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 January 7th, 2003 25

2
  1                        APPEARANCES
  2  
  3  Ronald Manes            )Commission Counsel 
  4  Patrick Moore           )
  5  Diana Groskaufmanis     ) 
  6  Linda Rothstein         )City of Toronto 
  7  Lily Harmer (np)        )
  8  Robert Centa   (np)     )
  9  Gordon Capern           )
 10  David Moore             )MFP 
 11  Fraser Berrill          ) 
 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 (np)     )Jim Andrew
 23  Paul Cavalluzzo (np)    )Dash Domi
 24  
 25  Joyce Ihamaki           )Registrar

1 TABLE OF CONTENTS 2 Page 3 PETER WOLFRAIM, Resumed 4 Cross-Examination by Mr. William Anderson 6 5 Cross-Examination by Ms. Linda Rothstein 46 6 7 Certificate of Transcript 247 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

1 EXHIBITS 2 No. Description Page 3 8 2 page unbound document 6 4 dated January 06, 2002 from 5 Cavalluzzo Hayes Shilton 6 McIntyre & Cornish regarding 7 Standing for Dash Domi 8 9 6, Volume 3 Bound Book of Documents 7 10 Titled "J. Peter Wolfraim, 11 Volume 3" Tabs 1 to 57 12 13 14 15 16 17 18 19 20 21 22 23 24 25

1 --- Upon commencing at 10:00 a.m. 2 3 THE REGISTRAR: The inquiry is now in 4 session. Please be seated. 5 6 PETER WOLFRAIM, Resumed 7 8 MADAM COMMISSIONER: Good morning. Welcome 9 back after hopefully a nice restful two (2) week respite. 10 I understand there has been another request 11 for standing. We received a letter, Mr. Manes, from Mr. 12 Cavalluzzo? 13 MR. RONALD MANES: Yes, that's correct. A 14 letter from Mr. Cavalluzzo, Cavalluzzo Hayes, that we 15 received on January 6th, 2003, representing Mr. Dash Domi and 16 requesting standing in this -- in this Commission. 17 If I can hand that letter up to you -- 18 19 (BRIEF PAUSE) 20 21 MADAM COMMISSIONER: Yes -- 22 MR. RONALD MANES: And I might say, 23 Commissioner, that Commission Counsel supports the 24 application for the reasons set out in Mr. Cavalluzzo's 25 submission letter.

1 THE REGISTRAR: That would be Exhibit 8. 2 MADAM COMMISSIONER: Thank you. Exhibit 8. 3 4 --- EXHIBIT 8: 2 PAGE UNBOUND DOCUMENT DATED 5 JANUARY 06, 2002 FROM CAVALLUZZO 6 HAYES SHILTON MCINTYRE & CORNISH 7 REGARDING STANDING FOR DASH DOMI 8 9 10 MADAM COMMISSIONER: All right. I've had an 11 opportunity to take a look at this letter. And Mr. Domi is 12 seeking separate standing. 13 It appears to me, certainly from the evidence 14 that I've heard so far, that he would have a substantial and 15 direct interest in the Inquiry and certainly could be helpful 16 to me in preparation of my report. So, I will give him 17 standing. 18 Now, Mr. Manes, has Mr. Cavalluzzo been 19 informed about what all of that entails and has he been 20 spoken to about cross examination, for example, of Mr. 21 Wolfraim? 22 MR. RONALD MANES: Yes, in all those matters, 23 I've spoken with Mr. Cavalluzzo and so has Ms. Groskaufmanis 24 and he's been informed of -- of our rules of procedure and 25 the present status of the proceeding.

1 MADAM COMMISSIONER: Okay and will we make 2 sure, if it already hasn't been done, that all Counsel have 3 copy of the -- of this exhibit, please? 4 MS. DAINA GROSKAUFMANIS: They already do. 5 MADAM COMMISSIONER: They already do? Well, 6 we're just cooking with gas here today. 7 All right. We can -- anything else? 8 MR. RONALD MANES: Yes, just one (1) -- one 9 (1) other matter. There is a third volume of documents for 10 Mr. Wolfraim. 11 Good morning, Mr. Wolfraim. 12 THE WITNESS: Good morning. 13 MR. RONALD MANES: Volume 3, that I'd like to 14 hand up to you, Commissioner. 15 THE REGISTRAR: This shall be Volume -- 16 Exhibit 6, Volume 3. 17 18 --- EXHIBIT NO. 6, VOLUME 3: 19 BOUND BOOK OF DOCUMENTS TITLED "J. PETER 20 WOLFRAIM, VOLUME 3", TABS 1 TO 57 21 22 MR. RONALD MANES: That is quite correct, 23 Registrar. Thank you and that completes our -- our 24 housekeeping for this morning. At least as far as -- 25 MADAM COMMISSIONER: Can you help me just

1 with respect to these last documents. I just want to make 2 sure that -- that -- I don't know -- actually know what they 3 are but did people have them in advance or are these ones 4 that other lawyers have asked to have put in to the -- as an 5 exhibit? 6 MS. DAINA GROSKAUFMANIS: Madam Commissioner, 7 maybe I can answer that question. They were documents that 8 were provided both by the City and MFP. A -- a considerable 9 number of the City's documents were provided to us last week, 10 although there were -- there was a group of documents, that I 11 understand were distributed -- or the -- the list of Begdoc 12 Numbers was distributed to Counsel yesterday. 13 I believe Counsel for MFP have reviewed, in so 14 far as possible, those documents with the witness. Although 15 there may -- they may require some time to go over some of 16 the documents that Mr. Wolfraim hasn't looked at in detail. 17 They -- there was a -- there was a schedule 18 that was proposed by Counsel for the -- for the exchange of 19 documents following the examination -- the direct examination 20 of Mr. Wolfraim and to a great extent that was met, although 21 some documents were put in relatively -- on relatively short 22 notice. 23 MADAM COMMISSIONER: Okay. 24 MR. DAVID MOORE: Well, can I just comment on 25 that?

1 MADAM COMMISSIONER: Yes, please. 2 MR. DAVID MOORE: The circumstances are a 3 little different from my perspective. We'll be able to deal 4 with the problem. I don't want to start out by raising a 5 huge issue about it. 6 I originally had proposed a schedule, which I 7 think Ms. Groskaufmanis re-circulated and -- and adopted with 8 minor variation. The -- the suggestion was that we would -- 9 that MFP would be given a list of the City documents by 10 December 23. That that would then give me opportunity -- us 11 an opportunity to respond with our list of any supplemental 12 documents by January 2. 13 That was the intended schedule that was going 14 to give Commission staff an opportunity to copy and circulate 15 the documents. I took two (2) days off over the holidays, 16 last Thursday and Friday. The first City list that we 17 received was on Friday, January 2. We received a further 18 list on Saturday or Sunday and a further list last night, 19 about six o'clock. 20 I happened to be out at MFP, doing the best I 21 could to go through with Mr. Wolfraim the additional 22 documents that had been received initially on Friday while I 23 was away and -- and then some more over the weekend. 24 So -- and I appreciate all Counsel are 25 labouring under the difficulty of trying to deal with the

1 huge database in a -- in an ongoing situation and we'll 2 continue to try to work with that and do the best we can. 3 The net effect of it all is that the documents 4 that -- that I believe were identified yesterday, there has 5 been no opportunity for me to review those with Mr. Wolfraim. 6 I understand from informal discussions with 7 City Counsel first thing this morning that they anticipate 8 that those documents will not be the subject of the cross- 9 examination until sometime tomorrow and in the circumstances, 10 there's no objection, as I understand it, to my taking an 11 opportunity sometime today, I guess, to take a moment with 12 Mr. Wolfraim and review those documents. 13 So that's -- that's the status. There may be 14 some additional documents that I will want to add. I don't 15 know. I'll consider that and -- and apprise Counsel in due 16 course. 17 MADAM COMMISSIONER: All right. 18 MR. DAVID MOORE: But that -- that's -- we'll 19 just have to, you know, make the best of it and -- and -- and 20 try -- 21 MADAM COMMISSIONER: Okay. Thank you, Mr. 22 Moore. 23 MR. DAVID MOORE: -- to work through it. 24 MADAM COMMISSIONER: Ms. Rothstein, did you 25 want to add something?

1 MS. LINDA ROTHSTEIN: I -- I think Mr. Moore 2 has fairly summarized the situation. A couple of the dates 3 are a little different in my recollection. It doesn't 4 matter. The point being that we don't want to be unfair to 5 Mr. Wolfraim or anyone else, and I assured Mr. Moore this 6 morning that if he needs time to review some of the 7 additional documents with this witness, I will not cross- 8 examine until he has done so. 9 MADAM COMMISSIONER: Okay. Thank you. Mr. 10 Manes? 11 MR. RONALD MANES: Yes. I -- one (1) oth -- 12 other matter I missed. We're now introducing to you Ms. 13 Sylvia Lee, who is a student-at-law appearing on behalf of 14 Hugh MacKenzie's office, which represents Mr. Andrew. 15 MADAM COMMISSIONER: Okay. L - E - E? 16 MS. SYLVIA LEE: That's correct. 17 MADAM COMMISSIONER: Thank you. All right. 18 Do we have agreement on who is going next? Who is going to 19 be the first cross-examiner? 20 MR. WILLIAM ANDERSON: I volunteered to go 21 first. 22 MADAM COMMISSIONER: You volunteered. All 23 right. And Mr. Anderson, how long do you anticipate you're 24 going to be? 25 MR. WILLIAM ANDERSON: Less than an hour.

1 MADAM COMMISSIONER: Less than an hour? Mr. 2 Wolfraim, I know a long time has passed, but you're still 3 under oath. We don't have to swear you again. 4 This is Mr. Anderson, Counsel for Wanda 5 Liczyk. 6 7 (BRIEF PAUSE) 8 9 CROSS-EXAMINATION BY MR. WILLIAM ANDERSON: 10 Q: Good morning, Mr. Wolfraim. 11 A: Morning. 12 Q: We spend some considerable time that last 13 day that we were here, discussing the delivery of the 14 response for the RFQ by MFP to the offices of City Hall. 15 Do you recall that? 16 A: Yes. 17 Q: In fact, if you could turn to Tab 24 of 18 your book of documents -- 19 MADAM COMMISSIONER: At Volume 1 is it? 20 MR. WILLIAM ANDERSON: Volume 1. 21 MADAM COMMISSIONER: Okay. 22 23 (BRIEF PAUSE) 24 25 MADAM COMMISSIONER: That's 23413.

1 CONTINUED BY MR. WILLIAM ANDERSON: 2 Q: If you could turn to second page, which is 3 Begdoc 23414, it indicates that the covering letter was 4 addressed to the Chief Financial Officer and Treasurer, 5 Finance Department, Purchasing and Materials Management 6 Division. 7 A: Yes. 8 Q: And that's your understanding on the 18th 9 floor, on the west tower of City Hall, that's where the 10 document was delivered to? 11 A: I don't know where it is, so my 12 understanding it was delivered to Purchasing, is that what 13 you mean? 14 Q: Yes. 15 A: Yes, that was my understanding, yes. 16 Q: In the third volume of documents that's 17 just been delivered to you, at Tab 29, if you could turn to 18 that document. 19 20 (BRIEF PAUSE) 21 22 Q: Begdoc number 6556 -- that's the response 23 by Dell Financial Services to the Computer Leasing RFQ? 24 A: Correct. 25 Q: And that's directed to Chief Financial

1 Officer and Treasurer of Finance Department Purchasing and 2 Materials Management Division, correct? 3 A: Correct. 4 Q: And that also is directed to the 18th 5 floor, west tower, City Hall? 6 A: That's right. 7 Q: In fact, all of the responses to the RFQ 8 were to be directed to the Chief Financial Officer and 9 Treasurer on the 18th floor on the west tower of City Hall? 10 Do you have any recollection of that? 11 A: I don't know specifically about that. 12 Q: Mr. Manes, in his examination In-Chief of 13 the witness, indicated that he couldn't make reference at 14 that point to the document, which was the request for 15 quotations. 16 If I could be granted an indulgence and refer 17 back to the actual RFQ which is the in Mayor's documents at 18 Volume 2, at Tab 195. 19 MADAM COMMISSIONER: Is it in Mr. Wolfraim's 20 documents? 21 MR. WILLIAM ANDERSON: It is not. 22 MADAM COMMISSIONER: Oh, it's not. 23 All right. 24 25 (BRIEF PAUSE)

1 MADAM COMMISSIONER: Mayor Lastman's which 2 Volume, I'm sorry? 3 MR. WILLIAM ANDERSON: Volume 2, Tab 195. 4 5 CONTINUED BY MR. WILLIAM ANDERSON: 6 Q: If you could turn to Begdoc number 6122 of 7 Tab 195. Mr. Manes suggested to you that it was odd that the 8 document was delivered to the Chief Financial Officer's 9 office, rather than Mr. Dave Beattie. 10 On Begdoc number 6122, could you indicate for 11 the record, where the response to the request for proposals 12 was to be directed? 13 A: It says to the Chief Financial Officer 14 and Treasurer of Finance Department, Purchasing of Materials 15 Management Division, 18th Floor, West Tower. 16 Q: So there was nothing odd with MFP 17 directing their response to the proposal to the Chief 18 Financial Officer and Treasurer of the City of Toronto? 19 A: No. 20 MADAM COMMISSIONER: I -- I'm not sure about 21 this, Mr. Anderson, as it is going back a little bit but I 22 thought Mr. Manes' concern was not that it was directed there 23 but that it was addressed to Dear Wanda and -- 24 MR. WILLIAM ANDERSON: And I will come to 25 that in a minute.

1 MADAM COMMISSIONER: Okay but I could be 2 wrong. It may be that -- 3 MR. WILLIAM ANDERSON: The Dear Wanda letter. 4 MADAM COMMISSIONER: Yes. 5 MR. WILLIAM ANDERSON: My recollection from 6 the evidence was also that Mr. Manes took issue with the 7 response to the request for proposals being delivered to the 8 Chief Financial Officer and not Mr. Beattie. 9 MADAM COMMISSIONER: Okay. Thank you. 10 11 (BRIEF PAUSE) 12 13 CONTINUED BY MR. WILLIAM ANDERSON: 14 Q: Was it your understanding that it was the 15 Purchasing Department that was going to review the responses 16 to the request for proposals? 17 A: I'm not sure. 18 Q: And -- 19 A: I -- I think they were opened when -- at 20 -- at -- by the Purchasing Department at -- at the 21 appropriate time. At the deadline date. 22 Q: Do you have any recollection or any 23 knowledge of where Ms. Liczyk's office actually is at City 24 Hall? 25 A: I don't know.

1 Q: So you're not aware that her office was 2 on the seventh floor of the East Tower of City Hall? 3 A: I wasn't aware of that, no. 4 Q: Were you aware that Ms. Liczyk never 5 received or reviewed the MFP response to the request for 6 proposals, nor any other bids that were submitted by any 7 responding bidders? 8 A: No, I didn't. 9 Q: Now, if you could turn back to Tab 24, 10 the Dear Wanda letter. 11 MADAM COMMISSIONER: This is in Mr. 12 Wolfraim's material? 13 MR. WILLIAM ANDERSON: First Volume. 14 MADAM COMMISSIONER: Thank you. 15 (BRIEF PAUSE) 16 17 CONTINUED BY MR. WILLIAM ANDERSON: 18 Q: Mr. Manes suggested to you that the 19 salutation Dear Wanda was inappropriately personal. Do you 20 recall that? 21 A: I recall a discussion. I don't recall 22 the -- exactly what the -- 23 Q: And you responded that it was a matter of 24 protocol and you weren't certain what would be appropriate? 25 A: I'm sorry?

1 Q: And you responded that it was a matter of 2 business protocol and you weren't certain what would be 3 appropriate? 4 A: Yeah. 5 Q: Is it a practice of MFP to direct 6 correspondence using an individual's first name? 7 A: I -- it would depend on the individual 8 sending the correspondence. It's been varied by -- to -- 9 from person to person. 10 Q: If I could direct your attention to a 11 number of documents which have been provided by Commission 12 Counsel and also the other parties, in Tab 164 of your 13 documents. 14 15 (BRIEF PAUSE) 16 17 Q: Begdoc number 21059. 18 19 (BRIEF PAUSE) 20 21 Q: This is a letter from MFP to Mr. Larry 22 Griffith and who is Melanie Misiak (sic)? 23 A: Heather Misiak? 24 Q: Heather Misiak. 25 A: She was a Lease Operations Manager,

1 Manager of Government Operations. 2 Q: Was she a close personal friend with 3 Larry Griffith? 4 A: I -- I would doubt that very much. 5 Q: And how does she direct this 6 correspondence? 7 A: Dear Larry. 8 Q: If you could go to Tab 175 of the same 9 book of documents. This is Begdoc 40415. This is a letter 10 from you to Mr. Lyons? 11 A: Yes. 12 Q: And this is a letter terminating your 13 contractual relationship with Mr. Lyons? 14 A: Yes. 15 Q: Are you a close personal friend of Mr. 16 Lyons? 17 A: No. 18 Q: How do you direct the correspondence to 19 Mr. Lyons? 20 A: Dear Jeff. 21 22 (BRIEF PAUSE) 23 24 Q: If you could turn to Tab 200 in the same 25 book of documents, Begdoc 40454, that's a letter from Irene

1 Payne to Jeff Lyons? 2 A: Yes. 3 Q: Is Ms. Payne a friend or close personal 4 relation to Mr. Lyons? 5 A: I don't know, but I wouldn't think so. 6 Q: How does she direct that correspondence? 7 A: Dear Jeffrey. 8 Q: If you could turn to the third volume of 9 your documents, Tab 28, Begdoc number 6298, that's a letter 10 from Mike Flanagan to James Ridge. Are you aware of Mr. 11 Flanagan having a close personal relationship with Mr. Ridge? 12 A: No, he doesn't have a close personal 13 relationship with Mr. Ridge. 14 Q: How does he direct his correspondence to 15 Mr. Ridge? 16 A: Dear James. 17 Q: All right. Tab 35 of the same book of 18 documents, Begdoc number 23632, it's also correspondence from 19 Mr. Flanagan to Mr. Ridge? 20 A: Correct. 21 Q: And how is that addressed? 22 A: Dear James. 23 Q: This is a point where MFP is actually in a 24 contractual dispute with the City of Toronto, isn't it -- 25 October of 2001?

1 A: No, I wouldn't say we're in a contractual 2 dispute at this point, the City is conducting a review and we 3 have not heard anything from the City, as to what sort of 4 progress they're making and we're offering to help out in any 5 way we can and we're not getting any calls returned from the 6 City. 7 Q: Are you in a particular friendly point in 8 your relationship with the City of Toronto at this point? 9 A: Friendly and frustrated. 10 Q: You're trying to be friendly with the 11 City? 12 A: Yes. 13 Q: If you could turn to Tab 33 of the same 14 book of documents. Begdoc number 23204, that's a letter from 15 you to Shirley Hoy? 16 A: That's right. 17 Q: Do you have a close personal relationship 18 with Ms. Hoy? 19 A: No. 20 Q: How do you direct the correspondence to 21 Ms. Hoy? 22 A: Dear Shirley. 23 Q: Right. Tab 37, same book of documents, 24 Begdoc number 29348. That's again a letter from you to Ms. 25 Hoy?

1 A: Yes. 2 Q: Directed to Dear Shirley? 3 A: Yes. 4 Q: There are other documents, in fact, I've 5 counted eleven (11) in total, when I've gone through these 6 documents, that use the salutation, Dear first name, coming 7 from MFP. 8 Would you agree with me, sir, that it is a 9 common practice at MFP to direct your correspondence -- 10 business correspondence to people using their first name? 11 A: Sure, yes. 12 Q: So, there's nothing untoward in your 13 opinion, or too personalized with respect to directly 14 business correspondence to someone by their first name? 15 A: No. 16 Q: I'd like to talk about the hockey games, 17 for a moment, sir. I understand from your evidence the other 18 day that there were five (5) hockey games available to MFP 19 for each season in 2000-2001, is that right? 20 A: Yes, we entered -- we purchased five (5) 21 hockey box nights in the '99/2000 season and the 2000/2001 22 season. 23 Q: And these are the corporate boxes that 24 you see at the Air Canada Centre? 25 A: That's right.

1 Q: On average, how many people are in the 2 box for a hockey game? 3 A: You can -- the -- the number of tickets 4 that are issued with -- for each event are twelve (12). You 5 can buy an extra six (6). So we would normally have eighteen 6 (18) because it's an expensive way to entertain customers. 7 Q: And MFP would invite various customers 8 and prospective customers to join them in the box to watch 9 the hockey game? 10 A: As would everybody else. Seventy-five 11 (75) percent of the people at the Air Canada Centre are 12 probably there as part of a business entertainment event. 13 Q: And other than Ms. Liczyk, were there 14 other City of Toronto employees in the MFP box the games that 15 you went to? 16 A: From time to time, yes. 17 Q: And were there City Councillors also in 18 the box? 19 A: I've never met any, but -- 20 Q: But you believe that there were? 21 A: I -- 22 Q: From time to time? 23 A: I understand there might have been from 24 time to time, yeah. 25 MADAM COMMISSIONER: I'm sorry?

1 THE WITNESS: There might have been from time 2 to -- there were from time to time. 3 Now, there are two (2) separate issues that I 4 suppose you've got to look at. One (1) here -- one (1) is 5 are they -- they there as a guest or are they -- there's a 6 terrific, I gather, networking -- socializing process that 7 takes place and there may be people that are -- I do recall 8 that there were people there as guests of other people in 9 their boxes or in different hockey seats that would drop in 10 -- 11 MR. WILLIAM ANDERSON: Quite often? 12 THE WITNESS: -- to visit between periods or 13 whatever. 14 15 CONTINUED BY MR. WILLIAM ANDERSON: 16 Q: MFP and other corporate sponsors of the 17 boxes would leave the door open and people would flow freely 18 in between the different corporate boxes and network with 19 other people? 20 A: That's correct. 21 Q: And you saw nothing untoward about that, 22 I take it? 23 A: No. 24 Q: Were there also provincial employees that 25 were invited to go to the MFP box?

25
  1                 A:   We had private sector, public sector and
  2  within the public sector, we've -- I think I mentioned, we've
  3  done business with -- with all ten (10) provinces, with the
  4  federal government, with probably fifteen (15) or twenty (20)
  5  different municipalities across the country, probably another
  6  twenty-five (25) or thirty (30) other public sector
  7  organizations, including school boards and such.
  8                 And any or all of those people would have been
  9  invited or may have attended either a hockey game or a
 10  basketball game because when you take five (5) hockey games,
 11  you also need to take five (5) basketball games.  So, that
 12  was the arrangement.
 13                 Q:   So it wouldn't be unusual for Ms. Liczyk
 14  and the other City of Toronto employees to see other public
 15  sector employees at these hockey games?
 16                 A:   It would be unusual or it would not be
 17  unusual?
 18                 Q:   It would not be unusual?
 19                 A:   No.
 20                 Q:   All right.  You indicated that your
 21  recollection was you recall talking to Ms. Liczyk at one (1)
 22  game, but she may have been at three (3) games that you
 23  attended also?
 24                 A:   Yeah.  That's a guess but, yeah.
 25                 Q:   And I believe your evidence was that the

1 first hockey game that you met Ms. Liczyk at was at -- in the 2 winter of 1999 and you thought that was December? 3 A: Yes. 4 Q: And that was well after MFP had already 5 been accepted as the lessor for the City of Toronto -- 6 A: The game -- 7 Q: -- for computer leasing. 8 A: The game that I recall, it was -- I think 9 it was either the 15th or the 23rd of December. It was, by 10 then, in a guess we'd done $40 or $50 million worth of 11 business. 12 Q: Right. You had an ongoing business 13 relationship with the City of Toronto when Ms. Liczyk 14 attended that hockey game? 15 A: Yes. 16 17 (BRIEF PAUSE) 18 19 Q: Now, I take it from your evidence the 20 other day, that you wouldn't allow yourself personally to 21 become involved in any activity that could be perceived as 22 unethical? 23 A: No. That's correct. 24 Q: And when you saw -- 25 MADAM COMMISSIONER: I think that was a

1 double negative sentence. I'm sure it wasn't meant to be a 2 trick question. 3 THE WITNESS: Is it like one (1) of those 4 when do you want to stop beating your wife questions or 5 -- 6 7 (BRIEF PAUSE) 8 9 CONTINUED BY MR. WILLIAM ANDERSON: 10 Q: You wouldn't put yourself in a position 11 where you were doing something that could be perceived to be 12 unethical? 13 A: No. 14 Q: And when you saw Ms. Liczyk at these 15 approximately three (3) hockey games and at a golf 16 tournament, you didn't think that there was anything untoward 17 or unethical about Ms. Liczyk attending at those games? 18 A: No, I didn't. 19 Q: And you'd agree with me, sir, that there 20 was a huge distinction between accepting a material or 21 tangible gift and attending a business event with a social 22 element? 23 A: You're taking me onto territory here 24 where -- there's a difference, yes, -- sure, yes. 25 Q: It's commonplace in the private and public

1 sector for employees and politicians to attend business 2 social events -- 3 A: Yes -- 4 Q: -- like hockey games? 5 A: -- yes, it is. Not only with MFP but 6 other people and -- 7 Q: And you indicated with respect to your own 8 code of conduct at MFP, that in order to make it clearer to 9 your employees you could have placed a dollar value on the 10 types of social events or gratuities that your customers or 11 business relations accepted from MFP? 12 A: Well, to clarify that, that's one (1) 13 thing that I think I suggested an organization could do if 14 they were looking to crisp up their conflict of interest 15 policy. 16 In our case, I put a dollar value on a gift, 17 but that was in the context of us being an organization that 18 is not a great acquisitor of goods and services, so -- there 19 are probably not more than five (5) or six (6) people in our 20 organization that either influence the selection or suppliers 21 or select suppliers. 22 So, my comment in the context of MFP was more 23 than anyone outside of those six (6) or seven (7) people who 24 are all part of the senior management group, I can't imagine 25 why any supplier would want to give any sort of gift other

1 than a sort of a goodwill type gift to anyone else in the 2 organization. 3 So, on that basis, I -- in our case, wouldn't 4 be uncomfortable putting a dollar value on it. 5 Q: That's right. And if you wanted to draw a 6 black and white -- black and white line distinguishing what 7 an acceptable invitation to accept would be versus an 8 unacceptable invitation, you could put that right into your 9 policy? 10 A: Yes. 11 Q: And are you aware of any City of Toronto 12 policy which drew such a distinction in terms of a monetary 13 value of attending a social event? 14 A: No. 15 Q: Now, Mr. Manes in his examination 16 suggested to you that Ms. Liczyk was nuts about hockey, 17 specifically Maple Leaf hockey, do you recall that? 18 A: Yes. 19 Q: And you agree with him? 20 A: I don't disagree. She's a real hockey 21 fan. 22 Q: And your knowledge of Ms. Liczyk's 23 fondness for hockey comes from seeing her enjoying a hockey 24 game? 25 A: Yes.

1 Q: So, when you were there and your 2 recollection is you talked to her on one (1) occasion, you 3 saw her on three (3), she seemed to be enjoying the game? 4 A: She spent her time watching the game. 5 Q: Is there anything unusual about that, sir? 6 A: No. 7 Q: No, in fact, probably most of the people 8 in the Air Canada Centre were enjoying the hockey game? 9 A: No, I -- frankly, some people go to talk 10 business, others go to watch hockey. So you get two (2) very 11 different types of customers as guests at those events. 12 Q: And Ms. Liczyk happened to watch the 13 hockey game? 14 A: That's right. 15 Q: And on that basis, you agreed with Mr. 16 Manes' comment that she was nuts about hockey? 17 A: Yes. 18 Q: Do you think that that might have been 19 somewhat of an overstatement with respect to her enjoyment of 20 the game? 21 A: I don't know. She's a hockey fan, I don't 22 know what -- 23 Q: Right -- 24 A: -- the right way is to express it. 25 Q: And you're not suggesting for a minute

1 that Ms. Liczyk was so nuts or insane about hockey, that she 2 would compromise her position as the CFO of the fifth largest 3 City in the North America, to go to a few hockey games? 4 A: Well, she could have got better seats than 5 ours if she chose to take advantage of her position. 6 Q: Right. And you're not suggesting for a 7 minute that she was taking advantage of her position by 8 accepting tickets to a hockey game? 9 A: No. 10 Q: Are you aware of anyone else at the City 11 of Toronto that took advantage of their position by accepting 12 tickets to hockey games? 13 A: No, I wouldn't say the behaviour was any 14 different from any other organization we deal with, so, no. 15 Q: You also indicated that the City of 16 Toronto levelled some criticism on you for putting Ms. 17 Liczyk, Mr. Andrew, and Ms. Viinamae in a testimonial in one 18 (1) of your corporate publications? 19 A: Yes. 20 Q: And they indicated to you that it would 21 require a City Council resolution in order to approve such a 22 testimonial? 23 A: In order to authorize it, yes. 24 Q: Have you ever seen any or been referred 25 to any specific requirement which would establish if that was

1 true? 2 A: Well, we've used customer testimonials in 3 our annual reports and on our website for many years and I'm 4 going to say that we've probably had sixteen (16) or 5 seventeen (17) different customers over the years, probably 6 two-thirds of them public sector, and I've never heard of 7 that before. 8 Q: And in fact, in the same corporate 9 publication you had a testimonial from the WCB at the 10 Province of Alberta? 11 A: Correct. Yes. 12 Q: Was there any backlash or criticism 13 regarding the employees of the WCB providing their comments 14 about what services were being provided to them by MFP? 15 A: No. 16 17 (BRIEF PAUSE) 18 19 Q: They indicated that the use of the 20 phrase, strong relationship, in respect of Ms. Liczyk and Mr. 21 Jakobek would have been an over-sell by your sales people 22 when they reported back to the executive on their in-roads 23 with the City of Toronto? 24 A: I -- yeah, I'd -- I'd have to look at the 25 context of the statement. I'm not sure what --

1 Q: It was a statement made by Mr. Wilkinson 2 -- 3 A: Saying strong relationships? 4 Q: -- was a strong relationship with Ms. 5 Liczyk and -- 6 A: I think the comment we -- 7 Q: -- Mr. Jakobek. 8 A: -- the comment we settled on was that 9 take a comment -- a statement like that with a grain of salt. 10 Q: Right. 11 MADAM COMMISSIONER: A statement like that 12 with what? 13 THE WITNESS: With a grain of salt. 14 MADAM COMMISSIONER: With a grain of salt? 15 THE WITNESS: I think it was your -- 16 MR. WILLIAM ANDERSON: Would it be the sales 17 -- 18 THE WITNESS: -- characterization. 19 20 CONTINUED BY MR. WILLIAM ANDERSON: 21 Q: Would it be the salesman making a pitch 22 to executive for acceptance of a deal? 23 A: Yes. 24 Q: Okay and you indicated later that you 25 thought Mr. Domi did develop a strong relationship with Ms.

1 Liczyk during the currency of the contractual relations 2 between MFP and the City? 3 A: Yes. 4 Q: And by strong relationship, what you 5 mean, or can I infer it to mean that they had a strong 6 working relationship? 7 A: Yes. 8 Q: And that if MFP were to make a phone 9 call, then their phone calls would be accepted because they 10 -- the City of Toronto, and specifically Ms. Liczyk, knew who 11 Mr. Domi was? 12 A: Yes. 13 Q: And knew he wasn't a creep? 14 A: Right. 15 MADAM COMMISSIONER: I -- I didn't know -- I 16 wouldn't have thought that that was necessarily the -- 17 MR. WILLIAM ANDERSON: My understanding -- 18 MADAM COMMISSIONER: -- the correct text 19 block. I think when you say -- I don't want to -- I don't 20 want, by my saying anything, to suggest that Dash Domi is a 21 creep but just because Wanda Liczyk might take Dash Domi's 22 call, it might not mean that she doesn't think he's a creep. 23 It might mean that he's the person she's doing 24 business with. So, all I'm saying is it's not -- I wouldn't 25 draw the necessary conclusion that he is or is not a creep on

1 the basis of what you're saying. 2 3 CONTINUED BY MR. WILLIAM ANDERSON: 4 Q: Would you agree with me that City 5 employees, from your knowledge, are approached -- approached 6 regularly by lobbyists, by businesses seeking to do business 7 with the City of Toronto? 8 A: Absolutely. Certainly and -- yeah. 9 Absolutely and, in particular, I would guess the senior 10 managers. 11 Q: And Mr. Domi and Mr. Wilkinson and Ms. 12 Payne were able to open up lines of communication with 13 various City employees in order to have ongoing dialogue with 14 the City? 15 A: As were many other people. 16 Q: Right and by that -- by accepting that, 17 you said and agreed that strong relationships developed? 18 A: Yes. 19 Q: Okay but there's nothing more to it than 20 that? 21 A: No. No. 22 23 (BRIEF PAUSE) 24 25 A: I -- yeah, I guess the only other

1 addition I would make -- I mean, relationships also imply 2 that there's a chemistry that exists. You're able to 3 communicate with people and understand what they're saying. 4 Sort of give and take and so forth. So, there's -- as you 5 get to know people better, it's easier to communicate ideas 6 to them. Let's put it that way. 7 Q: And there's nothing -- 8 A: And have discussions with them. There's 9 nothing wrong with it. I'm just -- 10 Q: And there's nothing unusual about that in 11 an ongoing business relationship? 12 A: Desirable from all -- 13 Q: All right. 14 A: -- perspectives. 15 Q: And you have an open and strong 16 relationship with Mr. Moore -- 17 A: Yes. 18 Q: -- because of your involvement with him? 19 A: Yes. 20 Q: All right and there's nothing unusual or 21 untoward about your relationship with Mr. Moore? 22 A: No. 23 Q: Right. 24 MADAM COMMISSIONER: From that I take it 25 you're meaning David Moore not Patrick?

1 MR. WILLIAM ANDERSON: Yes, I am. 2 MADAM COMMISSIONER: Okay. 3 4 CONTINUED BY MR. WILLIAM ANDERSON: 5 Q: There was also some evidence the other day 6 about three (3) individuals being key decision makers at the 7 City of Toronto with respect to computer leasing and other 8 types of leasing. 9 And they were Mr. Jakobek, Ms. Liczyk and Mr. 10 Andrew, do you recall that? 11 A: Yes. 12 Q: At that point, Mr. Jakobek was the budget 13 chief? 14 A: Yes. 15 Q: Which was a senior position at the City of 16 Toronto in Council? 17 A: I'm not sure how the City operates, but 18 that was the title. 19 Q: And Ms. Liczyk was the CFO? 20 A: Correct, yes. 21 Q: And that's a senior administrative 22 position at the City of Toronto? 23 A: Right. 24 Q: And Mr. Andrew was the head of the IT 25 Department at the City of Toronto?

1 A: Yes. 2 Q: And there was an assumption made by MFP 3 that those individuals were actual decision makers with 4 respect to the leasing contract? 5 A: Well, again, I would say they were, I 6 would characterize them more as influencers than decision 7 makers, but -- they could recommend decisions, influencers, 8 recommenders -- decision makers implies a finality that I 9 don't think -- 10 Q: Would it come as a surprise to you, sir, 11 that Ms. Liczyk didn't review or analyze or make a 12 recommendation specifically about accepting the MFP bid? 13 That that decision had been made by her staff? 14 A: I would assume she reviewed the work of 15 her staff, but I wouldn't expect her necessarily to do the 16 analysis herself. 17 Q: Right. And you have no knowledge whether 18 or not, she said anything to her staff to influence the 19 decision one (1) way or another? 20 A: No. 21 Q: And it will be Ms. Liczyk's evidence that, 22 in fact, she didn't interfere with the analysis or 23 recommendations of the staff and that wouldn't surprise you 24 given her position? 25 A: No.

1 Q: Okay. 2 MR. RONALD MANES: Well, I only rise to say 3 that there's documentary evidence in respect to Ms. Liczyk's 4 participation -- 5 MADAM COMMISSIONER: Could you stand closer to 6 the microphone please? 7 MR. RONALD MANES: -- in respect to Ms. 8 Liczyk's participation in the decision making, to the extent 9 that she participated and that documentary evidence is not 10 being put to the witness, but rather Mr. Anderson's words and 11 propositions are being put to the witness and in particular, 12 I refer to the July 9th, 1999 recommendation by Ms. Liczyk 13 and Mr. Andrew, to -- to Policy and Finance, and the editing 14 of that -- of that document by Ms. Liczyk, which will be in 15 evidence. 16 And it's also not being put to the witness. I 17 only say that for the record, Commissioner. 18 MR. WILLIAM ANDERSON: Thank you Mr. Manes. 19 MR. DAVID MOORE: Can I just say for the 20 record, there's been lots of evidence adduced in this Inquiry 21 where no or very few documents have been put to the witnesses 22 at various points in time. 23 The document that Mr. Manes speaks, my 24 recollection is there's probably about thirty (30) versions 25 of that, maybe twenty (20), but a very large number of drafts

1 back and forth. 2 And I would guess probably ten (10) City 3 employees involved in the drafting, back and forth, over a 4 period of about a week to ten (10) days. 5 So, I don't think any of those specific 6 documents have been put in any detail to Mr. Wolfraim or any 7 other witness by any Counsel to date in this Inquiry. 8 So, I just -- some of these comments on the 9 record do impact my client, although it's not my cross 10 examination that's involved, I do feel bound to make that 11 observation. 12 MADAM COMMISSIONER: Mr. Manes? 13 MR. RONALD MANES: Yes, I agree with what Mr. 14 Moore says and the editing and it includes editing by Ms. 15 Liczyk as well, amongst the number of edits that were done by 16 various staff. 17 I only point that out again for the record. 18 MADAM COMMISSIONER: All right. So, I think 19 Mr. Anderson, what I hear Counsel saying to you, is that when 20 you put to this witness that it will be her evidence that she 21 didn't interfere, that that may be the case, but if you're 22 going so far as to suggest that she didn't have any 23 involvement whatsoever in any of the documentation that there 24 are documents that you will have that demonstrate that she 25 did have some touching of the documents, I guess, if I can

1 put it that way. 2 MR. WILLIAM ANDERSON: I think the record will 3 show that I didn't use a phrase, any involvement or anything 4 like that, with respect to Ms. Liczyk and the July 9th 5 report. 6 We've seen the July 9th report in evidence 7 before, we know it was signed off by Mr. Andrew on behalf of 8 himself personally and on behalf of Ms. Liczyk and we will 9 also, I assume, see evidence with respect to Ms. Liczyk's 10 comment on one (1) draft of the report. 11 MADAM COMMISSIONER: All I'm saying is that 12 obviously Mr. Wolfraim is not in a position to answer yes or 13 no. So what you're doing, and I understand why you're doing 14 it and I don't have a difficulty with why you're doing it, is 15 trying to put forward that Ms. Liczyk is not going to be here 16 for quite some time. 17 So I understand that and I guess what Mr. 18 Manes is saying is that maybe just in the way that you put 19 that you understand her to be saying, is make sure that 20 you're not saying anything that contradicts documentary 21 evidence. 22 MR. WILLIAM ANDERSON: I don't believe it 23 will. 24 MADAM COMMISSIONER: All right. Thank you. 25 Go ahead.

1 CONTINUED BY MR. WILLIAM ANDERSON: 2 Q: Sir, given your involvement with public 3 sector bids, would it surprise you at all that the Chief 4 Financial Officer of the City of Toronto did not interfere 5 with the selection of the successful bidder under the RFQ for 6 the leasing services? 7 A: No. 8 Q: That typically, in your experience, is 9 done by staff members? 10 A: Yeah -- yes. 11 MADAM COMMISSIONER: Do you know that, Mr. 12 Wolfraim? 13 THE WITNESS: It typically would be d -- 14 well, I don't know that for sure but I w -- I would say 15 typically the work would be done -- the analysis, I would 16 expect, would be done by staff members and -- and, I guess, 17 I look at our organization and how we would evaluate things 18 that the staff our CFO would do the work but he's ultimately 19 got to review the work and is responsible for whatever 20 decision is made. So -- or recommendation is made. That's - 21 - or I guess I'm ultimately responsible, so. 22 23 CONTINUED BY MR. WILLIAM ANDERSON: 24 Q: You made passing reference in your 25 evidence with respect to a service that you provided called

1 Periscope? 2 A: Yes. 3 Q: And one (1) of the aspects of the 4 Periscope service was that you could classify assets in order 5 to assign the cost to different groups, right? Or 6 departments? 7 A: Yes. 8 Q: And was it your understanding that the 9 City of Toronto was actually looking to break down the leases 10 by equipment so that they could assign the cost of the 11 equipment to various departments throughout the City of 12 Toronto? 13 A: Yes. 14 Q: Right and they approached -- 15 A: For other reasons, as well. 16 Q: -- and they approached MFP in the summer 17 of 2000, and were requesting their assistance in order to 18 provide for schedules which would allow them to allocate 19 costs out to different departments? 20 A: Yes and I think we got to the point where 21 -- there -- there were -- it was a two (2) or three (3) stage 22 process that we were going through. 23 One (1) was in the summer of 2000, putting all 24 of the assets on to likes -- like assets onto the same 25 schedules.

1 The second stage was to get the cost centre 2 information so it would facilitate the budget process and I 3 gather by, I think, about March of 2001, we had about 90 4 percent of the cost centre data but we were waiting for the 5 City to provide that so we could build the model that would 6 facilitate the budget and -- and IT refresh -- or IT 7 strategy. 8 Q: And that never occurred? 9 A: Well, we got to 90 percent of the 10 information and then -- then we hit the spring of 2001, and 11 here we are. 12 Q: And MFP was coordinating those efforts 13 directly with the IT Department at the City of Toronto? 14 A: I -- yeah. I think it was coming through 15 -- I'm not sure who it was coming through but we were -- 16 yeah, we were trying to get the information from -- from the 17 City, whether it was IT or finance, I'm not sure. 18 Q: Now, who was the primary contact -- 19 A: I don't know -- 20 Q: -- person at -- 21 A: At our end, it would -- you'd have to -- 22 it would be Rob Wilkinson that you'd have to ask because he 23 was the one (1) that was quarterbacking. I -- yeah, I'm not 24 sure who he was dealing with. It wasn't Wanda then. 25 Q: All right. Thank you. Those are all of

1 my questions. 2 MADAM COMMISSIONER: Mr. Anderson, you were 3 less than an hour. 4 MR. WILLIAM ANDERSON: I indicated before I 5 would be forty-five (45) minutes to My Friend and I gave you 6 an hour just to be on the safe side. 7 MADAM COMMISSIONER: Oh. Now I know what's 8 going on. 9 10 (BRIEF PAUSE) 11 12 MADAM COMMISSIONER: Ms. Ryley, are you next? 13 MS. BAY RYLEY: I am, but we do not have any 14 questions for Mr. Wolfraim. 15 MADAM COMMISSIONER: Oh, all right. Thank 16 you. 17 MS. LINDA ROTHSTEIN: I guess that means it's 18 the City. 19 MADAM COMMISSIONER: Okay and are you ready 20 to go? 21 22 (BRIEF PAUSE) 23 24 MADAM COMMISSIONER: Ms. Linda Rothstein for 25 the City of Toronto.

1 THE WITNESS: Thank you. 2 3 (BRIEF PAUSE) 4 5 MS. LINDA ROTHSTEIN: Madam Commissioner, I 6 think I may be two (2) days with Mr. Wolfraim. 7 MADAM COMMISSIONER: Thank you. I forgot to 8 ask you, as well. 9 MS. LINDA ROTHSTEIN: Sorry to tell you, Mr. 10 Wolfraim, but I will try and get through this quickly if 11 that's possible and I know that you will do your best to 12 assist me in that regard. 13 14 CROSS-EXAMINATION BY MS. LINDA ROTHSTEIN: 15 Q: My partner, Mr. Capern, called Mr. Moore 16 yesterday, in aid of trying to assist us in getting through 17 some of this material more quickly. 18 And we asked him, and I don't expect you to 19 answer without him having some role in this, sir but, we're 20 wondering whether you would supervise the preparation of a 21 chart that would show the profit earned to date by MFP on the 22 deals with the City? 23 A: I'll tell you exactly what it is. 24 Q: Okay. 25 A: We -- there -- if you look at these

1 transactions, we've done about $80 million worth of financing 2 and netted commissions, what we will earn as a gross profit 3 number through the term of the transactions, which is five 4 (5) years, it's a net of commissions of about $2.5 million. 5 So that is about five hundred thousand dollars 6 ($500,000) a year on average, which if you look at the lease 7 portfolio of $80 million amortizing to zero over five (5) 8 years, it has an average balance of about $40 million. 9 Five hundred thousand (500,000) on 40 million 10 is about a 1.25 per cent, gross profit, to start. 11 Q: Right. 12 A: What that compares to, in terms of our 13 overall book, is that we normally earn, and we're a public 14 company so that information is available, we earn about 4.0 15 to 4.5 per cent on our lease portfolio. 16 That compares to the TD Bank, the Royal Bank, 17 they earn about two hundred and fifty (250) to three hundred 18 (300) basis points, so like we've said from the beginning 19 that this was a very well priced deal from the City's 20 perspective. 21 In terms of your specific question, how much 22 have we earned to date, in fiscal 2000 -- our year is March 23 31st, in fiscal 2000, I think we'd done $58 million worth of 24 business and the gross profit it contributed to our year -- 25 that year was zero.

1 We made about $50 million in gross profits in 2 that fiscal year. In the fiscal year 2001, we made about -- 3 I think it was about $50 million gross profits again, and 4 this business contributed about five hundred thousand 5 (500,000). 6 And in the current fiscal year, our gross 7 profits are dropping because our portfolio is shrinking for a 8 variety of reasons, but I think it's about six hundred 9 thousand (600,000) that it will contribute. 10 Q: Okay. Mr. Wolfraim, would you be good 11 enough to set out for me the method by which you come to that 12 calculation of the $2.5 million over the term of the deal? 13 A: I went to our CFO and asked him. 14 Q: I'd be obliged if you would, by all means 15 -- 16 A: No, I did, that's where I got the 17 information. 18 Q: But if you could just show us the means by 19 which he calculated that? 20 A: Oh sure -- 21 Q: Because it isn't self-evident to me and I 22 don't know that it will be to the Commissioner, yet. We 23 could probably muck through the documents, but it would take 24 us an awfully long time, sir. 25 A: No, we've had the discussion about

1 preparing something -- 2 Q: Right -- 3 A: -- and I have no issue with that. I mean 4 these numbers I got directly from our CFO in anticipation of 5 being asked so -- 6 Q: Good. Well, I'd be obliged sir, if you 7 would prepare a chart that actually shows the means by which 8 you come to those numbers. I don't doubt them, but it would 9 be helpful for us to understand -- 10 A: Yes -- 11 Q: -- how your CFO calculates those amounts. 12 Commissioner -- 13 MADAM COMMISSIONER: If you want those -- 14 you're still here tomorrow in cross examination, so do you 15 want those for cross examination purposes or? 16 MS. LINDA ROTHSTEIN: It would be helpful, 17 but, I know Mr. Wolfraim, that you've more of less resigned 18 yourself to the fact that you may well be back -- 19 THE WITNESS: No, I think it would be better 20 if we did this properly and took some time out if that's -- 21 MADAM COMMISSIONER: Okay -- 22 MS. LINDA ROTHSTEIN: So, I have defense 23 Commissioner that it might be more helpful for all, if we got 24 through what we can get through with Mr. Wolfraim, in terms 25 of the general principles.

1 We now have from him the essence of the 2 evidence, but when it comes to the fine tuning and the 3 detail, I'm content, sir, that you get that to us in due 4 course and that we call you back to ask you any questions 5 that may arise from it. 6 THE WITNESS: Absolutely. 7 MS. LINDA ROTHSTEIN: Thank you. 8 MR. DAVID MOORE: And can I just -- that's 9 consistent with the discussion that Mr. Capern and I had 10 yesterday afternoon in which he raised that issue and I took 11 the opportunity, I was early enough to discuss it with Mr. 12 Wolfraim, he had no objection to that, and you've heard the 13 evidence. 14 So we will, before Mr. Wilson -- Wolfraim 15 comes back, put that in a -- in a more concrete form and 16 follow up with counsel if there are questions, we'll -- we'll 17 -- we'll deal with that. 18 I am hopeful that to the extent that there are 19 financial analysis numbers generated or reflected within the 20 City documentation, that the same spirit of cooperation and 21 disclosure will -- will come back in the other direction, but 22 that that may be a matter of further discussion as well 23 MADAM COMMISSIONER: Okay, I'm quite happy 24 with that, I just was trying to -- I should have known that 25 you had it all worked out and I didn't need to have to ask

1 the question. I'll learn my lesson. 2 MS. LINDA ROTHSTEIN: We're doing our best to 3 give heads up where we can, sometimes a little belatedly, I 4 know from My Friend Mr. Moore's perspective, but we're trying 5 to do that. And absolutely we will try and return the favour 6 where that's required. 7 8 CONTINUED BY MS. LINDA ROTHSTEIN: 9 Q: The $2.5 million, Mr. Wolfraim, did that 10 differentiate the profit to MFP as compared to the profit to 11 Aztec? 12 A: That's an all-in number. 13 Q: That's an all-in number, all right. And 14 just in terms of Aztec can you -- I understand that Aztec is 15 a limited partnership; is that correct? 16 A: Yes. 17 Q: Can you tell us who the limited partners 18 of Aztec were, at the time that this deal was done and if 19 it's changed as of today? 20 A: You may be asking the wrong person, but 21 it -- it's a charitable trust that's -- that's -- the prime 22 trust is the limited partner. And it -- potentially it's a 23 charitable trust, I think Prime Trust issues certificates 24 that are sold by TD Securities in the commercial paper 25 market.

1 Q: And Prime Trust, who are the -- 2 A: Prime Trust, they just issue -- Prime 3 Trust issue -- are the limited partners and they're just 4 notes that are issued in the commercial paper market and sold 5 by TD Securities. 6 Q: Okay. 7 A: The -- the general buyers of commercial 8 paper product I guess. 9 Q: Okay. And if we look at the -- as you've 10 said, you've told us that absent the commissions that were 11 paid on this deal, it was $2.5 million, net of commission. 12 We know the commission that Mr. Domi received on the deal. 13 Was there any commission paid to Irene Payne? 14 A: No. 15 Q: Was there any commission paid to Rob 16 Wilkinson? 17 A: Yes, I think last time with Mr. Manes, we 18 indicated it was about eight thousand dollars ($80,000), but 19 I don't think -- yeah, and that -- so that would be added on 20 top here. 21 Q: Anyone else, other than Mr. Wilkinson and 22 Mr. Domi who received commission on these deals? 23 A: Actually, let me back away from that. 24 Mr. Wilkinson's commission doesn't come out of the leasing 25 profits, it comes out of this G and A. So it wouldn't be

1 included in the -- like if you were going to rebuild the $2.5 2 million number and add one point two (1.2), that would be all 3 you'd add. 4 There's -- there was another fifty thousand 5 dollar ($50,000) number there, I think we made reference to, 6 which was a split with Mr. Nigro at the end of -- at the end 7 of 2000, but so it'd be a million two fifty (1,250,000), on 8 top of the 2 1/2 million roughly. 9 Q: Okay. 10 A: So the gross -- gross, gross profit is 11 about three million seven fifty (3,750,000), before any costs 12 are attributed to it. 13 Q: Okay, but just walking through who got 14 commission and not fussing for the moment about the gross 15 profit number, Mr. Wilkinson got some commission, but it came 16 through a different channel? 17 A: Well, no, in terms of our financial 18 statement presentation, it doesn't go through the same spot. 19 Q: Right. 20 A: So, I think what I indicated to Mr. Manes 21 last time was that Mr. Domi got a million two -- 22 Q: Hmm hmm. 23 A: -- he was paid a million two, Mr. 24 Wilkinson was paid about eighty thousand (80,000) and Mr. 25 Nigro was paid about fifty thousand (50,000) and that's the

1 extent of it. 2 Q: And that's it? Right. And there was no 3 commission to you, sir? 4 A: No. 5 Q: Okay. Or to Ms. Payne? 6 A: No. 7 Q: The other thing that would be helpful for 8 us to have in chart form, sir, is the lease rate factors that 9 were used in respect of each piece of this deal from October 10 1, 1999, forward. 11 Now, I know those are set out in various 12 places, but in addition to setting all of those out for us in 13 one chart, which would be I think very helpful to the 14 Commissioner in the end, I'd like you as well, if you would, 15 to correlate those lease rate factors with the implicit rate 16 of interest with respect to each of those lease rate factors. 17 Now, when -- just a minute -- 18 A: What's the implicit rate of interest? 19 Q: -- what's the implicit rate of interest? 20 And you're going to say to me, well, it depends in part on 21 what the residual value of the equipment is at the end of the 22 lease; right? 23 A: No, it depends on what the customer wants 24 to do at the end of the lease, whether the customer wants to 25 purchase, return, renew --

1 Q: Right. 2 A: -- whatever. 3 Q: For the purpose of this chart, I'd be 4 obliged if you would simply make the hypothetical assumption 5 that at the end of the lease, the equipment goes back to MFP, 6 but it is of no value to you at the end of sixty (60) months 7 on the resale market? 8 A: Okay. 9 MR. DAVID MOORE: Well, I -- I again -- this 10 was a matter that Mr. Capern raised with me yesterday 11 afternoon as to -- actually in a slightly different form, as 12 to whether or not there had been calculations prepared or 13 drafted by MFP with respect to this quote/unquote, "notion of 14 implicit interest rates." 15 And my response, this was an informal 16 conversation yesterday afternoon, was that firstly, MFP does 17 not analyse these transactions, either on a -- a day-to-day 18 basis, or -- or really for any purpose on the basis of 19 implicit interest rates, that's not how it views the 20 transactions at all. The notion of implicit interest rates 21 is something that the City raised. 22 That said, I indicated I would make inquiries 23 to see if in response to the City having raised the issue, 24 any kind of analysis existed. And that once I had 25 ascertained the answer to that question, I'd advise My Friend

1 whether I had any issue about producing it, which is the 2 current state of affairs. 3 Now, in terms of this question that's -- I'm 4 being put in cross-examination, I am -- it's a numerical 5 exercise of compiling a chart showing what the lease rate 6 factors were on a quarterly basis. That is in the -- in the 7 documents already, I have no problem in compiling that, if 8 that's a more convenient way to -- to look at it. 9 Whether or not MFP should be required or 10 should agree to undertake the next analysis, based upon some 11 assumption that the City chooses to -- to utilize, I'm not 12 sure about that, I would prefer to reserve judgment on that, 13 consider it and if need be, seek some direction from you, if 14 we can't agree. 15 But -- but that analysis I would have thought 16 is something that the City probably has already done. I 17 don't think we have it, but if they haven't done it, can do 18 it, I'm just not sure whether -- whether we -- we should go 19 that next step further, but I'd like to reflect on it before 20 any commitment is made. 21 MADAM COMMISSIONER: Okay, shall I take it 22 you're saying that from Mr. Wolfraim's point of view right 23 now, is that he's free to answer the questions, but before we 24 -- before you put together a chart on this, especially with 25 respect to the lease rate factor, you want to think about it?

1 MR. DAVID MOORE: Yeah, well -- 2 MADAM COMMISSIONER: And -- 3 MR. DAVID MOORE: -- that's right, and the 4 question is really, it's analogous to as if we were sitting 5 on examination for discovery asking a witness to give some 6 form of undertaking to -- to do some analysis and produce it. 7 It's -- it's -- I -- I understand the 8 question, I just -- it's that kind of question, and before 9 some kind of commitment is made corporately to do that, I 10 would prefer an opportunity to reflect on that as counsel, 11 and advise My Friend in due course. 12 Mr. Wolfraim is coming back, if we can't agree 13 and it has to be the matter of -- something in the manner of 14 submissions, we can do it that way. Hopefully that won't be 15 necessary. 16 MS. LINDA ROTHSTEIN: Okay, I have no trouble 17 with that, Madam Commissioner, we will act on that basis. 18 19 CONTINUED BY MS. LINDA ROTHSTEIN: 20 Q: I just wanted to understand from Mr. 21 Wolfraim, I take it that if you make such an assumption, it 22 would be possible to do the calculation? 23 A: Yeah, I'm not sure I understand the 24 question, so you're ahead of me. So that -- that's -- 25 Q: Okay.

1 A: -- I think it requires some further 2 discussion as to what exactly you mean by an implicit rate of 3 interest, because you have to make certain assumptions, so I 4 need to know what the assumptions are, in order to produce 5 the -- 6 Q: Well, why don't we do this. Why don't 7 you tell me, because it may be my ignorance, sir, what 8 assumptions in addition to the ones that I have made, one 9 needs to know to do the calculations? 10 A: Well, no, it -- it -- it -- you're going 11 to produce different implicit rates of interest, depending on 12 what assumptions you -- you make about outcomes at the end of 13 the lease. 14 If all you're saying is you want one (1) 15 implicit rate of interest, which is -- is -- assumes zero (0) 16 residual value -- 17 Q: Yeah. 18 A: -- and the equipment's returned at the 19 end of the lease -- 20 Q: Yeah. 21 A: -- then that -- then that's -- that 22 information the City already has. I mean, and I think that's 23 in the documents, but I -- I -- but -- 24 Q: You know, sir, it may well be in the 25 documents and I don't know how to find it, that could be the

59
  1  answer.
  2                 A:   Yeah.
  3                 Q:   But your counsel, I take it, will let us
  4  know, Madam Commissioner and I will move on and not belabour
  5  the point at the moment. 
  6                 MADAM COMMISSIONER:   Thank you.
  7                 MS. LINDA ROTHSTEIN:   Thank you.
  8  
  9  CONTINUED BY MS. LINDA ROTHSTEIN:
 10                 Q:   Now, Mr. Wolfraim, I don't propose to
 11  take you to this, but I want to remind you that there was a
 12  National Post article in -- from your material, in which you
 13  were quoted, and one (1) of the things I understood you to
 14  tell the National Post some time ago, is that before the City
 15  ever contemplated specifically the RFQ, which is the subject
 16  of this Proceeding, you were of the view that there was
 17  market potential in the public sector in the leasing
 18  business, that had not been fully tapped; is that fair, sir?
 19                 A:   We've been in the public sector since the
 20  day we started twenty (20) years ago.
 21                 Q:   Right.  But am I correct in understanding
 22  that certainly in '97 and '98 and early '99, you personally
 23  were of the view that there remained market potential in the
 24  public sector that had not been tapped by leasing companies
 25  such as yours?

1 A: Well there was additional opportunity, 2 sure. 3 Q: And that what you saw, just to put it in 4 context, is that Governments were increasingly pressured by 5 smaller budgets and a resistance to tax increases; correct? 6 A: Right. 7 Q: They were increasingly needing large 8 capital costs to support large infrastructure projects, and 9 less inclined to finance those through, as I said, tax hikes 10 or debentures? 11 A: That's -- that's -- that -- you're -- 12 you're making reference I think to a business area called our 13 Asset Base Finance Group, which we started back in '97 and 14 '98 -- 15 Q: Right. 16 A: -- which is completely different from -- 17 from this kind of business, but it's a completely separate -- 18 was a completely separate business unit within MFP, for the 19 technology financing business. 20 Q: Okay, but fair enough, but wasn't the 21 same underlying context apparent, that there was going to be 22 a need for supporting increased technology infrastructures in 23 Government; yes? 24 A: No. 25 Q: No?

1 A: It wasn't a technology thing, it was -- 2 it -- it had to do more with the concept of where -- where we 3 saw our niche in that market, where we defined our niche 4 opportunity in the asset based finance market was for assets 5 that had long lives and produced revenues, and computers 6 don't generate revenues, and they're short term deals. 7 So it was a completely separate undertaking 8 from -- from the core business of MFP. It was a new -- new 9 tangent of -- in our growth force. 10 Q: All right, new tangent or not, would you 11 agree with the characterization of the City of Toronto as a 12 strategic account for MFP? 13 A: For technology financing, yes. That we 14 didn't see them as a candidate for this asset based finance 15 business necessarily. 16 Q: All right. But would you agree with Ms. 17 Payne's assessment, and I can take you to it in her statement 18 to the OPP, that the strategy was to broaden your Government 19 portfolio generally, and that the City of Toronto could be 20 useful in that regard? 21 A: Oh ab -- no, as a technology customer, 22 the City of Toronto was the last big Y2K prospect, yes. The 23 last major IT or technology user that hadn't made the -- the 24 transition to Y2K compliant products. 25 Q: Now, Mr. Wolfraim, I understood you in

1 your answers to Mr. Manes, to disagree with the 2 characterization of the City of Toronto in '97/98 and '99, 3 particular at the time of amalgamation, as a novice in 4 technology leasing? 5 A: No, no, the City of Toronto had been 6 leasing vehicles for ten (10) or fifteen (15) years, and 7 there's very little difference in the contractual form from 8 leasing -- leasing is leasing. 9 So, were they -- it's a forty (40) -- twenty- 10 five thousand (25,000) person organization, it's a massive 11 corporation. Novices? I -- I wouldn't -- wouldn't call them 12 that I don't think. 13 Q: What I understood you to say to Mr. 14 Manes, in addition to experience that you understood they had 15 doing fleet leasing, was that there were two (2) other 16 examples that you knew of in the technol -- on the technology 17 side, one (1) was the City of Scarborough-Unix (sic), that 18 you had a foothold in; correct? 19 A: Unisys. 20 Q: And the other was the Toronto Police 21 Unix (sic) -- 22 A: Unisys, Unisys. 23 Q: Okay. 24 A: Yeah. 25 Q: Can you spell that for me?

1 A: Unis -- U-N-I-S-Y-S. 2 MADAM COMMISSIONER: It came out in the 3 transcript as E-U-N-I-C-E, and I -- 4 MS. LINDA ROTHSTEIN: That's why I'm 5 pronouncing it that way. 6 THE WITNESS: Right. 7 MS. LINDA ROTHSTEIN: Unisys, U-N-I-S-Y-S, 8 okay. 9 THE WITNESS: U-N-I-S-Y-S unit. Now, in the 10 City of -- well, plus they had access to as many experts, and 11 I think my comment was that within two (2) blocks of City 12 Hall, there are probably a thousand (1,000) people that know 13 as much or more about leasing than MFP does. I mean leasing 14 and technology leasing does not -- we're not splitting the 15 atom, it's pretty straight forward stuff, so. 16 17 CONTINUED BY MS. LINDA ROTHSTEIN: 18 Q: But, just so we're clear, and not walking 19 two (2) blocks from City Hall to other resources, which we 20 all know exist in the land, you're not suggesting, sir, that 21 anyone from either the Toronto Police or Scarborough, that 22 may have been involved in those Unisys deals, was involved in 23 either the Councillors' leases or the main 1999 leasing deal? 24 A: I can't comment, because I don't know 25 who --

1 Q: You have no knowledge of that -- 2 A: I have no knowledge, that's right, I 3 assume a $6 1/2 billion corporation has the resources to go 4 ahead and make the proper assessments and decisions and -- 5 Q: Right. Would you be good enough to look 6 at Volume 3, Tab 10, of your binders? 7 8 (BRIEF PAUSE) 9 10 Q: This is Begdoc number 25441. It's a 11 letter from Mr. Ashbourne and Mr. Smedhurst to Mr. Andrew, 12 December 1, '97. And you'll see the second paragraph, Mr. 13 Wolfraim, reads as follows: 14 "At the conclusion of our meeting you 15 indicated that a summary memorandum on the 16 benefits of leasing would be helpful as a 17 source for internal use. You anticipated 18 the need for internal communication and/or 19 presentations on the leasing option. 20 Accordingly, we have included these summary 21 points in the body of this letter, 22 enclosing a general page describing the 23 benefits of leasing, and two (2) pages 24 describing the benefits of selecting an 25 independent lessor, and the offer of more

1 extensive literature on the benefits of 2 leasing in the future, if necessary." 3 And do you agree with me, Mr. Wolfraim, that 4 at the date of this letter in December 1997, Mr. Ashbourne 5 was the key MFP contact with the City of Toronto? 6 A: The key -- I suppose, sure. 7 Q: In fact, there really wasn't any other 8 person who had any direct connections with the City of 9 Toronto at that time, isn't that fair? 10 A: Well unless Irene Payne, I mean she had 11 the relationship with Jim Andrew that went back -- 12 Q: All right. 13 A: -- to his Provincial days, so -- 14 Q: All right, so Irene Payne and Rob 15 Ashbourne would then have been the key contacts from the MFP 16 side with the City of Toronto in '97? 17 A: Okay. 18 Q: And do you agree that from what you know, 19 Mr. Andrew was the key contact at the City of Toronto back in 20 those days? 21 A: Whether you go into a customer 22 organization through the Finance Department or the IT 23 Department, depends on where your relationships are. The 24 relationship that we had I guess was with Jim Andrew, and 25 that's where Rob and -- and -- and Irene were.

1 Q: And therefore the answer to my question 2 is, yes, based on your knowledge of this file, Mr. -- 3 A: From -- 4 Q: -- Andrew was the key contact? 5 A: -- from their perspective he was the key 6 contact. 7 Q: That's correct. And certainly if we look 8 then at the communication between the key MFP or one (1) of 9 the key MFP contacts and one (1) of the key City contacts, 10 what we read is that the City believed it needed information, 11 more information from MFP, on the benefits of leasing, that 12 that was something that would be needed for internal 13 communication at the City of Toronto at that time? 14 MR. DAVID MOORE: Well, can I just interject 15 there. First, I don't know that Mr. Ashbourne was asked any 16 questions about this document. I would have thought he would 17 be a better source of information -- 18 MS. LINDA ROTHSTEIN: He absolutely was and I 19 can -- 20 MR. DAVID MOORE: Well, I don't know whether 21 he was asked these particular questions, but -- but -- but in 22 any event, I'm not sure how Mr. -- Mr. -- you know, the -- 23 the letter speaks for itself. Mr. -- the witness is being 24 asked to comment upon what the City's needs and beliefs were, 25 which presumably we'll hear from him -- hear about it in due

1 course from Mr. Andrew and others. 2 I don't want to interrupt a cross-examination 3 unduly but I think that there's got to be some caution 4 applied when questions are put to witnesses, asking them to 5 frankly, speculate on -- on what may be in the minds of City 6 employees or former City employees, who have yet to be 7 witnesses in this case. 8 MADAM COMMISSIONER: I don't see anything 9 wrong with the question. 10 I think Mr. Wolfraim's position, as I 11 understand it, is MFP was dealing with a large organization 12 with a multi-billion dollar budget, and thousands of 13 employees, and he felt -- I'm going a little further I guess 14 than what he said, but I think what he -- what I hear him 15 saying is he felt he should have been able to rely on this 16 organization as having whatever they needed in their 17 organization to deal with leasing. 18 And the question that I understand Ms. 19 Rothstein to be asking is, well, that's all fine and well, 20 but here's the letter in 1997 that seems to suggest, at least 21 this part of the organization, doesn't know anything about 22 leasing and wants to know more. 23 Is that a fair characterization? 24 MS. LINDA ROTHSTEIN: That's where I am, 25 Madam Commissioner.

1 THE WITNESS: Yeah, well I disagree that he 2 didn't know anything about leasing -- 3 MADAM COMMISSIONER: And -- 4 THE WITNESS: -- but that -- I would disagree 5 that he didn't know anything about leasing, but he's asking 6 about more information. 7 MADAM COMMISSIONER: Okay. 8 THE WITNESS: I don't know who's making -- 9 who makes these decisions at the City either at this point or 10 even today, as to what -- are they going to lease or what 11 form of financing is this going to take. My guess would be 12 that it would not likely be Jim Andrew's decision in 13 isolation, so -- 14 15 CONTINUED BY MS. LINDA ROTHSTEIN: 16 Q: Right. And because it wasn't Mr. 17 Andrew's decision in isolation, Mr. Wolfraim, if we look at 18 this letter, what it suggests, and it was sent to your 19 company, is that he believed, Mr. Andrew believed that more 20 information was needed beyond him at the City of Toronto, 21 about the benefits of leasing. Isn't that a fair 22 interpretation of the document, sir? 23 A: I don't know that I'd go there, but it's 24 one (1) interpretation, yeah. 25 Q: Okay, and indeed, I'm going to suggest to

1 you, Mr. Wolfraim, that whether or not your assumptions about 2 the City was -- the way the City was and could have operated 3 at that time were true, that in fact, at the time that new 4 City of Toronto started, MFP through Mr. Ashbourne at least, 5 took it upon itself to inform key City staff about the 6 general benefits of leasing? 7 A: Along with other people as well, I 8 presume. I mean this is the sort of letter that we would 9 send to forty (40) or fifty (50) people, every couple of 10 months. 11 I mean these are -- these are generally -- 12 general, generic industry generic type presentations. 13 Q: Well, quite beyond the letter itself, if I 14 could ask you to turn to Mr. Ashbourne's evidence given on 15 the 16th of December, and specifically -- 16 MADAM COMMISSIONER: He's not going to have 17 that. 18 MS. LINDA ROTHSTEIN: Oh, he doesn't have 19 that. 20 21 CONTINUED BY MS. LINDA ROTHSTEIN: 22 Q: I'm going to read it to you then, sir. 23 A: Okay. 24 Q: All right. So that will be the fastest 25 way of doing this. But, for you Madam Commissioner, if you

1 would be good enough to turn to page 12 -- 2 MADAM COMMISSIONER: Of December 16th? 3 MS. LINDA ROTHSTEIN: Of the first day of Mr. 4 Ashbourne's testimony. 5 6 (BRIEF PAUSE) 7 8 MS. LINDA ROTHSTEIN: And this is in response 9 to questions of Commission Counsel, Mr. Manes, on that day, 10 starting at the top of the page. 11 12 CONTINUED BY MS. LINDA ROTHSTEIN: 13 Q: "Question: And we'll talk more about the 14 meetings that you had with Jim Andrew and 15 others, but broadly speaking in the fall of 16 '97 before the Councillor's lease, what was 17 your understanding of what Jim Andrew's 18 wishes were from a vision perspective from 19 the City?" 20 And: 21 "Answer: In terms of these lease financing? 22 Question: Yes. 23 Answer: Going forward? Obviously --" 24 And this is Mr. Ashbourne's evidence, sir: 25 "Obviously, because the City had not done

1 much lease financing, most of it had been 2 through debenture funding, there was an 3 education process that had to take place, 4 both from Jim's perspective and through to 5 the Finance Department. And Jim had asked 6 me to assist him with going through some 7 purchase versus lease analysis, things of 8 that nature, which I did on several 9 occasions. I provided him a number of 10 documents in regards to helping assist the 11 process of understanding leasing and the 12 benefits of leasing. So I provided a fair 13 amount of documentation." 14 And my question, simply put, Mr. Wolfraim, is 15 do you have any reason to believe that Mr. Ashbourne's 16 assessment of the state of knowledge and needs of the City of 17 Toronto back in '97, were in error in any way? 18 A: No, as a matter of fact, that puts it in 19 much better -- puts all this letter and everything else in 20 much better context. 21 Q: And indeed therefore, what Mr. Ashbourne 22 rightly did, I take it from your perspective, is he made 23 presentations to the City, that were carried out, at least in 24 part, with a view to educating the City on the benefits of 25 leasing?

1 A: Yes. 2 Q: And that he did that because he, Mr. 3 Ashbourne, and he told the Commissioner this, I can take you 4 to the transcript, felt that education was needed? 5 A: Yes, well, that's what you just read so -- 6 Q: Now, I next want to take you, if I can, to 7 Volume 2, Tab 184. 8 9 (BRIEF PAUSE) 10 11 Q: And am I correct, sir, that this is the 12 first formal memorandum prepared by Mr. Ashbourne to the 13 investment committee of MFP, about the Megacity bid? 14 A: I'm not -- 15 MADAM COMMISSIONER: Just make sure I have the 16 Begdoc number on -- 17 MS. LINDA ROTHSTEIN: Sorry, it's 25495. I 18 realized that midway through my question. 19 20 CONTINUED BY MS. LINDA ROTHSTEIN: 21 Q: Is that your recollection, sir? 22 A: I assume it is. 23 Q: All right. And did it -- 24 MR. DAVID MOORE: When My Friend, says the 25 Megacity bid, my understanding is this -- I don't know if she

1 means the 1999 RFQ or -- 2 MADAM COMMISSIONER: Well, that's the subject 3 that Mr. Ashbourne has put in the -- in the memo. 4 MS. LINDA ROTHSTEIN: I'm simply reading the 5 re: line actually, but let me clarify with the witness, Mr. 6 Moore, because I think it's a good point. 7 8 CONTINUED BY MS. LINDA ROTHSTEIN: 9 Q: I take it that at this stage there wasn't 10 any knowledge that there was going to be any broad Y2K 11 Megacity leasing bid. The idea was to get in and do the City 12 Councillor leasing deal. Is that fair? 13 A: Yes, but it appears that the rationale 14 that Rob's using to -- to promote the pricing that he's 15 suggested is that -- that the way the City is going to go 16 about preparing itself for Y2K is by upgrading five thousand 17 (5,000) PCs per year for -- over a two (2) or three (3) year 18 period. 19 Q: So the id -- idea is get in and get a 20 foothold, correct? 21 A: Right. 22 Q: And hopefully that will enhance the 23 ability of MFP to draw up the broader contemplated business 24 which will be a Y2K platform of some kind? 25 A: Right.

1 Q: And do I understand you to be saying, Mr. 2 Wolfraim, that you take all of these sorts of memorandums 3 with a grain of salt, as a member of the Investment 4 Committee? 5 A: Not all of them but some elements of 6 them, I suppose. 7 Q: But when, for example, we read under 8 History in the second bullet point: 9 "Jim is a strong supporter of leasing and 10 with our effort over the past six (6) 11 weeks, he has convinced their Finance 12 Director to support leasing." 13 Is that something that you relied on or didn't 14 rely on in assessing this memorandum? 15 A: I didn't rely on it or -- or not rely on 16 it. Neither way. 17 Q: Is that because you don't recall, sir, or 18 -- 19 A: Well, partly because I don't recall but 20 partly because I don't know how -- I mean, th -- that's part 21 of a -- what Rob is arguing for is some aggressive pricing 22 because he sees a business opportunity coming and -- and he's 23 arguing that we are positioning ourselves, if we make sure we 24 win this business, to do some of this other business. 25 So, there's no promise of other business.

1 He's just suggesting that Jim is a supporter of leasing, so I 2 -- 3 Q: And he's also suggesting that not only is 4 Jim -- 5 A: And the Finance Director, as well. Yeah. 6 Q: -- but he's made inroads into the Finance 7 Department, which I take it would be relevant for MFP to 8 know? 9 A: Absolutely. 10 Q: And if true and reliable, it would be a 11 reason to aggressively price this deal. Am I right? 12 A: Yes. 13 Q: Because in the absence of a sense of a 14 strong relationship with key potential decision-makers at the 15 City, there isn't as much reason to aggressively price such a 16 deal? 17 A: That's right. 18 Q: And so that you're doing a kind of risk 19 benefit assessment on the the Investment Committee, if I 20 understand it correctly. You're calculating the extent to 21 which an aggressively priced deal now will yield you a more 22 profitable deal down the line on the strength of your 23 relationships with the City? 24 A: Well, it's more a question of where do we 25 need to be to win this business and so the Investment

1 Committee is -- is listening to the recommendation of the 2 Sales Department, which is Rob Ashbourne and Irene Payne, and 3 they're telling us that we need to price this business at 4 this level in order to win it. 5 We don't want to beat people, necessarily, we 6 -- but -- by -- by a ton, but we -- we believe that this is 7 where we need to price the business to win it and we believe 8 it's worth winning because there's more opportunity there. 9 Q: Right but the key point being, it's not 10 only about winning this particular piece of business. The 11 reason it's worth winning, even if at a potential loss to 12 your company, is because of the potential for future 13 business? 14 A: Correct -- 15 Q: Correct? 16 A: -- and, in fact, I think the pricing that 17 was being recommended here was pricing that -- that stripped 18 the opportunity for profit out of the deal during the lease 19 term and -- and that's a pretty big step for us to take, so. 20 Q: Right, but my simple point, Mr. Wolfraim, 21 is that the potential of future business is, from your 22 perspective on the Invest -- ve -- Investment Committee, is 23 dependent at least in part, on the strength of the 24 relationships which were salespersons and other key contacts 25 have with their counterpart at the City.

1 A: Our mission statement says that we invest 2 in people relationships and accounts, so. 3 Q: So, if I understand you correctly, Mr. 4 Wolfraim, your position is that whether or not the City was, 5 in fact, a relative ne -- leasing novice and whether or not 6 it had available to it other resources which it could have 7 used to educate itself on the general benefits of leasing, 8 your company has no role or no obligation, let me change the 9 wording. No obligation to provide that education; is that 10 your position? 11 A: No. No, well, obligation is that -- you 12 said a mouthful, so -- 13 Q: Okay. 14 A: -- we're a relationship business, we 15 believe in long term -- having -- developing long term 16 relationships with our customers. So, by all means it's our 17 -- in part of our process is to make presentations and answer 18 any questions our customers may have about -- about the 19 services we offer or about particular proposals that we make 20 to them. 21 Q: Okay. 22 A: If what you're asking me is are we 23 obligated to educate our customers? Maybe so, maybe not. 24 It's -- it's a very -- it's a general -- it's kind of a -- in 25 isolation, it -- it -- you need some context for -- for --

1 Q: Okay, so let's just -- let's just see if 2 you and I can agree on what some of that context is. 3 A: Right. 4 Q: And again, stop me if my questions are 5 too long. It's an unfortunate problem from time to time. 6 But am I right in understanding, sir, that you 7 accept that to the extent that a lessee needs that education, 8 because they are in fact a relative novice in this business, 9 however simple you may think it is, your company assumes the 10 role of providing that education? 11 A: We would, along with others. 12 Q: And you certainly wouldn't be looking at 13 yourselves as the only educator out there in the world, but 14 you would -- you would assume that role? 15 A: Someone like the City of Toronto, it's 16 hard to -- if you look at the City of Toronto, you're looking 17 at a $6 billion corporation. 18 Q: Hmm hmm. 19 A: I mean they're going to attract -- MFP is 20 -- is going to be knocking on their doors, as is every other 21 leasing company in town. 22 Everybody knew, for example, not in '97, but 23 -- but perhaps later, that there was a major deal. So 24 everybody was trying to get in front of the City and -- and 25 pitch not only the advantages of leasing, but the advantages

1 of leasing from their company. 2 So, and part of that -- part of that process 3 is -- is -- is an educational process. 4 Q: So your point, if I understand you, sir, 5 is, nobody should look to you alone to be providing that 6 education? 7 A: Right. I'm not sure how to answer the 8 question. 9 Q: Am I correct, sir, that in addition to 10 providing education generally on the benefits of leasing, 11 your company would also think it part of its job to explain 12 what the terms and conditions of the lease are, that may 13 affect the lessee's decision? 14 A: For example? 15 Q: Well, simple things, the financial impact 16 of moving from a three (3) to five (5) year lease? 17 A: We would present options and answer 18 questions, it's up to the customer to evaluate the options 19 and make his own decision. We are not making the decision 20 for our customers. 21 Q: That -- 22 A: We'll provide what is normal in the 23 industry in terms of background information, we'll answer any 24 questions the customer has, and -- but -- 25 Q: Nobody's suggesting for a moment, sir,

1 you know, that it's your job to make the decision for the 2 customer. 3 A: But it -- 4 Q: But there's a concept generally, about 5 providing all relevant information the customer needs to make 6 an informed and educated decision. 7 A: Yeah, well, no, and that's what I'm 8 saying is that -- that we would provide all relevant cust -- 9 all relevant information that it is customary to provide in 10 our industry in order for the customer to make the -- the 11 right decision. 12 Q: But what I want to just make sure you and 13 I understand is what's customary in your industry, and you 14 agree, I don't know, that what -- what you're obliged to do 15 or what you should be trying to do in -- in MFP's position, 16 is to provide the prospective lessee with all of the relevant 17 information it needs to make an informed and educated 18 decision? 19 A: Well, you see, that implies to me that -- 20 that we've got a fiduciary obligation. 21 Q: Well, let's look then at Volume 2, Tab 22 188 and see if it's a fiduciary obligation or an obligation 23 your company has undertaken as part of its agreement to be 24 following with the FLA guidelines? 25

1 (BRIEF PAUSE) 2 3 Q: And you need to turn to -- this is 4 unfortunately not coded, Commissioner. So there is no Begdoc 5 number but, Mr. Wolfraim, are you with me at the Code of 6 Ethics, at -- 7 A: Yes. 8 Q: -- page 4, sir? 9 A: Yes. 10 11 (BRIEF PAUSE) 12 13 MR. DAVID MOORE: Now, which tab is that, I'm 14 sorry? 15 MS. LINDA ROTHSTEIN: And we're at Tab 188 of 16 Volume 2. 17 MR. DAVID MOORE: Thank you. 18 19 (BRIEF PAUSE) 20 21 CONTINUED BY MS. LINDA ROTHSTEIN: 22 Q: Mr. Wolfraim, if we can just turn then to 23 the code of ethics and just review a couple of basic points. 24 I take it from what you told Mr. Manes, that 25 MFP considers itself governed by that code of ethics?

1 A: We're members of the organization, I was a 2 director of the organization for a number of years. 3 Q: And, therefore the answer to my question 4 is -- 5 A: Sure, yes. 6 Q: -- yes. And it's a code of ethics, it's 7 not a code of legal obligations. So just so you -- I know -- 8 I don't want to play lawyer with you, Mr. Wolfraim, I really 9 don't -- I am distinguishing the two (2) things. 10 So, when you say fiduciary obligation, I -- I 11 recognize that as a legal one (1) and I'm not going to use 12 those words -- 13 A: No, well I didn't -- I meant it in a 14 different context. 15 Q: All right. But, in any event, you'd agree 16 that there are ethical obligations that might govern the way 17 your company conducts itself out in the world, that might be 18 different from its legal ones? 19 A: Yes. 20 Q: Okay. And there's no doubt that your 21 company is governed by the principles set out here, which are 22 ethical? 23 A: Correct. 24 Q: All right. And if we look at the third 25 principle, and I know they're not numbered, it provides that

1 your company will not knowingly make false or misleading 2 statements or withhold information vital to an intelligent 3 business decision concerning any aspect of a leasing 4 transaction, right? 5 And I'm suggesting to, Mr. Wolfraim, that set 6 out there, it suggests that it's incumbent upon leasing 7 companies to provide information vital to an intelligent 8 business decision to lessees? 9 A: Yes, I don't disagree at all. I agree 10 totally. 11 Q: And it's not simply a question of waiting 12 for the question to be asked, it's surely the responsible as 13 an ethical matter, of the less -- of the leasing company to 14 provide that information? 15 A: Yes, but, I think what I said, was what is 16 in this -- and we will provide information to the extent it's 17 normally provided in the industry. That's what I'm saying. 18 It's not normal, for example, if you're buying 19 a PC to ask IBM to break your pricing down and tell me how 20 much is allocated to overhead, how much is profit, how much 21 are your variable costs, et cetera, et cetera. 22 So, what they'll do is they'll give you a 23 price and tell you what the PC is and they'll tell you what 24 the PC does. 25 Similarly, in our business, we provide the

1 information that we believe is normally required to make the 2 appropriate decision. 3 Q: Right. And I take it that includes all 4 relevant information as to the terms and conditions of the 5 lease which may affect the lessees' decision. That's what it 6 says -- 7 A: Okay -- 8 Q: -- it says in number four (4). 9 A: -- okay. 10 Q: And it's actually a positive obligation to 11 disclose all of that information? 12 A: Yes. 13 Q: And I'm suggesting to you, sir, that those 14 two (2) principles taken together would surely require a 15 leasing company to disclose to a lessee the financial impact 16 of moving a technology lease from three (3) years to five (5) 17 years? 18 A: I don't know what you mean by the 19 financial impact, I guess -- 20 Q: What the financial impact will be on the 21 lessee of making such a decision? 22 A: Well, I don't know -- I guess I would 23 suggest that we would present three (3) year deals, five (5) 24 year deals. It is normal in any business environment that 25 you would expect the customer to do his own analysis and come

1 back with any questions he may or may not have. 2 Q: And is it therefore your evidence in the 3 face of these ethical guidelines, that unless the customer 4 asks, you don't have to provide any information on the 5 financial impact of such a decision. 6 MR. DAVID MOORE: There's not -- 7 THE WITNESS: There's enough information 8 that's been disclosed the customer can calculate the 9 financial impact, that's my point. Are we supposed to break 10 the deal down in terms of dollars and cents and pennies and 11 say, here's what all the differences are? No. 12 What we do, is we present the deals and it's 13 up to the customer to do his analysis and analyze the 14 alternatives. Sorry, Dave. 15 16 CONTINUED BY MS. LINDA ROTHSTEIN: 17 Q: And if Mr. Wolfraim, this Inquiry hears 18 more evidence about whether or not, the City got a good deal 19 with MFP on the five (5) year equipment schedules on the 20 lease re-writes, and if it turns out that we hear evidence 21 that those deals were not to the financial advantage of the 22 City, are you prepared to return to explain why MFP was under 23 no obligation to advise the City about those implications? 24 A: I disagree. I think the City got all the 25 information it needed to evaluate the options and make the

1 appropriate decision. And I think they got a good deal. 2 They -- 3 MR. DAVID MOORE: And we're at 11:30, but, I 4 should say, I'm not aware of anything that has been produced 5 from any source that speaks of evidence that's going to be 6 adduced along those lines -- 7 MS. LINDA ROTHSTEIN: We'll we're -- 8 MR. DAVID MOORE: -- tremendous undertaking, 9 that there's going to be evidence that the City calls. I'm 10 not aware that Commission Counsel was going to be calling 11 that evidence, based upon what I've heard so far or been told 12 so far. 13 I don't know if -- if we're now hearing that 14 the City is -- is, itself, undertaking to be calling some 15 kind of evidence along those lines and if we get that 16 evidence, we'll deal with it at the appropriate time but I -- 17 I -- I -- I'm curious the underlying premise to that 18 question. 19 MS. LINDA ROTHSTEIN: It certainly has been 20 my understanding, Madam Commissioner, that indeed as this 21 goes on, Commission Counsel saw it as part of its mandate to 22 explore that issue. 23 I don't know the precise details of that 24 evidence and that's why I put it in the hypothetical form 25 that I have but it's very much an if at this stage but

87
  1  certainly on my -- based on my discussions with Commission
  2  Counsel, I understood that they intended to explore that.
  3                 MADAM COMMISSIONER:   Well, this is a -- this
  4  a -- it's 11:30 now, anyway, so why don't we take the break
  5  but I understood the question to be, if we hear evidence that
  6  it was not to the financial advantage of the City, are you
  7  prepared to return?  
  8                 Well, we already know it appears that Mr.
  9  Wolfraim is going to be returning, in any event, and I guess
 10  the question is, does he return if we find information bef --
 11  beforehand, does he return right after that or when does he
 12  return in the process?
 13                 MR. DAVID MOORE:   No, he -- he'll be
 14  returning and he'll answer all appropriate questions when he
 15  returns.  
 16                 I -- I may be overly sensitive, but -- but --
 17  but this is -- this is a public inquiry.  One (1) of the
 18  purposes of the inquiry is to provide some broader education
 19  to the public at large about some of the issues that have
 20  given rise to the inquiry and I am concerned over questions
 21  being put in a way that implies that, in fact, such and so
 22  and -- and that then gets pick