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 16th, 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   (np)     )
 10  Gordon Capern           )
 11  
 12  David Moore             )MFP 
 13  Fraser Berrill          ) 
 14  Ken Jones (np)          ) 
 15  Brian Heller   (np)     )Ball Hsu and Associates Ltd.
 16  Melissa Kronick (np)    )CUPE 
 17  Raj Anand (np)          )Lana Viinamae
 18  Bay Ryley      (np)     )
 19  William Anderson        )Wanda Liczyk
 20  Valerie Dyer (np)       )Dell Computers
 21  Jennifer Lynch (np)     )
 22  Edward Greenspan (np)   )Jeff Lyons
 23  Todd White (np)         )
 24  Joyce Ihamaki           )Registrar
 25

1 2 TABLE OF CONTENTS 3 Page 4 5 ROBERT ASHBOURNE, Sworn 6 7 Examination-in-Chief by Mr. Patrick Moore 6 8 9 10 11 Certificate of Transcript 193 12 13 14 15 16 17 18 19 20 21 22 23 24 25

1 EXHIBITS 2 No. Description Page 3 5 Bound book of documents 4 titled "Rob Ashbourne" 5 Tabs 1 to 100 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

1 --- Upon commencing at 10:14 a.m. 2 3 THE REGISTRAR: The Inquiry is now in 4 session, please be seated. 5 MADAM COMMISSIONER: Good morning. 6 Well, I thought it was too good to be true. 7 It seemed that we were all here and already to go, but, 8 without the technicians, we are helpless. 9 So, sorry that we're a little late in 10 starting, but we're all set to go now. 11 12 ROBERT ASHBOURNE, Sworn: 13 14 MADAM COMMISSIONER: Good morning. 15 THE WITNESS: Good morning. 16 MADAM COMMISSIONER: Sorry to keep you 17 waiting. Good morning, Mr. Moore. 18 MR. PATRICK MOORE: Good morning, 19 Commissioner. 20 For the examination of Rob Ashbourne, we have 21 a book of documents which I'll give to him. And it will 22 become Exhibit 5 in these proceedings if you wish it. 23 MADAM COMMISSIONER: Thank you. Exhibit 5. 24 25 --- EXHIBIT NO. 5: Bound book of Documents titled "Rob

1 Ashbourne", tabs 1 to 100 2 3 MADAM COMMISSIONER: Thank you. 4 5 EXAMINATION-IN-CHIEF BY MR. PATRICK MOORE: 6 Q: So, Rob Ashbourne, Regional Director of 7 Sales, MFP Financial Services Limited, 2281 North Sheridan 8 Way in Mississauga, so your card says. 9 Is that correct to you, sir? 10 A: Yes, it is. 11 Q: Mr. Ashbourne, we're going to begin and 12 end today with the proposition that you were a sales 13 representative for MFP on the City account from 1997 through 14 to the spring of 1999, is that correct? 15 A: Yes. 16 Q: And for your benefit and that of the 17 Commissioner, let me just outline where we're going to go 18 through the questioning of you here today, Mr. Ashbourne. 19 We're going to start with a little of your 20 background and then we'll go from there into your sales and 21 business development activities at the old City of Toronto 22 and then the new amalgamated City. 23 We'll talk about specific meetings that you 24 had with Jim Andrews and others at the City in those months, 25 including meetings leading up to the Councillors computer

1 transaction in the fall of 1997, late fall. 2 And then at some stage we'll talk about the 3 documentation arising from that transaction. Perhaps we can 4 take some of the mystery out of the documents, with your 5 help. 6 And then we'll talk about a little bit about 7 the lead-up to the RFQ and the emergence of Dash Domi. 8 A: Hmm hmm. 9 Q: Are you comfortable with all of that? 10 A: Yes. 11 Q: All right. Let me begin, Mr. Ashbourne. 12 If you could turn up Tab 84 in your book of documents before 13 you and I have flagged for you and for the Commissioner the 14 document bearing number 41812. 15 Now that's your statement, as I understand it, 16 Mr. Ashbourne, given to the OPP during the course of the 17 recent investigation. Do you recognize that? 18 A: Yes. 19 Q: Now, I'm not going take you through that 20 entire document; not now and probably not at all during the 21 course of your questioning, but let me just ask you this 22 about it. 23 First, you've had a chance to review that 24 document, have you? 25 A: Yes, I have.

1 Q: And are you comfortable in saying that it 2 fairly and accurately reflects the conversation that you had 3 with Officer Karski? 4 A: Yes. Now, this document number is 41810, 5 on the top. 6 Q: The one that I have is 41812 and it has 7 your name at the very top. Let's just see. 8 A: My name is on it but it's a different 9 number. 10 MADAM COMMISSIONER: I guess that's the RFQ 11 document. 41810 also has his name on the top of it -- 12 MR. PATRICK MOORE: Yeah. 13 MADAM COMMISSIONER: -- and it is a synopsis. 14 THE WITNESS: It's a synopsis. 15 MR. PATRICK MOORE: Sorry, Commissioner. 16 Thank you. 17 18 CONTINUED BY MR. PATRICK MOORE: 19 Q: Just while we have -- 20 MADAM COMMISSIONER: I'm sorry, did you say 21 that's fairly and accurately relates -- 22 THE WITNESS: Yes. 23 24 CONTINUED BY MR. PATRICK MOORE: 25 Q: And just while we have it open, let me

1 just lead you briefly through the background portion of it. 2 It tells us, Mr. Ashbourne, that you were born 3 in November of 1956. That you live in Newmarket and that you 4 work for MFP. All of that is so? 5 A: Yes. 6 Q: Now, tell us in the -- in the fall of 7 1997, what was your position with MFP? 8 A: Fall '97 I was Regional Marketing 9 Manager, Salesman. 10 Q: And tell us a bit about your job function 11 or role in that position at MFP at that time. 12 A: I handled a number of specific accounts 13 for MFP from a sales perspective, most of them in the private 14 sector. I handled two (2) accounts effectively in the 15 government sector. One (1) being Ministry of Natural 16 Resources and City of Toronto. 17 Q: Right and for what period of time had you 18 been working on the City of Toronto account? 19 A: Probably from the time that I had joined 20 MFP in 1992. Although there was no lease activity within the 21 City, so, it was a named account. I knew some of the players 22 from previous years. 23 We had -- the organization that -- the -- 24 there was a company that was purchased by MFP in 1992 called 25 Triathlon Computer Leasing. I was with that firm. Obviously

1 the assets of Triathlon were brought into the assets of MFP 2 and at that time I had some dealings with the City. 3 We had done an assignment of a lease from a 4 manufacturer on Mayprint (phonetic) processor. 5 Q: All right. Do I take it correctly from 6 what you've told us so far that you did not have dealings 7 with the other Municipalities that eventually amalgamated 8 into the new City? 9 A: No. 10 Q: And you mentioned Triathlon. What was 11 your position at that company? 12 A: Within Triathlon, I was vice president. 13 Q: And what was the nature of its business? 14 A: The same type of business. Financial 15 services, leasing organization. 16 Q: Now, leasing of IT equipment? 17 A: Yes, mostly IT. 18 Q: And by the fall of 1997, approximately 19 how long had you spent in -- in the business of leasing IT? 20 A: Seventeen (17) years by that point. 21 Q: All right. How did it come about, Mr. 22 Ashbourne, that you were placed onto the City of Toronto 23 account? 24 A: As I said, I just assumed it when I came 25 on board with MFP. I had been handling it from a Triathlon

1 perspective, so I looked after the account. Although, as I 2 said, the only activity we had was we took an assignment of a 3 lease from a manufacturer when we were with Triathlon and 4 that just continued with MFP but there was no other leasing 5 done up until late '97 with the City. 6 Q: We understand, and there will be evidence 7 later on from him that Jim Andrew was the Director of IT at 8 the City of Toronto. 9 Now, before the fall of 1997, did you know Jim 10 Andrew? 11 A: No, I did not. 12 Q: And at some point did you meet Jim Andrew 13 and start to discuss leasing opportunities with him? 14 A: Yes, in early fall of '97 was when I made 15 some phone calls to set up an appointment with him. 16 Q: And did anyone at MFP have a business 17 relationship with Jim Andrew before you made those calls? 18 A: Yes, I believe, Irene Payne, who I believe 19 at that time was our Senior Vice President of Sales and 20 Marketing, who I worked for, had indicated that she had some 21 dealings with Jim at -- when he was with the Ministry of 22 Natural Resources. 23 Q: Was Jim then to become your major contact 24 at the City of Toronto? 25 A: Yes.

1 Q: And we'll talk more about the meetings 2 that you had with Jim Andrew and others, but broadly speaking 3 in the fall of 1997, before the Councillors lease, what was 4 your understanding of what Jim Andrews wishes were from a 5 vision perspective for the City? 6 A: In terms of lease financing -- 7 Q: Yes. 8 A: -- going forward? Obviously because the 9 City had not done that much lease financing, most of it had 10 been through debenture funding, there was an education 11 process that had to take place, both from Jim's perspective 12 and through to the finance department. 13 And Jim had asked me to assist him with going 14 through some purchase versus lease analysis, things of that 15 nature, which I did on several occasions. 16 I provided him a number of documents in 17 regards to helping assist the process of understanding 18 leasing and the benefits of leasing. So, I provided a fair 19 amount of documentation. 20 Q: And we'll be going through some of that 21 during the course of your evidence here today, but broadly 22 speaking is it fair to say that by the fall of 1997, that Jim 23 Andrew was aware, becoming aware of the benefits of leasing? 24 A: Yes. 25 Q: That it relieved the pressure on the

1 capital budget, which was important for him? 2 A: Absolutely. 3 Q: That it permitted refresh of technology on 4 an orderly basis -- 5 A: Yes -- 6 Q: -- which was important to him. And that 7 it obviated the need to go back to Council every three (3) or 8 five (5) years to replace the entire asset mix? 9 A: Yes. 10 Q: Now, in addition to Jim Andrew, let me 11 just raise some names that we have or have heard or will hear 12 in these proceedings, and you can tell me whether you had any 13 contact with or dealings with them, as well. 14 Michael Franey? 15 A: Yes. 16 Q: What did you understand Michael Franey's 17 position at the City to be? 18 A: Manager of Client Services, I believe, at 19 that time. 20 Q: And he had -- 21 A: Basically he had responsibility for the 22 desktop. 23 Q: Right. 24 MADAM COMMISSIONER: How do you spell his last 25 name?

1 MR. PATRICK MOORE: F-R-A-N-E-Y. 2 MADAM COMMISSIONER: Thank you. 3 4 CONTINUED BY MR. PATRICK MOORE: 5 Q: And Katherine Bulko -- B-U-L-K-O? 6 A: Yes. 7 Q: You recognize that name? 8 A: Yes. 9 Q: So what did you understand her position to 10 be at the City? 11 A: She was an administrator within that 12 group, again responsible for desktops. 13 Q: And Lana Viinamae, V-I-I-N-A-M-A-E, did 14 you have dealings with her? 15 A: I really only had one (1) meeting with 16 Lana, and that was in spring of 1999. I knew Lana, of 17 course, I think I did have a few phone conversations with 18 her. At the time she was responsible for the Y2K rollout. 19 Q: Right. 20 MADAM COMMISSIONER: You met with her -- you 21 had one (1) meeting with her in the spring of when? 22 THE WITNESS: 1999. 23 MADAM COMMISSIONER: 1999. 24 THE WITNESS: Yes. I know I had several 25 conversations with her and --

1 MADAM COMMISSIONER: I thought you said '95 2 and I knew that wasn't making any sense, so I figured I had 3 mis-heard but, I didn't know when it was supposed to be. 4 THE WITNESS: Right. 5 MADAM COMMISSIONER: Thanks. 6 7 CONTINUED BY MR. PATRICK MOORE: 8 Q: And what about Dave Beattie? 9 A: Yes, I knew Dave as well. 10 Q: What was Dave Beattie's role at the City? 11 A: He was within purchasing. I don't know 12 his exact title, but, I know he was responsible for IT 13 acquisitions within the City. 14 Q: All right. We'll come to him a little 15 later too. What about Len Brittain? 16 A: I had a meeting set up with Len, I think 17 we briefly spoke on the phone, but unfortunately he had to 18 cancel after I had arrived for the meeting. He couldn't make 19 it, he was called to another appointment and I met with one 20 (1) of his finance people. 21 Q: And we'll come to that later too. Nadir 22 Rabadi -- R-A-B-A-D-I? 23 A: Yes. 24 Q: You had dealings with him? 25 A: Yes, I did.

1 Q: Did you ever have any meetings with or 2 dealings with any lobbyists? 3 A: No. 4 Q: Specifically, did you have any dealings 5 with Jeff Lyons? 6 A: No. 7 Q: What about Wanda Liczyk? Did you have 8 occasion to meet her in -- at any time in '97 and through 9 into the spring of '99? 10 A: No, I did not. I attempted on several 11 occasions. We had several sessions lined up but she had to 12 cancel. 13 Q: Right and we'll talk about one of those 14 when we get to the documents a little later. Mayor Lastman? 15 A: No. 16 Q: Michael Garrett? 17 A: No. 18 Q: All right. 19 A: I mean, I have met Mel but on other 20 occasions and charity events because I'm involved in a 21 charity. 22 Q: Right. Mr. Ashbourne, you've been good 23 enough to share with us your DayTimer and if you turn to Tab 24 25, we'll see the first of several DayTimer pages that we'll 25 be taking you to but the -- the page that we're now looking

1 at is 25124 and I'd just like to -- 2 MADAM COMMISSIONER: Just wait. Is that 3 under -- oh, okay. It's quite faint so I don't have it up. 4 25124? 5 MR. PATRICK MOORE: Yes, Commissioner. 6 MADAM COMMISSIONER: Thank you. 7 8 (BRIEF PAUSE) 9 10 MADAM COMMISSIONER: Yes. 11 12 CONTINUED BY MR. PATRICK MOORE: 13 Q: Thank you but before we talk about this 14 entry, Mr. Ashbourne, tell us a little bit about your 15 DayTimer. What you kept it for and the extent to which it 16 accurately reflects the attendances or meetings that appear 17 to be shown there? 18 A: This is just a type of scheduling tool I 19 used. It's a DayTimer that I carry with me at all times to 20 book meetings, log some phone calls that are required during 21 -- throughout the day. That's basically it. So, it's a log 22 for my meetings and certain phone calls that I might have to 23 make. Just to re -- remind myself. 24 Q: And we'll come to it shortly but from the 25 evidence that you've given me so far, we know that you will

1 put in expected or upcoming meetings. 2 A: Yes. 3 Q: That they took place, you can't 4 necessarily confirm by simple reference to the page? 5 A: Correct. 6 Q: All right. Now let's refer to this page 7 at Tab 25. It's the first indication that I could find in 8 your DayTimer of a meeting with Jim Andrew. 9 A: That's correct. 10 Q: If you look at the right-hand side of the 11 page against the number one (1), presumably one o'clock, the 12 name Jim Andrew is written in there. Is that your 13 handwriting? 14 A: Yes, it is. 15 MADAM COMMISSIONER: It actually says Jim 16 Andrews. 17 MR. PATRICK MOORE: Yes, it does. 18 MADAM COMMISSIONER: The same person as him? 19 MR. PATRICK MOORE: It's the same person? 20 THE WITNESS: Yes. 21 MR. PATRICK MOORE: Yes. 22 23 CONTINUED BY MR. PATRICK MOORE: 24 Q: And then a little lower down, between 25 three (3) and four (4) is the word, it looks like "Irene"?

1 A: Yes. 2 Q: Can we conclude that Irene was in some 3 respect instrumental in helping you to set this meeting up? 4 A: Yes. I think, if I remember the set of 5 circumstances, I had called Jim asking for the meeting and 6 referring the fact that obviously that his awareness of Irene 7 and his dealings in the past and that I would like to try and 8 set up a meeting with him. 9 Q: And there's a line running from the J of 10 Jim going upwards to about ten o'clock which seems to me to 11 say ex-MNR. Is that the way you read it? 12 A: Yes, that's correct. 13 Q: What's the significance of that, if 14 anything? 15 A: Again, as I mentioned earlier, it was my 16 understanding that Jim had worked for MNR at some previous 17 time-frame. 18 Q: That's the provincial government -- 19 A: Ministry of Natural Resources. 20 Q: -- Ministry -- 21 A: Yes. 22 Q: And when you met with Jim Andrew, at that 23 time, now we're at November of 1997. What was the nature of 24 the meeting? 25 A: It was a basic introduction meeting. Of

1 course, for me to introduce myself and, of course, the 2 services of MFP at that time frame with respect to looking at 3 potential leasing with the City. 4 Q: Did you do a full presentation at that 5 meeting? 6 A: I can't recall if I did one (1) at that 7 meeting. I don't believe so. It was just an introductory 8 meeting. 9 Q: All right and then if you go to Tab 53, 10 we find a letter which appears to have document 25441 on it. 11 Do you recognize that letter, Mr. Ashbourne? 12 A: Yes. 13 Q: It appears to be a follow up letter and 14 following up upon the meeting that we were just talking 15 about? 16 A: That's correct. 17 Q: Am I reading that correctly? 18 A: Yes. 19 Q: And it says in the first line, after Dear 20 Jim: 21 "Thank you for the recent opportunity to 22 meet and review the current information 23 technology environment for both Metro and 24 the new amalgamated organization." 25 Let me just stop there, for a moment. At that

1 point, I suppose Mr. Andrew and you, were both aware of the 2 upcoming amalgamation to be effective January of 1998? 3 A: Correct. 4 Q: And your letter goes on to say: 5 "There appear to be some challenging times 6 ahead and MFP would welcome the chance to 7 work with you." 8 The challenging times ahead, I suppose would 9 be a reference to amalgamation and all that that brings with 10 it? 11 A: Yes. 12 Q: And that would include harmonization 13 across the entire new City? That was something that Jim 14 would have told you about? 15 A: Yes. 16 Q: And was Y2K on the horizon at that time? 17 A: It was starting to be discussed, but, 18 obviously the main concern, at hand, at the time was the 19 amalgamation and with the six (6) or five (5) different 20 cities and six (6) different data centers that they had, it 21 was going to be quite a chore to amalgamate all of that 22 equipment. 23 Q: Right. And the letter goes on in the 24 final paragraph to indicate that MFP has extensive literature 25 and in the paragraph before, it references literature that

1 you were appending to this letter for Mr. Andrew's 2 edification and that of others at the City? 3 A: Yes. 4 Q: Do I have that right? 5 A: Yes. 6 Q: If we turn then to Tab 54, which is 25442, 7 does that look to you to be a document that would have 8 accompanied the letter to Mr. Andrew? 9 A: Yes. 10 Q: And if you just look at the numbered 11 headings, Mr. Ashbourne, did those outline the sorts of 12 things that you and Mr. Andrew would be -- would have been 13 talking about at that time? 14 A: Yes. 15 Q: And those are the general benefits of 16 leasing from your perspective? 17 A: Yes. 18 Q: Let's just look at number five (5) for a 19 moment. That says: 20 "Provides for fixed rate financing." 21 And it says that rates of borrowing are fixed 22 for the term of the lease. 23 We'll be talking more about the lease and 24 lease documents later, but do I read that correctly to say 25 that -- that once a lease -- once an asset is put on lease,

1 and a schedule is created, that the rate applicable to that 2 schedule is fixed for the term of the lease? 3 A: That's correct. 4 Q: But that if additional schedules follow 5 for additional pieces of IT hardware of software, those may 6 not attract this same rate? 7 A: Correct. 8 Q: Each schedule will have an applicable rate 9 for it? 10 A: That is correct. 11 Q: Okay. And Jim Andrew understood that, did 12 he? 13 A: Yes. 14 Q: So far as you could tell? 15 A: Yes. 16 Q: All right. The one (1) thing that it 17 doesn't say on the general benefits of leasing, but that you 18 may have discussed with Jim Andrew, is the advantage of 19 leasing versus owning equipment at the end of the useful life 20 of the equipment? 21 A: Yes. 22 Q: Was it your understanding that Jim Andrew 23 didn't want to get the City into the asset disposal business? 24 A: Correct. That's one (1) of the main 25 advantages that they were interested in, in terms of

1 disposal, retirement of the assets at the end of the lease. 2 Q: And just while we're on this subject, 3 maybe you could tell us, what the advantage to leasing or 4 leasing with MFP is, in that respect? 5 A: At the end of whatever fixed lease term, 6 the lessee enters into, they can return the equipment to MFP 7 at no charge, just ask us to come and pick up the equipment 8 and we will pick it up from them. 9 Q: All right and are there environmental 10 concerns arising when one (1) considers disposition of -- 11 A: Yes. 12 Q: -- old hardware? 13 A: Yes. 14 Q: What are those? 15 A: Well, especially with the monitors, they 16 have to be disposed of in a proper fashion. 17 Q: And to do that is there inconvenience and 18 expense -- 19 A: Yes. 20 Q: -- involved? 21 A: Yes. 22 Q: Tell me, Mr. Ashbourne, at this time in 23 November of 1997, were you aware of the size of the universe, 24 if you will, at the City to follow upon amalgamation; that 25 is, the number of desktops the City would then have?

1 A: Yes, I believe I was. 2 Q: And -- and about what number do you 3 recall now? 4 A: Anywhere between thirteen (13) and 5 fifteen thousand (15,000) PCs, I think is the numbers that 6 were sent to me. 7 Q: And did you understand that there were 8 approximately twenty-five thousand (25,000) people employed 9 or that would be employed at the amalgamated City? 10 A: Yes. 11 Q: Outside of the Agencies, Boards and 12 Commissions that is. 13 A: Yes. 14 Q: If you turn to Page -- to Tab 55 at 15 Document 25443 is that also a document that accompanied your 16 letter to Mr. Andrew? 17 A: Yes, I believe it was. 18 Q: And it refers, in the first paragraph, to 19 MFP's best of the breed leasing service. Maybe we could 20 pause there and you could tell me something about what you 21 would have told Mr. Andrew about MFP that, in your view, set 22 it aside from other lease financing companies? 23 A: Well, we talked about some of the 24 transactions that MFP had completed with other lessors within 25 the last couple of years of this time frame and going

1 through, I think we specifically talked about some Ministries 2 where we had done a fair amount of business over the years in 3 terms of the variety of services that we provide. 4 Such as procurement services which includes us 5 supplying the PCs, not only financing them but supplying them 6 as well. We talked about asset management. We have a custom 7 built software -- asset management software that would be use 8 -- very useful for the City in respect of managing their 9 entire portfolio of PCs because this is one (1) of the things 10 that folks look to organizations like ourselves that can 11 provide that type of value-added service which is a part of 12 the leasing itself in terms of the -- the financing. 13 Q: Let me just stop you there if I could, 14 Mr. Ashbourne, and maybe you could tell us a little bit more 15 about what asset management is and -- and why it's important 16 for an organization like the City of Toronto? 17 A: It's important for any organization 18 whether you're running five hundred (500) PCs or twenty-five 19 thousand (25,000) PCs in terms of keeping track of the 20 various PCs, the various configurations because normally 21 there are -- especially in consolidation of a number of 22 cities like that where you've got different brands of 23 equipment out there, different functionality, it's very 24 critical that you keep tabs on what equipment is out there 25 for upgrade purposes.

1 Obviously, you want to keep track of them from 2 an inventory perspective and this software helps to do that. 3 Both -- it provides financial information, management 4 information for making decisions on upgrades at a future 5 point in time. 6 Q: Mr. Ashbourne, was it your understanding 7 that the City was inventorying its -- its asset mix of IT 8 hardware in around the fall of '97? 9 A: Yes. 10 Q: And did MFP play a role in helping Mr. 11 Andrew and others at the City locate, identify, and -- and 12 document the asset mix that it had? 13 A: We did not specifically. I did -- I 14 believe I gave Jim some information in terms of people that 15 do that. 16 Q: Right and did he tell you, from time to 17 time, in your subsequent meetings that that work was ongoing? 18 A: Yes. 19 Q: So, if you take an example like the City 20 of Toronto, once they find out what equipment they've got -- 21 A: Hmm hmm. 22 Q: -- then they can deal with it. Then they 23 can do many things including refresh it when they think the 24 time is appropriate? 25 A: Yes.

1 Q: Do I have that right? 2 A: Yes. 3 Q: And if they refresh it and acquire new 4 equipment, for example, the Councillors' computer equipment - 5 A: Hmm hmm. 6 Q: -- then I understand what you're saying to 7 us and what you said to Mr. Andrew is, that you could help to 8 manage the mix? 9 A: Yes. 10 Q: Right. In order to do that, MFP would 11 need input from the City of Toronto, would it not? 12 A: That's correct. 13 Q: It seems to me, simplistically looking at 14 it, that among the things that you would need from the City 15 would be the identity of the equipment, including serial 16 numbers? 17 A: Yes. 18 Q: And if they give you enough information 19 then, are you telling us, you can put it into some computer 20 assisted program that you have -- 21 A: Yes -- 22 Q: -- at MFP? All right. So, then the 23 computer would help you to manage the information? 24 A: Yes, goes into a database. 25 Q: All right, into a database and you can

1 manage it. For instance, what you can do, is you can have 2 the computer tell you when a certain piece of equipment is 3 approaching, let's say, three (3) years of age? 4 A: Yes. 5 Q: And then when you are told that, you can 6 then liaise with the City and it can make decisions about 7 what it wants to do with the equipment? 8 A: Yes. 9 Q: Keep it, re-lease it, or dispose of it? 10 A: Correct. 11 Q: All right. So that's a service that would 12 be of great value and interest to Jim Andrew, I would think? 13 A: Yes. 14 Q: And that was your impression -- 15 A: Yes -- 16 Q: -- of his take on it? 17 A: Yes. 18 Q: All right. 19 A: And there are -- it's an online service, 20 so that they can set up a number of different users to go in 21 online and check their database. 22 Q: And -- 23 A: They can't make changes to it, but they 24 can view it. 25 Q: Right. We'll be talking about the

1 Councillors' computers later, but was the computerized asset 2 management tool used in connection with the Councillors' 3 lease? 4 A: No. 5 Q: And is that, in part, because the assets 6 on that lease were relatively few? 7 A: Yes. 8 Q: And that they were in roughly the same 9 building or floor, i.e., where the actual Councillors were? 10 A: Well, they were scattered around, but, it 11 was -- the nature of the deal, when you're looking at asset 12 management, you look at it as a corporate-wide asset 13 management. 14 It's not specific to one (1) little piece of 15 the organization. And I believe that was only two hundred 16 and fifty (250) machines. 17 Q: Right. 18 A: I mean, I was introducing it in terms of 19 looking forward down the road, to help them with the overall 20 amalgamation of all IT assets. 21 Q: Because if they were going to replace 22 twelve or fifteen (12,000-15,000) units, an asset management 23 tracking tool would be both valuable -- 24 A: Yes. 25 Q: -- and, in fact, necessary?

1 A: Absolutely. 2 Q: All right. Well, then if we can move 3 forward in time, from the November initial meeting with Jim 4 Andrew, let me take you to December 9 of 1997, and the 5 document at Tab 26. 6 7 (BRIEF PAUSE) 8 9 Q: We're back in your DayTimer and this is 10 document 25125. The page for 9 December 1997, and in looking 11 at it, Mr. Ashbourne, I see at two o'clock you appear to have 12 scheduled a meeting with Jim Andrew and someone else. Can 13 you identify that someone else? 14 A: Bill Smedhurst, who worked for MFP at the 15 time. 16 Q: And what would Mr. Smedhurst's role have 17 been in attending on this meeting? 18 A: Bill at that time, I believe his title -- 19 I may be incorrect here, but his title was VP of Operations, 20 I believe. 21 So, he was responsible for the operation side 22 of our house, with respect to putting documentation together. 23 And Bill was a CA by trade, so he had extensive knowledge 24 with respect to purchase versus lease scenarios. 25 Q: And would, therefore, be of assistance in

1 answering any technical or difficult questions that Mr. 2 Andrew may have? 3 A: Yes. 4 Q: And -- 5 A: Bill went on a number of customer calls 6 with us, things of this nature, talking about these types of 7 situations where you're dealing with a customer that 8 purchased most of their assets, but, were looking towards 9 leasing and the benefits of leasing. 10 Q: All right. Now, if you can now turn to 11 the documents at Tab 75. 12 A: Okay. 13 Q: That's Document 25462 through 25464. Are 14 those the notes that were made at or contemporaneous with 15 that meeting on the 9th of December? 16 A: Yes, it was. 17 Q: And are those notes in your handwriting, 18 sir? 19 A: Yes. 20 Q: You've had a chance to review them? 21 A: Yes. 22 Q: Do they help to refresh your memory of, 23 at least in broad terms, some of the discussions you had with 24 Mr. Andrew at that meeting? 25 A: Yes.

1 Q: All right. Take us through, if you 2 would, what was being discussed. I see, for instance, total 3 PCs. That seems to be right beneath Megacity -- 4 A: Hmm hmm. 5 Q: -- and the number fifteen thousand 6 (15,000)? 7 A: That was indicated to me as the total 8 population of their desktops at that time and he anticipated 9 to be upgrading, once they got on to a full program, five 10 thousand (5,000) per year. 11 Q: And then the next line suggests that 12 somebody wants to lease software. Would that have been Jim 13 Andrew? 14 A: Yes. 15 Q: Tell me about leasing software. In the 16 marketplace at that time, Mr. Ashbourne, was that a common 17 thing, to lease software, or not so much? 18 A: I don't know what percentages of people 19 would back then. It was really out of convenient -- based on 20 the customer, the individual customer, it was out of 21 convenience in some cases. Where they like to add -- they 22 don't want to have to pay separately out of cash, out of 23 capital for software, so, they like to just include it. 24 If it's being supplied -- if the software's 25 being supplied by the same vendor that's supplying the

1 hardware, it makes it real easy for that vendor to invoice 2 the lessor, being us at the time, for both hardware and 3 software. 4 Q: So is the software that this note is 5 talking about, the software that would be necessary in order 6 to make the computers that you were talking about leasing, 7 operational? 8 A: Yes. 9 Q: And this would be distinct from, for 10 instance, software like Oracle licenses? 11 A: No. It could have been other types -- I 12 mean, I didn't indicate here one way or another. It was a 13 general comment that I obviously wrote with respect to any 14 type of software. I don't know whether it was specifically 15 related to those PCs or any software that he had in mind. 16 Q: Okay. I just didn't see any note 17 there -- 18 A: Yeah. 19 Q: -- with any specific software, so I -- 20 A: I -- I can't recall. 21 Q: All right but then you go on and you 22 identify Tier 1 and does that say, "clone product"? 23 A: Yes. 24 Q: And what is Tier 1? 25 A: Tier 1 is -- we classify certain

1 manufacturers of product, such as Compaq, Dell, IBM, Apple, a 2 Tier 1 product. 3 Q: To designate what? 4 A: Sorry? 5 Q: To designate what? Does it have to do 6 with the nature of the product, the quality or the complexity 7 of it? 8 A: Basically those manufacturers that have a 9 good name in the industry with respect to reliability, 10 quality products. Products that we are going to be able to 11 re-market at the end of the lease. 12 Q: And MFP had no difficulty in placing 13 Compaq equipment with the City of Toronto? 14 A: No. 15 Q: Or Dell equipment, if that's what the 16 City wanted? 17 A: Yes. 18 Q: But it -- was it your role, Mr. 19 Ashbourne, to recommend to the City what supplier or 20 manufacturer of equipment they should look to? 21 A: No. It's not my role but we are asked on 22 occasion by clients for information with respect to that 23 because we're dealing in the industry on a day-to-day basis, 24 they like to have a non-bias third-party opinion. 25 Q: Right and for the Councillors' leases,

1 that was not a problem. What they had specified was entirely 2 appropriate in your view? 3 A: Yes but I had no -- again, I had no 4 influence on that whatsoever. They had two (2) suppliers at 5 the time, one (1) for the City and one (1) for Metro. 6 Q: Right. That they had as vendors of 7 record? 8 A: Yes and they had vendors of record for 9 both the supplier and the manufacturer. 10 Q: Right and MFP was not involved in the 11 process, whatever it was, by which the City selected its 12 vendors of record for the supply of hardware? 13 A: No and I believe at the time they had 14 just extended that. They had been dealing with those folks 15 for a while and they extended those agreements, I believe. 16 If I remember correctly. 17 MADAM COMMISSIONER: I'm missing part of what 18 -- your voice dropped right at the -- 19 THE WITNESS: Oh, sorry. 20 MADAM COMMISSIONER: -- end of that. 21 THE WITNESS: I believe that they had 22 recently extended those agreements with both the 23 manufacturers and the resellers at that time. 24 MADAM COMMISSIONER: Thank you. 25

1 CONTINUED BY MR. PATRICK MOORE: 2 Q: And just while I think of it, Mr. 3 Ashbourne, I'm -- I'm assuming, but perhaps you should 4 clarify this for us, that MFP didn't play a role in -- in 5 helping the City to define its business case for what its 6 perception of what its needs would be? 7 A: No. 8 Q: So, when the reference in the next line 9 is to business case, what does that -- what does that mean to 10 you? 11 A: Business case purchase versus lease? 12 Q: Yes. 13 A: That is when Jim was asking for some 14 information from us with respect to justifying the lease 15 versus purchase analysis. 16 Q: All right. So in other words, he's done 17 the business case and now it's a matter of how do we put it 18 in place, debenture or -- or lease? 19 A: I don't know whether he had completed it 20 by that point, he was requesting information from me, and had 21 on a continuous basis, as you'll see as we go through further 22 documents, that I provided him with a number of different 23 scenarios on a purchase versus lease analysis, for specific 24 transactions. 25 Q: Right, we -- we will see that, but these

1 -- these preliminary discussions seem to involve discussions 2 about purchase -- purchase versus lease, and if lease, a 3 thirty-six (36) month lease -- 4 A: Yes. 5 Q: -- seems to be noted? 6 A: Yeah, I was asking him questions. Again, 7 this is all part of my gathering information. I would have 8 asked him what term of lease would you be looking at. Would 9 it be annual payments, would it be monthly, quarterly, things 10 of that nature, information I would need in order to present 11 some proposals for him. 12 Q: Right. This document refers to annual 13 payments in advance. Was that pretty standard in the 14 industry? 15 A: I would say, no. With a lot of the 16 Government facilities, yes. With a lot of the Ministries, 17 they do annual payments, the private sector has a tendency to 18 do either monthly or quarterly. 19 Q: From MFP's perspective, does it make a 20 difference? 21 A: No. 22 Q: All right. The thirty-six (36) month 23 lease, was that reasonably standard for Tier 1 equipment of 24 this kind at that time? 25 A: Yes.

1 Q: And from your perspective, was that a 2 sensible length of lease term? 3 A: Yes, it's -- it's hard to anticipate. 4 You have to understand the complexities of each organization, 5 and with amalgamation, I mean, we have customers that lease 6 three (3) years, four (4) years, five (5) years. Sometimes 7 I've seen twelve (12) month and three (3) month leases. 8 So you -- you have to anticipate based on 9 their needs analysis, and obviously that input comes from 10 them in terms of what they anticipate the useful life of the 11 equipment to be. 12 Q: So useful life of the equipment is one 13 (1) of the driving forces? 14 A: Yes. 15 Q: In this case we're talking about leases 16 for Councillors, and the term of a Councillor was three (3) 17 years? 18 A: Yes. 19 Q: Were you aware of that? And was -- was 20 one (1) of the things that was important to Jim Andrew, that 21 it would be sensible to have the lease term co-terminus with 22 the term in office of the Councillors? 23 A: Yes, 24 Q: All right. 25 A: But should also match budgetary

1 restraints as well. 2 Q: And at that time, if Jim had asked you, 3 what would you say the useful life of -- of equipment, Tier 1 4 equipment of the kind we're talking about for the 5 Councillors, to have been? 6 A: Total useful life? Again, anywhere from 7 thirty-six (36) to sixty (60) months. 8 MADAM COMMISSIONER: I'm sorry? 9 THE WITNESS: Anywhere from thirty-six (36) 10 to sixty (60) months. 11 MADAM COMMISSIONER: Thank you. 12 13 CONTINUED BY MR. PATRICK MOORE: 14 Q: And we seem to be talking, at least your 15 note refers to desktops and notebooks; is that what 16 ultimately this Councillor's lease involved? 17 A: Yes. And as I've got there, a 90/10 18 split, 90 percent desktop and 10 percent notebook. 19 Q: Okay. 20 A: What -- which is what was anticipated. 21 Q: And then you have the note here about 22 upgrade, some number of months into the lease. 23 What can you tell us about that? 24 A: I don't really recall, but I -- Jim must 25 have asked me for some type of an upgrade provision, eighteen

1 (18) months out into the lease. 2 Q: And to you, what would that have 3 involved? Would that mean taking back some of the components 4 and replacing them with newer and better models? 5 A: It can mean a number of different things, 6 but it could mean a physical upgrade, or it could mean a sub 7 -- substitution upgrade. 8 Q: Now, was there any discussion at that 9 time, that you can recall, about how the City would pay for 10 these desktops and notebooks, that is what the source of City 11 funds would be? 12 A: I believe they had a special, I think -- 13 I think it was called a transition fund or contingency fund 14 of some sort, for these machines. 15 Q: And was there any discussion about -- 16 about the City seeking reimbursement for the cost of this 17 lease from the Province? 18 A: I do recall something of that nature. 19 Q: And did Jim Andrew ever ask you to build 20 into this lease, if you got it, a provision that will allow 21 him to collapse the lease in a year? 22 A: Not that I can recall, but -- 23 Q: All right. 24 A: -- I'm not sure. 25 Q: Well then, moving along in your notes,

1 there's a reference to -- is that $2 million annually, just 2 towards the bottom of the page in the centre? 3 A: Yes. 4 Q: And what does that tell us about this 5 lease, if anything? 6 A: No, I don't recall what that -- that 7 means. 8 Q: Well then, lower down and somewhat to the 9 left, there's a note that says, total 5 to 10 million, it 10 looks like. Do I read that correctly? 11 A: Hmm hmm. 12 Q: And does that then include the potential 13 for the City's leasing spending across the new Megacity and 14 the Agencies, Boards, and Commissions? 15 A: It could have, but again I -- I don't 16 recall. 17 Q: The reason I wondered that is that below 18 the 5 to 10 million is a name -- 19 A: Yeah. 20 Q: -- and beside that, Metro Police? 21 A: Right. That may have been another 22 transaction that Jim had made me aware of. 23 Q: As a business opportunity that you might 24 want to follow up on? 25 A: Yes.

1 Q: All right. And then if you could turn to 2 the next page, 25463 -- 3 A: Hmm hmm. 4 Q: -- about a third of the way down there is 5 reference to SHL and Compugen, beside Metro and City? 6 A: Yes. 7 Q: Can you explain to us what that means, 8 perhaps by first explaining what is SHL? 9 A: SHL System House was a reseller of 10 equipment at that time, and they were supplying the equipment 11 to met -- Metro. 12 Q: They were the vendor of record -- 13 A: Yes -- yes, that's my understanding. 14 Q: -- right. 15 A: And Compugen, again was another reseller 16 that was supplying equipment to the City of Toronto. 17 Q: Right. And it says beside them, 18 contracts extended through end of '98? 19 A: Yes. 20 Q: Now that -- that is something you 21 referred to on the previous page? 22 A: Yes. 23 Q: But then a little bit farther down 24 there's something in brackets, and then the number six 25 hundred (600) and then it says, it looks like, units right

1 away. Am I reading that correctly? 2 A: Yes. Jim had, I guess, indicated to me 3 that for those two (2) boroughs, they were going to be 4 acquiring six hundred (600) units. 5 Q: And then it says: 6 "First Council, January 6, '98." 7 A: Yes. 8 Q: Is that the first Council to take office 9 at the new amalgamated City? 10 A: I believe so, yes. 11 Q: And what he's telling you there, or what 12 this is recording, is that this transaction needs to be done 13 quickly so that Councillors will be able to have their 14 computers when they take office? 15 A: Yes. 16 Q: And if you turn the page to 25464, we see 17 a hundred and fifty (150) desktop and fifty-seven (57) 18 notebooks. Was that your understanding of the asset mix for 19 the Councillors' lease? 20 A: Yes. 21 Q: And again, Tier 1 beside that, and it 22 looks like 1.2 million, and then something beneath that. Is 23 it: 24 "Split Compugen and SHL." 25 A: Yes.

1 Q: Is that how it -- 2 A: Jim had indicated to me that they would 3 be using the two (2) vendors for this transaction. 4 Q: Now, this was a -- a forthcoming 5 transaction, it hadn't yet happened. Did Jim tell you how it 6 was going to unfold? 7 A: He indicated to me that it was obviously 8 coming very quickly, that there was a mandate to get these 9 computers in quickly, up and running, and that there would 10 not be a lot of time in order to accomplish this. It was a 11 short time frame. 12 Q: All right. The next note that I saw in 13 your diary, comes about ten (10) days later, in fact on the 14 19th of December, and that note is under tab 27. And it's 15 document 25127. 16 17 (BRIEF PAUSE) 18 19 Q: And -- do you have that, Mr. Ashbourne? 20 A: Yes, I do. 21 Q: All right. And this doesn't look to be 22 the same as the ones we've looked at before, which were 23 actual diary pages. This looks to be and says it is, a diary 24 and work record. Is that from the same book? 25 A: Yes.

1 Q: And beside the number 2, I read: 2 "Megacity rates - Jim and Dave." 3 Do you see that? 4 A: Yes. 5 Q: And would the Jim that that's referring 6 to be Jim Andrew? 7 A: Yes. 8 Q: And would the Dave be Dave Beattie? 9 A: Yes. 10 Q: Tell me, what does -- does that note 11 signify to you? What was it you were telling yourself by 12 making it? 13 A: It was a reminder of myself to put 14 together a proposal with respect to lease rates on the 15 Councillor machines. 16 Q: And farther down at number 7, there's 17 another reference to Jim Andrew. Is that in connection with 18 the Councillors' computers too? 19 A: Yes, and I can't recall what specific 20 reminder that was supposed to be. 21 Q: All right, well help us to an 22 understanding then of what's transpired in the ten (10) days 23 between the meeting on the 9th and this note on the 19th. 24 Had you had any contact in that interval, that you can 25 recall, with Jim Andrew?

1 A: I believe I had, and Jim had indicated 2 that again, the time frames were going to be short, that they 3 would require a -- some lease rates -- lease rate information 4 from me, and that they were just compiling the information 5 with respect to the specifics, because I believe I asked him 6 verbally on the phone -- he asked me what I would require to 7 put a quote together, and I was waiting for that information 8 to be sent to me, either verbally or faxed -- 9 Q: Right. 10 A: -- with respect to being able to put a 11 quote together. 12 Q: And so to that point, had you had any 13 conversations or contact with Dave Beattie in Purchasing? 14 A: I believe I had, but again, I can't 15 recall specifically. I don't know specific what dates I did, 16 but I was waiting for information that was being put 17 together, and I can't remember who it came from, whether it 18 came from Dave, whether it came from Jim or his people. 19 Q: Well, this may assist all of us, Mr. 20 Ashbourne. If you go to tab 74, document 25495. We'll see 21 in this document, reference to this transaction and to MFP's 22 dealings with the City, will we not? 23 A: Yes. 24 Q: All right, before we talk about that, 25 help us with what this is?

1 A: This is an internal document that I 2 create or I created, on any transaction that is sizable in 3 nature. We have to put a -- what's called an Investment 4 Committee document together, with respect to the transaction, 5 getting all the details, what the opportunity is, the history 6 of the account, the potential competition on the account and 7 my recommendation and strategy. 8 Q: All right, now -- 9 A: So this is something that I prepared on 10 December 19th and presented to the Committee. 11 Q: All right, so it -- it's a standard 12 document, there's nothing unusual about this document -- 13 A: No. 14 Q: -- being prepared in connection with this 15 transaction? This is what you'd expect to see for a 16 transaction like this? 17 A: Yes. 18 Q: All right. The Investment Committee is 19 -- it's a body that we'll no doubt hear more about from other 20 witnesses, but is it a committee that you yourself sat on at 21 that time? 22 A: No, I just did the presentation. 23 Q: All right. Can you help us with broadly, 24 who -- what -- what kind of -- what people at MFP sat on the 25 Investment Committee?

1 A: In that time frame, I believe it would 2 have been Peter Wolfraim, the President of MFP, Irene Payne, 3 the Senior VP of Sales and Marketing, Brian Stevens, I 4 believe, sat on the committee at that time, he's our Vice 5 President and Treasurer. 6 Q: Is that S-T-E-V-E-N-S? 7 A: Yes. 8 Q: Yes. 9 A: And Suzanne Michaelson, our general 10 Counsel. 11 Q: Can you help us with the spelling of her 12 name? 13 A: M-I-C-H-A-E-L-S-O-N, I believe. 14 Q: And I gather that the purpose of the 15 committee is to have discussions and make an informed 16 business judgment on -- on a transaction such as this one? 17 A: Yes. I believe there was one (1) other 18 individual as well. I believe there was Mike Flannagan. I 19 might be wrong, but, Vice President of Asset Management at 20 the time. 21 Q: All right. And so, generally speaking, 22 what this document does, is it provides your business case 23 and recommendation to your own internal MFP committee? 24 A: Yes. 25 Q: It's not a document that you share with

1 the client, in this case, the City? 2 A: No. 3 Q: Okay. So, this document, if we look at 4 the top of it, is dated the 19th of December 1997? 5 A: Yes. 6 Q: And it tells us about the opportunity, 7 that is an opportunity from MFP's perspective, isn't it? 8 A: Yes. 9 Q: And the opportunity is immediate and it 10 involves desktops for the new Councillors to be installed 11 within two (2) weeks, short time line? 12 A: Yes. 13 Q: And then it tells us about what we have 14 seen in our -- in the notes that I've taken you to already, 15 that there's a 1998 opportunity involving about five thousand 16 (5000) PCs per year, out of the total population of fifteen 17 thousand (15,000), and a 90/10 split? 18 A: Yes. 19 Q: Okay. Then there's a history. It's 20 important, I suppose, for the executives at MFP, who don't 21 perhaps know about the nature and extent of the relationship 22 with the City, to have an understanding about how it -- how 23 it developed? 24 A: Yes. 25 Q: So, that's the purpose of that section, is

1 it? 2 A: Yes. 3 Q: All right. Can you read to us, that 4 section, so that we'll have it in the record, Mr. Ashbourne? 5 A: "Both the City of Toronto and Metro 6 Toronto have not leased PCs in the past. 7 Current suppliers are Compugen for the City 8 with IBM hardware and SHL for Metro with 9 Compaq equipment. Both suppliers to split 10 this deal. Jim Andrew is current Director 11 of IT for Metro, most likely to take on the 12 Megacity Director position and Jim is a 13 strong supporter of leasing with our effort 14 over the past six (6) weeks, he is 15 convinced their Finance Director to support 16 leasing." 17 Q: Can I just stop you there for a moment, 18 Mr. Ashbourne? 19 A: Yes. 20 Q: Was your understanding that their Finance 21 Director would be Wanda Liczyk? 22 A: Yes. 23 Q: And the effort over the past six (6) 24 weeks, is that the effort that you've told me about here 25 today?

1 A: Yes. The several meetings that we had 2 talking about purchase versus lease and all the benefits of 3 leasing. 4 Q: All right. Jim was already aware of the 5 benefits -- some of the benefits of leasing, before those 6 discussions, but, they helped him to a fuller and fairer 7 understanding? 8 A: Yes, yes. 9 Q: All right. And then the final line in 10 that section says: 11 "Strong relationship in place between Irene 12 and Jim from previous Ministry position." 13 A: Yes. 14 Q: Tell us what your understanding was of the 15 nature and extent of the relationship between Irene Payne and 16 Jim Andrew? 17 A: It was a business relationship she had 18 developed while he was in a position within the Ministry of 19 Natural Resources, where we had been doing lease 20 transactions, lease business with the Ministry, probably for 21 about seven (7) years or six (6) years, prior to this. 22 Q: And what size of contract would that have 23 involved for your company? 24 A: At the Ministry of Natural Resources? 25 Q: Yes?

1 A: Probably in the area of $5 to $6 million a 2 year, something like that. 3 Q: So, that it would be a valued and strong 4 business relationship? 5 A: Yes. 6 Q: And that the principals involved in it, 7 were Jim and Irene? 8 A: No, there were other people within the 9 Ministry, as well. Jim was just one (1) of the players. 10 Q: Okay. What was his role in the Ministry, 11 do you know? 12 A: That I'm not exactly certain of. It was a 13 management level, but I'm not sure. 14 Q: Do you know, or did you know then, whether 15 Brendan Power, was at that Ministry? 16 A: I don't know. I'm not aware. 17 Q: Do you know Brendan Power? 18 A: No. 19 Q: All right. So then returning to the -- to 20 the memo, Mr. Ashbourne, you then go on to outline something 21 about competition, and -- and this is something that we'll 22 want to focus on. So if you would, could you read that in 23 for us? 24 A: "Jim requested Compugen to get two (2) 25 quotes, Greyvest and MFP, and the City

1 Purchasing Department requested GE, SHL, 2 and Bombardier, obvious political internal 3 battles had been created." 4 Q: Tell me what that last line means, 5 obvious political internal battles, what -- what -- what were 6 you taking from that? 7 A: Basically that comment was due to the -- 8 the -- in terms of the City itself and the politics around 9 the City with respect to having certain suppliers and 10 obviously Metro having its own set of suppliers. 11 So I could see there was a bit of a conflict 12 going on with respect to the amalgamation to -- to come into 13 play. 14 Q: Right. But it didn't involve you, and it 15 didn't involve MFP? 16 A: No, no, no, that is just a reference to 17 the fact that obviously you have two (2) bodies that have 18 current suppliers in place, and that there's going to be some 19 problems associated with that in trying to develop a strategy 20 going forth. 21 Q: All right. So what this short paragraph 22 seems to be telling us is something about the process by 23 which the City would approach this acquisition? 24 A: Yes. 25 Q: And it appears to indicate that the City

1 was interested in -- in having a competitive tender process? 2 A: Yes, absolutely. 3 Q: But it -- was it your understanding that 4 there would be a formal RFQ as part of that process? 5 A: At the time of this, I think probably 6 not, because of the nature of the transaction. It would -- 7 again, Jim had indicated to me that it was a very quick 8 decision process because of the fact that they had to get the 9 machines in quickly. 10 Q: And the -- the process, whatever it was; 11 was not one (1) that you had any role in designing? 12 A: I had no role whatsoever. 13 Q: And did you have any contact with or 14 involvement with the other companies that we see referenced 15 in this short paragraph? 16 A: Only from the fact that they were the 17 ones, I believe, that had sent me copies of the purchase 18 orders showing the equipment. 19 Q: Yeah, well, we're going to come to that 20 in a moment, that would be SHL and Compugen? 21 A: Yes. 22 Q: And those would be the purchase orders 23 that allowed you to put the lease in place? 24 A: Yes. 25 Q: So that by the time you got those --

1 those documents, the invoices from those companies, you had 2 already been told by Jim, as I understand it, that you had 3 won the -- the right to do the lease? 4 A: Yes. 5 Q: But back on the 19th, when you prepared 6 this document, am I -- am I right in my assumption, that you 7 didn't have information from SHL and Compugen yet? 8 A: No, I don't believe I did. 9 Q: And am I right in my assumption that you 10 didn't have any contact with Greyvest or Bombardier or GE? 11 A: No. 12 Q: Right. 13 MADAM COMMISSIONER: Didn't operate, or -- 14 MR. PATRICK MOORE: It's the way I asked the 15 question. 16 17 CONTINUED BY MR. PATRICK MOORE: 18 Q: Sorry, Mr. -- 19 A: I had had no -- I had had no contact with 20 them. 21 MADAM COMMISSIONER: Okay. 22 23 CONTINUED BY MR. PATRICK MOORE: 24 Q: And I suppose it flows from that, Mr. 25 Ashbourne, that you don't know whether they had any formal

1 process that they responded to? 2 A: The other competitors? 3 Q: Yeah? 4 A: I have no idea. 5 Q: And then the recommendation section, 6 that's your recommendation to your Investment Committee, is 7 that you take this deal to get a master lease in place? 8 A: Yes. 9 Q: And you say something here also about 10 that you would require pricing on twenty-four (24), thirty- 11 six (36) and forty-eight (48) month terms. And I stop there, 12 can I ask you this. 13 Does that suggest to the reader that the -- 14 the -- the length of this lease had not yet been determined 15 by the City? 16 A: I believe that's the case. 17 Q: And so, therefore, you'd have to have a 18 variety of pricing, so that the City could select from a 19 smorgasbord of information? 20 A: Yes. 21 Q: All right. And then you go on to 22 recommend a percentage over something called a grid. Do you 23 see that? 24 A: Yes. 25 Q: Okay. What is a grid?

1 A: That's our internal grid that we use in 2 regards to pricing transactions. 3 Q: All right. 4 A: So, it's a grid that's given to each of 5 the salesman. 6 Q: So, that's a document that you carry with 7 you -- 8 A: Yes. 9 Q: -- and it gives you what kind of 10 information? 11 A: It tells us with respect to the different 12 types of equipment we are going to be providing pricing on. 13 It will give, what we -- in layman's terms, the equity 14 position, the present value equity position or residual that 15 MFP is willing to take on a transaction of this nature for 16 that particular time frame. 17 And that grid will show different times -- or 18 different lease terms. It will show the residual taken at 19 the front of the transaction and it will also show the future 20 value position that MFP will book for that equipment, based 21 on that lease term. 22 Q: Okay. Let's see if we can back that up a 23 little bit, to help me to a better understanding of what it 24 is you're talking about. 25 The residual is a term that you've used --

1 A: Yes -- 2 Q: -- what is a residual? 3 A: A residual is the equity position, we call 4 it, can be referred to in the industry as an equity position 5 as a residual position. It's in fact, a cash position that 6 we're taking as an investment on that particular piece of 7 equipment. 8 Q: And is that a position -- is that a piece 9 of information of relevance to the customer, that's provided 10 to the customer? 11 A: No, not usually. What's provided to the 12 customer is a lease rate factor for a monthly rental stream, 13 based on the cost of that equipment. 14 Q: And is the customer told that if we take, 15 for example, a thirty six (36) month lease, is the customer 16 told that at the end of that lease, they have an option to 17 purchase the equipment? 18 A: Yes. 19 Q: And if they exercise that option, do they 20 know, going into the lease, what it will cost them? 21 A: Sometimes they do, sometimes they don't. 22 Some organizations want a fixed purchase price in the 23 contract for at the end of the term and others don't. 24 A lot of it is dependent upon their own 25 internal procedures with respect to audits. Is it an off

1 balance sheet type transaction, is it an operating lease? In 2 some cases they don't like to see fixed purchase options. It 3 varies based on the individual client. 4 Q: In the -- in this particular case, on the 5 transaction involving the Councillors leases, did it 6 eventually become a thirty six (36) month lease? 7 A: Yes. 8 Q: And was there a purchase option at the end 9 of it? 10 A: Yes, fair market value. 11 Q: And would the City have known, would Jim 12 Andrew have known, going into the transaction, what that 13 value was going to be at the end of thirty six (36) months? 14 A: He could have estimated what that value 15 would be. 16 Q: How would he do that? 17 A: Basically on -- in some of the information 18 that folks in the IT industry read, magazines, things of that 19 nature, his history obviously, he has been in that position 20 for a number of years. 21 So, historically he can take a look at some 22 history with respect to estimating three (3) year old 23 equipment. What percentage of original cost would it be 24 worth in the marketplace? 25 Q: Right. The residual on this transaction

1 was of the order of 17 percent? 2 A: That's correct. 3 Q: And the fair market value at the end of 4 three (3) years may or may not approximate that number, is 5 that what you're telling us? 6 A: That is correct. 7 Q: It would just be happenstance if it did? 8 A: Correct. 9 Q: And the fair market value in a leasing 10 transaction like this is determined in what way at the end of 11 three (3) year term? 12 A: Again it depends on -- sometimes we put 13 definitions in contracts with respect to how that's going to 14 come to an agreement with both parties. 15 There may be an independent appraiser brought 16 in, one (1) selected by us, one (1) selected by the client. 17 There's different methodologies to look to in coming up with 18 the correct fair market value. 19 Q: Is it typically a retail value or a 20 wholesale value? 21 A: Retail value. 22 Q: So in this case, you're requiring pricing 23 for various terms and you're recommending 4.5 percent over 24 grid. 25 A: Yes.

1 Q: Does that mean then that if your residual 2 is 17 percent your grid would be 4.5 beneath that? 3 A: That was the recommendation that I did put 4 in there. We actually ended up by the time we did the deal, 5 it was a little bit more aggressive. 6 The grid, I believe, at that time was 10.5 7 percent, which would have put it at about 15 percent. 8 Q: And you ultimately did the deal near 9 seventeen (17)? 10 A: Yes. 11 Q: Let's just -- 12 A: But there are two (2) factors that also 13 go in to play here; not only the residual position but the 14 interest rate on the transaction. 15 Q: And is the interest rate a piece of 16 information provided to the City in a transaction like this 17 one? 18 A: Not normally. I mean, sometimes we get 19 into those discussions with a client. Sometimes we do, 20 sometimes we don't. 21 Q: Just before we talk about the interest 22 rate, let me see if I can help us all to a bit of an 23 understanding of how MFP structures these -- the financing 24 for these transactions. 25 If your residual is 17 percent, does that then

1 mean that MFP has 17 percent of the total asset value on 2 lease of its own money involved? 3 A: That is correct. 4 Q: And that the remaining -- what does it 5 become, 83 percent -- 6 A: Yes. 7 Q: -- is sourced from funders outside of 8 MFP? 9 A: That is correct. 10 Q: So you go to the market and you borrow 11 money to fund the 83 percent -- 12 A: That's correct. 13 Q: -- and in order to carry the cost of that 14 borrowing, you charge a lease rate which incorporates an 15 interest rate that's sufficiently high to get you, at least, 16 even on your borrowing costs. 17 Do I have that right? 18 A: That's correct. 19 Q: And typically does -- does MFP seek to 20 make money over the cost of -- of the money it borrows? 21 A: Not really. No, not usually. We try and 22 match fund, is what we call it. 23 Q: That is, you try and get even on -- on -- 24 on what you've borrowed but in -- 25 A: Obviously rates are fluctuating. On a

1 daily basis we track things to the bond market and bonds kind 2 of -- up and down a little bit. Even in the course of the 3 stable rates as of today, you can still see ten (10), fifteen 4 (15), twenty (20) basis point spreads -- 5 Q: Right. 6 A: -- on the bonds. 7 Q: But when you go to the Investment 8 Committee, Mr. Ashbourne, the -- with a recommendation such 9 as this one, is it the case that the Investment Committee has 10 not yet made a deal with your funders? 11 A: That is correct. 12 Q: So that they're -- they're taking a bit 13 of a gamble -- 14 A: Yeah. 15 Q: -- that funding will be available from 16 the -- the standard sources, whatever they may be? 17 A: Yes. 18 Q: All right and then they will commit, as 19 they did in this case, to a residual and to a lease rate and 20 provide that to you to give to the City. 21 A: That's correct. 22 Q: And that enables you, I suggest, to be 23 able to tell the -- the City that if they want a thirty-six 24 (36) month lease with a value of -- here it says seven 25 hundred and fifty thousand dollars ($750,000) but whatever

1 the value of the assets are, that -- that you will require 2 payments based on a lease rate of X? 3 A: Correct. 4 Q: And that will drive monthly payments or 5 annual payments, however it's set up? 6 A: Correct. 7 Q: All right. So then, if you turn the 8 page, there we have the strategy. The strategy section, I'm 9 supposing, but you can correct me on this if I'm mis- 10 supposing, is on a going forward basis? 11 A: Correct. 12 Q: So that in the first bullet point, you're 13 talking about -- about opportunities through the end of 1998? 14 A: Yes. 15 Q: And that's something other than this 16 Councillor's lease? 17 A: Yes. 18 Q: Okay. I understand. And then again you 19 referenced something we talked about earlier, which is asset 20 management, that's the second bullet point and disposition, 21 which we talked about as well. 22 A: Yes. 23 Q: And those are important issues, as you 24 understood it, from Jim Andrew's perspective. 25 A: Yes.

1 Q: So you're telling your Investment 2 Committee and the executives at MFP? 3 A: Yes. 4 Q: And then the -- the final point says, 5 "Get in early while transition is still 6 taking place and develop standard 7 government model in 1998, i.e., work deals 8 to budget constraints." 9 Can you help us with what that means? 10 A: Again, that was just looking into the 11 next fiscal year with respect to the types of transactions 12 that I anticipated based on my previous conversations with 13 Jim and working all of the -- the preparatory work I had done 14 with Jim in regards to convincing them that obviously leasing 15 had some direct benefits to them. 16 And so I was just thinking towards future 17 transactions in 1998, in trying to develop and using those 18 strategies. 19 Q: So am I right in this, that the 20 Councillors' lease was a nice opportunity for you to have? 21 A: Yes. 22 Q: Not so much because of the lease itself, 23 it being a small one (1), but because it was a foot in the 24 door opportunity? 25 A: Absolutely.

1 Q: And that's what you're telling the -- 2 A: Yes. 3 Q: -- the Committee and executives who read 4 your memo, at the second page? 5 A: It was important to get a master lease in 6 place because those negotiations can be lengthy, and you want 7 to get that first transaction done -- the master lease in 8 place, so that it makes doing business in the future, a 9 little -- much easier. 10 Q: Yeah, and we're going to talk more about 11 that when we come to look at the lease documents. But 12 broadly speaking, what you're saying here is that if you have 13 a master lease that the City is familiar with -- 14 A: Yes. 15 Q: -- they can look to it as a model for 16 future leasing and across the whole of the City? 17 A: Yes. 18 Q: And you're referencing the standard 19 Government model, and I'm supposing that that means the model 20 that was in place with the Ministry of Natural Resources, or 21 perhaps other Provincial Government departments? 22 A: Yes. 23 Q: And that was a model that had been in 24 place for some years, and it worked effectively from your 25 perspective?

1 A: Very well, yes. 2 Q: What does the in brackets comment mean, 3 when you say: 4 "Work deals to budget constraints." 5 Would those be the budget constraints at the 6 City? 7 A: Yes. 8 Q: They're not yours? 9 A: No, no. 10 Q: That is MFP's? 11 A: No, no. 12 Q: All right. And from the date of this 13 Investment Committee memo, can we glean anything of when the 14 Investment Committee actually met and -- and reviewed your 15 recommendations? 16 A: I believe it was that day. 17 Q: All right. And is it your recollection 18 then, that as of that day you had the decision of the 19 Executive Committee? 20 A: I believe so, yes. 21 Q: All right, and then armed with that 22 decision, I suppose you would want then to re-establish some 23 contact with the City, to pass the information along? 24 A: Yes. 25 Q: All right, we'll move then to the next

1 date, which you can confirm this for me, is the 23rd of 2 December, 1997, and that's at tab 28, and I think, Mr. 3 Ashbourne, that that is probably the next date of contact 4 that you had with the City on this transaction? 5 A: I believe that's correct. 6 Q: And that's document 25128, and it is a 7 page from your appointment book for the 23rd of December, 8 1997? 9 A: Correct. 10 MADAM COMMISSIONER: Mr. Moore, why don't we 11 take the break now. I wouldn't normally because we started 12 late, but I know that the -- some of the staff and people 13 here have all been here since ten o'clock anyway. 14 So, why don't we take a little break, and 15 we'll be back at ten (10) to. 16 THE REGISTRAR: Order. The Inquiry will 17 recess until ten (10) to 12:00. 18 19 --- Upon recessing at 11:30 a.m. 20 21 --- Upon resuming at 11:50 a.m. 22 23 THE REGISTRAR: The Inquiry will resume, 24 please be seated. 25

1 CONTINUED BY MR. PATRICK MOORE: 2 Q: Mr. Ashbourne, I had taken you to the 23 3 December date, but just before we go there, I wonder if we 4 can take a little detour here and you can help us with 5 another one (1) of MFP's documents that will be of interest 6 and some relevance. 7 At Tab 81, the document is 29546. And let me 8 begin by asking you, what is this document? 9 A: This is what we call internally our yellow 10 sheet, with respect to all the information regarding a 11 particular lease transaction that must be filled out and 12 signed off by management, in order, for documentation to be 13 created for the customer. 14 Q: So once the investment committee has met 15 and decided to go forward with the transaction, or allow you 16 as the sales person to take it to the next level, this 17 document follows sometime later, I take it? 18 A: Yes. Once the deal has been agreed to 19 with the client, this is basically the first thing that the 20 sales rep will finalize. 21 Q: Now, in the case of the Councillors' lease 22 we don't see a yellow sheet back at the stage of allowing the 23 salesperson to seek the opportunity? 24 A: Sorry? 25 Q: In other words, in the case of the

1 Councillors' lease, we don't have a yellow sheet, before you 2 get into the transaction, it follows at the end of the 3 transaction? 4 A: Yes. 5 Q: All right. And we know that in this case, 6 because the initials and the dates for the initials, at the 7 bottom of the page, the sign-offs are late '97 and early '98? 8 A: It may have been. I probably generated 9 it, usually sign-offs take a little bit of time, as you can 10 see here, they were signed on different -- different people 11 signed on different dates. 12 So, I probably created the yellow sheet, 13 probably around the 29th of December, maybe a day or so 14 earlier, I'm not sure. Started generating it, so that I 15 could give it to my assistant to start preparing the 16 paperwork, as she gets this signed off by the proper 17 authorities. 18 Q: And then the -- the lease can start moving 19 forward, formally documented? 20 A: Yes. 21 Q: Just -- if you look to the lower right- 22 hand corner of the document, there's a schedule or lease 23 number applied, 784-1. 24 A: Yes. 25 Q: Now, what does the 784 designate?

1 A: That just designates our internal number 2 that we have put for the deal. 3 Q: And when we come, as we will at some time 4 during your examination, when we come to look at the lease 5 documents, they will show 784 -- 6 A: Yes -- 7 Q: -- as the master lease for this 8 transaction? 9 A: That's correct. 10 Q: All right. Now, up -- up on the left side 11 of the page, near the top, under the heading customer 12 information, we see an address and then a contact person, 13 being Dave Beattie? 14 A: Yes. 15 Q: And from that, do we fairly take it that 16 when the lease gets properly, legally papered, that Dave 17 Beattie would be the contact person that you would deal with 18 at the City to implement getting the acquisitions in place? 19 A: Yes. 20 Q: Now, can you go down to the transaction 21 description section and help us to work through that so that 22 we'll recognize it next time and understand it. 23 To begin with, beside the word "rent," we see 24 the date January 1, 1998, do you see that? 25 A: Yes.

1 Q: And I'm taking that to mean that this 2 lease -- the idea is that this lease will begin on January 1, 3 1998 and continue through its term? 4 A: That's correct. 5 Q: And the term we see, over to the left at 6 the bottom of that transaction description section, the 7 number three (3). And does that tell us it's a three (3) 8 year lease? 9 A: What that does is it's number of payments. 10 Q: All right. Three (3) and then beneath and 11 to the right, we see annually -- 12 A: Yes. 13 Q: -- so it will be three (3) annual 14 payments? 15 A: Yes. 16 Q: And that means a three (3) year lease, 17 effectively? 18 A: Yes. 19 Q: And then going back up a little bit, we 20 see the initials HW and SW in the line above that, at the 21 centre of the page, and then some numbers. 22 Now, do I understand correctly then, Mr. 23 Ashbourne, that we're talking about hardware, HW, and 24 software, SW? 25 A: Yes.

1 Q: And the numbers reflect the asset value? 2 A: Yes. 3 Q: That is nine hundred and sixty-eight 4 thousand, five hundred and twenty-five dollars ($968,525) for 5 hardware? And beside to the right of that, we see a number 6 nine hundred ninety-one, four-three-o, (999,430). 7 That would be the total value of hardware and 8 software together, correct? 9 A: Yes. 10 Q: And to the right of that, this transaction 11 would drive an annual payment of two hundred and ninety-two 12 thousand, two hundred and fifty-five dollars ($292,255)? 13 A: Correct. 14 Q: Now, can we go down to the line beneath 15 that, at the centre of the page, there's a -- a number, seven 16 point four four (7.44) annual, what does that number mean? 17 A: That's the interest rate that was used for 18 this transaction. 19 Q: Is that an internal rate at MFP or is that 20 the cost of money for MFP? 21 A: That would have been the cost of money 22 that would have been provided to me by our funding 23 department. 24 Q: And so you would assume from that, as we 25 discussed earlier this morning, that MFP for the portion of

1 this transaction that it is borrowing money from the 2 marketplace, that MFP would be paying 7.44 percent for its 3 money? 4 A: Yes. 5 Q: Then move to the right, if you will, and 6 down to the next section on the page, underneath the heading: 7 "Cash margin estimate." 8 A: Yes. 9 Q: Can you tell us, what is the -- what's 10 the -- the top number on the right hand side, and what -- 11 what does it mean? 12 A: That number is the present value of the 13 rental strain, so the fixed annual payment of two ninety-two 14 two fifty-five (292,255) for a three (3) year term, based on 15 7.44 percent annual interest rate, the present value of that 16 is eight -- I believe that says eight hundred and seventeen 17 four fifty-two (817,452). 18 Q: Right, and am I correct in -- in assuming 19 that eight hundred and seventeen thousand (817,000) being the 20 present value, will over time grow to nine hundred and 21 ninety-one thousand (991,000)? In other words, you start 22 with the nine ninety-one (991) and you discount it to create 23 a present value? 24 A: No. 25 Q: Is that how that works?

1 A: No, you're -- what you're doing is we're 2 -- we're funding or discounting the rental stream of three 3 (3) annual payments at two ninety-two two fifty-five 4 (292,255) at 7.44 equates to the eight seventeen (817), 5 that's the number that we could go to a funder in the 6 marketplace and we could fund that transaction and receive 7 that amount of money from the funder. 8 Q: And the difference between that amount of 9 money and the nine ninety-one (991) then becomes the 10 investment of MFP in this transaction? 11 A: Correct. 12 Q: And somebody has put a number there, it 13 looks like 18 percent, is that your handwriting? 14 A: I don't believe I filled this out, I 15 believe that my assistant probably did it. 16 Q: Right. 17 A: Because this is not my writing. 18 Q: You've done a calculation, I know -- 19 A: Yes. 20 Q: -- because I've asked you to, and I 21 gather that from that you would tell us that the residual is 22 nearer 17 percent than 18? 23 24 (BRIEF PAUSE) 25

1 A: It's 18 percent of the hardware cost 2 only. So it is 18 percent. 3 Q: All right. And then beneath and to the 4 right of that is the number one hundred and seventy-three 5 thousand nine hundred and seventy-eight (173,978) and it 6 seems to be in brackets, what does that tell us? 7 A: That means it's a negative cash margin 8 transaction, that's our investment in the -- in the deal. 9 Q: And does -- does that mean then that at 10 the end of the transaction, if MFP gets the leased equipment 11 back, and has an opportunity to sell it in the marketplace 12 generally, you would seek to get enough from that sale to 13 exceed the one hundred and seventy-three (173) negative cash 14 margin? 15 A: Correct. 16 Q: That number also appears lower and on the 17 left side, under the heading: 18 "MFP residual -- residuals investment 19 details." 20 A: Yes. 21 Q: And there are four (4) numbers in that -- 22 in a column of numbers. I'd be grateful if you could tell us 23 what each number is and what it represents and -- and how 24 those numbers interact, so that we'll know what it is we're 25 reading there?

1 A: I think as I indicated earlier. On our 2 cost sheet, the future value worksheet that each salesman has 3 with respect to structuring a transaction, we show both the 4 residual position or present value that we want to take in a 5 transaction. We also show the future value that the 6 transaction will get booked at, in terms of MFP, our books. 7 And the FV of equipment means future value of 8 equipment, out three (3) years, we'll put a value on this 9 equipment of a hundred and seventy thousand three two-six 10 (170,326). 11 Q: And that may or may not equate to the 12 amount that -- by way of fair market value you would charge 13 the City, if it sought to purchase it? 14 A: Yes, that's correct. 15 Q: All right. And then the next number? 16 A: We present value that future value at the 17 debt rate of seven point four-four (7.44) and bring that back 18 to today's date or the date of the transaction. 19 And at the 7.44 interest rate, if you present 20 value that hundred and seventy thousand (170,000) back, it 21 comes back to one thirty-six three four-seven (136,347). 22 Q: And that's the number that is in the 23 section above on the right as PV of equipment residuals? 24 A: Correct. 25 Q: And then beneath that number is the MFP

1 cash investment which you've told us about before, that 2 number also appears in the centre section on the right? 3 A: Yes. 4 Q: And now we have a new number and concept, 5 the number being ninety three thousand nine hundred and forty 6 (943,940), and what does that represent? 7 A: That's just a number that is basically put 8 together on our grid, as -- and it's more from a commission 9 perspective -- 10 Q: All right -- 11 A: -- based on the compensation plan that 12 existed at that time. It has no relevance to the deal from a 13 booking perspective. 14 Q: And no relevance to the customer? 15 A: No. 16 Q: It's not a number that gets passed along, 17 indeed none of these numbers get passed along to the 18 customer? 19 A: No. 20 Q: And can you identify for us, the initials 21 of the sign-offs and tell us who was signed off on this 22 transaction? 23 A: I believe in the first box under sales 24 management, I think there's two (2) there, there is Hal Shaw 25 and Irene Payne.

1 Q: All right. 2 A: Asset management I think that was Peter 3 Balduzzi, at the time. He was Vice President of asset 4 management. 5 Credit and funding would be Jerry Makahon, who 6 was in our funding department, responsible for funding the 7 transaction with an external funder. 8 And then sales administration, I think it 9 might have been Jennifer Smith at the time, but I'm not sure. 10 Q: This transaction -- 11 MADAM COMMISSIONER: Mr. Moore, would you be 12 kind enough to have someone put the spelling of those into 13 the record for our Court Reporter's purposes? 14 MR. PATRICK MOORE: Yes, would you like that 15 done now, or later? 16 MADAM COMMISSIONER: Now. 17 MR. PATRICK MOORE: Now. All right. 18 19 CONTINUED BY MR. PATRICK MOORE: 20 Q: Mr. Ashbourne, could you help us with the 21 spelling of those names. Irene Payne, for instance, we know 22 is P-A-Y-N-E. 23 A: Shaw is S-H-A-W. 24 Q: Balduzzi? 25 A: Balduzzi -- B-A-L-D-U-Z-Z-I, I believe.

1 Q: All right. 2 A: Jerry -- that's Jerry with a J, M-A-K-O- 3 H-A-N, or H-O-N, I believe. 4 MADAM COMMISSIONER: M-A-K-A-H-O-N. 5 THE WITNESS: H-O-N. 6 MADAM COMMISSIONER: And I think the Jennifer 7 Smith is okay. 8 9 CONTINUED BY MR. PATRICK MOORE: 10 Q: And conspicuous to me, at least by its 11 absence here, is any initials for Mr. Wolfraim -- 12 A: Well, there's a signature above, where it 13 says "credit funding." I can't tell based on this photocopy 14 whose signature that is. 15 Q: But from your perspective the appropriate 16 people and the appropriate number of people, in order to 17 properly paper this transaction had signed this document? 18 A: Yes. There's another one (1) off to the 19 left above cash in. 20 Q: Hmm hmm. 21 A: Again, I'm not sure who that is either. 22 Q: All right. So, with that in mind now, can 23 we return to the document that I flagged for you just before 24 we broke, which is at Tab 28? 25 I appreciate we're going back in time a few

1 days, but on the 23rd we see an entry against the time twelve 2 (12) o'clock, and by the way this is document 25128, which 3 among other things, has the name of Jim Andrew. 4 It seems to say, lunch; is that what it says? 5 A: Yes. 6 Q: Megacity, Jim Andrew and there's a 7 reference to Jim on the left, call Jim, see that? 8 A: That's a different individual. 9 Q: Okay. And if you go from there to -- keep 10 your finger on that one (1) and move to Tab 76 as well, 11 document 29051, this is a new type of document to us this 12 morning, but as I understand it, this is your expense report 13 for the month of December 1997? 14 A: Correct. 15 Q: And that's an internal document that you 16 prepare following the end of a month, in order that you might 17 be reimbursed for expenses incurred during the course of that 18 month? 19 A: Yes. 20 Q: And you'll see, Mr. Ashbourne, on this 21 and others, of these documents that we will be referring you 22 to, that some information has been redacted or blacked out, 23 and that's been done on agreement, to reflect the fact that 24 the entries bear no relationship to the City of Toronto 25 transactions?

1 A: Yes. 2 Q: Is that right? 3 A: Yes. 4 Q: Okay. If you go down to item number 11, 5 it appears to be a -- an item referring to Jim Andrew, Irene 6 Payne, Dave -- is it Robson? 7 A: Yes. 8 Q: And to the left of that, the date is 12- 9 23, and from the amount of money and from the entry that you 10 see at December 23rd, is it fair for us to conclude that that 11 involved a lunch? 12 A: Yes. 13 Q: Would -- would lunch have provided you 14 the opportunity then to provide the rates to Jim Andrew? 15 A: I'd have to refer to -- there's another 16 document in here. 17 18 (BRIEF PAUSE) 19 20 A: I don't believe I supplied him with the 21 rates at that time, but I may be wrong here. I think it was 22 a few days later. 23 24 (BRIEF PAUSE) 25

1 Q: All right. 2 A: I might stand to be corrected here, but. 3 Q: All right. Let's move to a series of 4 documents, if we could, beginning at Tab 65, which may also 5 shed some light on this. 6 The document at 65 is document number 25472. 7 And it appears to be a -- a fax cover sheet for the Compugen 8 company? 9 A: Yes. 10 MR. DAVID MOORE: If I might just assist My 11 Friend, I think in terms of the communication with respect to 12 the rates, there's Tab 73. 13 MR. PATRICK MOORE: I'm coming to that, thank 14 you. 15 MR. DAVID MOORE: I'm -- I'm sorry. 16 MR. PATRICK MOORE: No, that's all right. 17 18 CONTINUED BY MR. PATRICK MOORE: 19 Q: And I -- I was just wondering, if we look 20 quickly at tab 73, Mr. Ashbourne, and, Commissioner, that is 21 document 25486, and it's a December 23 letter, and it appears 22 to be -- to have been accompanied by the document at tab 72, 23 which is a fax cover sheet, number 25485. 24 Am I reading those correctly? 25 A: Yes.

1 Q: And that letter may have been the one (1) 2 you were looking for, it does provide in the first paragraph, 3 rates. Are those the rates for this transaction? 4 A: Yes. 5 Q: And -- and so the -- the letter at -- at 6 Tab 73, is -- is, it appears, one (1) faxed to Dave Beattie 7 on the 23rd, although the fax information does not show on 8 these documents. 9 So, I'm wondering, did you fax it, Mr. 10 Ashbourne, or did you provide it to Mr. Andrew at the lunch? 11 A: I can't recall, I thought I had faxed it, 12 because I wouldn't have created this fax sheet otherwise. 13 MR. FRASER BERRILL: If it helps My Friend, 14 Tab 28 which is the Tuesday, December 23rd DayTimer, 15 indicates that rates -- it says: 16 "Faxed rates, as item number 7 to Dave 17 Beattie." 18 On that date. 19 MADAM COMMISSIONER: Okay. I think I've got 20 about five (5) fingers in this -- 21 MR. FRASER BERRILL: Yeah. 22 MADAM COMMISSIONER: -- in different places 23 right now. So Tab 28, then? Is that of assistance to you, 24 Mr. Moore? 25 MR. PATRICK MOORE: Let's turn to that. Tab

1 28. 2 MR. FRASER BERRILL: Yes. 3 4 CONTINUED BY MR. PATRICK MOORE: 5 Q: In the second page is item 7, and it 6 provides -- item 7 page 25129, reference to Dave Beattie and 7 a fax number and the note fax rates? 8 A: Right. 9 Q: All of which suggest that you may well 10 have faxed these documents at Tab 72 and 3, to Mr. Beattie, 11 but, your memory is as you've given it? 12 A: Yes. 13 Q: All right. In any event, the City was 14 provided the rates that we see here and what was the next 15 step in the -- in the process from your perspective? 16 A: I believe I was still, at this point, 17 waiting for confirmation in terms of exact configurations of 18 the equipment from both Copygen and SHL. 19 Q: Yes. And at that lunch on the 23rd were 20 you told by Jim Andrew that MFP would have this transaction? 21 A: I don't believe so. I'm quite certain at 22 this stage that I still have not found out whether we were 23 the lessee or the lessor of choice. 24 Q: All right. Thank you. And at this stage, 25 was it still your understanding that some form of tender

1 process was being rolled out by the City? 2 A: Yes, that's why I faxed this to Dave 3 Beattie. 4 Q: Okay. So, then at some point between the 5 23rd and the 30th -- 6 A: Hmm hmm -- 7 Q: -- I presume that you were told by the 8 City, that you had won the process? 9 A: Yes. 10 Q: Do you remember how that came about? I 11 haven't seen any documentation on it, perhaps nothing turns 12 on it, but what's your recollection? 13 A: My recollection is that Dave called me and 14 said that we had been awarded the leasing business on the 15 Councillor machines. 16 Q: And we'd seen an earlier reference to 17 Dave, that being Dave Beattie -- 18 A: Hmm hmm -- 19 Q: -- having attended with you and Jim 20 Andrew. Did you talk to Dave Beattie about the lease and how 21 it would look and how it would operate? 22 A: When? 23 Q: At any point between the -- before this 24 conversation in the vicinity of December 30th? 25