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 19th, 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    (np)     )
  8  Robert Centa   (np)     )
  9  Gordon Capern           )
 10  David Moore             )MFP 
 11  Fraser Berrill (np)     ) 
 12  Ken Jones      (np)     ) 
 13  Brian Heller   (np)     )Ball Hsu and Associates Ltd.
 14  Melissa Kronick (np)    )CUPE 
 15  Raj Anand (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          )Jim Andrew
 23  
 24  Joyce Ihamaki           )Registrar
 25

1 TABLE OF CONTENTS 2 Page 3 Discussion 4 4 5 MICHAEL ANTHONY FLANAGAN, Resumed 6 Continued Examination-in-Chief 7 by Mr. Ronald Manes 36 8 Cross-Examination by Mr. Gordon Capern 78 9 10 Certificate of Transcript 228 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

1 --- Upon commencing at 10:01 a.m. 2 3 THE REGISTRAR: The Inquiry is now in session, 4 please be seated. 5 MADAM COMMISSIONER: All right? 6 Where's Mr. Flanagan? 7 MR. WILLIAM ANDERSON: He's right outside. 8 9 (BRIEF PAUSE) 10 11 MADAM COMMISSIONER: Good morning, the Deputy 12 brought me in because he thought everyone was here and then 13 the two (2) main protagonists walked out of the room just as 14 he brought me in. 15 MR. DAVID MOORE: I'm sorry, there's another 16 briefcase I just need to grab. I'll be two (2) seconds. 17 MADAM COMMISSIONER: Well, Mr. Moore, do you 18 want us to wait -- 19 MR. DAVID MOORE: No, it's okay. 20 MADAM COMMISSIONER: All right. 21 22 (BRIEF PAUSE) 23 24 MADAM COMMISSIONER: Mr. Flanagan, why don't 25 you have a seat in the body of the Hearing Room, because I

1 think I'm going to be hearing some legal arguments first, all 2 right? 3 THE WITNESS: All right. 4 MADAM COMMISSIONER: No, need to have you sit 5 up here and wait. 6 7 (BRIEF PAUSE) 8 9 MADAM COMMISSIONER: Mr. Manes, when we left 10 yesterday, I had said to Counsel that I would hear their 11 submissions today, with respect to the letter from Mr. Moore 12 to you. 13 And I'm just wondering if you're standing up 14 there, is something else happening? 15 MR. RONALD MANES: No, I was just standing up 16 to indicate my presence in my position -- 17 MADAM COMMISSIONER: I see -- 18 MR. RONALD MANES: -- I'm about to sit down 19 because as I anticipate, Commissioner, you want to hear 20 submissions from Counsel -- 21 MADAM COMMISSIONER: Yes, I do. 22 MR. RONALD MANES: -- on this February 18th 23 letter. 24 MADAM COMMISSIONER: Right. 25 Mr. Moore?

1 MR. DAVID MOORE: Yes, thank you, 2 Commissioner. 3 MADAM COMMISSIONER: And what I'm specifically 4 interested in, if you can help me -- 5 MR. DAVID MOORE: Yes? 6 MADAM COMMISSIONER: -- is how the letter is 7 helpful to me as Commissioner of a Public Inquiry, as opposed 8 to being a Judge in a lawsuit? 9 MR. DAVID MOORE: All right. I'll deal with 10 that. 11 MADAM COMMISSIONER: And I think the way I 12 left it yesterday was to ask the three (3) of you if you 13 could chat and see if there's anyway -- other way to resolve 14 this. 15 MR. DAVID MOORE: Yes, we did -- and I did 16 have a brief discussion as suggested with Mr. Capern, 17 immediately after the close of proceedings yesterday and then 18 first thing this morning. 19 Without getting into the details of that, and 20 I appreciate Mr. Capern is not acting in the civil litigation 21 and it's not his decision to make, in fact, it's not Counsel 22 decision -- legal Counsel's decision to make, it's the 23 position of the City to determine what use it wants to make 24 or attempt to make of proceedings. 25 And the City instructs Counsel and Counsel

1 acts appropriately. So -- so an indeed in this case, it's 2 not Mr. Capern who is the Counsel, it's Mr. Lenczner's firm. 3 But, all that said, it was my hope that 4 perhaps the City might reconsider its intended use of the 5 transcripts in this proceedings and of course, if there was 6 any reconsideration of that position, that would alleviate 7 many of the concerns that I had identified both verbally and 8 in my letter. 9 That said, my understanding is that the City 10 has not changed its position. Mr. Wolfraim, I'm advised, was 11 cross-examined yesterday in the civil proceedings. 12 And I'm advised that over MFP's objection, 13 various questions were put to Mr. Wolfraim in 14 cross-examination utilizing excerpts from the transcripts in 15 this proceeding, for the City's own purposes. 16 And so what might have been an issue that 17 could have gone away or could have been a momentary one (1), 18 appears not to be the case. 19 It appears from my client's perspective that 20 that will be an ongoing position that the City will be 21 asserting in the civil litigation and whether the excerpts 22 whether that method of proceeding in the civil litigation is 23 deemed to be admissible, or not, I guess we'll await another 24 day to decide that. 25 MADAM COMMISSIONER: Right.

8
  1                 MR. DAVID MOORE:  And clearly, it's not part
  2  of your function to rule on admissibility of excerpts or
  3  documents in the civil litigation.
  4                 However, what is part of your function, in my
  5  submission, is to be aware of concerns that any party and I
  6  don't, obviously, restrict this to MFP, it applies to any
  7  party to this proceeding, where that party has a concern over
  8  the process, where developments arise that cannot be
  9  resolved, and this unfortunately is one (1) of them, that
 10  impact upon the process and from our perspective the fairness
 11  of the process; then its incumbent upon Counsel for that
 12  party to make those concerns known.
 13                 And in my submission, those concerns, when
 14  they arise should be a matter of public record of this
 15  Inquiry.
 16                 And indeed, for my purposes, to be specific
 17  the letter which I wrote, which unfortunately continues to be
 18  a live and real issue, is a matter of great concern to my
 19  client.
 20                 And the context reflected in the letter,
 21  mainly that the City considers it appropriate and fully
 22  intends to continue utilizing transcript references and
 23  documents filed in evidence to support its position in the
 24  civil litigation, that context does have an impact, from time
 25  to time -- will have an impact, from time to time, on the

9
  1  processes and procedures followed in this Inquiry.
  2                 And in that context, it should in my
  3  respectful submission, be a matter of public record what
  4  those concerns are and what those issues are and the
  5  consequences of that, the application of those particular
  6  concerns to a given situation, can be dealt with as the need
  7  arises.
  8                 And so, my letter is not intended to be one
  9  (1) that affects your substantive consideration of any of the
 10  issues.
 11                 But it is a letter which is intended to convey
 12  my client's concerns and to reflect certain circumstances,
 13  which in my submission, will inevitably have an impact, from
 14  time to time, on the processes followed in this Inquiry.
 15                 And so from that perspective, in my
 16  submission, it should be made part of the public record.
 17                 And I could maybe step back and say, I don't
 18  contemplate that that is going to necessitate a flurry of
 19  correspondence back and forth, and filing of correspondence
 20  back and forth between Counsel every time that there's a
 21  dispute or issue.
 22                 I think Counsel have been encouraged to try to
 23  discuss and canvass informally issues that arises and resolve
 24  them as the case may be.
 25                 And so far, that's generally been possible to

10
  1  do.  However, where an issue arises that does affect the
  2  process that can't be resolved, it's incumbent upon the party
  3  to raise those.
  4                 And indeed, as I recall, a few weeks ago in
  5  one (1) of the exchanges, you made it clear that if any party
  6  was concerned or had issues about the process and we wanted
  7  to be aware of them and I think the public should be aware of
  8  them and -- and that goes for any concerns that MFP may have
  9  or the City may have or any other party may have.
 10                 So in those circumstances, in my submission,
 11  the -- the letter should be marked and -- and we -- we can
 12  proceed.  I guess the alternative way of doing it would have
 13  been for me, either yesterday or theoretically today, to take
 14  up forty-five (45) minutes or an hour of the Commission's
 15  time and the public record's time in articulating the
 16  concerns that I've laid out my letter so that -- so that the
 17  procedural difficulties that MFP perceives would be part of
 18  re -- public record, would be known to all, would be known to
 19  the public who reads the transcript.  
 20                 That's one (1) way of doing it.  It strikes me
 21  as not a very efficient way of doing it.  It struck me the
 22  more efficient way to do it would be to articulate those in
 23  letter and -- and as you know, at the break over lunch, we're
 24  ready to provide a copy to the registrar for your reference
 25  and we did and -- and it strikes me that that's a much more

1 efficient way to articulate those concerns and -- and 2 especially in the context where Counsel are trying to 3 cooperate to be as efficient as possible in the conduct of 4 the Inquiry. 5 So, I -- I -- finally, I'd add this. As I 6 understand it, or at least as I understood yesterday, that 7 Mr. Manes was not taking any position. Mr. Capern can speak 8 to himself but -- but my understanding of it at the end of 9 the day yesterday that the City was not w -- not taking any 10 position or not opposing th -- that that be made part of the 11 record. 12 MADAM COMMISSIONER: That -- 13 MR. DAVID MOORE: So, in all those 14 circumstances, I -- I would ask that it be made part of the 15 record and -- and we can then get on with the rest of the 16 evidence today. 17 MADAM COMMISSIONER: Okay. Well, I think the 18 way we left it yesterday was that I was going to ask you and 19 the City and, in my view Commission Counsel also, to -- to 20 comment because it will be helpful for me in -- in making my 21 decision. 22 MR. DAVID MOORE: Yes. 23 MADAM COMMISSIONER: I don't know if Mr. 24 Capern has anything more than what he said yesterday but I -- 25 I w -- I do intend to call on him.

1 MR. DAVID MOORE: No, I don't -- I don't mean 2 to preempt Mr. Capern. I'm just saying that's my 3 understanding, as -- as sitting here this morning of this 4 morning of what the -- what the position is. 5 MADAM COMMISSIONER: Okay. Mr. Capern, I'll 6 let you speak for yourself. 7 MR. GORDON CAPERN: Commissioner, I'm 8 wondering whether it's appropriate for the Commission Counsel 9 to address the issue of the appropriateness of the admission 10 of the letter prior to the City taking its -- making its -- 11 MADAM COMMISSIONER: You're wondering -- 12 MR. GORDON CAPERN: -- position. 13 MADAM COMMISSIONER: -- what, sorry? Whether 14 it's -- 15 MR. GORDON CAPERN: It's appropriate for the 16 Comm -- Commission Counsel to make its position known about 17 the admission about the letter into evidence prior to us and 18 I'm happy to go first. 19 MADAM COMMISSIONER: Why don't you go first, 20 because I don't see why I would hear Mr. Manes first, but Mr. 21 Manes, do you have a view on that? 22 MR. RONALD MANES: I was expecting Mr. Capern 23 to go next -- 24 MADAM COMMISSIONER: Okay. 25 MR. RONALD MANES: -- and respond directly to

1 Mr. Moore. 2 MADAM COMMISSIONER: And I haven't done what 3 I would normally do in a courtroom. In a courtroom, if one 4 person goes first, the next person says what they have to say 5 and one has the right of reply. I have let it be more lax in 6 that regard here because my -- I have a different focus here. 7 So if anything comes up as a result of Mr. 8 Manes' comments, I'm happy to hear you again, all right? 9 MR. GORDON CAPERN: Commissioner, I -- I -- 10 MADAM COMMISSIONER: Okay. 11 MR. GORDON CAPERN: -- I would like to limit 12 my comments, if I can, with one limited exception to the 13 impact on the Inquiry itself. 14 First, I think that in our submission, the -- 15 I view Mr. Moore's letter predominantly being one between and 16 among Counsel and I -- we anticipate that as the Inquiry 17 proceeds, there will undoubtedly be correspondence that is 18 passed between the City and Commission Counsel and MFP's 19 Counsel and City -- and Commission Counsel and so on and it's 20 our preference that those matters -- those types of 21 correspondence remain among Counsel. 22 We think that the -- the evidentiary body at 23 the -- at the Commission itself should really be filled with 24 matters that are in evidence that are subject to the usual 25 rules of cross-examination and so on and we don't necessarily

1 believe that -- that adding the letter to the body of 2 evidence assists you in rendering your report and decision at 3 the end of the Inquiry. 4 Having said that, we do -- the City is 5 strongly of the view that it is necessary to effect the 6 purpose of the public Inquiry that parties with standing and 7 parties without standing be given -- who -- who are affected 8 by individual issues, be given the opportunity to be heard 9 fully on those complaints. 10 They're -- it's important for this public 11 Inquiry that the -- that it appear to be transparent and that 12 it is transparent. 13 And so to the extent that Mr. Moore or any 14 other Counsel acting on behalf of parties, has legitimate 15 issues that they believe should be brought to your attention, 16 we believe that those parties should have that opportunity. 17 We believe that the appropriate forum to do 18 that is by way of submissions to you. And not in the form of 19 admitting letters between Counsel into evidence. 20 21 (BRIEF PAUSE) 22 23 Mr. Moore has articulated in his letter a 24 number of concerns that I think are evident from the letter. 25 We share the concern that I'm sure you also have,

1 Commissioner, that the process be fair to witnesses and be 2 fair to parties. 3 And I think what we've seen so far in the 4 Inquiry, is that all Counsel have endeavoured to the best of 5 their ability to ensure that questions that are being put to 6 witnesses are fair and that witnesses are given a fair 7 opportunity to consider documents carefully, to consider the 8 questions that are put to them carefully in the course of 9 providing their answer. 10 All of that with a view to providing full and 11 complete answers, so that the Inquiry can do what it is 12 supposed to do, which is get to the bottom of this. 13 I don't believe that the letter particularly 14 assists or enhances the possibility or probability that there 15 will be greater fairness to witnesses. 16 I think that you, Madam Commissioner, you've 17 been clear that -- and vigilant in ensuring fairness to 18 witnesses and to parties in the manner the questions have 19 been put. I don't think the letter advances that any 20 further. 21 Mr. Moore, has made clear that he seeks no 22 remedy from you, at this stage. We share his view and 23 obviously your view, that the matters of admissibility of the 24 Inquiry transcript in the civil proceeding, are entirely to 25 be dealt with in the civil proceeding.

1 So, at the end, we say that the proper -- if 2 you're prepared to hear Mr. Moore on his complaints, having 3 regard to the fact that he seeks no remedy from you, the 4 appropriate way to do that, is to hear from him and to allow, 5 if necessary, any response. 6 If the letter is to be admitted into evidence, 7 the City would seek an opportunity to put in a very brief 8 reply letter which will, among other things, make clear that 9 at least from a legal perspective, the position being 10 advanced by MFP is without legal foundation. 11 MADAM COMMISSIONER: Is without legal what, 12 sorry? 13 MR. GORDON CAPERN: Foundation -- sorry. 14 MADAM COMMISSIONER: Oh, foundation, okay. 15 MR. GORDON CAPERN: And I only add in passing, 16 and I try to keep my remarks limited to the Inquiry that the 17 -- MFP is seeking in the civil litigation, by way of its 18 motion for judgement, to eliminate the City's right to have a 19 full trial of the matters that have been raised in that 20 litigation. 21 And the City does have the right to formulate 22 their defense. And other than that, I have no comment about 23 the use of the transcripts outside. 24 MADAM COMMISSIONER: Okay. 25 Mr. Manes?

1 MR. RONALD MANES: Commissioner, I think it's 2 quite appropriate for any Counsel for parties involved in 3 these proceedings to make you aware of any legitimate 4 concerns that they might have, with respect to any matter. 5 My concern is only the manner in which Mr. 6 Moore seeks to make you aware of those concerns and the 7 vehicle he has chosen in addition to giving you the letter to 8 read and advising you basically of its contents, is to make 9 it as an exhibit in the proceedings. 10 And it's in that -- it's in that regard and 11 only in that regard that I have concern. An exhibit in a 12 proceeding has more than just an importance of making 13 something a public record. 14 It is a matter of the admissibility of 15 evidence and that's based on whether this evidence is helpful 16 to you, according to our rules. 17 It's not to be used and the Commission is not 18 to be used, and I know that Mr. Moore does not intend to use 19 it, as a vehicle to communicate his concerns to the public. 20 So, its simply that he wishes it marked as an 21 exhibit to make his views known. I think Mr. Moore has made 22 his views known. They're in the press this morning. 23 You've had an opportunity to read that letter 24 and you know his views and I think you told Mr. Moore, that 25 at the end of the day, that you were aware of these concerns.

1 So, I guess the issue for Commission Counsel, 2 is then how is further making this an exhibit going to be 3 helpful? There is no context for this, in the sense that we 4 don't have Mr. Ridge in the witness box and advancing by way 5 of cross-examination this evidence and marking it as an 6 exhibit. 7 It is a letter of concern from Counsel and 8 solely that. 9 So, I don't know how it qualifies as an 10 exhibit. I don't know how it's helpful to you as an exhibit, 11 although it may be helpful certainly for you to be aware of 12 those concerns. 13 Lastly, I'd just like to say and I know Mr. 14 Moore would not agree, that the Commission is not involved in 15 any civil process. 16 There are -- I understand three (3) of them 17 that are proceeding, the same time as the Commission is 18 having hearings. 19 The Judges in those civil proceedings is 20 responsible for that process. The Judge makes the decisions 21 of admissibility in that process, make decisions of liability 22 in that process. 23 You've said several times Commissioner, that - 24 - and quite rightly, that you make no finding of civil 25 liability; that you and the Commission is not involved in

19
  1  that process.
  2                 We are involved in a process that's defined by
  3  the terms of reference and by our rules to the end object,
  4  being to make recommendation to City Council with respect to
  5  good government.
  6                 According to our rules, evidence is
  7  admissible, that is, an exhibit can be marked as an exhibit,
  8  or document can be marked as an exhibit, that is helpful.  
  9                 Here Mr. Moore seeks no relief, but since he
 10  wants to communicate to the public his concerns, our rules
 11  don't provide for that method of communicating with the
 12  public, and as I've said, accordingly, I don't support
 13  marking this as an exhibit, irrespective of whether the City
 14  consents.
 15                 And I might say in conclusion, that what will
 16  happen and Mr. Capern said so, is that if you mark this as an
 17  exhibit, then you would invite another exhibit, because Mr.
 18  Capern would formally respond.
 19                 And if that precedent were set, it would be
 20  unfortunate because this may not be the only issue that comes
 21  up in the proceedings where Counsel wants to make concerns
 22  public and communicate it through an exhibit.
 23                 So, I don't support marking it as an exhibit,
 24  Commissioner.
 25                 MADAM COMMISSIONER:  Mr. Moore, do you want to

20
  1  say anything more?
  2                 MR. DAVID MOORE:  I'm really amazed by the
  3  position that's being taken by counsel.  It's different
  4  position than taken yesterday.
  5                 This is a very simple matter.  My client has
  6  significant procedural concerns that are raised by the way in
  7  which the City has chosen on a considered basis to make use
  8  of the evidence in this Inquiry.
  9                 We are entitled, with all the greatest of
 10  respect, to express those concerns and where they exist and
 11  can't be resolved, as here, those concerns in the interest of
 12  transparency and in the interest of appearances, about which
 13  we've heard a lot in this Inquiry so far, those concerns have
 14  to be part of the public record.  
 15                 I wish that those concerns didn't exist.  I
 16  wish that the City could see its way clear not to make use of
 17  evidence in this Inquiry for its own purposes in the civil
 18  litigation, let alone make use of that evidence in a
 19  selective and misleading way; but the City has chosen to do
 20  that.
 21                 My client has no choice in those circumstances
 22  but to express our concerns, draw them to your attention. 
 23  Now, it's quite true you're not making findings of civil
 24  liability.  You're not making rulings in the civil
 25  proceedings and Mr. Manes, as well, you'll -- th -- this

21
  1  Commission -- let me just look at his -- use his words:
  2                   "This Commission is not involved in the
  3                   civil litigation."
  4                 Well, it's not involved in the sense that you
  5  don't -- will not be making rulings in that civil litigation
  6  but the Commission and the Commission processes and the
  7  evidence and -- and the witnesses that come here henceforth
  8  are involved in that civil litigation by virtue of the
  9  conscious and considered decision of the City to take
 10  selected transcript references and to file them and -- and
 11  seek to rely upon them in those civil proceedings.
 12                 So there's no two (2) ways about it.  People
 13  can slice it and dice it however they see fit but the City
 14  has chosen to create that overlap.  It has chosen to try to
 15  use the evidence here for its own purposes to the prejudice
 16  of my client.  
 17                 That's what's going on and my client feels
 18  most strongly about that.  It feels, as a matter of process,
 19  as a matter of procedure, that it is entitled to draw those
 20  matters to your attention, to have those matters part of the
 21  public record.  
 22                 It's not a matter of using this process to
 23  communicate to the press.  In fact, I did not circulate my
 24  letter to the press.
 25                 MADAM COMMISSIONER:   Hmm hmm.

1 MR. DAVID MOORE: It's a matter where 2 procedural issues arise that may have all kinds of 3 ramifications upon the future course of this Inquiry and how 4 it's conducted. 5 The reasons for that should be part of the 6 public record. I'll give you a specific example to 7 illustrate my point. 8 In Mr. Ridge's affidavit of February 4th, he 9 swears in Paragraphs 92 and 93 about the draft RFQ. What 10 he's referring to is the document dated April 30th that has 11 been filed as an exhibit and which has been the subject of 12 some evidence in these proceedings. 13 Paragraph 92 asserts that that is a draft of 14 the RFQ -- the City RFQ and goes on to assert that that was 15 obtained improperly and highly improper for a potential 16 supplier to have such a draft RFQ. 17 The next paragraph and the only other 18 paragraph that deals with that issue in that affidavit refers 19 to the cross-examination of Ms. Rothstein several weeks ago 20 when reference was made to an April 30th expense chit and the 21 implication is left by that that one of Mr. Jakobek, Mr. 22 Andrew or Ms. Liczyk gave this internal -- internally 23 authored, confidential City document improperly to MFP. 24 That's the sum and substance of what is dealt 25 with in that affidavit about that document.

1 Now, anyone who has been at this Inquiry and 2 has followed the process knows full well that there's a 3 context to that document that there's a real issue about 4 where that document came from and -- and this is actually a 5 classic illustration of the admonition that you've repeated 6 several times and that is: The parties, public, counsel, 7 should not pre-judge an issue; should not come to conclusions 8 about an issue until they've heard the whole story. 9 Now, the whole story about that document 10 without reciting the evidence in chapter and verse, is that 11 it may very well not be a City document at all. It may very 12 well be a document, given the mistakes in the document, the 13 reference to ministries in the document, the date references 14 in the document. 15 I'm not going to take you through the whole 16 nine (9) yards of what's been said about it. It may very 17 well be, and probably is not a City authored document at all. 18 And -- and I would have hoped and would have 19 thought that perhaps the City might, in due course, reassess 20 its position and say, in effect, to the Commission and 21 Commission Counsel, well what superficially appeared to be a 22 live issue and a potential problem, we -- we consider it's 23 not a further issue. It -- it may not be a City document at 24 all. 25 MADAM COMMISSIONER: Well --

1 MR. DAVID MOORE: The City's not obligated to 2 do that. Not having done it, raises the question and as I 3 say, it's been put in this affidavit in a very selective one 4 (1) sided and I say, misleading way. 5 That being the case, it being now a live issue 6 in this Inquiry, that begs the question, how is that going to 7 affect the future course of this Inquiry? 8 Well, one (1) way in which it's going to 9 affect it is it necessitates Mr. Kassam, being called as a 10 witness. 11 Now, as of now, he's not on the witness list. 12 As of two (2) days ago, when we sat down informally to 13 discuss budget issues, he was not on the witness list. 14 And so I at that time, having seen these 15 paragraphs in this affidavit and this is just one (1) 16 example, I could go through many, but I'm citing this one (1) 17 example. 18 Having realized that the City was continuing 19 to assert that position, I suggested that Mr. Kassam, 20 obviously is going to have to be a witness and clearly that - 21 - I don't know if any decision has been made by Commission 22 Counsel about that. 23 I do know from speaking to Mr. Chenoweth this 24 morning, that he has not heard from anybody although I've 25 suggested that he be the logical person to contact, if

25
  1  anybody wants to be in touch with Mr. Kassam to arrange an
  2  interview.
  3                 In fact, I'd arranged several weeks ago, when
  4  the issue first came up, that it would be desirable to meet
  5  with Mr. Kassam and get that issue dealt with and put to rest
  6  and the subject of evidence.
  7                 Now, again, that's a live issue apparently
  8  that the City is pursuing, it affects my client.  That
  9  particular document has been the subject of ongoing press and
 10  ongoing media coverage, which has implied from time to time,
 11  that it's a confidential document improperly obtained by my
 12  client, from some City employee who too, was acting
 13  improperly.
 14                 That's the innuendo that's created by this. 
 15  So, there's a concrete example of, unfortunately, the way in
 16  which the use of this material from this Inquiry, by the
 17  City, a very conscious choice on its part, is affecting and
 18  will continue to affect -- I wish it weren't so, but will
 19  continue to affect the future course of this Inquiry.
 20                 Now, in my respectful submission, it's
 21  important for those concerns to be expressed, it's important
 22  for the public record to reflect those concerns, and it's
 23  important, not the matter of the members of the press, it's
 24  the matter of the public -- when the public is viewing this
 25  Inquiry, is reading the transcripts, is observing what's

26
  1  going on and is from time to time, presumably reading about
  2  procedural issues or rulings that have to be made, it's
  3  important that the public understand the context in which
  4  those issues arise.
  5                 And it's for that reason, that I seek to file
  6  the letter.  And again, if a letter like this, where the
  7  issue cannot be resolved informally is not permitted to be
  8  filed, what the consequence is, that every time a procedural
  9  issue arises, whether it's myself on behalf of MFP, or some
 10  other Counsel, will have to take verbally, whatever time is
 11  needed to fully articulate the concerns, take up time on the
 12  public record, additional cost, additional delay.
 13                 And if that's the process that has to be
 14  followed every time a concern that is unresolvable arises, so
 15  be it.
 16                 But, that's -- that would be the consequence
 17  of not allowing a letter like that to be filed.
 18                 Lastly, in terms of the rules, we've had it
 19  said many times in this Inquiry that the rules of evidence do
 20  not apply.  This material is clearly relevant to procedural
 21  issues that arise and it should be filed and permitted to be
 22  filed on that basis alone.
 23                 We've had various letters filed from Counsel
 24  before now, with respect to the question of standing.  
 25                 As I say, the rules clearly indicate and

1 indeed the law is -- is trite on this point, that the strict 2 rules of evidence don't apply to the Public Inquiry of this 3 nature, and at the risk of belabouring the obvious, I'm not 4 filing the letter with a view to asking it be used to make 5 some substantive filing -- or finding about a given issue. 6 I'm filing it to put the procedural issues on 7 the table. To put it in context so that the public record, 8 anyone observing this proceeding, the parties, Counsel for 9 the parties, to whom I didn't circulate the letter either, 10 and some of them may have an interest in this too, so that 11 everybody knows exactly what the concerns are. 12 So I'm astounded, quite frankly, that there 13 would be an issue about this and I'm in your hands as to 14 whether it gets filed or not. 15 I would ask that if your ruling is that it not 16 be filed, that there be some brief reasons for that, because 17 frankly, I -- 18 MADAM COMMISSIONER: I always give reasons. 19 MR. DAVID MOORE: No, I understand, but, I 20 don't want to be kind of interpreting, for my client, why -- 21 why -- 22 MADAM COMMISSIONER: I'll give you reasons. 23 MR. DAVID MOORE: Thank you. 24 MADAM COMMISSIONER: Okay. 25 Mr. Capern, nothing more?

1 MR. GORDON CAPERN: Nothing. 2 MADAM COMMISSIONER: Mr. Manes, anything 3 further? 4 MR. RONALD MANES: No, Commissioner. 5 MADAM COMMISSIONER: Okay. 6 Yesterday, I was given a copy of a letter that 7 had been written by Mr. Moore to Mr. Manes, it's dated 8 February the 18th, 2003, and it's marked delivered. 9 And Mr. Moore now wants to have that letter 10 and the supporting -- and an affidavit of James Ridge and 11 supplemental affidavit of James Ridge, together with a letter 12 from Mr. Harry Underwood, U-N-D-E-R-W-O-O-D, who is Counsel 13 for MFP on the lawsuit, he wants all of that to be marked as 14 an exhibit. 15 I've read the letter. I've heard Mr. Moore's 16 comments both yesterday and today and also the submissions of 17 Mr. Capern for the City and Mr. Manes for the Commission -- 18 as Commission Counsel. 19 I gather from Mr. Moore's letter and from the 20 submissions I've heard from him, that what he is doing is 21 expressing a concern about the way in which the City is 22 defending itself from MFP's summary judgment motion, and -- 23 by using evidence that has been heard at the Inquiry and 24 information obtained as a result of the Inquiry process. 25 Mr. Moore is not seeking any relief, he just

1 wants me to be aware of what's happening in the lawsuit and 2 wants the public to be aware of MFP's strongly held view, and 3 then wants to file this as an exhibit. 4 There's always a difficulty when there is a 5 Public Inquiry and at the same time, there are lawsuits in 6 which entities are suing each other. 7 There's a difficulty that there may be some 8 spillage between evidence heard at the Public Inquiry and 9 evidence heard at the lawsuit, either by way of affidavit or 10 by way of oral evidence. 11 In this case, it happens to be that the City 12 and the lawsuit is wanting to use evidence from the Inquiry. 13 I can fully anticipate a situation where it might be the 14 reverse or as well, where MFP or the City might wish to 15 cross-examine an Inquiry witness on affidavit evidence that 16 they gave at the lawsuit. 17 My interest here, is in fulfilling my terms of 18 reference and in protecting the integrity of the Inquiry. 19 I'm not interested in doing anything at all 20 that has the potential to increase the cost of the Inquiry to 21 the Toronto taxpayer. 22 So the question I ask myself is, is this 23 letter helpful to me in fulfilling my terms of reference. 24 And in my view, the answer is, that it is not helpful to me, 25 as a Commissioner of this Inquiry to have this marked as an

1 exhibit. 2 I'm not saying that it's not helpful to me to 3 know, to a certain extent, what -- what MFP or the City's 4 concerns are in the lawsuit, but it is not helpful to me to 5 have this marked as an exhibit. 6 What Mr. Moore wants to have marked as an 7 exhibit, is a letter that he wrote to Commission Counsel that 8 attaches the exhibits that I referred to. 9 The affidavit made by James Ridge, was for the 10 purpose of defending a summary judgment motion brought by 11 MFP. It has nothing to do with this Inquiry. Although, I do 12 note, that he's a City employee and he's currently on our 13 list of witnesses, who will be called at the Inquiry. 14 So, what am I supposed to do with this letter 15 that Mr. Moore asks me to file as an exhibit? Am I supposed 16 to make a finding of fact? The answer is, no. Mr. Moore 17 isn't even asking me to make a finding of fact, and even if 18 he were, I couldn't possibly do that without hearing from the 19 other side. 20 At the same time, none of the -- none of this 21 is subject to any kind of cross-examination at all. It's 22 just merely submissions being made by Counsel in a written 23 format. 24 And these are essentially allegations 25 contained in a letter from Commission Counsel from one (1)

1 Counsel or a party with standing to Commission Counsel. 2 I have a very serious concern that if I did 3 accept this letter as an Exhibit, then any lawyer for any of 4 the parties with standing, could write a letter to Commission 5 Counsel and then try to have their correspondence put in as 6 an exhibit on the basis that it might be helpful to me, for 7 whatever purpose. 8 The City, in fact, has already said that it 9 now wants its -- this is made an exhibit, it wants to file a 10 brief reply. The City did that, and I anticipate that MFP 11 would want to file a reply to the City's position then here I 12 am, in a sense being hi-jacked, by the -- by the lawsuit. 13 And I don't think that serves any useful 14 purpose and does not help me in fulfilling my mandate under 15 my terms of reference and, in fact, if anything, it has the 16 effect of lengthening this Inquiry, in my view, 17 unnecessarily. 18 It's very important to keep in mind here that 19 there are different processes involved here. I am conducting 20 a public Inquiry. There are lawsuits that also touch on the 21 same subject matter that I'm inquiring into, but the Inquiry 22 has nothing to do with the lawsuits. 23 I've taken great pains, as Mr. Moore has 24 acknowledged, as a Commissioner to indicate that I do not 25 rule on -- on issues of civil responsibility. I will not be

1 making findings of civil responsibility. It's not allowed by 2 our Supreme Court of Canada, even if I wanted to. 3 I will not, also, be ruling on what happens in 4 the civil trial and Counsel are properly not asking me to 5 rule on what happens in the civil trial but by me receiving 6 this, it puts me in -- in that uncomfortable situation of 7 possibly being -- of the public wondering why I'm not ruling 8 on it. 9 I've gone to great pains to emphasize that I'm 10 not -- I'm not going to be finding civil or criminal 11 responsibility. 12 So as a Commissioner, what I have is I have an 13 affidavit by James Ridge. I can't rule on the admissibility 14 of the affidavit. He may ultimately end up being cross- 15 examined on it, in fact, when he comes here because I fully 16 expect that Mr. Moore or someone on behalf of MFP will -- 17 will be cross-examining him on anything there that appears to 18 be an inconsistency or will be wanting to cross-examine him 19 on anything that appears to be an inconsistency. 20 What -- Mr. Moore gave me an illustration, 21 which I think is quite a good one, about putting something in 22 context and he used, in particular, the -- the part in Mr. 23 Ridge's affidavit that refers to the draft RFQ or the draft 24 RFP and, in my view, the responsibility for making sure that 25 the proper context is put on those affidavits is not me and

1 it's not from Commission Counsel and it's not from the 2 lawyers of the parties with standing at this Inquiry. 3 It's for the lawyers in the civil trial to 4 ensure that any documents filed in the courts are put in the 5 proper context. They have a responsibility to do that for 6 their clients. They also have a responsibility as officers 7 of the court to do that before the Judge and the 8 responsibility will then be on the Judge who is presiding 9 over the civil trial to make any findings with respect to 10 that. It's not me. 11 In my view, Mr. Moore has consistently been 12 vigilant in protecting his client's rights by ensuring that 13 questions are always placed in a proper context. Personally, 14 I don't see any reason for Mr. Moore to change how he has 15 conducted himself in the past because I feel that he has, in 16 fact, been consistent in being vigilant about having matters 17 put into the proper context and the record would support 18 that. 19 So I don't see any need to change his 20 behaviour and I don't think that this letter to Mr. Manes 21 changes the need for that in any way whatsoever. I, 22 personally as Commissioner of this Inquiry, intend to protect 23 the integrity of the Inquiry and I will be watchful to ensure 24 that we do not have to contort our process to suit the 25 lawsuit, and that the lawsuit does not end up getting

34
  1  imported into this Inquiry.
  2                 The -- the submissions made by -- by Mr. Moore
  3  can be made part of the public record without being entered
  4  into -- without it being entered into as an exhibit.
  5                 And I don't think it needs to be made an
  6  exhibit.
  7                 It is part of the public record now, it was in
  8  several newspapers today and I don't fault Mr. Moore for that
  9  at all.  In fact, I don't actually care if it gets given to
 10  the press.  
 11                 MR. DAVID MOORE:  Well, I didn't give it to
 12  the press.
 13                 MADAM COMMISSIONER:  And I know that Mr. Moore
 14  didn't give it to the press, it went through the normal --
 15  the normal channels as it does here when something is about
 16  to be made an exhibit.
 17                 Commission Counsel give it to the media and
 18  that was done here yesterday and I take no issue with that.
 19                 However, I suppose the only concern I have is
 20  that it wasn't, in fact, as it turned out, made an exhibit. 
 21  But I have no concern whatsoever in Mr. Moore, or Mr. Capern,
 22  on behalf of the City, speaking to the press, if they want,
 23  right now to address this particular issue.
 24                 But that's not my issue.  My concern is
 25  protecting the integrity of the Inquiry.  And that's what I

1 want to do. 2 So, I just want to clear up one (1) thing, 3 lest there's any ambiguity. 4 Section 9 of the Public Inquiries Act offers 5 protection to witnesses in subsequent proceedings whether 6 they're criminal or civil. 7 And in my view, the Charter of Rights and the 8 cases that have interpreted the Charter of Rights and in 9 particular Section 5(2), of the Canada Evidence Act, make it 10 clear that the Charter of Rights, has removed the need to 11 inform witnesses of the 5(2) rights, insofar as -- as 12 criminal proceedings are concerned. 13 Lest there's any doubt about whether this 14 applies from a civil perspective, as far as I'm concerned, 15 every witness, as put forward by the Public Inquiries Act, is 16 deemed to have objected to the questions and has the 17 protections offered by Statute. 18 All right. 19 So, I will not be making this as an exhibit 20 and Mr. Manes, I'm ready for Mr. Flanagan. 21 MR. RONALD MANES: Thank you. 22 23 MICHAEL ANTHONY FLANAGAN; Resumed 24 25

1 MADAM COMMISSIONER: Mr. Flanagan, you still 2 here? 3 THE WITNESS: I am. 4 5 (BRIEF PAUSE) 6 7 8 CONTINUED EXAMINATION-IN-CHIEF BY MR. RONALD MANES: 9 Q: Good morning, Mr. Flanagan. 10 A: Good morning. 11 Q: That's our on the record good morning, 12 because I already wished you good morning informally, didn't 13 I? 14 A: Yes, you did. 15 Q: One (1) lingering question from yesterday 16 that I didn't address before we go into the issue of expenses 17 is -- the question as to whatever contacts representatives of 18 your company had or, in particular, Mr. Wolfraim, had with 19 Mr. Godfrey, when the issue -- when issues in relation to 20 Windsor or Waterloo broke, or when issues in relation to City 21 of Toronto broke. 22 Do you have any personal knowledge of the 23 discussions, if any, with -- between your company and Mr. 24 Godfrey? 25 MR. DAVID MOORE: Can I just interject before

1 that question is answered? 2 It covers a variety of topics. I, informally, 3 several weeks ago advised My Friend that my understanding 4 was, I didn't get into details because I didn't think they 5 were relevant, that Mr. Godfrey, at some point, had been 6 consulted and had been retained or in some way shape or form, 7 by my client in respect of matters outside the scope of this 8 Inquiry. 9 Perhaps pertaining to Waterloo, perhaps 10 Windsor, I don't know the scope of it, quite frankly. 11 I don't see what that has to do with this 12 Inquiry in any way, shape, or form. 13 MADAM COMMISSIONER: Mr. Manes? 14 MR. RONALD MANES: I appreciate the fact that 15 Mr. Moore advised me informally of that information. On the 16 other hand, Mr. Wolfraim, gave evidence -- 17 MADAM COMMISSIONER: And the Mayor did, as 18 well. 19 MR. RONALD MANES: -- and the Mayor, did as 20 well. 21 And I'm simply asking the witness for his 22 evidence under oath, as to whatever information he might 23 have, whether personally or otherwise, as to Mr. Godfrey's 24 participation, if any, in the issues surrounding City of 25 Toronto or Windsor Waterloo.

1 Either of those -- 2 MADAM COMMISSIONER: You're referring to Paul 3 Godfrey, not Rob Godfrey? 4 MR. RONALD MANES: Yes. 5 MADAM COMMISSIONER: We've had two (2) names 6 in this Inquiry. 7 MR. RONALD MANES: Either of those may be 8 helpful to the Commissioner -- to you, Commissioner, to 9 understand Mr. Wolfraim's previous references. 10 So again, just simply asking a straight 11 forward question, if the witness has any information about 12 it. 13 MR. DAVID MOORE: Might I just respond 14 briefly? 15 Mr. Wolfraim was not asked any questions and 16 did not give any evidence whatsoever about whatever role Mr. 17 Godfrey may have had or may not have had in connection with 18 Windsor or Waterloo or anything else. 19 He was asked about what role, if any, Mr. 20 Godfrey had in connection with the matters of the City of 21 Toronto. 22 That's what he was asked about. That's what 23 his evidence covered. Now, if we're going to get into what 24 his role was or what happened in connection with Windsor and 25 Waterloo, we'll be expanding the issues and that will -- fine

1 if that's the ruling, so be it, then that will be another 2 area that perhaps we'll have to explore in greater detail in 3 due course in this Inquiry, if it's deemed to be relevant. 4 I still don't understand the relevance. I 5 understand the question as it relates to City of Toronto, 6 although on that issue, my understanding also is that 7 Commission Counsel does not particularly regard the attempts 8 to resolve the matters in a business way that occurred in the 9 -- I think it was the fall of 2001, my understanding is 10 Commission Counsel does not intend to delve into that, and 11 does not regard that as particularly helpful or relevant. 12 So, I'm not even sure what the relevance of that is. 13 But, that said, there has been evidence on 14 that narrow point. But beyond that, in terms of what Mr. 15 Godfrey did or didn't do, was asked to do, et cetera, in 16 connection with Windsor Waterloo or other matters, the 17 relevance of that escapes me. It has not been the subject of 18 evidence to date. 19 MADAM COMMISSIONER: Mr. Manes, the question 20 that has been asked to Mr. Wolfraim, is as I recollect it, 21 doesn't have anything to do with Waterloo or Windsor, but was 22 with respect to, I think they were called reconciliation 23 discussions between MFP and the City. 24 And you had asked Mr. Wolfraim if he had ever 25 discussed -- if Paul Godfrey had ever discussed the City with

1 anyone at MFP. 2 And I think that the objection that, Mr. 3 Moore, is making is that you've now, in terms of your asking 4 your question here, you've added Waterloo and Windsor. 5 So, help me with the Waterloo and the Windsor 6 part. 7 MR. RONALD MANES: I certainly don't -- 8 MADAM COMMISSIONER: I have no difficulty with 9 the City of Toronto, that's already come up several times at 10 the Inquiry and if you're going to ask that question, it's 11 just the Waterloo and Windsor that you threw in this time. 12 MR. RONALD MANES: I certainly want to pursue, 13 to some extent, the relationship between -- if any between, 14 Mr. Godfrey and MFP. 15 MADAM COMMISSIONER: Yes. 16 MR. RONALD MANES: And I don't need to go, at 17 this point, into Waterloo and Windsor. I quite -- if Mr. 18 Moore thinks that I'm extending that too far, I won't go 19 there, at this point. 20 I'll limit my question to the question of the 21 City of Toronto. 22 23 CONTINUED BY MR. RONALD MANES: 24 Q: Mr. Flanagan, do you have any information 25 or personal knowledge with respect to your Company's dealings

1 with Mr. Godfrey in relation to the City of Toronto? 2 A: No, I haven't. 3 Q: Now, let's turn to expenses. As I 4 understand it, you, as a Senior Vice President including 5 sales and marketing, had the overall responsibility for 6 reviewing salespersons accounts, after you -- after you took 7 over from Irene Payne? 8 A: That's correct. 9 Q: All right. And that included Mr. Domi and 10 Mr. Nigro, after they were reviewed by -- whether it was Mr. 11 Rollock or Mr. Makohon? 12 A: Yes. I haven't, as part of the Inquiry 13 process or my interviews with Commission Counsel, discussed 14 any of Vince Nigro's expenses, but we did look at some of 15 Dash Domi's and I had been signing those for a period of 16 time. So, I would agree with you. 17 I assume it's the same situation with Mr. 18 Nigro. 19 Q: All right. And I know, sir, that there 20 were specific expenses or expense reports that you did not 21 review? 22 A: Your statement that I was ultimately 23 responsible is fair. 24 Q: All right. It was fair from the point of 25 view of whether or not you ultimately -- you -- you reviewed

1 it, that you were ultimately responsible for what reviews had 2 been done? 3 A: That's correct. 4 Q: The whole point of -- of the process is 5 sort of a belt and suspenders to make sure that not only are 6 the supervisors under you doing their job, but to make sure 7 that -- that the process is being done? 8 A: Correct. 9 Q: The -- we've heard evidence from both Mr. 10 Nigro and Mr. Domi as to their approach to their expenses and 11 I want to ask you about that approach and just have you 12 comment on it, whether you think it's legitimate or not? 13 A: Sure. 14 Q: Mr. Domi testified January 27th at page 15 187, lines 1 to 5. 16 MADAM COMMISSIONER: Fifteen (15)? 17 MR. RONALD MANES: I'm sorry? 18 MADAM COMMISSIONER: One (1) to five (5) or - 19 - 20 MR. RONALD MANES: One (1) to five (5). 21 MADAM COMMISSIONER: Okay. 22 23 CONTINUED BY MR. RONALD MANES: 24 Q: And in this context he was -- he was 25 being asked questions about a pair of cufflinks --

1 A: Hmm hmm. 2 Q: -- that he had bought his friend Rob 3 Godfrey, and from that there became more general examination 4 about his -- his approach to expensing to MFP. And 5 ultimately he said, and this question and answer: 6 "I take it --" 7 This is myself putting the question. 8 MADAM COMMISSIONER: Where are you now, I 9 have the transcript in front of me, where -- 10 MR. RONALD MANES: 187, line 1. 11 MADAM COMMISSIONER: Line 1, okay, all right. 12 13 CONTINUED BY MR. RONALD MANES: 14 Q: "I take it your evidence is that you 15 would -- that that would be a legitimate 16 business expense, so long as you were 17 thinking about business in general? 18 A: I was focussed on business, yes." 19 Now, I want you to assume that Mr. Domi's 20 approach was that when he was thinking about business in 21 general, and if he was even thinking about a particular 22 person and doing business with that person, whatever 23 entertaining he was actually doing, even if that person 24 weren't in his presence, was a legitimate business expense. 25 Can you comment on that approach, and whether that is a

1 legitimate business expense from MFP's point of view? 2 A: There might be situations where a 3 legitimate business expense was incurred, even if the people 4 -- sorry, even if the relevant account was not in attendance, 5 but generally, it's not sufficient that you were thinking 6 about an individual or a customer while you were entertaining 7 other people, to justify that as a business expense, no. 8 Q: Let me give you what Mr Nigro's views 9 were. And this is at January 20th, page 22, lines 10 through 10 24. 11 12 (BRIEF PAUSE) 13 14 Q: Q: But that doesn't necessarily mean that 15 any of these organizations that you have 16 put down, for example, City of Toronto, 17 meant that you were doing City of Toronto 18 business either; is that what you were 19 saying? 20 A: Well, I was in the City of Toronto. I 21 mean it -- it's like -- no, I mean it 22 doesn't necess -- it doesn't necessarily. 23 I could have had discussion about the City 24 of Toronto at those meetings, but --" 25 Q: When -- when you say you were in the

1 City of Toronto, are -- are you saying it 2 was appropriate at MFP, that if you were in 3 the City of Toronto, and incurring an 4 expense, you could write it off simply 5 because you incurred the expense within the 6 City of Toronto? 7 A: That was, kind of -- under the general 8 liberal policy, that was my impression." 9 Can you comment on that? 10 A: Well, I think those statements don't make 11 much sense, and certainly it's not what's understood at MFP, 12 and it is not legitimate to submit an expense and label it as 13 an expense incurred in pursuing business with the City of 14 Toronto, when nobody from the City of Toronto was in 15 attendance, but you happened to be within the City of 16 Toronto, it's -- it was not the policy or -- 17 Q: All right. 18 A: -- practice. 19 Q: Okay. And if those facts were brought to 20 your attention at the -- at the time you were either 21 reviewing Mr. Makohon or Mr. Rollock's approved statements, 22 or actually if you were reviewing directly Mr. Domi or Mr. 23 Nigro, I take it you would have disallowed those as expenses 24 for MFP? 25 A: Generally, yes, I'll answer a specific

1 example if you have one (1), but if the salesman took a 2 relative to lunch in the City of Toronto and submitted that 3 as an expense, that would not be -- 4 Q: Even if the -- 5 A: -- allowed. 6 Q: -- even if the salesman were thinking 7 about the City of Toronto at the time? 8 A: Even if. 9 Q: Even if the salesman were within the City 10 of Toronto at the time? 11 A: Even if. 12 Q: Let me give you a specific example, 13 you've -- you've asked for one (1), and this is at page -- 14 this is Mr. Domi being examined on January 27th, at page 182, 15 lines 1 through 17. This is the cufflinks. It starts out -- 16 sorry, I don't have 181 here. 17 MR. RONALD MANES: I should start at 181, 18 Commissioner, because there's -- 19 MADAM COMMISSIONER: Okay. 20 MR. RONALD MANES: -- one (1) line on 181 -- 21 MADAM COMMISSIONER: Hmm hmm. 22 MR. RONALD MANES: -- line 25. 23 24 CONTINUED BY MR. RONALD MANES: 25 Q: Now -- this is my question:

1 "Now, frankly, when you gave these 2 cufflinks -- when you bought these 3 cufflinks for -- for Rob --" 4 That's Rob Godfrey: 5 "-- did you really think about a business 6 purpose, or was it because he was a good 7 friend of yours?" 8 Answer: 9 "I was -- I'm always thinking about 10 business, and he's my friend." 11 And then if you go down to 14, this is in 12 relation to the gold pen to Mr. Andrew. 13 Q: Same thing, as long as you have some -- 14 something in mind about business, it's okay 15 to write it off? 16 A: In that time frame, my mind was 17 focussed on business, yes." 18 So, let's take those two (2) -- 19 A: Hmm hmm. 20 Q: -- and have your comments. 21 First of all, let's assume that -- that the -- 22 that Mr. Domi had it in mind to -- to buy a present for his 23 good friend, Mr. Godfrey, and spent five hundred dollars 24 ($500) on it. And he also had it in mind at the time he did 25 that, that he was thinking about business.

1 Was this present to Mr. Godfrey legitimate or 2 not, from MFP's point of view? Had it been brought to your 3 attention in that way? 4 A: No, it wasn't an appropriate business 5 expense, and I don't -- and I did discuss this with 6 Commission Counsel. 7 He -- I don't know what conversations took 8 place around that expense, I do believe Martin Makohon, or I 9 do know that he signed off on that expense chit, and -- or 10 both of those. And I would be surprised if he did not raise 11 at least one (1) of those with me. 12 I've also spoken to Martin Makohon, since I 13 was interviewed by Commission Counsel. He similarly thinks 14 he would have talked to me about that, he doesn't recall 15 specifically that he did. But regardless of what took place, 16 I can state that that -- the -- both of those were not 17 appropriate items. 18 The first one (1), the pen, was not 19 appropriate to offer to Mr. Andrews (sic), and was not -- and 20 similarly, was not an appropriate business expense and should 21 not have been approved. 22 The gift to Rob Godfrey, that's between Dash 23 and Rob Godfrey and should -- whether that was appropriate, 24 that's -- depends on whatever their relationship is. But 25 again, that was not an appropriate business expense and

1 should not have been approved. It should not have been 2 submitted, and it should not have been approved. 3 Q: All right, thank you. So, the -- the 4 gift to Mr. Andrew was inappropriate for one (1) reason, and 5 the gift to Mr. Godfrey was inappropriate for another reason? 6 A: Well, it may have been appropriate gift, 7 but it was not an appropriate item to submit -- 8 Q: To MFP? 9 A: -- right. 10 Q: And let's talk about the -- the gift to 11 Mr. Andrew. And let's assume for a moment it wasn't expensed 12 through MFP, but the fact that a gift was given of that 13 nature to Mr. Andrew, given his position at the City of 14 Toronto, given the history with the RFQ, et cetera. 15 Would it in your view, have been appropriate 16 for a salesperson to give such a gift, even if they'd paid 17 for it personally -- 18 A: Hmm hmm. 19 Q: -- to a -- a City employee, in the 20 circumstances that -- that we know here? 21 A: Well, can you remind me please. When was 22 that gift given, you mentioned the RFQ. 23 Q: We have a -- it's a good question. We 24 have some issue as to when it was given. According to Mr. 25 Andrew apostrophe S, Mr. Andrew's counsel, it was given in

1 December of 1999. 2 According to the particular Commission 3 document, part of Mr. Domi's expense account, it was given in 4 December of 2000. So -- 5 A: That's a full year discrepancy. 6 MADAM COMMISSIONER: I'm not sure -- I wasn't 7 sure if it was exactly quite like that, Mr. Manes. I think 8 Mr. Domi seemed to think that it was given December 2000, and 9 he felt that it was given December 2000. 10 The one (1) -- the difficulty with the expense 11 accounts, from what I could gather, is that with respect to 12 December '99 or December 2000, there are -- there is a 13 specific expense marked for December 2000, that -- that is 14 from Birk's, and we seem to know that the pen was from 15 Birk's. And so the assumption was made, I think, that -- 16 that the pen was the Birk think in December of 2000. 17 Now, Mr. Andrew's counsel seemed -- has said 18 that when Mr. Andrews (sic) comes and testify -- when Mr. 19 Andrew comes to testify, he will say it was December of 1999, 20 and not December of 2000. 21 I would be interested, regardless of what -- 22 of what the answer is, whether it's 1999 or 2000, I would be 23 interested in any event, after Mr. Manes has asked this 24 particular question, of whether you think that's an 25 appropriate gift to a City employee, whether there's an RFQ

1 going on or not, in a business context? 2 MR. DAVID MOORE: Can I just add, and it may 3 not matter, if -- it may be a question of interest in any 4 event to you, as you've just said, but -- but I think perhaps 5 one (1) of the points in terms of the chronology, whatever -- 6 my recollection is that the pen shows up on the January 7 report. But perhaps the most significant document is -- 8 MADAM COMMISSIONER: January of...? 9 MR. DAVID MOORE: 2001. 10 MADAM COMMISSIONER: I see, 2001. 11 MR. RONALD MANES: January 19th, that's 12 right. 13 MR. DAVID MOORE: But -- but of course we 14 know that -- that expenses may be put on a report, but 15 doesn't necessarily mean that's proximate to the expense. So 16 -- so that may be of some value, but -- but -- but perhaps 17 the most significant is the fact that the Visa bill, the Visa 18 receipt and chit is dated December of 2000. 19 Now, ultimately -- 20 MADAM COMMISSIONER: Right. 21 MR. DAVID MOORE: -- we'll have to wait on 22 Mr. Andrew, and -- and if that remains a live factual issue, 23 I'm not sure that -- that a huge amount will turn on that in 24 the grander scheme of things, but to the extent it does, 25 you'll have to make a finding.

1 But -- but just since we're talking -- 2 MADAM COMMISSIONER: Maybe what we could do 3 is have Mr. Flanagan answer essentially three (3) 4 hypotheticals. Assuming December 1999, assuming December 5 2000, and assuming no date at all but in that -- somewhere in 6 that period. 7 MR. RONALD MANES: That's where -- 8 MADAM COMMISSIONER: Okay. 9 MR. RONALD MANES: -- I'm going on -- 10 MADAM COMMISSIONER: You'll -- 11 MR. RONALD MANES: -- it. I might say that 12 -- that it was my recollection, limited to that, that when 13 Mr. MacKenzie raised that potential evidence, Mr. Domi's 14 response in that -- in that respect was that made him unclear 15 as to whether it was December '99 -- 16 MADAM COMMISSIONER: Right. 17 MR. RONALD MANES: -- or December 2000 or -- 18 MADAM COMMISSIONER: I think you're right. I 19 -- I think later on, Mr. Domi said he thought it was December 20 2000. I don't think he was 100 percent clear. 21 MR. RONALD MANES: All right. 22 MADAM COMMISSIONER: So let's ask Mr. 23 Flanagan each one -- 24 MR. RONALD MANES: Okay -- 25 MADAM COMMISSIONER: -- and -- and --

1 MR. RONALD MANES: -- and that's fine. 2 MADAM COMMISSIONER: -- not get up -- too 3 caught up on it. 4 5 CONTINUED BY MR. RONALD MANES: 6 Q: Let's proceed with the first assumption 7 that Mr. Domi, of his own accord, bought Mr. Andrew a gift, 8 paid for it himself, of a gold pen. Now, just to put this -- 9 MADAM COMMISSIONER: Paid for it himself? 10 MR. RONALD MANES: As a gift for Mr. Andrew. 11 MADAM COMMISSIONER: Okay. 12 MR. RONALD MANES: Just to put this into -- 13 into context. I may have rushed into this too fast. 14 15 CONTINUED BY MR. RONALD MANES: 16 Q: We know here and have accepted that Mr. 17 Andrew gave this pen back ultimately, in effect, saying that 18 it was inappropriate to receive it. So -- 19 A: So if the -- if I understand, your 20 question is if Mr. Domi did not put this item on his expenses 21 but paid for it personally, would it have been appropriate 22 for him to offer that as a gift? 23 Q: That's right. If -- if that came to your 24 attention. What would you have done? 25 A: Well, I don't think it's -- I don't think

1 it's appropriate and I'm -- I'm assuming it wasn't part of a 2 gift exchange between the two (2) men and that it was a one- 3 way event but I don't think it would be appropriate and I 4 think would show poor judgement to offer a gift of that order 5 to a customer. 6 Q: Can you expand just a bit further why you 7 feel that that would have shown poor judgement? 8 A: It's just too expensive and too 9 meaningful an item to offer to somebody in a situation where 10 it's important to maintain a sense of propriety. 11 MADAM COMMISSIONER: Now, when Mr. Domi was 12 here the impression I got from him was that well, this is 13 just a pen. He said pens were given in business context and 14 this was just a pen. 15 THE WITNESS: Well, I -- I would agree if it 16 was a thirty-five dollar ($35) pen then I think the order of 17 magnitude is such that it is not cause for concern and it's 18 possible Mr. Andrew attributed little value to the pen and 19 didn't know what it cost and would potentially mitigate 20 concerns of extending that gift but still if the person 21 offering it knows what it costs, seven (7) -- I'm sorry. Is 22 it five (5) or seven hundred dollars ($700), the pen? 23 But anyhow, either case, five hundred (500) or 24 seven hundred dollars ($700) is too much to spend on a 25 personal gift for a customer unless there is some other

1 aspect to the relationship where gifts are exchanged of 2 comparable value. 3 4 CONTINUED BY MR. RONALD MANES: 5 Q: You used the -- the term propriety. Can 6 I suggest something to you in -- in terms, just digging down 7 about what the meaning of that is in this context. 8 Are you saying that -- are you using the word 9 propriety in the sense that giving such an expensive gift 10 makes it look like the person giving the gift is trying to 11 influence the person receiving the gift with that gift? 12 A: Yes. 13 Q: So that when you pick the number thirty- 14 five dollars ($35) as a pen, it wouldn't look like, with a 15 thirty-five dollar ($35) pen, that any person stepping back 16 would have a reasonable apprehension that that gift was made 17 to influence this other person's decision but when you get up 18 to seven hundred dollars ($700) in a pen, then the 19 appearances are quite different? 20 A: Well, at thirty-five dollars ($35) 21 there's much less likely that there would be that concern. 22 And individuals have to use their best judgment. And they 23 have to take some guidance from what they observe the 24 customers habits are, and the way other vendors treat that 25 customer.

1 But I can't imagine a situation where a 2 customer routinely accepts items of that value from vendors. 3 Q: Mr. Domi told us that he had never 4 received any training on the appropriateness or 5 inappropriateness of the kind of expenditures he made on his 6 expense account. 7 He had never gone to HR, Human Resources, he 8 had never seen the policies -- the Policy Manual at MFP and 9 that to put it at its highest, he just didn't see anything 10 wrong with making that kind of gift to Mr. Andrew. 11 Would you expect a person in Mr. Domi's 12 position to have appreciated that that gift was too much, or 13 not, assuming he had no training from MFP about it? 14 A: I would still expect that he would 15 understand that that gift, that it was unlikely it was 16 inappropriate -- sorry, it was likely to be inappropriate. 17 If he offered that gift very early on in his time at MFP to a 18 customer and the customer gave it back with a comment that it 19 wasn't appropriate to have such a gift offered, and then Mr. 20 Domi didn't do it again, I think that would be an 21 understandable situation. 22 Q: All right. 23 MADAM COMMISSIONER: Do we know whether he did 24 get the training? Have you had an opportunity to look into 25 whether Mr. Domi ever received any training with respect to

1 expenses? 2 Because you answered the question assuming 3 there was no training. 4 THE WITNESS: I'm not aware that he received 5 any training and -- but I have not looked into it. 6 MR. DAVID MOORE: And Commissioner that's an 7 area that we will try to look into if we can. 8 MADAM COMMISSIONER: All right. 9 MR. DAVID MOORE: I know that there is a brief 10 note in Ms. Payne's -- one (1) of her books that refers to 11 training in conjunction with Mr. Domi's start. 12 And the person who would know best would be 13 Human Resources and we intend to make those inquiries and 14 discuss that further with Commission Counsel. 15 MADAM COMMISSIONER: Okay. 16 Thank you, Mr. Moore. 17 MR. DAVID MOORE: Thank you. 18 MR. RONALD MANES: According to what I 19 recollect of the evidence, Mr. Domi, Mr. Nigro and Mr. 20 Pessione -- 21 MADAM COMMISSIONER: Pessione? 22 MR. RONALD MANES: Yes, Mr. Pessione all 23 testified that they received no training. 24 MADAM COMMISSIONER: No, I understand that. 25 I'm just asking -- I know that they did that, I know that

1 they said that. 2 MR. RONALD MANES: All right. 3 MADAM COMMISSIONER: I was asking this witness 4 whether he had any other information. 5 MR. RONALD MANES: Okay. 6 7 (BRIEF PAUSE) 8 9 CONTINUED BY MR. RONALD MANES: 10 Q: There was evidence here about the 11 expensing to MFP of a strip club attendance. Mr. Nigro, Mr. 12 Domi and some potential clients of MFP. 13 MR. DAVID MOORE: Well, again in the context 14 that I'm having to deal with the notion that that was -- that 15 all the people who attended that instance were potential 16 clients, I think My Friend knows, and I don't know that it's 17 a matter of record at this point, but I think My Friend 18 knows, that there's some real issue as to whether all those 19 people were potential clients of MFP. 20 MADAM COMMISSIONER: I guess the question is 21 asked based on the evidence, is that what -- 22 MR. DAVID MOORE: Well, it's --again in the 23 context -- 24 MADAM COMMISSIONER: Well, whatever -- you 25 know, whether they're potential clients, whether they're

1 currently clients, whether -- I think the question as I'm 2 hearing it, is does MFP consider it to be appropriate to 3 expense going to a strip club, for any of its employees, in 4 the course of their entertaining anybody, whether they're 5 current clients or prospective clients. 6 That's how I'm hearing the question, is 7 that -- 8 MR. RONALD MANES: That's the question. 9 MADAM COMMISSIONER: Okay. 10 THE WITNESS: So, I'm clear, there's one (1) 11 evening, I understand that's involved here and there were no 12 -- there was nobody from the City of Toronto in attendance? 13 14 CONTINUED BY MR. RONALD MANES: 15 Q: Correct. 16 A: So, the general situation is it 17 appropriate to entertain clients at a strip club. I don't 18 feel that's appropriate. 19 MADAM COMMISSIONER: Now -- sorry, Mr. Manes, 20 are you going further in that one (1), because I just have a 21 question with respect to Mr. Nigro on that. Are you going 22 further into that? 23 MR. RONALD MANES: I -- I wasn't going to, I 24 was going to leave that -- that area, but -- 25 MADAM COMMISSIONER: Okay.

1 THE WITNESS: Sorry -- 2 MADAM COMMISSIONER: Yes. 3 THE WITNESS: -- Commissioner, I -- I would 4 say too, my understanding is that in the approximately, I 5 think it's three (3) years worth of expenses that have been 6 reviewed for Mr. Domi, and the approximately two (2) years of 7 expenses for Mr. Nigro, I believe this is the only situation 8 where -- 9 MADAM COMMISSIONER: Right. 10 THE WITNESS: -- the strip club is in 11 question, so. 12 MADAM COMMISSIONER: Right. 13 MR. RONALD MANES: That's quite right, 14 thanks. 15 MADAM COMMISSIONER: Just let me -- what I 16 wanted to ask about is -- is my rec -- and I'm only going on 17 my recollection of the evidence here, and somebody can help 18 me if I -- if I'm wrong. 19 But, Mr. -- when Mr. Domi expensed this, this 20 endeavour, this entertaining endeavour, he testified that it 21 was -- that it was a client of Mr. Nigro's, as far as he was 22 aware, I think, or a potential client. I can't remember 23 exactly which, but it was Mr. Nigro's account. 24 And that Mr. Nigro had called him to -- to 25 come to this club, and then ultimately Mr. Domi ended up

1 expensing the thing. 2 Now, at that point Mr. Nigro had been with 3 MFP, I think maybe a month. That's the part I'm -- I'm just 4 having to go from memory here. So I'm wondering if, assuming 5 Mr. Domi's evidence is -- is accurate, would anyone have 6 spoken at MFP to Vince Nigro, if he was hired on your watch, 7 as it were -- 8 THE WITNESS: Hmm hmm. 9 MADAM COMMISSIONER: -- would anyone have 10 spoken to Mr. Nigro about what he could or could not expense, 11 because this happened so soon after he started? 12 THE WITNESS: It is possible that nobody had 13 a discussion about what he could and could not expense with 14 them. I don't believe I had the discussion with him. 15 It would be routine that upon joining MFP, he 16 like any other new employee, would have had a meeting with 17 somebody in our HR Department, or Human Resources Department, 18 where they would be pointed to the policy manual that's on 19 our Internet, and cover items, probably provided with expense 20 forms, medical and dental benefit claim forms, set up payroll 21 information and so forth. 22 But in terms of an explicit discussion about 23 what events were viewed as appropriate to expense and which 24 weren't, I'm not aware that he ever had that discussion with 25 anybody.

1 MADAM COMMISSIONER: Okay. 2 3 (BRIEF PAUSE) 4 5 MR. RONALD MANES: Commissioner, the date of 6 that the -- the expense was incurred -- 7 MADAM COMMISSIONER: Was what, sorry? 8 MR. RONALD MANES: The date the expense was 9 incurred -- 10 MADAM COMMISSIONER: Yes. 11 MR. RONALD MANES: -- of the visit, was 12 September 21st -- 13 MADAM COMMISSIONER: Of which year? 14 MR. RONALD MANES: -- 2001, 2000 rather. 15 So -- 16 MADAM COMMISSIONER: 2000, and Mr. Nigro had 17 started -- 18 MR. RONALD MANES: In September, we don't 19 know -- 20 MADAM COMMISSIONER: -- in September of 2000? 21 MR. RONALD MANES: Yes. Now I don't know -- 22 MR. DAVID MOORE: I don't know -- it was 23 early, very early on in his tenure at -- at MFP. 24 MADAM COMMISSIONER: So, I guess what I was 25 really wondering about then is was there something about MFP

1 or about Mr. Nigro that would have made him think that this 2 was appropriate within his first month of starting there, and 3 then having Mr. -- according to Mr. Domi's evidence, having 4 Mr. Domi pay for it? 5 THE WITNESS: Well, I would assume the 6 evening arose or evolved subsequent to a discussion with the 7 customer, and quite likely after a stated preference by the 8 customer. 9 But again, I think it's helpful to keep in 10 mind that it doesn't appear that neither Mr. Nigro or Mr. 11 Domi had any habit of -- 12 MADAM COMMISSIONER: Right. 13 THE WITNESS: -- going to strip clubs. 14 MADAM COMMISSIONER: Right. 15 THE WITNESS: So... 16 17 (BRIEF PAUSE) 18 19 CONTINUED BY MR. RONALD MANES: 20 Q: Mr. Flanagan, in terms of the 21 Commissioner's last question and it basically regards, 22 perhaps, the -- whether the -- the culture at MFP somehow, 23 directly or indirectly, contributed to the manner in which 24 they approached their expense accounts. 25 We've been through the manner in which they've

1 approached their expense accounts and now, some specific 2 instances of that. 3 Firstly, are you able to confirm that there 4 was no limit on -- put to an individual salesperson at MFP on 5 how much they could spend? 6 A: They did not have explicit budgets, no. 7 Q: And in terms of what and how much they 8 could spend on a particular account, was there any limit? 9 A: Again, no explicit limits. Just the -- 10 again, the general guidelines of using your own judgement in 11 terms of appropriateness and whether or not it was worthwhile 12 -- 13 Q: All right. 14 A: -- to spend that amount of time, let 15 alone the money, with -- with an account. 16 Q: And are you able to say now, in 17 retrospect, having reviewed all -- all the procedures and -- 18 that went into approving Mr. Domi's expense account, Mr. 19 Nigro's expense account, are you able to confirm that it is 20 at least questionable whether they were at all effective? 21 MADAM COMMISSIONER: I don't understand your 22 question, Mr. Manes. 23 MR. RONALD MANES: Whether the procedures at 24 MFP in reviewing Mr. Domi's expense account and Mr. Nigro's 25 expense account were effective.

1 THE WITNESS: Well, it -- it -- it's -- you 2 know, the short answer is no, they weren't as effective as I 3 would have liked them to be. 4 It is a difficult situation. If you're -- 5 you're not, as a manager, prepared to call the establishments 6 that are listed on the expense form or call the individuals 7 that are listed on an -- on an expense form to validate their 8 attendance and to confirm the point of the meeting, you do 9 have take on faith that that's -- what is presented is, in 10 fact, an actual fair representation of -- of the event and 11 who was in attendance. 12 13 CONTINUED BY MR. RONALD MANES: 14 Q: You have, to some extent, trust the 15 judgement of the salesperson involved? 16 A: Absolutely and -- but just so I'm clear 17 here, there's a couple of things that have been referred to 18 and, in particular the pen and the cufflinks, I don't think 19 there's -- nobody has presented to me that those items were 20 misrepresented on Mr. Domi's expenses. 21 My point was that they were approved and I 22 don't feel they should have been approved. Were -- and I 23 view myself as ultimately responsible for that -- for those 24 two (2) items. 25 MADAM COMMISSIONER: W --

1 MR. RONALD MANES: Well -- 2 MADAM COMMISSIONER: Were they -- in terms of 3 being misrepresented in -- 4 THE WITNESS: Well, I said I -- I don't 5 believe they were misrepresented on his submission. 6 MADAM COMMISSIONER: What we heard here is 7 that with respect to his expense accounts, that what Mr. Domi 8 would do is he would write -- let's say he was having dinner 9 with Vince Nigro and in the course of having dinner with 10 Vince Nigro, they discussed other people. 11 So they discussed, say Wanda Liczyk and what 12 Mr. Domi told us what he would do then is he would -- not 13 consistently, but what he might do is put down on his 14 expense, dinner at such and such a place with Vince Nigro and 15 Wanda Liczyk or anybody else but -- or just City of Toronto. 16 Okay and -- 17 THE WITNESS: Where did Vince Nigro work at 18 the time in this -- 19 MADAM COMMISSIONER: I've -- 20 THE WITNESS: -- at this -- 21 MADAM COMMISSIONER: Well, it was all the way 22 -- let me not take Vince Nigro, then, because sometimes he 23 was working with the City; sometimes he was with MFP. 24 So he might be with, let's say with Vince 25 Nigro when he was at MFP and they were talking about City of

1 Toronto. 2 THE WITNESS: I'm sorry, met with? 3 MADAM COMMISSIONER: Dash Domi. Dash Domi 4 testified -- 5 THE WITNESS: Hmm hmm. 6 MADAM COMMISSIONER: -- that when he filled 7 out his expense accounts, if in the course of wherever he was 8 that he was talking about somebody that he would put that 9 somebody's name on his chit, for example. 10 A lot of the chits have various names, and as 11 I'm sure you've already read, as a result of that there's an 12 allegation out there that there was a lot of entertaining up 13 to a high amount because the City of Toronto is -- 14 THE WITNESS: Hmm hmm. 15 MADAM COMMISSIONER: -- mentioned there. So 16 I guess what I'm wondering about, you said that no one has 17 told you that they were -- that there was misrepresentation? 18 THE WITNESS: Well, I was specifically 19 referring to the two (2) items that we -- or two (2) of the 20 items we've talked most about which were the pen and the 21 cufflinks. 22 If your question now is what's my opinion of 23 submitting an expense form with a name -- an individual's 24 name on that form who was not in attendance -- 25 MADAM COMMISSIONER: Right. Help me with

1 that. 2 THE WITNESS: No, the -- when you initial or 3 sign an expense form you submit, you're implying or -- you're 4 implying that it's an accurate representation of what took 5 place and if you put a name down, that's implying that that 6 person was in attendance. 7 MADAM COMMISSIONER: And is that what you 8 would take when you were looking at his expense account? 9 Would you then assume that he was with the people he -- that 10 were listed? 11 THE WITNESS: To the extent I noted who was 12 there, yes. 13 MADAM COMMISSIONER: Hmm hmm. 14 THE WITNESS: That's -- 15 MADAM COMMISSIONER: Okay. 16 THE WITNESS: -- clear. That would be my 17 assumption, if I reviewed an expense submission. 18 MADAM COMMISSIONER: Okay. Mr. Manes, I know 19 it's -- it's 11:30, anyway. So should we take the morning 20 break? 21 MR. RONALD MANES: Yes. Thank you, 22 Commissioner. All right. We'll return at ten (10) to. 23 THE REGISTRAR: The Inquiry will recess until 24 ten (10) to 12:00. 25

1 --- Upon recessing at 11:30 a.m. 2 3 --- Upon resuming at 11:50 a.m. 4 5 THE REGISTRAR: The Inquiry will resume, 6 please be seated. 7 MR. DAVID MOORE: Madam Commissioner, can I 8 just deal with something very briefly, Mr. Manes was 9 concerned at the break that I'd been unfair to him in some of 10 my remarks this morning. 11 I had understood, and -- and people sometimes 12 misunderstand, but it was my understanding that Mr. Manes was 13 not intending to take a position. If his recollection is 14 different, so be it, and -- and that sometimes happens, but 15 that was my understanding. 16 In addition, when I -- in my submissions 17 indicated I was astounded at the position. I was not 18 referring to any changes in position. Counsel are always 19 entitled to reconsider their position and take a different 20 position. Well, whether it is a different position or not. 21 So, I wasn't intending to suggest that there 22 was anything inappropriate about that, I just didn't 23 understand the substantive position, and I -- Mr. Manes had 24 expressed concern to me about that, and so I wanted to 25 briefly address it.

1 MADAM COMMISSIONER: Thank you, Mr. Moore. 2 MR. DAVID MOORE: Thank you. 3 MADAM COMMISSIONER: All right. Mr. 4 Manes...? 5 MR. RONALD MANES: And I thank Mr. Moore for 6 that as well. 7 8 CONTINUED BY MR. RONALD MANES: 9 Q: Now, Mr. Flanagan, I just have hopefully 10 a few questions left. And it's -- they're both in the area 11 of entertaining, two (2) general questions. 12 Firstly, did MFP have any attitude towards the 13 City of Toronto in relation to whether they or it welcomed 14 entertainment or had a policy against entertainment. Can you 15 help us in that area? 16 A: My -- my impression, that might be a 17 better description than attitude, but that my view was that 18 the City staff or people associated with the City were 19 willing to participate in events and be entertained and I was 20 under the impression that they were reasonably accessible to 21 MFP and other vendors. 22 23 (BRIEF PAUSE) 24 25 Q: And the second area is the amount of

1 entertaining. And in that regard, I'd like to draw on your 2 experience and see if you can help us. As I recall, just to 3 put us in context here, you spent three (3) years in hardware 4 sales, in effect, at IBM? 5 A: Yes. 6 Q: And there were three (3) leasing 7 companies that -- IT leasing companies that you worked for as 8 a salesperson? 9 A: Yes. 10 Q: One (1) I think, CMI was a comparable 11 size -- 12 A: Correct. 13 Q: -- to MFP, and two (2) were not. And 14 then of course you worked for GE Capital, between 1996 and 15 1998? 16 A: Correct. 17 Q: That was -- you -- did you have anything 18 to do with sales in that regard at GE Capital? 19 A: I did in -- in relation to wholesale 20 sales. So buying and selling for other leasing companies and 21 in a support role to our end-user customer sales reps. 22 Q: Yeah. In all of these jobs, did your 23 various companies have policies in relation to expenses? 24 Policies in relation to donations? Policies in relation to 25 conflict of interest? Policies in relation to appropriate

1 conduct of its salespeople? 2 A: GE and IBM certainly had, although I 3 can't recall every reviewing those and the other firms, I'm 4 not aware one way or another if they had documented policies 5 and guidelines on those items. 6 Q: Did you have any sense -- well, let me 7 preface this by asking you to assume something. Assume that 8 Mr. Domi was handing in expense accounts to MFP in the area 9 of two (2) to four thousand dollars ($4,000) a month or more 10 in relation to City of Toronto entertaining. Just -- just 11 assume that. 12 Would that have caused you any concern as to 13 the sheer amount of -- of that volume of entertaining? 14 MR. DAVID MOORE: Can I just -- 15 THE WITNESS: No. Well, the two (2) to four 16 thousand (4,000)? Is that your question? 17 MADAM COMMISSIONER: Hang on a second, Mr. 18 Flanagan. 19 MR. DAVID MOORE: That was my concern. That 20 -- that two (2) to four thousand (4,000) or more is kind of 21 an open-ended question that may not be a huge amount of 22 value. 23 MADAM COMMISSIONER: To that, Mr. Manes meant 24 two thousand (2,000) to four thousand (4,000) -- 25 MR. RONALD MANES: Yes, Mr. Moore, did I --

1 MADAM COMMISSIONER: -- or more -- 2 3 CONTINUED BY MR. RONALD MANES: 4 Q: All right. Two (2) to four thousand 5 dollars ($4,000) and by the way, I'm excluding from this any 6 special permission for the flights. I'm just talking on -- 7 in general, you see two (2) to four thousand dollars ($4,000) 8 coming through from a salesman -- from Mr. Domi every month. 9 A: That is -- no, that wouldn't have caused 10 me particular concern, although that is -- four thousand 11 (4,000) certainly is getting into the higher range of what we 12 see from a salesman in terms of entertaining. 13 Q: Would that have been your experience at 14 GE Capital and IBM that there would not have been any upset 15 at those kinds of figures, two (2) to four thousand dollars 16 ($4,000) from a salesperson? 17 A: That's consistent with my view of events 18 at those organizations. Certainly at GE, I can't -- I -- I 19 should correct myself. I worked with many small accounts at 20 IBM and at that point an -- at IBM with those types of 21 accounts, we did not entertain much. 22 Q: At -- at IBM? 23 A: Correct. 24 Q: Did you have an -- an impression while 25 you were at MFP as to the amount of entertaining that was

1 going on at the City of Toronto by your competitors for this 2 RFQ? 3 A: Yes, I have an impression. I -- I -- but 4 I would comment, it's not just this RFQ. There -- there's 5 much business or a great amount of business that goes on with 6 the City and there's more business than just this leasing 7 RFQ. I'm assuming activity by other vendors similar to MFP 8 dealt with more than just this leasing RFQ. 9 Q: Did you have an impression of the amount 10 of entertaining they were -- your competitors were doing? 11 A: Yes, I was under the impression that they 12 took City people to the Air Canada Centre, that they took 13 them golfing, that they participated in City sponsored 14 charitable events, as MFP would. 15 Q: And in terms of the -- of the volume that 16 Mr. Domi was doing, in particular, did you have any 17 impression as to whether a similar volume would -- was being 18 done by your competitors? 19 A: I couldn't say in terms of volume but 20 again, I would comment that my impression was other vendors, 21 as well as our -- some of our competitors on -- excuse me, 22 the -- the leasing RFQ offered similar entertainment 23 opportunities to the City people as MFP did. 24 25 (BRIEF PAUSE)

1 Q: I understand from discussions with 2 Commission Counsel that you met the following people in the 3 Air Canada box, and I'll just name them and you can agree or 4 disagree if I've misnamed them, as I'm going through every 5 one (1) with you. 6 Ms. Bulko, Ms. Leggieri -- 7 MADAM COMMISSIONER: Just a minute, you're 8 going a little fast for -- 9 MR. RONALD MANES: All right. 10 THE WITNESS: Excuse me, Mr. Manes, I don't 11 believe that's what I discussed with Commission Counsel -- 12 MR. RONALD MANES: Oh, sorry. 13 THE WITNESS: -- I don't think -- I don't 14 think it was specifically at the Air Canada Centre, I believe 15 it was a more general question, who had I met. 16 17 CONTINUED BY MR. RONALD MANES: 18 Q: All right, then I don't -- 19 A: I believe. 20 Q: -- all right, that's fine. I won't -- 21 won't pursue that in -- in that respect. 22 But to -- 23 A: I'm happy to comment on where I think I 24 met many individuals. 25 Q: Oh, no need. I want to ask you about one

1 (1) -- two (2) specific people. Did you ever meet Mr. 2 Andrew? 3 A: Yes. 4 Q: And where was that? 5 A: I met him a number of times, I did meet 6 him at the -- the CIO's Charity Golf Tournament, so he was I 7 guess essentially the -- the sponsor of that, or the 8 convener, if you like. 9 I've met him at the Air Canada Centre, and 10 that time in particular he was the guest of another vendor's, 11 and he came over to say hello. And I've met him a number of 12 times. 13 Q: And I understand that you have never met 14 Mr. Tom Jakobek? 15 A: I have not. 16 Q: All right. 17 18 (BRIEF PAUSE) 19 20 . 21 MR. RONALD MANES: All right, so, those are 22 my questions, Commissioner. 23 MADAM COMMISSIONER: Okay, do we -- do we 24 know who's next? 25

1 (BRIEF PAUSE) 2 3 MR. WILLIAM ANDERSON: I'll go first by 4 saying that I have no questions for this witness. 5 MADAM COMMISSIONER: Okay. 6 MS. BAY RYLEY: I'll go second by saying I -- 7 neither do I. 8 MADAM COMMISSIONER: All right, well then, 9 Mr. Capern, I guess that's you. 10 MR. GORDON CAPERN: Great, thank you, 11 Commissioner. 12 MADAM COMMISSIONER: Mr. Capern acts for the 13 City of Toronto. 14 THE WITNESS: Thank you. 15 MADAM COMMISSIONER: You've probably figured 16 that out by now. 17 Just -- just before he asks you a question, in 18 the time that you were working for other individuals -- other 19 companies, IBM and GE Capital, you were working in sales? 20 THE WITNESS: Not directly in sales to end 21 users, I was in a direct sales capacity with other leasing 22 companies to buy and sell used equipment from them on a 23 wholesale basis. And my involvement with end user customers 24 was in conjunction with an outside sales rep, or an end user 25 sales rep.

1 So, for example, if it was the situation at 2 the City of Toronto, I would have been in a role more similar 3 to Rob Wilkinson's -- 4 MADAM COMMISSIONER: Okay. 5 THE WITNESS: -- than Dash Domi's. But I 6 would have had some involvement. 7 MADAM COMMISSIONER: All right, thank you. 8 9 (BRIEF PAUSE) 10 11 MR. GORDON CAPERN: Thank you, Commissioner. 12 13 CROSS-EXAMINATION BY MR. GORDON CAPERN: 14 Q: That actually segues, Mr. Flanagan, into 15 my first area of questioning for you, which is to get a 16 slightly better understanding of your role at the company, 17 and in particular in relation to the bid for the computer 18 leasing contract with the City of Toronto. 19 Just to help me understand better, have you 20 had the opportunity in preparing for today to review the 21 transcripts of the other present or former MFP employees, who 22 have testified to date? 23 A: I have read a good portion, but not all 24 of Dash Domi's testimony; a reasonable portion again, but not 25 all of Vince Nigro's. I've read none of Irene Payne's, and I

1 have read none of Peter Wolfraim's. I'm not sure if there 2 were any other witnesses. 3 MADAM COMMISSIONER: Rob Ashbourne. 4 THE WITNESS: Mr. Ashbourne, I've not read 5 his either, no. 6 7 CONTINUED BY MR. GORDON CAPERN: 8 Q: Let me just understand then, bearing that 9 in mind, when I had the opportunity to examine Ms. Payne, to 10 give -- and have her give a description of the relative 11 levels of expertise of the MFP employees who were involved in 12 the Toronto bid, she distinguished in part, the -- I guess 13 the technical skills, the technical leasing and financial 14 skills that one (1) might find with Rob Wilkinson from the 15 absence of those skills that one (1) might find with Mr. 16 Domi, if I can use them as opposite ends of the -- of the 17 spectrum. Is that -- are you comfortable with that 18 characterization? 19 A: Yes. 20 Q: In other words, Mr. -- you agree that Mr. 21 Wilkinson would be the person at MFP who'd have among the 22 highest technical skills both in leasing and finance; is that 23 fair to say? 24 A: That's fair. 25 Q: All right. And Mr. Domi would be at the

1 other end of that spectrum as someone who had limited or no 2 expertise in -- in finance and -- and in leasing? 3 A: That's fair, at that time, yes. 4 Q: Thank you. And that's exactly what I'm 5 asking about is at the time that is relevant for the purposes 6 of the Inquiry. 7 And I wanted to get a sense of how you would 8 fit yourself in that spectrum, are you more like Rob 9 Wilkinson in your skill set, or more like Mr. Domi in your -- 10 A: I'm more like -- 11 Q: -- first of all dealing strictly with 12 your technical, leasing and finance skills? 13 A: More like Rob Wilkinson. 14 Q: And can you help me with what background 15 you have that assists your -- that allows you to say that 16 you're more like Mr. Wilkinson than Mr. Domi? 17 A: I have a commerce degree and I have 18 fifteen (15) or more years of experience in the business. 19 Q: And those are things that assist you in 20 -- in developing expertise in both leasing and finance? 21 A: Yes, without getting into details of what 22 you mean specifically by leasing and finance, but in terms of 23 -- well actually I won't make any assumptions what you mean 24 by that -- 25 Q: Right.

1 A: -- but my skill set would be much closer 2 to Rob Wilkinson's than to Dash Domi's. 3 Q: Would you help me understand then, 4 perhaps give me some specific examples of, again, going back 5 to the time. The types of things that either you or Mr. 6 Wilkinson could do in that area, that Mr. Domi could not do. 7 What are the types of things that you were able to 8 accomplish, which he wasn't? 9 A: Well, the first off, I don't -- I didn't 10 work directly with Dash Domi at that time, so I'm not sure 11 what he couldn't do. Rob Wilkinson I know does some fairly 12 extensive financial modelling and he uses some computer tools 13 to assist him in that. 14 I'm pretty confident that Dash Domi cannot do 15 those things, whether or not Dash can do the straight forward 16 calculations associated with a single lease transaction, he 17 might well be able to do that, I'm not sure. 18 But -- but -- and I'm not -- anyhow, sorry, 19 I'll let you continue. 20 Q: Yeah, I'm just -- I'm just trying to 21 explore a little bit about -- about the reason why your, I 22 guess former colleagues would have -- or and present 23 colleagues would describe a difference in the skill sets 24 between Rob Wilkinson on the one (1) end and Mr. Domi on the 25 other.

1 And -- 2 MADAM COMMISSIONER: Were you talking about 3 Rob Wilkinson or Rob Ashbourne? 4 MR. GORDON CAPERN: Rob Wilkinson. 5 MADAM COMMISSIONER: Wilkinson, all right. 6 MR. GORDON CAPERN: Thank you, Commissioner. 7 8 CONTINUED BY MR. GORDON CAPERN: 9 Q: And is it just so -- to put I guess that 10 in more concrete terms, for example, if -- if you were 11 approaching the City to describe to them the potential cash 12 flow impacts of choosing, for example, a five (5) year lease 13 term versus a three (3) year lease term, you would expect 14 that the development of those kind of cash flow models would 15 be something that would be within Mr. Wilkinson's skill set? 16 A: Yes. 17 Q: And conversely they would not be within 18 Mr. Domi's skill set? Is that -- is that an example of 19 something he would not be able to do? 20 A: Again, I don't want to be unfair to him. 21 I don't think he could do that but I -- I would say without 22 hesitation that he would not be as effective at it, 23 certainly, as Mr. Wilkinson would be. 24 Q: So that's an example of something that 25 Mr. Wilkinson could do that Mr. Domi possibly could not?

1 A: Correct. 2 Q: And then just -- so, for example, if we 3 were to understand that -- just assume for the purposes of 4 this that the City was interesting in -- interested in 5 understanding the -- the different implications that might 6 flow from a three (3) year lease term versus a five (5) year 7 lease term, you believe that the person at MFP who could best 8 explain that to them or cou -- I guess, as between Mr. 9 Wilkinson and Mr. Domi, the better person would be Mr. 10 Wilkinson? 11 A: Correct. 12 Q: So then taking this back to you, Mr. 13 Flanagan, I wanted to fully understand, if I can, the role 14 that you played in the bid to the City because if I've got 15 the evidence right, you at the time had the title of Vice 16 President of Trading, is this correct? 17 A: Trading and asset management. 18 Q: And as Mr. Manes, I think, put to you, 19 that meant that you were responsible for, among other things, 20 assisting MFP in getting rid of -- selling off computer 21 assets that would come off lease at the back end of a lease? 22 A: Correct. 23 Q: So -- and if I've understood your 24 involvement in the City bid properly or at least one (1) of 25 the things that you did was to assist MFP in fixing the

1 residual when it was first calculating -- doing the necessary 2 calculations to allow it to respond to the City's RFQ in June 3 of 1999? 4 A: Not precisely. We -- I think we covered 5 this in a discussion of the residual grid. 6 The actual residual values for a specific 7 piece of equipment, we would set that independently of a 8 specific deal. 9 My discussion and involvement in preparing the 10 -- the RFQ response for the City of Toronto would have 11 focussed more on the actual equity or lease rates that we 12 were going to quote and less so than the residual value we 13 would book -- 14 Q: So -- 15 A: -- on that deal. 16 Q: Yes -- so -- so -- okay, let me just 17 understand that. Dealing first with the work that you do on 18 the residuals. I understand, I think, the point that you 19 make about that, which is that it's important for MFP's 20 business that there be some objectivity to the residuals in 21 the sense that you don't want -- 22 A: Correct. 23 Q: -- the residuals fluctuating because some 24 salesman or another thinks that you can get more for an IBM 25 computer from the City of Toronto than you can from City of

1 Windsor? 2 A: That's right. 3 Q: Using that as an example. So it's 4 important for you guys to maintain your objectivity with 5 respect to the establishment of resi -- re -- of the 6 residuals? 7 A: Correct. 8 Q: And that's why you do it independent of 9 the -- of a transaction? 10 A: Correct. 11 Q: N