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 February 13th, 2003 25

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

1 TABLE OF CONTENTS 2 Page 3 List of Exhibits 4 4 5 SANDY PESSIONE, Sworn 6 Examination-in-Chief by Mr. Ronald Manes 5 7 Cross-Examination by Mr. William Anderson 122 8 Cross-Examination by Ms. Lily Harmer 127 9 Cross-Examination by Mr. David Moore 181 10 Re-Examination by Mr. Ronald Manes 212 11 12 Certificate of Transcript 224 13 14 15 16 17 18 19 20 21 22 23 24 25

1 EXHIBITS 2 No. Description Page 3 16, VOLUME 1 Bound document titled 15 4 " Sandy Pessione" 5 Tabs 1-19 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

1 --- Upon commencing at 9:58 a.m. 2 3 THE REGISTRAR: The inquiry is now in 4 session. Please be seated. 5 MADAM COMMISSIONER: Good morning. 6 Mr. Manes...? 7 MR. RONALD MANES: Good morning, Commissioner. 8 MADAM COMMISSIONER: Would you swear in the 9 witness, please? 10 11 (BRIEF PAUSE) 12 13 SANDY PESSIONE, Sworn: 14 15 EXAMINATION-IN-CHIEF BY MR. RONALD MANES: 16 Q: Good morning, Mr. Pessione. 17 A: Good morning, Mr. Manes. 18 Q: Now, as you know, we hadn't intended to 19 call you as a witness here -- 20 A: Yes. 21 Q: -- and, in fact, we interviewed you, I 22 think twice -- now three (3) times after last -- last night. 23 The reason that we're calling you is some of 24 the information that Mr. Domi imparted made it necessary to 25 bring you in and ask you some questions.

1 And as well, thought you might be of 2 assistance to the Commissioner -- Commission regarding 3 managing the RFQ process, which I understand you're the 4 resident expert -- were the resident expert at MFP. 5 A: Responding to them, correct. 6 Q: Yes, and of course, there's some issues on 7 expenses and want to talk -- 8 A: Yes. 9 Q: -- to you about. And thirdly, it might be 10 helpful to the Commissioner, to some extent your experience 11 -- previous experience in government, you're in government 12 now, through that and -- with respect to bidding processes, 13 procurement processes for IT and especially the manner in 14 which the government, provincial government, used to deal 15 with - with the bidding process and how it has tightened it 16 up at the present time. 17 So, all of those may be of some assistance to 18 the Commissioner. So, thank you for coming. 19 A: You're welcome. 20 Q: Now, first, as I understand it, Mr. 21 Pessione, you were employed by MFP from July 15th, 1996, to 22 late August 2002, when you were laid off? 23 A: Correct. 24 Q: You were recruited by Irene Payne? 25 A: Correct.

1 Q: We'll get into the context of that in a 2 moment. You now are with the Ministry of Consumer and 3 Business Services? 4 A: Correct. 5 Q: You are a Project Manager with -- the 6 specific project being the electronic service delivery to 7 individuals? 8 A: Correct. 9 Q: ESD 2003 Project? 10 A: ESDI 2003. 11 Q: ESDI? 12 A: Correct. 13 Q: All right. Got it. Now, just a bit of 14 background about you. 15 Bachelor of Science and Forestry, from the 16 University of Toronto? 17 A: Correct. 18 Q: And you then went from there and between 19 1981 and 1987 you were with the Ontario Ministry of Natural 20 Resources in IT Development and Training? 21 A: And Forestry Research. 22 Q: And Forestry Research, all right. Now, 23 just one point of clarification. While you were at the MNR, 24 you did not know Mr. Andrew? 25 A: Correct.

1 Q: All right. After you left the MNR, you 2 went to ComSoc, Community and Social Services? 3 A: Correct. 4 Q: And in the IT area, you im -_ implemented 5 a provincial-wide case worker technology project? 6 A: Correct and I moved to that project in 7 1993. 8 Q: All right and my -- my briefest 9 understanding of that project, it w -- was a $150 million 10 technology project which you -- where you developed the RFP, 11 you managed it -- the process, you evaluated the results and 12 you negotiated the contract? 13 A: Correct. 14 Q: All right. Now, MFP was the successful 15 bidder in that -- in that project? 16 A: Correct. There were three (3) parts to 17 it, hardware supply and leasing which MFP was the successful 18 bidder and then there was a project management portion to the 19 RFP which SHL System House was the successful bidder. 20 Q: Now, l -- let's just stop here for a 21 moment. Was MFP the vendor of record for leasing for that 22 $150 million techni -- technology project? 23 A: Well, if we step back in terms of the 24 RFP, it was a joint RFP between Community and Social Services 25 and Management Board of Secretariate.

1 Q: Yes. 2 A: MBS had a project to obtain a vendor of 3 record for the entire province for both hardware supply and 4 -- or hardware leasing and so they became the defacto vendor 5 of record for the province where the -- the ministries were 6 not obligated to use that vendor of record but they were 7 encouraged to. 8 As for the project at ComSoc they -- MFP 9 became the defacto supplier of hardware and leasing services. 10 Q: All right. Now, did we -- had discussion 11 here about what vendor of record means. First of all, in the 12 RFP that you prepared, do you recall -- I know we don't have 13 a copy of that but d -- in your recollection, did the RFP 14 state that it was looking for a vendor of record? 15 A: I believe it did. 16 Q: And was vendor of record a defined term 17 in that RFP, do you recall? 18 A: I'm not sure if it was defined in the 19 sense of the legal definitions at the beginning of the 20 document but within the -- the RFP I believe there was a 21 paragraph concerning that. 22 Q: Was it intended to convey to the -- to 23 the reader that a vendor of record was exclusive provider or 24 a non-exclusive provider? 25 A: In this situation it was non-exclusive.

1 Q: All right. 2 A: It depends on what your definition of a 3 record of vendor (sic) is. 4 Q: So what you're saying is that one can be 5 a vendor of record and be an exclusive provider; one can be a 6 vendor of record and be a non-exclusive provider. It depends 7 on what it is conveyed in the -- in the RFP? 8 A: Correct. 9 Q: All right. I understand that -- that in 10 the course of your -- that RFP and in the course of your 11 tenure at ComSoc that you, on occasion, met Brendan Power who 12 was at Manage Bo -- Management Board Service? 13 A: He was -- 14 MADAM COMMISSIONER: Secretariate. 15 MR. RONALD MANES: I said it again. 16 Management Board Secretariate. 17 THE WITNESS: We can call it MBS to make it 18 easier. 19 MR. RONALD MANES: All right. 20 THE WITNESS: He was the manager responsible 21 for the vendor of record for the Province. So, I worked more 22 closely with the staff than with Brendan Powers. 23 Q: But in that capacity, as a Manager would 24 you expect Mr. Power to be skilled in the development of 25 RFP's, negotiation, and managing of the master agreement?

1 A: Yes, yes. 2 Q: All right. 3 4 (BRIEF PAUSE) 5 6 Q: Let's take you to your job at MFP. Your 7 title was, Business Development Manager? 8 A: Hmm hmm, correct. 9 MADAM COMMISSIONER: Has somebody told you 10 already, you have to say, yes or no. 11 THE WITNESS: No, but I just realized that 12 when I said, uh huh. Yes, I'll say yes or no. 13 MADAM COMMISSIONER: Business Development 14 what? 15 THE WITNESS: Manager. 16 MADAM COMMISSIONER: Manager. Thank you. 17 18 CONTINUED BY MR. RONALD MANES: 19 Q: But, I understand what that meant was that 20 60 percent of your time was spent in sales support? 21 A: Correct. 22 Q: Mainly presentations, supporting staff on 23 presentations? 24 A: Correct. 25 Q: You rarely went on the actual

1 presentations? 2 A: Correct. 3 Q: All right. And 40 percent in managing the 4 -- or responding to the RFQ process? 5 A: Correct. 6 Q: All right. I understanding that in terms 7 of bonuses, you were not -- your bonus was not tied to any 8 particular account, but you were -- could be bonused on the 9 company's overall performance? 10 A: Correct. 11 Q: All right. You reported to Irene Payne? 12 A: Yes. 13 Q: And then Mike Flanagan? 14 A: Yes. 15 Q: In terms of the 40 percent of your time 16 that you spent on coordinating RFP of RFQ responses, I 17 understand that you responded to RFP's or RFQ's approximately 18 twenty (20) to twenty five (25) times per year? 19 A: That would be the high number, yes. 20 Q: All right. 21 MADAM COMMISSIONER: What would be more 22 realistic then? 23 THE WITNESS: Ten (10) to fifteen (15). 24 MADAM COMMISSIONER: Ten (10) to fifteen (15). 25

1 CONTINUED BY MR. RONALD MANES: 2 Q: So, suffice it to say, that you were -- 3 had substantial experience in responding to various RFP's or 4 RFQ's? 5 A: Correct. 6 Q: It was not part of your job description to 7 prepare expense accounts for sales persons? 8 A: Correct. 9 Q: And it was not part of your responsibility 10 to deal with financial responses to RFP's or RFQ's, such as 11 pricing, lease rate factors, residuals? 12 A: Correct. 13 Q: That was Mr. Wilkinson and Senior 14 Management? 15 A: Correct. 16 Q: I understand, sir, that upon entering MFP 17 and during the course of your tenure at MFP, you had no 18 training in respect to any formal policies of MFP? 19 A: Correct. 20 Q: You did not see, nor review with anyone 21 from HR or otherwise, any conflict of interest policy, 22 donation policy, or expense policy? 23 A: That is correct. 24 Q: There as no training in respect to general 25 expected, appropriate, or acceptable behaviour as a

1 representative of MFP? 2 A: Correct. 3 Q: Now, I'm not suggesting you wouldn't use 4 your own common sense, and there weren't some things that you 5 had learned on the job, but I'm talking about the formal 6 policy? 7 A: No, formal policy, correct. 8 Q: So, for example, you would know that 9 expenses that were presented to MFP for payment, would have 10 to be legitimate business expenses? 11 A: Correct. 12 Q: Let me take you to the 1999 City of 13 Toronto leasing RFQ. Firstly, as I understand it, you first 14 learned about that leasing RFQ from Mr. Domi? 15 A: Correct. 16 Q: And that would have been prior to May -- 17 May 31st, 1999, when it was formally issued? 18 A: Are you asking if he knew about it 19 beforehand? 20 Q: Yes, if he told you about it. 21 A: Yes. He made me aware of the fact that 22 there was an RFP -- or RFQ -- sorry, a tender coming out from 23 the City. 24 Q: All right. Now, am I right in saying 25 that these things such as the fact that a tender was coming

1 out from the City are not confidential? It's -- it's known 2 in the -- in the community? 3 A: Yes. 4 Q: Business community? 5 A: Yes, it's -- 6 Q: Do you have any idea when Mr. Domi told 7 you about this particular RFQ in relation to May 31st, 1999? 8 A: I can't recall specifically when he would 9 have told me, no. 10 Q: Now, as you -- you ... 11 12 (BRIEF PAUSE) 13 14 Q: As you know, there's a number of 15 documents that you've an od -- an opportunity to review that 16 -- 17 A: Hmm hmm. 18 Q: -- we're going to present here this 19 morning and Madam Commissioner, I hand these to you and mark 20 those as Exhibit 16. 21 THE REGISTRAR: That is right, sir. Thank 22 you. 23 24 --- EXHIBIT 16, VOLUME 1: Bound document titled " Sandy 25 Pessione" Volume 1 Tabs 1-19

1 2 MR. RONALD MANES: And Exhibit 16, for our 3 record, has nineteen (19) tabs. 4 5 (BRIEF PAUSE) 6 7 MADAM COMMISSIONER: Taking yours apart 8 already, are you? 9 THE WITNESS: Just moving it over a little 10 bit. 11 MADAM COMMISSIONER: Do you know something I 12 don't know? 13 THE WITNESS: I have notes. 14 15 (BRIEF PAUSE) 16 17 CONTINUED BY MR. RONALD MANES: 18 Q: Mr. Pessione, as you've -- as you know 19 and as we discussed -- at least the last interview -- two (2) 20 interviews, Mr. Domi had in his file that was presented to us 21 by his -- by MFP's Counsel, Mr. Moore, an April 30th, 1999 22 draft RFP which is Tab 1. 23 A: Correct. 24 Q: Now, this is Begdoc 29280. 25 "City of Toronto Information Technology

1 Services Branch Request for Proposal for 2 leasing and value added services, RFP: --" 3 No number. 4 "Draft 1" 5 Lower right hand corner: 6 "April 30th, 1999" 7 Now, prior to this document being presented to 8 you by Commission Counsel, had you ever seen that document 9 before? 10 A: No, I haven't. 11 Q: Now, just on the face of this document 12 I'm going to ask you some -- some questions about the 13 content. On the face of this document, does it look like a 14 document that was prepared by the province? 15 A: It looks like a document pre -- prepared 16 by a public sector -- 17 Q: All right. 18 A: -- organization. 19 Q: Do you have any information or personal 20 knowledge how this document came into Mr. Domi's file? 21 A: No, I do not. 22 Q: Have you personally ever been in Mr. 23 Domi's file? Hard copy file? 24 A: I don't know if he had any files -- I -- 25 Q: All right.

1 A: No. 2 Q: Now, if this document was, in fact, 3 prepared by the City of Toronto in draft form, if it was 4 prepared by the City of Toronto in draft form; would you 5 consider it appropriate to receive it at MFP? 6 A: No. 7 Q: Would the reason be that you would 8 consider that to be a confidential document to the City? 9 A: If it was created by the City. 10 Q: Yes. Now, I take it, sir, that in your 11 preparation of the RFQ response, you did not use this 12 document having never seen this document? 13 A: Correct. 14 Q: Now, would you turn to Tabs 2 and 3, in 15 your binder of documents? 16 A: Yes. 17 Q: Tab 2 is Begdoc 27547 and that is an 18 e-mail from Sandy Pessione to Mr. Kassam at Prescient, copies 19 to Rob Wilkinson and Dash Domi, subject latest version and 20 it's dated June 10th, 1999, 4:04. 21 And Tab 3 is the latest version, there is no 22 issue here, it's the latest version of an RFQ, 27548 is the 23 Begdoc number for Tab 3. 24 Mr. Pessione, Tab 3 was the latest version of 25 the RFQ response that you were preparing in respect of the

1 1999 leasing RFQ? 2 A: Correct. 3 Q: All right. And on June 10th, at 4:04 p.m. 4 Now, can you explain to the Commissioner the circumstances 5 under which you communicated with Mr. Pessione -- 6 MADAM COMMISSIONER: He is Mr. Pessione. 7 8 CONTINUED BY MR. RONALD MANES: 9 Q: I'm sorry, communicated with Mr. Kassam, 10 Mr. Pessione, and sent him the latest version of your draft 11 on June the 10th? 12 A: My recollection is that I was asked by 13 Irene Payne to send it to Karim for his comments, most likely 14 that day, on June 10th. 15 Q: Had you ever been asked by Irene Payne to 16 do that kind of thing in any other RFQ responses or is it 17 isolated to the MFP response to the City of Toronto RFQ? 18 A: There were two (2) other occasions. I 19 believe that I had sent draft responses to Karim for feedback 20 and comments, and both -- and I guess all three (3) 21 occasions, we never received any comments. 22 Q: All right. On this occasion then, on June 23 the 10th, 1999 at 4:04 p.m., pursuant to instructions from 24 Ms. Payne, you sent Mr. Kassam the latest version of your 25 draft, which is at Tab 3, and received no response?

1 A: Correct. 2 Q: I take it then, that Mr. Kassam did not 3 then participate directly or indirectly, as far as you were 4 concerned, in the drafting of the RFQ response to the City? 5 A: Correct. 6 MADAM COMMISSIONER: Why -- was he somebody 7 you had on retainer or something? Why would you be sending 8 it to Karim Kassam? 9 THE WITNESS: MFP and his company had done 10 business in the past -- 11 MADAM COMMISSIONER: Hmm hmm. 12 THE WITNESS: -- and Irene respected his 13 opinion, I believe, in terms of his knowledge of the IT 14 industry and also in terms of the leasing industry so that's 15 why she asked me to send it to him. 16 MADAM COMMISSIONER: But -- w -- so, was he 17 expected to then do something with it or to give you some 18 sort of comment or feedback? 19 THE WITNESS: My instructions were to send it 20 to him, w -- 21 MADAM COMMISSIONER: Right. 22 THE WITNESS: --and I guess my expectations 23 where that I would provide some feedback to the -- to the 24 draft response and -- 25 MADAM COMMISSIONER: He never did on any of

1 the three (3) that you sent to him? 2 THE WITNESS: Correct. 3 MADAM COMMISSIONER: Okay. 4 5 CONTINUED BY MR. RONALD MANES: 6 Q: Now, as long as we're -- as we're talking 7 about Mr. Kassam, did you know Mr. Kassam from previous 8 employment? 9 A: Yes, he -- 10 Q: At? 11 A: -- and I worked at the Ministry of 12 Community and Social Services for approximately three (3) to 13 four (4) years. I was in the operational aspect of the IT 14 division and he was in the -- more of the technical branch of 15 the division. 16 Q: Were you familiar enough with -- with Mr. 17 Kassam's work to tell us whether you considered him an expert 18 in -- in IT? 19 A: I would consider him an expert in IT. 20 Q: All right. Would Mr. Kassam be capable 21 of preparing the Tab 1 -- the request for -- the draft 22 request for proposal dated April 30th, 1999, Begdoc 29280? 23 A: Yes, he would be. 24 MADAM COMMISSIONER: You -- the which one? 25 THE WITNESS: Tab 1.

1 MADAM COMMISSIONER: Tab 1? 2 MR. RONALD MANES: Tab 1. 3 MADAM COMMISSIONER: Okay. 4 5 (BRIEF PAUSE) 6 7 CONTINUED BY MR. RONALD MANES: 8 Q: Now, sir, I understand that shortly after 9 May the 31st you started work on MFP's response to the City's 10 RFQ? 11 A: Correct. 12 Q: All right. We'll find the -- the RFQ 13 response under the RFQ request -- quotation requests at Tabs 14 5 and 6. At Tab 5 is a two (2) page cover sheet called a 15 Quotation request -- 16 A: Correct. 17 Q: -- Begdoc 6102 and it's year -- it has 18 the number of the RFQ and the person to be referred responses 19 is F. D. Beattie, B - E - A - T - T - I - E and his phone 20 number and the date issued, May 31st, 1999, and the closing 21 date June 11th, 1999. 22 A: Correct. 23 Q: Now, then we have the quotation request 24 itself and that is at Tab 3 -- or Tab 6, Begdoc 6104 and 25 again we have that same kind of information. The number, Mr.

1 Beattie, closing at -- at twelve (12) noon here on June the 2 11th, date issued. 3 A: Correct. 4 Q: Now, maybe you can tell me because I 5 don't understand. Why do you -- why do you need both Tabs 5 6 and Tab 6? Why wouldn't these just be consolidated? They 7 seem redundant in the first -- in the first part, at least. 8 A: I'm not an expert on the City of Toronto 9 procurement process but from my experience, it looks like you 10 have a general quotation request form which has all the T's 11 and C's on the second page in Tab 5. 12 Q: T's and C's, just for our record, Terms 13 and Conditions? 14 A: Terms and Conditions. 15 Q: Yes. 16 A: I thought with lawyers here I could say 17 that. Anyway, and -- and also you have on the front page the 18 document at the bottom there for the signatures and some 19 Canadian contact information. So this is just the general 20 for that they use for, I guess, any request for quotation. 21 Q: Just to satisfy my curiosity, do you ever 22 fill out this Tab 5, at the bottom, when you -- 23 A: You would have to, it's a requirement. 24 Q: All right. So, let's then go to Tab 6. 25 A: Number 6 is the actual requirement, in

1 terms of the specifics on the -- on the bid. 2 Q: All right. Now, as I understand it, the 3 preparation -- your preparation for the response here, was 4 between thirty (30) and forty (40) hours? 5 A: Correct. 6 Q: All right. Is that typical, or atypical? 7 A: That's typical. 8 Q: All right. Now, I take it that you 9 reviewed the RFQ, and I also appreciate this was four (4) 10 years -- almost four (4) years ago? 11 A: Correct. 12 Q: All right. Now, you would know on 13 receiving this RFQ that the City is looking at thirty-six 14 (36) month lease period? 15 A: Correct. 16 Q: You would know that they're interested in 17 tier one (1) servers, desktops, notebooks, software and 18 associated peripheral devices for that period? 19 A: Correct. 20 Q: You would know that they are interested in 21 value added services and want a cost -- 22 A: Correct. 23 Q: -- associated with those value added 24 services. All right. Nothing in there that is extraordinary 25 or out of the ordinary, rather?

1 A: That's correct. 2 Q: All right. Is there anything in this RFQ 3 specifically stating that the City is seeking a vendor of 4 record, does it ever use those terms, vendor of record? 5 A: There's no explicit reference to that, no. 6 Q: Did you have a view, at the time, as to 7 whether the City was looking for a vendor of record, with 8 respect to this RFQ? 9 A: No, I wasn't aware of that. 10 Q: All right. Well, were you -- did you have 11 a view at the time, whether the City was looking for an 12 exclusive provider of the technology referred to in the 13 introduction, for a period of thirty-six (36) months? 14 A: In terms of leasing services? 15 Q: Yes? 16 A: My understanding at the time, was that 17 they were looking for one (1) vendor to supply those leasing 18 services. 19 Q: Can you tell us, if you can recall, on 20 what basis was your understanding, from whom or was it from a 21 reading of this RFQ or what? 22 A: It was just my general feeling at the 23 time, reading the RFQ, that they weren't looking for multiple 24 lessors. 25 Q: Would you explain, in your experience sir,

1 the difference between -- in your opinion, an RFQ and an RFP? 2 A: An RFQ is a explicit request for a product 3 and the basis for determining the successful bidder is highly 4 -- what's the word, leaning towards price. So, in this 5 situation, an RFQ would be approximately -- over 90 percent 6 would be based on price, in terms of the evaluation. 7 Q: All right. And how is that different from 8 an RFP? 9 A: An RFP is a document outlining 10 requirements by the client where they're looking for 11 proposals and therefore when you're responding to it, you're 12 -- you have the actual wording, in terms of what the proposal 13 is, plus the price, and is -- I could say that in most cases, 14 like it's a fifty/fifty (50/50), split between the pricing 15 and the proposal. 16 It's more subjective in terms of selecting the 17 vendor -- or selecting the successful bidder. 18 Q: 50 percent objective, 50 percent 19 subjective, in an RFP. 90 percent objective, meaning price, 20 10 percent of possibly subjective, in an RFQ? 21 A: Correct. 22 23 (BRIEF PAUSE) 24 25 Q: Now, did you have an understanding at the

1 time as to whether there was a sale and leaseback involved in 2 this RFQ? 3 A: Yes, that would be based on Begdoc 6116 4 which is Page 7 of the response where Table 3 indicates that 5 the City hardware and software configurations -- typically 6 new configurations already purchased or to be purchased in 7 1999, so they have existing technology in place. They bought 8 it and at that point they want to lease it -- or sell it to 9 the successful vendor and then lease it back from them. 10 Q: Sir, I haven't drafted these before and 11 of course, haven't received and respond to so many of them. 12 Would it have been more explicit to -- to use the term sale 13 and leaseback? 14 A: Yes. The more explicit you are in the 15 RFQ, the less ambiguity you have in the responses and the -- 16 therefore the less subjectivity there is. 17 MADAM COMMISSIONER: The less what? Sorry. 18 THE WITNESS: Subjectivity by the bidders. 19 20 CONTINUED BY MR. RONALD MANES: 21 Q: Now, if -- if we can just continued with 22 6116, that's that Page 7. Would ha -- would it have been 23 helpful for you to know in either dollar figures or in 24 description of equipment what had already been purchased and 25 what was to be purchased?

1 In other words, how much was to be on sale and 2 leaseback that you were to purchase and -- as the leasing 3 company and how much was going to be a quote "new" unquote 4 purchase? 5 A: It would be helpful and it would have 6 been helpful, as well, to have a -- as I've seen in some 7 situations, they would have a list of the technology that 8 they've already purchased and they would have had another 9 separate table completely that would ask for the -- the lease 10 rates for those products. 11 Whereas here in this response, it only have -- 12 or this requirement, they only have monthly lease rates per 13 thousand and -- and that situation, it's moving forward as 14 opposed to anything that was purchased in the past. 15 Q: So looking this -- at -- at this on its 16 face as -- as a person skilled in -- in -- in assessing and 17 responding to this, you couldn't tell how many of these nine 18 thousand (9,000) Dell desktops specified here were -- I'll 19 use the word -- well, were already purchased or to be 20 purchased? 21 A: Correct. 22 Q: And you wouldn't know in terms of those 23 Dell desktops how old they were? 24 A: Correct. 25 Q: How much power they had?

1 A: Correct. In hindsight, I guess we should 2 have asked a question like that but I don't think we did. 3 Q: All right. Now, when you say that you 4 should have asked a question about that, could you turn to 5 Tab 7. Tab 7 is entitled Addendum 1 to the 1999 leasing RFQ, 6 and it's Begdoc 3902, dated June 7th, 1999, reply to 7 Mr. F. D. Beattie. 8 Is this something, sir, that one would call a 9 clarification of the -- of the -- the May 31st, '99, leasing 10 RFQ? 11 A: It's more information but it -- it 12 wouldn't reflected, for example, what I had just talked about 13 in terms of a more explicit, more detailed list of 14 information concerning the technology that was either going 15 to purchased or have been -- has been purchased. 16 Q: So what does -- if you go to Tab 8 and 17 that's CO -- Begdoc 3903. That part of it describes typical 18 server configurations? 19 A: Correct. This is a bit more helpful, I 20 guess, in terms of if it's concerning technology moving 21 forward, as it outlines the explicit detail of the -- of the 22 servers, but it doesn't provide anything in terms of the 23 volumes. 24 Q: All right. Now, if you then will turn to 25 Tab 9, which is part of this addendum, Begdoc 3907.

1 A: Yes. 2 Q: Here they then have added the approximate 3 value of each asset type. And those add up to forty three 4 million, one hundred and fifty thousand dollars 5 ($43,150,000), is that of some assistance to you? 6 A: It gives you a total number that you're 7 bidding for, so, yes it's of -- it's of some assistance. 8 Q: A total number that you're bidding for, 9 sir, in terms of the present? 10 A: Correct. 11 Q: All right. We'll talk about the future in 12 a moment. May I turn you back to Tab 6, Begdoc 6104, which 13 is the leasing RFQ and take you to Begdoc 6107, which is 14 paragraph 1.1.21, and that's a page 3 of the RFQ? 15 A: Correct. 16 Q: In addition, to the forty three million, 17 one hundred and fifty thousand dollars ($43,150,000) of 18 hardware specified in Tab -- in the addendum, there's also 19 this addition: 20 "The City may from time to time negotiate 21 separate corporate license agreements for 22 major software acquisitions, [that's in the 23 plural] and expects the respondent to 24 incorporate these costs into a lease 25 agreement. The respondent must indicate a

1 willingness and ability to comply with this 2 requirement." 3 Now, so in addition to the -- to the forty 4 three million, one hundred and fifty thousand dollars 5 ($43,150,000) in hardware acquisition, the City is interested 6 in negotiating a major software acquisition, correct? 7 A: Correct, correct. 8 Q: And in your experience, the use of the 9 term, major software acquisition, do you have any sense of 10 what that would mean, or perhaps the better way to put it is, 11 at the time, did you have any sense of the magnitude of what 12 a major software purchase would be for an amalgamating City, 13 such as the City of Toronto, when there were seven (7) 14 amalgamating entities? 15 A: It would -- I would expect it would 16 include enterprise type software that would be financial 17 based or HR based, payroll based. That would be centralized. 18 Then there would be client server software 19 that would be distributed to the desktops. So, we'd be 20 talking a substantial number of seats, as they call it, 21 fifteen thousand (15,000) seats, for each of the computers, 22 potentially. 23 Q: How much? 24 A: It depends on the type of software, but 25 $10 million would be a fair number.

1 Q: All right. Could it exceed $10 million? 2 A: It could, yes. 3 Q: All right. Now, as I understand it, sir, 4 if you just go back to Begdoc 6116, it's the same Tab, this 5 is page 7. 6 A: Yes, the table. 7 Q: There is software specified there, in 8 terms of Microsoft NT, twelve thousand six hundred (12,600) 9 components or licenses? 10 A: Correct. 11 Q: If I just might have a moment here -- 12 A: And System Management, ten thousand 13 (10,000). 14 Q: Right -- now, those are not in the 15 estimating leasing volumes of forty-three million one hundred 16 and fifty thousand dollars ($43,150,000), which we referred 17 to before at Tab number 9, Begdoc 3907. 18 A: Well they're -- they're in the line there 19 saying System Management CA, so that might be the ten 20 thousand (10,000) units. 21 Q: And that might be the ten thousand 22 (10,000) units? 23 A: Yes. 24 Q: And how about the Microsoft NT? 25 A: That might be the Microsoft ELA, three

1 hundred and fifty dollars ($350) per desktop. 2 Q: Are -- are you saying you can't tell for 3 certain, or are you relatively confident that that's -- that 4 the estimated leasing volumes include the -- those IT needs, 5 software components, rather? 6 A: I'm fairly confident that's what they -- 7 Q: All right. 8 A: -- are addressing there. 9 Q: So, in addition then to the forty-three 10 million one hundred and fifty thousand (43,150,000), the City 11 would be seeking, as far as -- as you could assess at the 12 time, approximately a $10 million software acquisition? 13 A: Correct. 14 Q: All right. Now, then if I could take you 15 to Begdoc 6117, and that would be page number 8. 16 A: Yes. 17 Q: Of the RFQ. And I'm -- I'm directing 18 your attention to number 4, usage assumptions. And it states 19 as follows: 20 "Approximately nine thousand (9,000) 21 desktops will be installed in the calendar 22 year 1999. It is anticipated that another 23 four thousand (4,000) desktops will be 24 installed during the term of an agreement 25 resulting from this RFQ."

1 Now -- 2 A: Correct. 3 Q: Am I right in saying that in addition to 4 the forty-three million dollar one hundred and fifty thousand 5 dollar ($43,150,000) -- 6 MADAM COMMISSIONER: In addition to how much, 7 Mr. Manes? 8 MR. RONALD MANES: Forty-three million -- 9 MADAM COMMISSIONER: Okay. 10 MR. RONALD MANES: -- one hundred and fifty 11 thousand dollar ($43,150,000) estimating leasing volume. 12 That was in the addendum. 13 THE WITNESS: Correct. 14 15 CONTINUED BY MR. RONALD MANES: 16 Q: And in addition to the -- to the major 17 software purchase, which you estimate as best you can, as $10 18 million, there -- there is another four thousand (4,000) 19 desktops installed that will be the subject of -- of an 20 agreement with respect to the RFQ? 21 A: Correct. 22 Q: Now, would that mean to you just the 23 desktops, or would there be components such as servers, et 24 cetera -- 25 A: I would assume there'd be servers,

1 network gear, software and other devices or software that -- 2 to support those four thousand (4,000) units. 3 Q: Is it possible, I'm not even putting it 4 as high as probable, but is it possible that -- that the 5 total acquisition here could exceed $80 million? 6 A: Yes. 7 Q: Now, I'm just talking about the -- the -- 8 the acquisition cost to -- to MFP, I'm not talking about the 9 -- the leasing -- 10 A: Correct, I understand. 11 Q: -- leasing rate factors or anything like 12 that, all right. 13 Am I right in saying this is a -- a big deal 14 for any major leasing company or competitor -- 15 A: Yes, it's a -- it's a major deal. 16 17 (BRIEF PAUSE) 18 19 Q: Sir, let me then take you to another 20 section of this RFQ, at Tab number 6, Begdoc 6104. And in -- 21 that is paragraph 1.1.17, at Begdoc 6106? 22 A: Correct, yes. 23 Q: Now, as you know this has been the 24 subject of a lot of examination -- 25 A: Yes.

1 Q: -- will be the subject of a lot of 2 examination at this Inquiry? 3 A: Yes. 4 Q: And this is also a -- a paragraph that -- 5 that Commission Counsel and you have discussed and you have 6 discussed with your counsel and so on and so forth? 7 A: Correct. 8 Q: All right. Now, firstly, when you 9 received and reviewed the -- at Tab 6, the leasing RFQ, you 10 would have reviewed 1.1.17? 11 A: Correct. 12 Q: Is there anything unique or extraordinary 13 about that paragraph? 14 A: No, I've seen it in the past. 15 Q: All right, now -- 16 MADAM COMMISSIONER: You've seen it in the 17 past? 18 THE WITNESS: In the past, yes. 19 20 CONTINUED BY MR. RONALD MANES: 21 Q: Let me just take this sentence by 22 sentence. You've seen in the past a request that you 23 guarantee the lease rate or the lease rate remains valid for 24 a period of a certain amount of time, here, a minimum of 25 ninety (90) days?

1 A: Correct. 2 Q: From the closing of the RFQ? Now, here 3 you are required to provide a quote: 4 "Mechanism for any changes to this lease 5 rate during the term of the agreement." 6 That is usual? 7 A: Correct. 8 Q: And that's in relation to -- after the 9 ninety (90) day -- after -- changes after the ninety (90) day 10 period? 11 A: Correct. 12 Q: All right. And in your business it is -- 13 would it be fair to say, a rule as opposed to the exception, 14 that this -- 15 A: Sorry, it's not my business any more. 16 Q: All right, in your former business? 17 A: Correct. 18 Q: Would it -- would it be fair to say that 19 it would be a rule as opposed to an exception that changes 20 can be reasonably contemplated in the -- in the term of a 21 thirty (30) -- in a thirty-six (36) month term? 22 MADAM COMMISSIONER: I don't know what you 23 mean, Mr. Manes? 24 MR. RONALD MANES: That you could reasonably 25 contemplate prior to -- to entering into a thirty-six (36)

1 month term with a -- with a -- with a City, that there would 2 be changes to -- to the lease requirements of the City? 3 THE WITNESS: Correct. 4 5 CONTINUED BY MR. RONALD MANES: 6 Q: And that might be refreshing or updating 7 or changes in technology, any of those matters are normal for 8 technology acquired for a three (3) year period? 9 A: Correct. 10 Q: All right. And this is addressing those 11 changes, in terms of providing a mechanism for pricing those 12 changes? 13 A: Correct. 14 Q: All right. And this says -- and this -- 15 that sentence -- this says: 16 "A complete description of this mechanism 17 must be -- must be included as part of the 18 Respondents response." 19 Now, a complete description means what to you? 20 A: In terms of how it was -- was -- how it 21 was responded to -- 22 Q: What is -- 23 A: -- or in general? 24 Q: -- what is the author trying to 25 communicate to you when the author uses the word complete

1 description, as opposed to just, say, description? Does that 2 mean anything? 3 A: They would want to know how the changes 4 affect the lease rates, and they would want it described so 5 that they can understand how it's changed. 6 Q: As best as you can? 7 A: Correct. 8 Q: All right. Mechanism meaning as best as 9 you can, a mechanical way in which they could compute the 10 cost of those future changes? As best as one can -- can do 11 that? 12 A: A description of how they can calculate 13 it. 14 Q: Well, this uses the word mechan -- 15 mechanism, and I'm suggesting to you that mechanism means as 16 much as possible, a mechanical way to -- to compute the 17 future lease rate factors? 18 A: Which is a challenge to do. 19 Q: Yes, I have no -- no doubt, but they're 20 putting the challenge to you? 21 A: They're putting the challenge to the 22 vendors; correct. 23 Q: And -- and they're using the word must. 24 A: Correct. 25 Q: So, they're saying complete description

1 of this mechanism must be included. I take it that what this 2 is saying to you, is they're pretty emphatic, as best as you 3 can, they want to know how you're going to go about -- or how 4 they can go about calculating the cost of the future lease 5 rate factors? 6 A: Correct. 7 Q: All right. Am I right, that there would 8 be some generally accepted ways of providing a mechanism, 9 such as providing external interest rate factors, tied to 10 external mechanisms such as bond rate? 11 A: That would be part of the mechanism, yes. 12 Q: Now, when you say that would be part of 13 the mechanism, that would be relating to the interest rate? 14 A: Correct. 15 Q: Now, I take it what you mean by that, is 16 that there is a residual -- 17 A: There's the back end -- 18 Q: The back end, the residual rate? 19 A: -- which is the crystal ball. 20 Q: That's the real challenging part of it? 21 A: Correct. 22 Q: All right. 23 A: Understand though, the response to this 24 particular question was handed over to Mr. Wilkinson. And my 25 knowledge of leasing is minimal compared to his.

1 But in terms of my general understanding, 2 that's how I'd respond here. 3 Q: Now, in terms of your general 4 understanding, I take it you would expect that Mr. Wilkinson 5 would have the same general understanding, at least of 6 1.1.17? 7 A: Correct. 8 Q: And when you say that was Mr. Wilkinson's 9 -- in effect, Mr. Wilkinson's department, I take it that you 10 prepare the response and wait for Mr. Wilkinson to provide 11 you with the response to 1.1.17? 12 A: Well, in this specific case, I would, in 13 terms of a draft, I would leave the response blank -- 14 Q: Right -- 15 A: -- and have him provide me with the 16 wording for that response. 17 Q: And in terms of that response, sir, in a 18 practical way at MFP did you have any input? 19 A: No. 20 Q: All right. So, whatever was presented to 21 you, you incorporated in here -- 22 A: Correct -- 23 Q: -- all financial aspects, including 1.17 24 and out it goes? 25 A: Correct.

1 Q: All right. 2 3 (BRIEF PAUSE) 4 5 Q: Now, if you'll turn to Tab 1 -- or Tab 2, 6 that's Begdoc 27547 and that's the e-mail covering 7 communication for the -- to Mr. Kassam with this -- with your 8 draft, your latest version of your draft response. 9 This communication is dated June 10th, 1999, 10 4:04 p.m. 11 A: Correct. 12 Q: And if you look down at the very bottom, 13 first of all, under subject it says, latest version? 14 A: Correct. 15 Q: All right. And look at the very bottom, 16 it says, City of Toronto response, eight (8) point do? Would 17 you explain what that means? 18 A: The dot do, should be dot doc, which is a 19 word -- 20 Q: Yes -- 21 A: -- doc and eight (8) would have been the 22 eighth version of response. 23 Q: All right. Now, we discovered this from 24 you last night, and we requested Mr. Moore to see if -- go 25 back into your electronic file --

1 A: Correct -- 2 Q: -- if that's available, to see if we can 3 get the earlier drafts? 4 A: To be honest with you, I believe I 5 probably deleted them -- 6 Q: All right -- 7 A: -- once I obtained the final version of 8 the document. 9 Q: And I believe you told us that, as well, 10 last night, but Mr. Moore was kind enough to say, we'll take 11 a look anyhow and -- 12 A: Sure -- 13 Q: -- confirm that one (1) way or the other. 14 Now, did you review any of these drafts with any other -- 15 anyone else from MFP? 16 A: With Rob and Irene. 17 Q: Rob Wilkinson and -- 18 A: Rob Wilk -- 19 Q: -- Irene Payne? 20 A: Yes. Yes and Dash would have been 21 involved in receiving copies as well. 22 Q: All right but in terms of a standard re - 23 - review, the -- the primary person would have been Rob 24 Wilkinson? 25 A: Correct.

1 Q: All right and do you recall how many 2 times you would have met with Mr. Wilkinson? 3 A: Four (4) or five (5) times over the -- 4 the life of the RFP -- or RFQ being open. 5 Q: And -- and any of those times, did you 6 ever have a discussion with Mr. Wilkinson, as the best you 7 can remember, with respect to pricing? 8 A: No. 9 Q: Just to cover this off, did you ever have 10 a discussion with respect to -- Ms. Payne or anyone else at 11 MFP with respect to pricing? 12 A: No. 13 Q: And I take it from that you weren't 14 involved with the Investment Committee or the Credit 15 Committee -- 16 A: Correct. 17 Q: -- or anything like that? All right. 18 Now, did you have any discussion with Mr. Wilkinson with 19 respect to 1.1.17? 20 A: I can't recall explicitly re -- reviewing 21 that with him. I most likely would have received an e-mail 22 from them or hand-written notes which I would have then scri 23 -- transcribed onto the -- to the response and left it at 24 that. 25 Q: All right. So is -- is the answer to my

1 question that -- that no, you don't -- you don't at least 2 remember any -- 3 A: I don't -- 4 Q: -- discussion about 1.1.7? 5 A: Correct. 6 Q: And the limits of communication with Mr. 7 Wilkinson in relation to 1.1.17 would be to receive a 8 communication from him which you would transcribe into the -- 9 the final response? 10 A: Correct. 11 Q: And as I understand it, that final 12 response provided you with the lease rate factors and the 13 response to 1.1.17 was not received until very late -- in 14 fact, the morning of June the 11th -- 15 A: Correct. 16 Q: -- 1999. 17 A: Correct. 18 Q: Now, do you remember when you received 19 those in that morning? 20 A: No, I do not. 21 Q: The only reason I ask that is that we 22 know th -- that you had to have this in at twelve (12) 23 o'clock or you were going to be disqualified. 24 A: Correct. 25 Q: Well, is that right?

1 A: That's correct. 2 Q: All right. Didn't you have some sense 3 that it was a little bit late to get these lease rate 4 factors? 5 A: Correct. Yes, we -- that seemed to be 6 the way that we got our bids in at MFP. 7 Q: All right. 8 9 (BRIEF PAUSE) 10 11 Q: Now I take it, given the process that -- 12 that you've -- that you have described to us, that sometime 13 that morning you got Mr. Wilkinson's 1.1.17 and anything in 14 relation to the financial matters and stuck them into the -- 15 what you had prepared? 16 A: Correct. 17 Q: All right. Let's go back, if we can, to 18 Tab number -- or go forward to Tab 10 and that's Begdoc 19 23413. 20 "MFP Financial Services Limited response to 21 requests for quotes for leasing service for 22 the City of Toronto" 23 Dated June 11th, 1999. Are you familiar with 24 that document? 25 A: It looks familiar, yes.

1 Q: Something that you drafted except for the 2 -- the -- that part -- those parts that you transcribed -- 3 A: Correct. 4 Q: -- in relation to what was provided to 5 you from Mr. Wilkinson? All right. 6 Now, this -- this document includes, at 7 Appendix A, Begdoc 23448, the MFP and City of Toronto master 8 lease agreement, number 784, the Councillors' -- Councillors' 9 lease? 10 A: Correct. 11 Q: Who decided to include that? 12 A: I believe it would have been Irene, to 13 include that document. 14 Q: Why -- why -- why was that document 15 included, to the best of your knowledge? 16 A: To the best of my knowledge it was 17 because it would indicate to the City that there was a master 18 lease in place with MFP, and therefore there would not be any 19 requirement to move forward with any negotiations concerning 20 developing a master lease with the City. 21 Q: All right, and this -- this particular 22 master lease, if you go to Begdoc 23456, that's page 7. 23 A: Yes, of 11, yes. 24 Q: This -- this particular Begdoc is signed 25 by the Chief Financial Officer and Treasurer of -- of the

1 City of Toronto, Ms. Liczyk? 2 A: Yes. 3 Q: And Mr. Stephens, Vice-President of Debt 4 Placement and Treasury Service at MFP? 5 A: Correct. 6 Q: All right. Let's go to the first page 7 beneath the cover sheet of this Tab 10, what has been 8 euphemist -- euphemistically described as the Dear Wanda 9 letter, Begdoc 23414, June 11th, 1999, Wanda Liczyk, Chief 10 Financial Officer and Treasurer, from Dash Domi, Regional 11 Sales Manager. 12 You're familiar with that -- 13 A: Yes. 14 Q: -- letter? All right. Who wrote that 15 letter? 16 A: I would have drafted the letter. 17 Q: Whose decision was it to put in the Dear 18 Wanda salutation? 19 A: I can't recall explicitly whose decision 20 it was. 21 Q: Was it somebody -- 22 A: When I -- when I showed Dash the letter, 23 I can't recall if I had Dear Wanda there or Dear Ms. Liczyk, 24 but it got changed to Dear Wanda, and I can't recall 25 explicitly if it was Dash or if it was there already.

1 MADAM COMMISSIONER: I'm sorry. You're 2 saying it got changed? 3 THE WITNESS: I'm not -- it may have got 4 changed, I can't recall what the sequence was in terms of the 5 -- if there was an original draft with -- without the Dear 6 Wanda there, and it may have got changed in subsequent 7 drafts. 8 MADAM COMMISSIONER: From Dear Ms. Liczyk to 9 Dear Wanda? 10 THE WITNESS: Correct. 11 MADAM COMMISSIONER: Okay. 12 13 CONTINUED BY MR. RONALD MANES: 14 Q: Was there any standard procedure, 15 practice, or precedent, to use first names in -- in the 16 response to RFQs? 17 A: I'd say the -- over 50 percent of the 18 responses would have a first name basis, not just -- both in 19 the public sector and in commercial. 20 Q: Would it be fair to say that it would 21 depend on the relationship between the writer and the -- and 22 the recipient? 23 A: Not necessarily. Some cases, if it was 24 just a -- for example, a bid coming off the -- the Internet, 25 some sales people would want to put the first name there.

50
  1                 Q:   Now, I'm talking about Mr. Domi in
  2  particular, did you have a discussion with Mr. Domi about
  3  using the -- Ms. Liczyk's first name or not?
  4                 A:   I can't recall.
  5                 Q:   Is it possible that you did?
  6                 A:   It's possible.
  7                 Q:   All right.  Did you have some sense from
  8  your discussions with Mr. Domi that he had a relationship
  9  with Wanda Liczyk to the extent that he could call her or
 10  write her on a first name basis?
 11                 A:   I had no sense of -- I knew they had a
 12  relationship in terms of having met her and prior to the --
 13  to the RFP, but I wasn't aware of the extent of the
 14  relationship.
 15                 Q:  All right.  
 16                 MADAM COMMISSIONER:  You mentioned that over
 17  50 percent of the time, responses would have a first name
 18  basis, both in the public sector and the commercial sector. 
 19  And I don't quite understand what you mean by that --
 20                 THE WITNESS:  By the --
 21                 MADAM COMMISSIONER:  -- what's the difference? 
 22  I know what public sector means and I know what commercial
 23  sector means, but I don't -- are you saying that if public
 24  sector is responding to it as well?  That doesn't make sense
 25  to me.

51
  1                 THE WITNESS:  No, in the -- we had sales
  2  representatives for both the public sector and for the
  3  commercial sector.
  4                 MADAM COMMISSIONER:  Okay, I see.
  5                 THE WITNESS:  So, I would be responsible for
  6  both of the sectors.
  7                 MADAM COMMISSIONER:  So, this is MFP
  8  responding to either the public sector or the commercial
  9  sector?
 10                 THE WITNESS:  Yes.
 11                 MADAM COMMISSIONER:  Okay.
 12  
 13                       (BRIEF PAUSE)
 14  
 15  CONTINUED BY MR. RONALD MANES: 
 16                 Q:  Now, you see in the -- this is signed by
 17  Dash Domi, as Regional Sales Manager?
 18                 A:  Correct.
 19                 Q:  We've heard from -- from Ms. Payne, that
 20  it was inaccurate to describe Mr. Domi as Regional Sales
 21  Manager, to the City.  Do you agree with that?
 22                 A:  It was?
 23                 Q:  Inaccurate?
 24                 A:  Inaccurate -- I would agree with that,
 25  yes.

1 Q: How is it that Mr. Domi then, since you 2 prepared this letter, how is it that Mr. Domi is described 3 with an inaccurate capacity as Regional Sales Manager? 4 A: I would have most likely have created the 5 letter from a previous response, i.e. a template, which had 6 the title, Regional Sales Manager, there. 7 Q: We've heard evidence that -- from Ms. 8 Payne, that internally, there was no such thing as Regional 9 Sales Manager there, just Sales Representatives, is that -- 10 A: Some -- 11 Q: -- would you agree with that? 12 A: -- some people have used the term Regional 13 Sales Manager in corresponding with other clients. 14 Q: Well, since that would be inaccurate, what 15 would be the reason for using that term? 16 A: I'm not sure, because the sales reps asked 17 me to put that term there. 18 Q: All right. 19 MR. RONALD MANES: Commissioner, the reference 20 for Ms. Payne's evidence for our transcript purposes here, 21 would be January 9th, page 112, line 17 to page 113, line 2. 22 MADAM COMMISSIONER: Thank you. 23 24 CONTINUED BY MR. RONALD MANES: 25 Q: Was it the view of the sales

1 representatives that just the words or title, sales 2 representative, wasn't impressive enough, not authoritative 3 enough, so they gave themselves a better sounding title? 4 A: I would agree with that. 5 Q: Now, in Mr. Domi's case, did Mr. Domi have 6 that discussion with you and tell you that he wanted to have 7 that name, Regional Sales Manager, on this? 8 A: I can't recall a conversation like that. 9 Q: If Mr. Domi objected to using that, would 10 you have expected him to say something before he signed his 11 name to it? 12 A: I would expect him to say something, yes. 13 Q: All right. 14 MADAM COMMISSIONER: Would you expect someone 15 who is a manager to be responsible for other people? 16 THE WITNESS: Well, my title was Business 17 Development Manager, and I was not responsible for -- 18 MADAM COMMISSIONER: You were not responsible 19 for anybody. 20 THE WITNESS: Right, and right now my title is 21 a Project Manager, or Senior -- sorry -- I've got a few 22 titles at the office -- 23 MADAM COMMISSIONER: There's a manager in it. 24 THE WITNESS: There's a manager in there, but, 25 I'm not responsible for staff.

1 MADAM COMMISSIONER: Okay. 2 THE WITNESS: I'm responsible for managing 3 certain aspects of a project. 4 MADAM COMMISSIONER: And that's in the public 5 sector? 6 THE WITNESS: That could be in -- 7 MADAM COMMISSIONER: Where you are now, I 8 mean. 9 THE WITNESS: Yes, I'm in the public sector 10 now, yes. 11 12 (BRIEF PAUSE) 13 14 CONTINUED BY MR. RONALD MANES: 15 Q: I believe you said in your evidence 16 before that although there were some ambiguities in the -- in 17 the -- if I can use that word, in the -- the RFQ, you never 18 was concerned -- you were never concerned enough to ask for a 19 clarification? 20 A: Correct. 21 Q: All right. Did you -- we know that Mr. 22 Domi made some telephone calls to -- to City staff, without 23 going through those, during the period May 31st, 1999 to June 24 the 11th, 1999, before twelve (12) o'clock. Did you ask Mr. 25 Domi to -- to call the -- for ex -- clarification for any of

1 the terms of the -- 2 A: No. 3 Q: -- RFQ? All right. Now, we -- in our -- 4 in the phone records that we -- we have here, you don't have 5 to go look at these but in Volume 1 of Dash Domi's celliar -- 6 cellular phone -- that's Volume 1. 7 At Tab 7 at Page 64. 8 MADAM COMMISSIONER: Where are the page 9 numbers? 10 MR. RONALD MANES: P -- 11 MADAM COMMISSIONER: Oh, I see. 12 13 CONTINUED BY MR. RONALD MANES: 14 Q: And left hand column, num -- Call 907 -- 15 A: Hmm hmm. Yes. 16 Q: That is a call at 8:45 a.m. on June the 17 11th to 905-767-3227 which is to Mr. Andrew's number. 18 A: Okay. 19 Q: All right. 20 MADAM COMMISSIONER: Jim Andrew, right? 21 THE WITNESS: Yes. 22 MADAM COMMISSIONER: Just so -- 23 THE WITNESS: Ji -- 24 MADAM COMMISSIONER: You know -- 25 THE WITNESS: Jim Andrew.

1 MADAM COMMISSIONER: -- that's who we're 2 talking about? 3 THE WITNESS: Yes. 4 MADAM COMMISSIONER: Okay. 5 6 CONTINUED BY MR. RONALD MANES: 7 Q: Did you ask Mr. Domi to -- to make a call 8 to Mr. Andrew? That call lasted for two (2) minutes and 9 twenty-eight (28) seconds. You make -- did you ask Mr. Domi 10 to make that call for any reason? 11 A: No. 12 Q: Do you have any information or -- or n -- 13 or personal knowledge as to why Mr. Domi called Mr. Andrew at 14 8:45 a.m. the -- the morning that the -- of June -- June the 15 11th that the -- that the bid had to be in? 16 A: No, I did not. 17 Q: All right. 18 MADAM COMMISSIONER: Did he -- did he tell 19 you that he had called Mr. Andrew? 20 THE WITNESS: The first I heard of it was, I 21 guess a few days ago, so the answer is no. 22 23 CONTINUED BY MR. RONALD MANES: 24 Q: Now, I understand that the bid was 25 actually delivered by you personally?

1 A: Correct. 2 Q: At 11:56 a.m. in the morning, four (4) 3 minutes prior to the -- 4 A: Correct. 5 Q: -- to the closing time. 6 A: Correct. 7 Q: That's pretty close. 8 A: I was running. 9 MADAM COMMISSIONER: You were -- 10 MR. RONALD MANES: And I -- 11 MADAM COMMISSIONER: -- running -- 12 MR. RONALD MANES: -- understand -- 13 MADAM COMMISSIONER: Running? Is that what 14 you -- 15 MR. RONALD MANES: Running. 16 MADAM COMMISSIONER: -- said? 17 THE WITNESS: Yes. 18 19 CONTINUED BY MR. RONALD MANES: 20 Q: And I understand that the driving was 21 being done by Mr. Domi? 22 A: That is correct. 23 Q: So Mr. Domi went very quickly at -- from 24 Mississauga to -- to -- 25 A: City Hall.

1 Q: -- City Hall and you then took off out of 2 the car and handed this -- handed the -- your bid proposal 3 in? 4 A: Correct. 5 Q: All right. Now, I understand then that 6 you waited approximately forty-five (45) minutes for the bids 7 to be opened and read? 8 A: Correct. 9 Q: Is that -- in your experience, is that 10 the usual process at the City in respect to -- to leasing? 11 A: I -- I never experienced -- 12 Q: In -- 13 A: Oh, in -- in general? 14 Q: In general, yes. 15 A: In terms of having them announce who -- 16 what the price is? 17 Q: Right after? 18 A: My understanding of what the other 19 Municipalities would do, would be that they would provide 20 whoever's there a list of the vendors who responded to the - 21 - to the RFP or RFQ, and that they would not release the 22 numbers at the opening of the RFP/RFQs. 23 Q: Do you have any understanding why -- and 24 if you -- don't speculate, but do you have any personal 25 understanding as to why in -- in -- in this case the City

1 read out the actual bids? 2 A: No idea. No idea. 3 Q: Now, am I right in that time period, it 4 was approximately forty-five (45) minutes after twelve (12) 5 o'clock, or you waited there for forty-five (45) minutes? 6 A: Correct, there were other tenders that 7 were being opened at that -- at that location, and we had -- 8 I recall explicitly asking if we could get ours opened first, 9 but they had other tenders there and they decided to do -- to 10 do the other tenders first, I think there were three (3) or 11 four (4) of them. 12 And then we waited, and the expectation was 13 that we would hear who the vendors were that responded, but 14 then they started reading out the -- the lease rates and the 15 residual numbers. 16 Q: And do you -- did you -- were there one 17 (1) or two (2) employees of the City of Toronto staff that -- 18 that read out the numbers, and where was that done? 19 A: That was done in the West Tower 20 Purchasing Department on the 18th Floor, as it says on the 21 cover letter there. And there were two (2) or three (3) 22 purchasing people there. 23 Q: Two (2) or three (3) purchasing people, 24 how would you know they're from purchasing, just out of 25 curiosity?

1 A: I'm assuming they're from purchasing, as 2 we were in the Purchasing Department. 3 Q: All right. That's who you were supposed 4 to respond to -- 5 A: That's where we -- 6 Q: -- all right. 7 A: -- had to deliver the -- the response. 8 Q: All right. Do you know Mr. Beattie? 9 A: No. 10 Q: Now, I understand that while you were 11 there you heard the bids read out and you recorded them to 12 the best -- as best you could, and -- 13 A: Correct. 14 Q: -- then gave the results over to Mr. 15 Wilkinson? 16 A: Correct. 17 Q: Now, if you will turn to Tab number 16. 18 19 (BRIEF PAUSE) 20 21 A: Yes. 22 Q: Are those the bids that you recorded, of 23 course your -- your own bid's not there, but are those the on 24 -- the -- the bids that you recorded from that -- 25 MADAM COMMISSIONER: Can I have the Begdoc

1 number please? 2 MR. RONALD MANES: Oh, I'm sorry, 36353, Tab 3 16. 4 THE WITNESS: Yes, these were the numbers 5 that I recorded at the -- City Hall. 6 7 CONTINUED BY MR. RONALD MANES: 8 Q: Now, without having returning to it, but 9 comparing your numbers to these numbers, were you the lowest 10 bid? 11 A: Yes. In terms of the lease rate factor. 12 Q: In terms of the lease rate factor, all 13 right. Now, does that mean you're going to win? 14 A: High probability, as we explained that 15 it's an RFQ and pricing is -- 16 Q: But you could only tell -- 17 A: -- important. 18 Q: -- that you were the lowest bid in terms 19 of the lease rate factors, but -- but not the residuals? 20 A: As I mentioned, my knowledge of leasing 21 is limited, so I'm not sure how that gets put into the 22 evaluation. 23 Q: So, it -- it's possible that you were not 24 the lowest bid, or were you comfortable that you were the 25 lowest bid?

1 A: Comfortable that we were the lowest bid. 2 Q: All right. So, when you say a high 3 probability, you mean getting back to your -- your equation, 4 90 percent probability, because 10 percent was still 5 subjective? 6 A: Correct. 7 Q: All right. So at this point it's a high 8 probability, but you hadn't won? 9 A: No, we had not won. 10 Q: Was there any other competitors there 11 hearing these bids read out? 12 A: No. 13 Q: When you in there at 11:56 handing in your 14 bid, did you run into any other competitors handing in their 15 bid? 16 A: No. 17 Q: Now, these -- all these competitors, I'm - 18 - well let me ask the question this way. 19 In terms of the subjective component of the 20 evaluators decision of the evaluation, that 10 percent, the 21 evaluator would want to know as well that the bidder was 22 capable of performing the contract? 23 A: Correct. 24 Q: When you look at Tab 16, Begdoc 36353, all 25 of these bidders, IBM, Dell, HSL, Bombardier, Compaq, didn't

1 have numbers for, were quite capable of performing that lease 2 agreement? 3 A: Correct. 4 Q: These are major -- 5 A: Yes, they are -- 6 Q: -- and reputable competitors? 7 A: -- yes. 8 Q: Part of the subjectivity would be value 9 added? 10 A: Correct. 11 Q: Preparing value added? 12 A: Correct. 13 Q: All of these competitors had good value 14 added services they were capable of delivering? 15 A: I'm assuming, they're large organizations 16 they do have that, yes. 17 Q: The subjectivity then, if it didn't 18 include value added because they were comparable, it didn't 19 include the capability of delivering the goods, relationships 20 would count for something? 21 A: Relationship between the? 22 Q: Various companies and the City? 23 A: I can't see how that would be part of the 24 evaluation. 25 Q: Well, let's just take an example. MFP

1 already had a relationship with the City, leasing 2 relationship in the master lease -- 3 A: Correct. 4 Q: -- when you put the master lease in there, 5 I take it what you're saying is that that would assist in 6 exercising that discretion that you already had a master 7 lease with the City? 8 A: Well, in terms of discretion, the 10 9 percent? 10 Q: Yes? 11 A: I wouldn't call it discretion, I would 12 call it part of the evaluation criteria. 13 Q: All right. 14 A: And if you're evaluating subjective 15 aspects of a response, you have to provide some rating to 16 those -- to those criteria. 17 So, I'm not sure what the City had in place, 18 in terms of evaluation criteria, but, i.e. would there be a 19 line item there for has a master lease in place with the 20 City? I'm not sure if that would be acceptable as part of a 21 evaluation criteria. 22 Q: All right. Let me suggest something to 23 you. Would you be surprised if you discovered that there was 24 no line item criteria at all for evaluation at the City, in 25 relation to this bid?

1 A: Would you repeat the question? 2 Q: There was no -- if there were no objective 3 written down evaluation criteria for this bid? 4 A: Would that surprise me? 5 Q: Yes? 6 A: No, it would not. 7 Q: All right. Then is it difficult to know 8 how -- what the evaluation criteria actually were? You don't 9 like the word, discretion, but I'm having trouble with how 10 you know what goes into an evaluation when there's nothing -- 11 assuming there's nothing written down here? 12 A: Correct. With this RFP or RFQ, sorry, 13 there doesn't seem to be any area where there can be some 14 subjective criteria. So, I guess if we go back to the 15 definition of an RFQ, most cases, it's 90 percent/10 percent. 16 In some cases you can have 100 percent 17 strictly on price. 18 Q: Is -- is it fair of me to -- to conclude 19 from what you're saying that it just -- the relationship 20 between the City and MFP would not be an appropriate criteria 21 for evaluating the proposal? 22 A: Correct. 23 Q: All right. Now -- 24 MADAM COMMISSIONER: Are you going to a -- 25 another area?

1 MR. RONALD MANES: Yes. 2 MADAM COMMISSIONER: Okay. 3 MR. RONALD MANES: Well, I -- I'm in this 4 area -- 5 MADAM COMMISSIONER: You can stay if you 6 like, I'm just asking. 7 MR. RONALD MANES: I'm just going to ask -- 8 MADAM COMMISSIONER: Okay. 9 MR. RONALD MANES: -- a few more questions. 10 11 (BRIEF PAUSE) 12 13 CONTINUED BY MR. RONALD MANES: 14 Q: There's always a chance, a risk of being 15 disqualified for some reason? 16 A: Correct. 17 Q: So when you walk out of there, even 18 though you might be confident in the pricing, you never know 19 -- 20 A: You always have some little doubt 21 somewhere in the back of your mind that you forgot to put a 22 period at the -- the end of -- end of a sentence, for 23 example. 24 Q: You never know? 25 A: You never know.

1 Q: All right. Now, did you think there was 2 any risk of being disqualified for the manner in which Mr. 3 Wilkinson responded to the City's 1.1.17 in providing a 4 complete description of a m -- of a mechanism for calculating 5 future lease rates? 6 A: No. 7 Q: And why is that, sir? 8 A: The response provided a complete 9 description of a mechanism, in my opinion. 10 Q: So let's just go back to -- to Tab 10, 11 again. 3413 -- Begdoc 3413. 12 MADAM COMMISSIONER: 23 -- 13 MR. RONALD MANES: And -- 14 MADAM COMMISSIONER: 23413. 15 MR. RONALD MANES: 23413 and let's just turn 16 to that mechanism when we come back from the break. 17 MADAM COMMISSIONER: All right. We'll break 18 until ten (10) to. 19 THE REGISTRAR: The Inquiry will recess until 20 ten (10) to 12:00. 21 22 --- Upon recessing at 11:30 a.m. 23 24 --- Upon resuming at 11:48 a.m. 25

1 THE REGISTRAR: The Inquiry will resume, 2 please be seated. 3 4 (BRIEF PAUSE) 5 6 MADAM COMMISSIONER: Mr. Manes...? 7 MR. RONALD MANES: Thank you, Commissioner. 8 9 CONTINUED BY MR. RONALD MANES: 10 Q: Here we are, Mr. Pessione, we're back to 11 1.1.17, and we're at Tab number 10, Begdoc 23425 -- 12 A: Yes. 13 Q: -- is the page number. Tab number 10, 14 the document number is 23413. 15 Now, it's your evidence then is it, that 16 having a look at what the City required in -- in terms of a 17 response on 1.1.7 (sic), and in terms of Mr. Wilkinson's 18 response, that it complied with that request? 19 That is that the -- that Mr. Wilkinson's reply 20 was responsive to 1.1.17 and the request for a complete 21 description of the mechanism? 22 A: Correct. 23 Q: Now, let me just take you back to your 24 days at -- at ComSoc in particular, that you're $150 25 million --

1 A: Hmm hmm, yes. 2 Q: -- RFP, you were involved in the 3 evaluation, not only drafting, but -- but the evaluation of 4 the responses? 5 A: Correct. 6 Q: Now, if you had received a response like 7 that, where you would -- you -- well, maybe I should put the 8 question this way. Did you ask for a -- a mechanism so that 9 you could evaluate future lease rates? 10 A: I'm as -- I'm assuming that we did, yes, 11 we had to. 12 Q: Exactly, all right, so -- 13 MADAM COMMISSIONER: You at ComSoc you mean? 14 MR. RONALD MANES: At ComSoc -- 15 MADAM COMMISSIONER: Oh -- 16 THE WITNESS: Yes. 17 MADAM COMMISSIONER: -- okay. 18 19 CONTINUED BY MR. RONALD MANES: 20 Q: And in the responses that you got back, 21 do you recall whether those responses were -- at least in 22 respect to the interest rates, were tied to any external 23 factors. 24 A: I can't recall. 25 Q: Well, would you have expected that they

1 would be tied to some external factor, in order to be 2 responsive, back then? To your RFP? 3 A: Yes. 4 Q: Now, notwithstanding that, you say here 5 that when you're working for MFP and in the witness box 6 today, that you feel that this is responsive and is a 7 complete description of the -- of the mechanism, because it 8 says that the mechanism would be to reflect changes in 9 technology and prevailing market rates, which includes the 10 underlying base interest rate. Would that be the mechanism? 11 A: It describes a mechanism. 12 Q: So you consider a complete description of 13 the mechanism to respond by saying the mechanism will -- will 14 be that we'll look at changes in technology, we'll look at 15 prevailing market conditions, including the base interest 16 rate? 17 A: That's describing a mechanism. 18 Q: Well, that's describing just the 19 considerations. There's no mechanism there, sir, is there? 20 There's no mechanics by which you can even remotely try to 21 calculate what the -- for example, the interest rate, would 22 be? 23 A: The lease rate, I guess you're asking. 24 Q: Well, no, here's it looks at the 25 underlying base rate?

1 A: But they're always -- they're asking for a 2 lease rate, not a interest rate. 3 Q: Would it have been more helpful to the 4 City to have provided them with a bond rate, plus a certain 5 factor, so that as a mechanism by which they could at least, 6 determine the risk of increasing interest rates? 7 A: It would have helped them and I'm assuming 8 after they received this they would have had that discussion 9 and had the opportunity to ask any vendor who provided a 10 response like this, to provide that information. 11 Q: Did you know that or assume that? 12 A: That they had an opportunity to -- after 13 an RFQ is closed, they can ask -- in terms of my history or 14 my experience with RFP's, that they can ask vendors explicit 15 questions about responses. 16 Q: They can or they can just simply say, we 17 don't think that's responsive, we're not going to consider 18 it? They have that discretion. 19 A: They have that discretion. 20 Q: You took that risk? 21 A: Correct. 22 Q: All right. Now, subject to that risk, 23 subject to other subjective concerns, 90 percent is a pretty 24 high probability? 25 A: Yes.

1 Q: I take it that you and Mr. Domi, must have 2 been very happy to be the lowest bidder, at least? 3 A: That day, yes. 4 Q: When you say, that day? 5 A: The next day I had another RFP to respond 6 to so -- 7 Q: Right. So, did you go back to the company 8 and say, we're the lowest bidder with some congratulating 9 everybody or -- 10 A: Went back to the office and I believe I 11 created that document in Tab 16 and provided it to Rob, let 12 him know what the -- we didn't have any congratulatory, any 13 celebration, any party, no. 14 Q: No, because it wasn't a done deal yet? 15 A: Correct. 16 Q: You still could lose? 17 A: Correct. 18 Q: But you -- this is a big deal? 19 A: Correct. 20 Q: It's an important deal? 21 A: Very. 22 Q: And made you and Mr. Domi, and I take it, 23 your company very happy, at that point? 24 A: Correct. 25 MADAM COMMISSIONER: Can you tell me how Mr.

1 Domi responded? You have ten (10) or fifteen (15) of these 2 to do every year. But this was the first one (1), as I 3 understand it, where it looked like you know, he might be the 4 successful sales person. 5 THE WITNESS: He was happy. 6 MADAM COMMISSIONER: I'm happy now right here 7 too, but in what sense? Did he show he was happy or how 8 could you tell he was happy? 9 THE WITNESS: He had a big smile, a grin on 10 his face, after we left the -- City Hall and on our way back 11 to the office. 12 MADAM COMMISSIONER: And did he say anything 13 to you about how happy he was or that this looks good for us 14 or anything like that? 15 THE WITNESS: I can't recall. 16 MADAM COMMISSIONER: Okay. 17 18 CONTINUED BY MR. RONALD MANES: 19 Q: Once the response has been delivered, 20 you've heard the results, communicated those results to the 21 company, as I understand what you've told us, you did no more 22 work on this -- the 1999 RFQ? 23 A: Correct. 24 Q: You didn't participate in the 25 negotiations, in the providing the lease rate factors or any

1 of the lease -- 2 A: Correct. 3 Q: -- terms, et cetera? All right. Can I 4 take you to Tab 11? That's Begdoc 27582. 5 6 (BRIEF PAUSE) 7 8 Q: And this is d -- this is a -- an e-mail 9 from Brian Stevens. 10 A: Yes. 11 Q: July 14th, 1999 at 12:45 p.m. 12 A: Correct. 13 Q: To Dash Domi, Sandy Pessione. Copy to 14 Irene Payne and Christine Vivaldo. 15 A: Correct. 16 Q: All right. Those are all the -- the 17 sales people -- 18 A: Correct. 19 Q: -- involved in this. All right and I 20 distinguish that Mr. Wilkinson was -- was support? 21 A: As I am. 22 Q: Yeah. All right. This is a document 23 that you'd looked at and talked about? 24 A: Correct. 25 Q: This document:

1 "Subject: City of Toronto 2 Congratulations! 3 Please copy me with yellow sheet (draft 4 will do) ASAP or at least advise deal 5 parameters as currently understood so that 6 we can begin to get funding in place. 7 Thank you. 8 Brian Stevens" 9 Firstly, who is Brian Stevens? 10 A: Brian Stevens is a Vice President of Debt 11 at MFP. He basically deals with the funders to get the money 12 for deals. 13 Q: Someone that you talk to regularly? 14 A: Not r -- no, not really. 15 Q: When these deals -- when these deals -- 16 well, let me put the question this way. I take it he would 17 get involved, generally, when you've been successful in a 18 deal and he's got to get money for it? 19 A: Correct. 20 Q: Did you ever read this e-mail, July 14th, 21 1999, from Brian Stevens? At -- on that date? 22 A: I must have since I read my e-mail daily 23 or as it comes in. 24 Q: Okay. Now, just went through the -- the 25 -- you and Mr. Domi's response to the -- to being the low

1 bidder, qualified by the fact -- that is you were happy 2 qualified the fact that something can always happen? 3 A: Correct. 4 Q: Now, here Mr. Stevens, July 14th, 1999 is 5 congratulating you. What did you -- well, do you remember, 6 did you have any reaction to that? Do you remember receiving 7 this at all? 8 A: I don't remember receiving this at all. 9 Q: Well, just look at is as -- as -- just as 10 you're sitting there now. Doesn't it sound like you won? 11 A: It sounds like that we had the lowest bid 12 and that we had a high probability of being the successful 13 bidder and that Brian wanted to have a heads-up so that -- 14 which obviously he hadn't, what the potential numbers would 15 be for the funders. 16 Q: Well, did you -- do you have any 17 knowledge, information, or belief that on June 11th or after 18 June 11th, after you found out that you were the lowest 19 bidder, that that was communicated to Brian Stevens? 20 A: No, I -- 21 Q: And would Mr. Stevens know, as far as you 22 know in your dealings with him, that the lowest bidder would 23 win? 24 A: No. 25 Q: Would Mr. Stevens know the difference

1 between an RFQ and an RFP, that is an RFP is 50 percent 2 price, whereas an RFQ was 90 percent price? 3 A: I don't think he would, no. 4 Q: Just -- just reading this with us here 5 today, you see: 6 "Copy me with the yellow sheet, draft will 7 do, as soon as possible." 8 What's that yellow -- what's the yellow sheet? 9 A: Yellow sheet identifies the amount of 10 hardware and software being leased and other information 11 which I can't recall at this point, in terms of -- it's used 12 to start the process for the leases, lease schedules. 13 Q: And as far as you're concerned, that's -- 14 that's a reference to the goods being leased, meaning that 15 you won, that there are goods that are being leased? 16 A: Correct. 17 Q: And he is saying that he wants to begin 18 to get his funding in place; right? 19 A: Yes. 20 Q: And he's not going to get his funding in 21 place unless you won; is that fair or not? 22 A: He's probably wanting to investigate what 23 the market is out there, in terms of the funds available. 24 I'm not sure if it means that you need to win, because in a 25 lot of cases we've -- and I guess you can ask Mr. Stevens

1 this, but there's been a situation where we've gone to 2 funders and then the deal collapses, for whatever reason, 3 with the customer. So, even though we have a relationship 4 with -- an existing relationship with the customer, they 5 decide not to lease any more. 6 Q: I don't know what your -- your company's 7 practises are, maybe you can just help me. I appreciate this 8 is not -- not your area, but would it be the -- the practice 9 to go out and get funds as soon as the -- as any RFQ is 10 released and you respond? 11 A: Again, I'm not -- I would defer those 12 questions to Mr. Stevens. 13 Q: All right. 14 A: But, yeah. 15 Q: Could you go to Tab 17. See if this is 16 going to assist your -- your recollection at all? 17 Now, this is from Kim Harle -- 18 A: Yes. 19 Q: -- this is Begdoc 27581, this is from Kim 20 Harle, she was the in-house counsel? 21 A: Correct. 22 Q: This is 6 -- does that say 6:54 a.m.? 23 A: Yes, it does. 24 Q: An early riser. 25 A: Hmm hmm.

1 Q: Now, Kim Harle, and -- and this is July 2 14th, 1999, and this is to Sandy Pessione. 3 A: Yes. 4 Q: Dash Domi, Brian Stevens, Susan 5 Michaelson. Now, Susan Michaelson would be her -- 6 A: General counsel. 7 Q: -- boss, general counsel? 8 A: Yes. 9 Q: All right. And this says: 10 "Subject: City of Toronto RFQ. Sandy and 11 Dash, I have been reviewing our response to 12 this RFQ with a view to starting to draft 13 the necessary revisions to the master lease 14 and program agreement already in place." 15 A: Yes. 16 Q: Well, did you read -- did you read this? 17 A: At the time? 18 Q: Yes. 19 A: I must have, yes. 20 Q: Well, it sounds like, just if you read 21 along with me, it sounds like she is starting to draft the 22 master lease, and it -- and it looks like according to -- 23 it's copied to Brian Stevens, and according to Brian Stevens 24 it looks like he is out looking for money, and I only -- I 25 ask you, from your experience, especially within the company,

1 doesn't it look like you've won, as far as Kim Harle and 2 Brian Stevens are concerned? 3 A: They're assuming that we won, yes. 4 Q: And there's some other detail in that 5 letter from Kim Harle that I -- I won't go into, but -- 6 because it's legal. 7 All right, well, in any event, you don't 8 remember receiving -- you don't -- although you say you must 9 have received them, you don't remember reading these? 10 A: Correct. 11 Q: All right. 12 13 (BRIEF PAUSE) 14 15 Q: I'm going to move on to another matter and 16 two (2) or three (3) months later. Tab 12 and Tab 13. 17 A: Yes. 18 Q: All right. I'll describe these for the 19 record. You've reviewed both these documents, and are 20 familiar with them? 21 A: Yes. 22 Q: All right. Tab 12 is Begdoc 27615, that 23 is a e-mail from you Mr. Pessione to Christine Vivaldo, c.c. 24 to Dash Domi, subject Dash's Q3/Q4. And you enclose a Q3/Q4 25 document.

1 A: Correct. 2 Q: What is that date, I can't read that 3 clearly? 4 A: 10/15/99, looks like. 5 Q: 10/15? 6 A: Yes. 7 Q: October 15, '99, that would be right. All 8 right. And the document that you enclosed is Tab 13. We've 9 referred that colloquially as the Q3/Q4 document, that's -- 10 A: Appropriate. 11 Q: -- document 27616? 12 A: Yes. 13 Q: Now, you prepared that for Mr. Domi, or 14 I'm sorry, you prepared that for Ms. Payne? 15 A: I most likely typed it based on -- or I 16 received it from Rob Wilkinson. 17 Q: All right. The information that you 18 relied on, that you transcribed -- 19 A: Correct. 20 Q: -- was based on information from Mr. Rob 21 Wilkinson? 22 A: Correct. 23 Q: Am I right? Is -- Mr. Wilkinson is 24 someone who has worked with you on many occasions? 25 A: Yes.

1 Q: Someone that you find reliable? 2 A: Yes. 3 Q: All right. Someone that is not given to 4 exaggeration? 5 A: Correct. 6 Q: Now, in looking at this memorandum, did 7 you -- is there anything in this memorandum that would have 8 concerned you in terms of preparing it for Ms. Payne? 9 A: No. 10 Q: Let me just read this, and then I'm going 11 to ask you questions that we discussed the other day. 12 A: Yes. 13 Q: "Dash has developed strong relationship 14 with the IT and finance senior management - 15 - 16 MADAM COMMISSIONER: Sorry -- all right. 17 18 CONTINUED BY MR. RONALD MANES: 19 Q: "Dash has developed strong relationship 20 with the IT and financial senior management 21 and with key political decision makers in 22 the Megacity. The City's Y2K project 23 hardware and software will be leased with 24 MFP. The total volume is $53 million which 25 will be completed by fiscal year end and

1 $20 million has been signed to date. The 2 term is five (5) years with no equity 3 invested. Client City of Toronto. Based 4 on the strong relationship with the Y2K 5 project, MFP learned -- has learned that 6 the leasing of this City fleet of ten 7 thousand (10,000) vehicles will be put on a 8 RFP in one (1) month. The opportunity for 9 this fiscal year is 30 to 35 million." 10 Let me ask you just a few questions about 11 this. In terms of the statements about the strong 12 relationship with IT and Dash's strong relationship with IT 13 and financial senior management and with key political 14 decision makers in the Megacity? 15 A: Yes. 16 Q: Anything that Mr. Domi, had ever said to 17 you that would make you think that that was not accurate? 18 A: I understood that he had a relationship 19 with the IT and Finance senior management. But, I'm not 20 sure, looking back that there was any strong relationship 21 with key political decision makers. 22 That sort of sticks out in terms of not being 23 -- the second part of that sentence, seems a bit verbose, I 24 guess. 25 Q: When you say, looking back, I take it

1 you've read transcripts of the proceedings here -- 2 A: Yes. 3 Q: -- and so on then but I -- I want you to 4 take your mind back then. 5 A: Yes, that's what I meant in terms of 6 thinking back at the time of 1999. 7 Q: So wh -- when you saw that, your evidence 8 is that you felt that was an overstatement? Strong 9 relationship. 10 A: In terms of the key political decision 11 makers. At that point I wasn't aware of any relationships he 12 had with any -- 13 Q: I see. 14 A: -- political people -- 15 Q: All right. 16 A: -- at that time. 17 Q: You were not aware of the nature and 18 extent of this relationship with Mr. Andrew? 19 A: Yes. 20 Q: Yes, you were not aware of it? 21 A: Sorry. Was I aware of his relationship 22 -- 23 Q: And the nature and extent of this 24 relationship with Mr. Andrew? 25 A: I knew that he was corresponding with

1 him, but I'm not sure to what extent. 2 Q: All right. 3 MADAM COMMISSIONER: Do you mean in writing? 4 THE WITNESS: Phone calls, as well, and 5 meetings. 6 7 CONTINUED BY MR. RONALD MANES: 8 Q: Well, for example, were you aware that -- 9 that he bought Mr. Andrew a close to eight hundred dollar 10 ($800) Cartier pen? 11 A: No, I did not. 12 Q: All right. Now, we know for the -- for 13 the record here that Mr. Andrew gave that back. 14 A: Correct. 15 Q: But you -- you didn't know that? 16 A: No, I did not. 17 Q: All right. Now, did -- did you know the 18 nature and extent of his relationship with Mr. Jakobek? 19 A: No. 20 Q: Did you know the nature and extent of his 21 relationship with Ms. Liczyk? 22 A: I knew that he had met her a few times, 23 as well, but to what extent the relationship was, I didn't 24 know at that time. 25 Q: All right. So, I know you're -- you're

1 -- you're casting your mind back and I asked you the question 2 whether you had any reason to believe that that statement, 3 that he had developed a strong relationship with key 4 political decision makers was an -- was an overstatement and 5 you said you thought it was. 6 A: Yes. 7 Q: I still don't know what the basis is for 8 your belief, if you don't really know the nature and extent 9 of the relationship he had with -- with Ms. Liczyk and Mr. 10 Jakobek and you didn't know, for example, that he had 11 purchased a gold pen from Cartier for Mr. Andrew. 12 I'm trying to understand why -- 13 MR. WILLIAM ANDERSON: Excuse me. Would he 14 have purchased that pen in October of '99? 15 MADAM COMMISSIONER: Well, I think the -- no, 16 it would have been in December. 17 MR. WILLIAM ANDERSON: No. 18 MADAM COMMISSIONER: December '99. 19 MR. WILLIAM ANDERSON: Yeah. 20 MR. RONALD MANES: Oh, that's quite right. 21 That's quite right. 22 23 CONTINUED BY MR. RONALD MANES: 24 Q: We have evidence we're expecting to hear 25 from Mr. Andrew that -- that he received that gold pen

1 December of -- of '99. You didn't know -- you didn't know 2 about that, in any event? 3 A: Not -- 4 Q: That he purchased that? 5 A: Correct. 6 Q: All right. Now, from whatever that -- 7 whatever that symbol -- 8 MADAM COMMISSIONER: Just in fairness because 9 I think Mr. Domi says he thinks it was the year 2000. So but 10 in any event, whether it was -- 11 THE WITNESS: '99. 12 MADAM COMMISSIONER: -- 1999 -- 13 THE WITNESS: -- or 200. 14 MADAM COMMISSIONER: -- or 2000, you didn't 15 know about it in any case? 16 THE WITNESS: Correct. 17 MADAM COMMISSIONER: All right. Thanks. 18 MR. RONALD MANES: All right. 19 20 CONTINUED BY MR. RONALD MANES: 21 Q: You didn't know, for example, that he, on 22 the day of the bid -- of the bid closing, at 8:45 in the 23 morning, he had made a call to Mr. Andrew? 24 A: I didn't know that. 25 Q: All right. Is it fair to say that --

1 that there -- there may be a lot of telephone calls and other 2 communications and relationships that were developed with 3 either Mr. Andrew or Ms. Liczyk or -- or Mr. Jakobek. You 4 just didn't know? 5 A: Correct. That's fair. 6 Q: All right. So is it fair to say that at 7 -- at the time, you had no reason to disbelieve that 8 statement that Dash has developed a strong relationship with 9 IT and Finance and with the key political decision makers at 10 the City of -- in the Megacity? 11 A: That's fair. 12 Q: All right. At least we can agree, as 13 well, on another thing. Mr. Liczyk -- Ms. Liczyk, Mr. Andrew 14 and Mr. Jakobek -- would -- would you consider them as key 15 decision makers at the City at the time? 16 A: Yes. 17 Q: All right. Now, wh -- this talks about 18 the term of the lease being five (5) years as opposed to the 19 RFQ which was three (3) years. 20 A: Yes. 21 Q: Did that -- did you -- did you catch on 22 to that or did that jump out at you? 23 A: It didn't, no. 24 Q: In your experience, would that be a -- a 25 substantial change in the terms with respect to the RFQ to be

1 changed from three (3) years to five (5) years? 2 A: Would it be a substantial change to whom? 3 Q: To the competitors and if everybody's 4 bidding on it, would that have changed -- would that have 5 changed the bids? 6 A: If it went from three (3) to five (5)? 7 Q: If it -- if it -- 8 A: If the request was for -- yes. 9 Q: Would -- would you, just in your 10 experience, have expected that if they're going to change the 11 -- the -- the terms from three (3) to five (5) and therefore 12 the financial terms, that there would -- there should have 13 been another RFQ? 14 A: I -- not necessarily. Depending on the 15 -- the type of agreement in place, because I believe at 16 ComSoc we even changed the terms. 17 Q: That -- that assumes there's already an 18 agreement in place? 19 A: Correct. 20 Q: I'm just talking about here there's no 21 agreement yet in place. There's -- they negotiated a new 22 term, rather than three (3) years it's five (5) years and I 23 take it that would have changed the financial aspects of it 24 as well, you'll agree with me it would? 25 A: It would, correct.

1 Q: So, given that there's no contract yet in 2 place -- 3 A: Right. 4 Q: -- wouldn't you -- wouldn't you expect 5 that in all fairness to the competitors there'd be another 6 RFQ? 7 A