get 16 it, I really don't know. 17 Q: So it was just suspicion on your part, 18 that it was other than he just had the best price? 19 A: I -- I didn't draw any conclusion other 20 than -- 21 Q: Well, you seem to be now, sir. 22 A: -- well, his tone of voice left me the 23 impression he was sure he was going to get that business, and 24 that's -- that's the feeling I had at the moment. 25 Q: Do you have any -- any facts to -- to

1 enlighten us with today, that lead you or support perhaps the 2 suspicion on your part, that there was anything other than 3 the best price -- 4 A: No. 5 Q: -- that led him to think that he might 6 get the business? 7 A: I -- I have nothing of an individual 8 nature that I can raise. 9 Q: Well, I want to move on to the 10 photocopier deal, because -- and -- and refer again to Mr. 11 Domi's confidence, because as I understand it, MFP did in 12 fact win the second bid; is that correct? 13 A: I -- I've had access to those documents, 14 and I believe that was the draft report that was going to 15 come forward that did not make it to Council, but through the 16 audit process it was shown to me. 17 Q: And that's at Tab 13, just for the 18 record. I don't propose to go there, but just for the 19 record, 9201, I think is the Begdoc number. 20 And in fact, it was won on price, it wasn't 21 won on any other kind of evaluation, it was won on price? 22 MADAM COMMISSIONER: I think we've already 23 gone there. 24 MR. FRASER BERRILL: Yes, yes, that's why I 25 don't want to go back here.

1 THE WITNESS: I -- I can't remember, to be 2 honest with you. 3 4 CONTINUED BY MR. FRASER BERRILL: 5 Q: All right. Well, the document will speak 6 for itself. 7 So are -- are you a little bit chagrined at 8 all, that having gone through the process of bidding the 9 first time with MFP's price, and then going through the bid 10 process, you still wind up with MFP having the best price. 11 But I'm told, or the evidence seems to indicate, it was some 12 six (6) weeks later, having gone through the RFQ process? 13 A: Now, how I understand the process clearly 14 with the schedules and that the schedules could come at any 15 time, and the problem with the ninety (90) days, I would have 16 -- if given the opportunity, I would look at those documents 17 from a different viewpoint. 18 Q: I see. Did you mention at any of your 19 interviews with the press, that MFP had the lower price when 20 it -- the bid was in fact re-tendered? 21 A: I can't say I recall doing that. 22 Q: Right. Is -- is there a reason that you 23 -- or you can't recall having done it or not done it, you may 24 have done it? 25 A: That's what I said.

1 Q: I see. Does it, in your view, look bad 2 on -- on Council or staff at all, that they had to go through 3 the re-tendering process, that they didn't get it right the 4 first time? 5 A: Sorry, would you repeat the question? 6 Q: Does it look bad at all on you or Council 7 or the City, that they had to go through the re-tendering 8 process, that they didn't get it right the first time? 9 A: I -- I wouldn't phrase it that way. I 10 would say I was doing my job to make sure staff was following 11 practices and procedures. 12 MS. LINDA ROTHSTEIN: Commissioner, I'm not 13 sure what it meant by "re-tender" in this context. 14 MR. FRASER BERRILL: I'm just using the word 15 that the witness used. 16 MADAM COMMISSIONER: Well, I don't know that 17 he said "re-tendered" but in any event, I think that the 18 difficulty with the question is that you asked whether it 19 looked bad that staff, Mr. Balkissoon or Council had to go 20 through the process again and Mr. Balkissoon is answering for 21 himself. 22 Basically, saying that he thought that he had 23 a responsibility as a Councillor if he thought something had 24 not gone through the appropriate process to bring it to their 25 attention.

1 MR. FRASER BERRILL: That's correct. That's 2 the way I took it, Commissioner. 3 4 CONTINUED BY MR. FRASER BERRILL: 5 Q: Now, I want to move to your conversations 6 with Mr. Lyons. 7 A: Mr. Lyons? Yes. 8 Q: It seems to follow chronologically, 9 because I -- I think it was just after the tendering or 10 re-tendering that transcript will speak for itself that -- 11 that you had your first conversation with Mr. Lyons. 12 A: No, I believe I said that Mr. Lyons 13 approached me -- I believe it was the second day of the 14 Council which would have been April the 20 something. 15 Q: I think that was just after, if I 16 understood your testimony, just after you'd held the 17 photocopier issue in Council? 18 A: It was -- I -- if my memory serves me 19 right, it was the day following when I held the item on 20 Council. 21 Q: All right and as I understand it, what 22 Mr. Lyons said to you is that MFP are good guys and my 23 client. 24 A: That's the words that I remember. 25 Q: All right.

1 A: And -- and the other statement that he 2 made that I remember clearly is he made it clear to me that 3 when they -- when they secured the first contract for the 4 software and hardware, that at that time he was not your 5 representative. He was the representative for GE Capital. 6 Q: All right. 7 A: He did say that. 8 Q: All right. Did he say GE Capital or did 9 he say Dell Financial Services? 10 A: I -- my memory says that he told me GE 11 Capital. 12 Q: Very good and -- and I assume that in 13 conversations that you had with Mr. Lyons then and up until 14 now that that is the extent of the lobbying, if you will, 15 that Mr. Lyons did on behalf of MFP? 16 A: To me? 17 Q: To you. 18 A: Well, in that conversation it proceeded 19 with the phone calls that voice mails were left on my cell 20 phone. 21 Q: And -- and were those the discussions 22 that we -- you referred us to yesterday, with respect to the 23 John Barber article? 24 A: Yes. 25 Q: All right and I understand it, and I just

1 wanted to clarify this, that his calls to you subsequently 2 were really just to refer to that article, not to lobby on 3 behalf of MFP? 4 A: No. He was -- he was calling and he made 5 some statements about Mr. Barber and he also made the 6 statements about my performance, if I could put it that way. 7 Q: All right but there was no more lobbying 8 on behalf of MFP? 9 A: I don't believe so. 10 Q: All right. I want to refer to your 11 telephone conversation with Mr. Nigro, Vince Nigro. That was 12 at or about that time. I don't have a note of -- 13 A: I believe it was after the article, 14 again. Vince called me, I -- I'm not sure if we made 15 connection the first time or if I returned his call. I'd 16 have to go back to my office where I could -- and it was a 17 very cordial conversation that he was trying to clarify that 18 he had nothing to do with the MFP contracts with the City and 19 that he was a new employee of MFP and he was very concerned 20 that the article came out the way it did. 21 And I made it very clear to him that Vince, I 22 had no conversation with Mr. Barber with Mr. Nigro's name 23 ever come up in our conversation and made it clear to him 24 that I was asked a bunch of questions by the press after the 25 Council meeting and I answered the questions strictly on the

1 basis of what was asked of me. I -- 2 Q: I think -- 3 A: -- and I did not discuss Mr. Nigro with 4 -- with the press at all. I mean, our -- that conversation 5 of -- that information with the press, they brought it out on 6 their own from I don't know where. 7 Q: I think the expression that you used 8 yesterday is that you quoted Mr. Nigro saying he had no 9 working doings? 10 A: He -- he did say to me that since he 11 started working with MFP, his function is -- is with 12 contracts at the Federal level, and that he had no work in -- 13 involvement with the contracts with the City. 14 Q: Did he mention to you that he would 15 consult from time to time back at the office with Mr. Domi or 16 other salespeople, with respect to the City of Toronto? 17 A: I don't recall him saying that. 18 Q: Did he say that he would sometimes give 19 advice as to the inner workings of the City and how to 20 navigate yourself around the labyrinth of the City 21 Departments and -- 22 A: I don't -- I don't believe he said that. 23 Q: All right, Mr. Manes took you, and I'm 24 just going to refer you one last time to the Mayor's book, at 25 Tab 19, I think that that's volume 1.

1 (BRIEF PAUSE) 2 3 Q: At 30525. 4 5 (BRIEF PAUSE) 6 7 MADAM COMMISSIONER: Tab...? 8 MR. FRASER BERRILL: Tab 19, and I had the 9 wrong Begdoc, it's -- 10 MADAM COMMISSIONER: It's number 607? 11 MR. FRASER BERRILL: That's correct. No, I 12 think I -- I guess I have the wrong tab number, I've done 13 this before. That's not the document that I was referring 14 to. It's the -- it's the letter to the Commissioners from -- 15 it's in Volume 3, I'm told. 16 MADAM COMMISSIONER: Oh, volume 3, of the 17 Mayor's -- 18 MR. FRASER BERRILL: That was my problem, 19 it's Tab 19, but it's Volume 3. 20 MADAM COMMISSIONER: Volume 3. 21 22 (BRIEF PAUSE) 23 24 MADAM COMMISSIONER: And which tab? 25 MR. FRASER BERRILL: Tab 19.

1 MADAM COMMISSIONER: Oh. 2 MR. FRASER BERRILL: 30525. 3 MADAM COMMISSIONER: Thank you. 4 5 (BRIEF PAUSE) 6 7 THE WITNESS: I have 30529. 8 MADAM COMMISSIONER: Me too, me too. 9 MR. FRASER BERRILL: Okay, I -- I wrote it 10 down incorrectly, I'm sorry. 11 12 CONTINUED BY MR. FRASER BERRILL: 13 Q: Now, I'm suggesting to you, Mr. 14 Balkissoon, that the letter that the Commissioner was sending 15 to the various departments is evinced by -- by this tab, 16 indicates that the fact that MFP was available to be used as 17 a lease provider, was -- was not a secret. 18 It was a fairly open process, and fairly well 19 known throughout -- throughout the City, at least among the 20 staff? 21 A: That's a possibility. 22 Q: All right. 23 24 (BRIEF PAUSE) 25

1 Q: And this letter doesn't say anything 2 about it being an exclusive arrangement with MFP? 3 A: I didn't find any reference to that. But 4 it -- but it does have the -- the one (1) statement, all IT 5 hardware and software. Someone can interpret that to mean 6 whatever they wish. 7 Q: Sure. Now, I -- I want to refer you to 8 the -- the last document that I put to you, and I believe 9 it's Tab 49 in your documents. 10 11 (BRIEF PAUSE) 12 13 MADAM COMMISSIONER: Tab 40 what, sorry? 14 Nine (9)? 15 MR. FRASER BERRILL: Forty-nine (49). No, 16 no, it would be -- I didn't put a tab number on it, because I 17 didn't know that it would be the next document referred to. 18 I don't think it's been put into evidence yet. The Registrar 19 has a copy and My Friends have had a copy now for -- for at 20 least a day, day and a half. 21 MADAM COMMISSIONER: Is this the Globe and 22 Mail article? 23 MR. FRASER BERRILL: No, it's the -- the 24 Registrar has it, it's -- it's the -- the MFP Technology 25 Services facsimile transaction, it's Begdoc 25297.

1 MADAM COMMISSIONER: Yes, I have that. So, 2 it's going into this book as then -- I guess that would be 3 Tab 55 would it? 4 MR. FRASER BERRILL: Yes. 5 MADAM COMMISSIONER: Is that correct? 6 MS. DIANA GROSKAUFMANIS: I'm just trying to 7 get some clarification, I think actually tab 49. I'll -- 8 I'll try to clarify that for you. 9 MADAM COMMISSIONER: I have something in Tab 10 49, it's a Globe and Mail article, this -- 11 MS. DIANA GROSKAUFAMANIS: Madam Commissioner, 12 I'll check at the break as to which one it's intended to be. 13 There's a number of documents added at the last minute, and 14 we've lost track of the tab numbers. 15 MADAM COMMISSIONER: Okay. In any event, it's 16 Begdoc 25297. Will you remind me after the break what this 17 is because -- just for the record purposes. Thanks. 18 Okay? 19 MR. FRASER BERRILL: All right. I'm just 20 going to ask you some questions about this document and I 21 think that will take up to the break, Madam Commissioner. 22 MADAM COMMISSIONER: Thank you. 23 24 CONTINUED BY MR. FRASER BERRILL: 25 Q: Now, this is a -- I'm referring to page 2,

1 first of all, and I'm going to suggest to you, Mr. 2 Balkissoon, that the date of the letter in actual fact, is 3 1999. It seems to make sense as we read the documents, it 4 looks like it was faxed January 18th, '99 if you read up at 5 the top of the page. 6 And I think it's -- it's common -- it's a 7 common mistake people make toward the beginning of the year, 8 that they use the last year number. 9 If you refer to the fax response from MFP on 10 the 1st page, it's January 18th, '99. Indeed the fax 11 transmission dates on the last page, with respect to the 12 order, read 1999, as well. 13 And the fax from System House is at the end of 14 1998. So do you have any recollection as to whether or not, 15 you ordered a new Pentium 2-350 computer for your office in 16 January of 1999? 17 A: I believe I did -- I did speak with IT 18 staff and requested that I purchase a computer out of my own 19 office budget and I would leave the responsibility to them. 20 I could have gone out in the market and buy it 21 on my own, but, I wanted to make sure the staff purchased 22 something that met their standards that it could be attached 23 to the network. 24 Q: Right. 25 A: So, I purchased -- I gave instructions to

1 purchase a computer. 2 Q: All right. And -- 3 A: And charge it to my office. 4 Q: And you gave instructions to whom? How is 5 that done in the ordinary course? 6 A: They would have been through the Clerk's 7 office to IT because Clerk's is responsible for Council, if I 8 recall correctly. 9 Q: All right. And when the Clerk's office 10 received your request for purchase and we don't have a 11 specific request for purchase from you, but, is that the 12 specifications for the machine on page 3? Or do you recall? 13 Or is that something that the Clerk's office 14 came up with? 15 A: Probably IT staff put this together, I'm 16 not sure. 17 Q: At your request? 18 A: At my request. 19 Q: All right. And then -- and you made the 20 request of the Clerk for that document and the Clerk, it 21 appears, went to the MFP representative, and I suggest to 22 you, as the current lease provider, at that point in time, 23 and asked for the computer that you ordered, to be put on a 24 lease schedule? 25 A: To be put on -- I'm sorry?

1 Q: A lease schedule. 2 A: I -- I don't know why because -- and I'd 3 have to go back to the office to check this. But, as far as 4 I know, my budget -- my office budget was tagged for the full 5 cost and in my opinion, I purchased that computer. I was not 6 aware of it being under lease. 7 In fact, it's still in my office and it was 8 not removed with the other computers that were leased by the 9 City. I still have the computer. 10 Q: Well, maybe it will be some day, Mr. 11 Balkissoon. You don't know whether it's purchased or leased, 12 that particular computer? 13 A: Well, my instructions was that I'm 14 interested in buying a computer because I need an additional 15 system in my office. I could have purchased it myself, but, 16 I went through the Clerk's office, because they look after my 17 budget and I basically said to them, I wanted it to be City 18 standards, so that I'm not buying something off the market 19 and it doesn't work. 20 So, I wanted to make sure it works. In fact, 21 I currently have another one and as far as I know, it was 22 purchased. 23 Q: Would it be fair to say, in reading these 24 documents that it appears that at this point in time, at 25 least, and that's January 1999, that MFP was the current

1 lease provider of computer equipment, for your computer? 2 A: From reading the information, I'd say, 3 yes, you're right. To my knowledge, I purchased it. 4 MR. FRASER BERRILL: Those are my questions, 5 for now. I'm sorry about that. 6 But, I do expect that will finish before noon. 7 MADAM COMMISSIONER: You will what, sorry? 8 MR. FRASER BERRILL: Finish before noon. 9 MADAM COMMISSIONER: Okay. Thank you. 10 MR. FRASER BERRILL: Or the lunch break, 11 rather. 12 MADAM COMMISSIONER: All right. 13 We'll break until ten (10) to and in the 14 meantime, Ms. Groskaufmanis and whoever else will figure out 15 what the -- Ms. Groskaufamanis, you'll figure out what the 16 Tabs are and what not? 17 MS. DIANA GROSKAUFAMANIS: Yes, I will. 18 MADAM COMMISSIONER: Thank you. 19 20 --- Upon recessing at 11:32 a.m. 21 --- Upon resuming at 11:50 a.m. 22 23 REGISTRAR: The inquiry will resume. Please 24 be seated. 25

1 (BRIEF PAUSE) 2 3 MS. DIANA GROSKAUFMANIS: Madam Commissioner, 4 before we begin I -- I apologize for the confusion with the 5 respect to documents. We've added six (6) in the last day. 6 So just for -- for ease of reference to confirm that everyone 7 has -- is working off the same tab numbers. 8 Tab 49 in Councillor Balkissoon's book of 9 documents is the article from the Globe and Mail that is not 10 scanned. It doesn't have a Begdoc number yet but it will 11 eventually. 12 Tab 50 is a document we've been calling the 13 MFP fax. It's Begdoc 25297. 14 Tab 51 is an email with the first author being 15 Lorraine Searles-Kelly -- 16 MADAM COMMISSIONER: And that's S-E-A-R-L-E-S 17 hyphen K-E-L-L-Y. 18 MS. DIANA GROSKAUFMANIS: -- and it's 19 document 8523. Tab 52 is a response from IBM -- 20 MADAM COMMISSIONER: Hmm hmm. 21 MS. DIANA GROSKAUFMANIS: -- and it's 22 Document 18047. 23 Tab 53 is a response from Bombardier and it's 24 Document 18032 and Tab 54 is a report of the Administration 25 Committee on the Code of Conduct for Councillors and it's

1 Document 37182. 2 MADAM COMMISSIONER: Thank you. 3 MS. DIANA GROSKAUFMANIS: I apologize for 4 that confusion. 5 MADAM COMMISSIONER: Mr. Berrill...? 6 MR. FRASER BERRILL: Thank you, Commissioner. 7 A couple of items, Mr. Balkissoon. I want to 8 refer you to your transcript at Page 125 of yesterday. 9 MADAM COMMISSIONER: Tab 14? 10 MR. FRASER BERRILL: Actually, I think it was 11 the day before, I'm sorry. Tab -- Page 125. 12 THE WITNESS: Which Tab is it? 13 MR. FRASER BERRILL: Well, it's not a tab. 14 I'm going to refer you to something that you said. 15 MADAM COMMISSIONER: Oh okay. He's referring 16 to the transcript -- 17 MR. FRASER BERRILL: It's in the transcript. 18 MADAM COMMISSIONER: -- of what you said 19 yesterday. 20 THE WITNESS: Okay. 21 22 CONTINUED BY MR. FRASER BERRILL: 23 Q: And it has to do with Brendan Power and 24 My Friend Mr. Manes was asking you a question and referable 25 to his retainer by the City because I believe he was a -- he

1 was a consultant and I understand that at your request, you 2 asked that his background and his relationship to MFP be 3 investigated, if you will. 4 A: I wouldn't say investigated. When his 5 name came up the first time during the audit and Council 6 process, I actually asked the individual, what is his 7 experience and what is his form of working relationships and 8 did it include MFP. 9 Q: All right and I don't see anywhere, in 10 the KPMG report, that it refers to -- to any reference to 11 that -- those inquiries having been reported upon and I'm 12 just wondering if you can enlighten us today as to whether or 13 not you became aware of whether or not MFP and Mr. Power have 14 a relationship? 15 A: There is a lot of activity on the KPMG 16 review that was not reported back because of the legal 17 matters being put in court and the interaction on those legal 18 matters. 19 A lot of the forensic work that was being done 20 at the time has never been reported back. In fact, some of 21 the issues raised at Audit Committee and Council, I believe, 22 never came back because Mr. Lenczner came back with some 23 offers of settlement instead. 24 So I can't recall receiving any information 25 outlining Mr. Power other than he was an employee with the

1 City as a consultant retained by the City and that's's about 2 it. 3 Q: So you have -- have no information with 4 respect to -- 5 A: Not -- 6 Q: -- the relationship between? 7 A: Not to this point, I don't believe so. 8 Q: All right. Then you were asked that 9 yesterday -- or the day before rather by Mr. Manes about the 10 $24 million budget overrun that -- that went back to Council 11 -- or rather, was referred to in a report and I won't take 12 you to the report but at Page 135 in the transcript, Line 16 13 your -- your statement was that you would have expected that 14 the budget overrun for Y2K at $24.3 million should require 15 some questioning and some clarification. 16 A: I believe that -- the way that it was 17 shown to me, I believe that document went to Budget Advisory 18 Committee and sometimes these supplemental reports or 19 background reports is not necessarily distributed to all 20 members of Council. 21 And I believe my statement was to the effect 22 that if there is an over expenditure beyond budget approval, 23 of this nature, it should have been reported to Council. I 24 believe, in my opinion, it should have been reported to 25 Council as a separate issue and not through the following

1 years budget process. 2 Q: Right. And you have, in the past, been a 3 member of that committee? 4 A: I was a member of the Budget Committee in 5 the