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 14th, 2003 25

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

1 TABLE OF CONTENTS 2 Page 3 IRENE PAYNE, Resumed 4 Continued Cross-Examination 5 by Mr. Gordon Capern 6 6 7 Certificate of Transcript 216 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 11, Volume 3 Binder of documents titled 5 4 "Irene Payne" 5 Additional tabs 16 - 18 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

1 --- Upon commencing at 10:02 a.m. 2 3 THE REGISTRAR: The inquiry is now in 4 session. Please be seated. 5 MADAM COMMISSIONER: Good morning. 6 7 IRENE PAYNE, Resumed 8 9 MR. GORDON CAPERN: Commissioner, good 10 morning. Before we begin, we've added this morning three (3) 11 additional tabs to Ms. Payne's Volume 3, continuing with what 12 we did with Ms. Dyer's additional documents which were at Tab 13 15, but we've added them as Tabs 16, 17 and 18. 14 And just to identify them quickly, 16 is an 15 e-mail June 16th -- sorry -- June the 10th, 1999 from Sandy 16 Pessione at MFP to Karim Kassam, the document number on that 17 is COT024958. 18 Tab 17 -- and I'll be referring to that e-mail 19 later on in the examination. Tab 17, which I will be 20 referring to earlier this morning, is three (3) documents 21 which are -- as I understand it the expense reports of Mr. 22 Domi for the months of January, February and April of 1999, 23 that were, I understand it, Ms. Payne has signed off and 24 we'll hear testimony about that this morning, as well. 25 There is no March expense report that the --

1 the similar expense reports from May, June and July are in 2 our Volume 4. 3 MADAM COMMISSIONER: Okay. 4 MR. GORDON CAPERN: So we'll be flipping back 5 a little. I'm sorry for that. 6 MADAM COMMISSIONER: Ms. Payne, have you seen 7 or been given an opportunity to look at these? 8 MR. GORDON CAPERN: I believe she has. Mr. 9 Chenoweth -- 10 MR. FRED CHENOWETH: Yes, a very brief, but, I 11 think adequate opportunity to look at them, as long as we 12 move somewhat slowly on the costs with respect to them. 13 MADAM COMMISSIONER: Well, I can almost 14 guarantee that. 15 MR. FRED CHENOWETH: Thank you. 16 MADAM COMMISSIONER: No offense to Mr. Capern. 17 MR. GORDON CAPERN: I was going to say, should 18 I take that as a hint, Commissioner? 19 MADAM COMMISSIONER: No, no, not at all. 20 MR. GORDON CAPERN: And in Tab 18, 21 Commissioner, I was struggling a little bit from my absence 22 from the Inquiry the first couple of weeks. It wasn't clear 23 to me that the master lease documents themselves were not 24 already in witness binders. 25 I was surprised to learn this morning that, in

1 fact, they are in none of the witness binders that have been 2 produced to date. 3 So, the first one (1) is at Tab 18 of Volume 3 4 for Ms. Payne. And that's the master lease -- master lease - 5 - equipment lease agreement number 838, made as of the 30th 6 day of July, 1999. The Begdoc number for that is COT020598. 7 And just -- I did not identify it, I will do 8 this for the record now. Begdoc numbers for the expense 9 report entries that are referring to at Tab 17, are 10 COT025536, 25502 and 26004, 11 MADAM COMMISSIONER: Thank you. 12 13 CONTINUED CROSS-EXAMINATION BY MR. GORDON CAPERN: 14 Q: So with that introduction, Ms. Payne, if I 15 can ask you to turn up the tabs that I referred to at the 16 close yesterday, that being Tabs 8 through 24. 17 A: Of volume? 18 Q: Volume 4. Do you have those Ms. Payne? 19 A: Yes. 20 Q: If I may -- I guess what I'd like, Ms. 21 Payne, is for you to direct your focus for the moment on the 22 Tabs found at, in reverse order from 12 through 8, because if 23 I'm guessing right, it would be in that order that the 24 documents would be created and dealt with at MFP, is that 25 correct?

1 A: Yes. 2 Q: So, if I can start, first Ms. Payne, with 3 a document that's contained at Tab 12, this appears to be an 4 expense report for Dash Domi, dated the month of May of 1999, 5 again the Begdoc number is 25611. 6 Can you identify that document, Ms. Payne? 7 A: Yes. 8 Q: What is this document? 9 A: It's one of Mr. Domi's expense reports. 10 Q: And if I'm -- am I right, Ms. Payne, just 11 if I can identify a few things on this document while we have 12 it open in front of us. 13 First in the lower lefthand corner, there 14 appear two (2) signatures. One (1) on the signature line, am 15 I right that that's Mr. Domi's signature that appears there? 16 A: Yes. 17 Q: And on the line below that, and I 18 appreciate that the signature is quite truncated, Ms. Payne, 19 but I'm hopeful that on the approval line, you'll agree with 20 me that that is your signature? 21 A: Yes. 22 Q: Now, over the -- to the right hand side 23 of the page at the bottom, below the totals. I -- I see here 24 a -- I guess, something that looks to me like C V Okay. 25 A: Yes.

1 Q: Am I right that that is Ms. Vivaldo -- 2 Ms. Vivaldo initialling the document? 3 A: Yes, I'd assume so. 4 Q: Well, do you know so or are you assuming 5 so? 6 A: I'm assuming so. 7 Q: Okay. Just so that I can -- 8 A: It appears that way. 9 Q: And is that -- is that, from your 10 familiarity with her handwriting, does that look like okay 11 below it? 12 A: Yes, it does. Yes. 13 Q: And over on the right hand side, there 14 appears to be some -- what appears to me to be a squiggle. I 15 can't really identify it. Do you know what that is? Lower 16 right hand corner to the right of the number ten thousand one 17 hundred and ten dollars and ninety three cents ($10,110.93). 18 A: I would thank that would be J E R. 19 Q: And is that Mr. Rollock's initials? 20 A: It's hard to -- I mean, obviously you 21 can't see the whole thing but that would appear to him. 22 23 (BRIEF PAUSE) 24 25 Q: I'm just trying to do this in a way that

1 -- so I can make sure that we've got the requisite signatures 2 identified. If I can take you just quickly to Tab 27 of 3 Volume 4. Begdoc COT025682. This appears to be the expense 4 report from Mr. Domi for the month of June 1999. 5 A: Yes. 6 Q: And if I'm -- I'm looking -- I turned 7 this up, Ms. Payne, so -- this looks to be a clearer 8 photocopy for us to work from for the purposes of this part 9 of the examination. 10 In the lower right hand corner again, this -- 11 there appears to be an initial there. Are you saying that 12 that's Mr. Rollock's? 13 A: I'm not sure. 14 Q: Do you have any idea whose that is if 15 it's not Mr. Rollock's? 16 A: No. 17 Q: At the top of that page, there appears to 18 me to be -- an indication C V and then some numbers beside 19 it? 20 A: Yes. 21 Q: It appears to be 8/29/99. Is that right? 22 A: Yes. 23 Q: Would that be Ms. Vivaldo indicating the 24 date on which she reviewed the document? 25 A: Yes.

1 Q: So just, if I can, turn you back to Tab 2 12 for the moment which is the document we first looked at. 3 Can you help me understand -- this is a document, I take it, 4 that would end up on your desk for approval, in accordance 5 with what you testified yesterday and earlier in your 6 testimony. 7 MR. FRED CHENOWETH: I just wanted to note 8 that it may be that on the document we've last referred to at 9 Tab 27 that there are two (2) signatures on the approval 10 line. It may be helpful to see if the witness can assist us 11 with that. 12 MR. GORDON CAPERN: Yeah. Thank you, Mr. 13 Chenoweth. That's correct. 14 15 CONTINUED BY MR. GORDON CAPERN: 16 Q: Are y -- are you able to help us with 17 that, Ms. Payne? 18 MR. FRED CHENOWETH: If Ms. Payne can't say 19 who the second signature is, is it -- maybe she can assist as 20 to whether or not there are, in fact, two (2) -- another 21 signature there or another initial in addition to hers? Even 22 if we can't identify it. 23 THE WITNESS: It would ap -- appear that 24 there's another initial there. I'm not sure whether it's -- 25 whose it is, actually.

1 MR. GORDON CAPERN: It looks to me like it 2 may also be a ser -- a pair of X's on the signing line. I'm 3 not sure if I've got that right or not, but -- 4 5 CONTINUED BY MR. GORDON CAPERN: 6 Q: You're not able to help us further with 7 that, Ms. Payne? 8 A: No. 9 Q: Okay. Let's go back to Tab 12 then, if 10 we can. Just going -- I'm interested in examining what the 11 document process that was in place at MFP in respect to these 12 expense approvals. 13 Can you tell when -- when -- when this 14 document at Tab 12 would arrive on your desk, what would be 15 appended to it? 16 A: All the receipts. 17 Q: So -- and again just to be fair to you, 18 Ms. Payne, I haven't purported to include all of the exp -- 19 receipts for this particular expense report. They're -- they 20 are in the database but -- but just for example the date be 21 -- the receipts that follow, at least from our understanding 22 of the database, through to Tab 24, were all receipts that 23 were in connection with this expense report at Tab 12. 24 So you're -- your testimony is that you -- 25 these types of receipts, in any event, would be appended to

1 the document at Tab 12 when you would receive it. Is that 2 right? 3 A: Yes. 4 Q: And generally speaking, would the -- if 5 you turn over to Tab 13 and we'll just use that as an 6 example, if we can for a moment. 7 You see on -- this appears to be a receipt and 8 the Begdoc number is 25614, appears to be a receipt with 9 respect to the Molson Centre in Montreal. And it appears 10 again to be Mr. Domi's signature on that credit card receipt, 11 is that right? 12 A: Yes. 13 Q: And up above, there appears to me to be 14 also -- it appears to be in Mr. Domi's handwriting, which 15 says: 16 " City TO Vince, John Danson Tom J." 17 Would you agree with me that that is Mr. 18 Domi's handwriting? 19 A: Yes. 20 Q: To the right hand side on that receipt 21 there appears to me to be some form of initials, do you have 22 any knowledge of what that is? 23 A: No. 24 Q: And again, turning to Tab 14, to see the 25 second example, we've got the same, I'm sorry, the Begdoc

1 number is 25618. Again this is a receipt for Ferro Bar Caf� 2 in Toronto, on what appears to be Mr. Domi's signature? 3 A: Yes. 4 Q: And again at the top, he appears to have 5 written in the names of certain individuals and identified 6 the City of TO? 7 A: Yes. 8 Q: So, just so I'm clear then, would those -- 9 the types of notations that I've just referred to, that being 10 the identification of the City of TO and the names that are 11 written in on those receipts, would those -- would that be 12 information that would be on the receipt at the time it 13 arrives with the expense report, for your approval? 14 A: I'm not sure actually. 15 Q: Why aren't you sure? 16 A: Because I haven't seen that before. 17 MADAM COMMISSIONER: Are you saying you 18 haven't seen this before? 19 THE WITNESS: No, it wasn't normal through 20 most of them that I can recall, that they would put on the 21 receipt that -- who they entertained at that time. 22 23 CONTINUED BY MR. GORDON CAPERN: 24 Q: What would they put Ms. Payne, on the -- 25 where would you put that information, if anywhere?

1 A: They would only put that information on 2 the expense sheet. 3 Q: So, that would be the document that would 4 be at Tab 12? 5 A: Where it talks to remarks. 6 Q: This may be an opportune time, Ms. Payne, 7 so that we can compare and contrast a couple of examples of 8 reports apparently filed by Mr. Domi. 9 If I can take you to Tab 17 of Volume 3, which 10 is the new Tab we added this morning. And I guess I'll just 11 pick one (1) at random the -- 12 MADAM COMMISSIONER: Just a second -- I don't 13 think she has -- 14 MR. GORDON CAPERN: I'm sorry. 15 THE WITNESS: 17? 16 MADAM COMMISSIONER: Of Volume 3. 17 THE WITNESS: Volume 3. 18 MADAM COMMISSIONER: I may be -- 19 20 (BRIEF PAUSE) 21 22 CONTINUED BY MR. GORDON CAPERN: 23 Q: Do you have that up now, Ms. Payne? 24 A: 17, yes. 25 Q: Thank you. If I can turn you to the

1 second page in, which is doc number COT025502, it appears to 2 be the expense report for Mr. Domi, for February of 1999. 3 And I put this one (1) to you, Ms. Payne, to 4 just I guess compare and contrast the degree of detail that's 5 contained in the report in February of 1999, versus what was 6 contained in May of 1999, on the actual expense report page. 7 Do you see the distinction that I'm drawing to 8 your attention? 9 A: Yes. 10 Q: And so for example, just going back to the 11 answer that you gave about the other sales reps, you say that 12 generally speaking, they would fill out the name of the 13 person being entertained in the expense report form itself, 14 is that right? 15 A: Yes. 16 Q: That was their general practice? 17 A: Yes. 18 Q: And so then, for example, with the 19 February 1999 expense report at Tab 17, Mr. Domi has himself 20 actually adopted that practice, at least with respect to that 21 report, is that fair to say? 22 A: Yes. 23 Q: And going to the May report, which is at 24 Tab 12 of Volume 4, he simply didn't do that in this -- in 25 respect of this report. Is that right?

1 A: That's right. 2 Q: Now, just I -- I'm interested, I guess, 3 Ms. Payne, in stepping away from that -- the specifics of 4 those two (2) documents, and seeking to ask you more 5 generally about the process that you would undertake when the 6 document hit your desk. 7 I take it that to the -- to the extent that 8 there was adequate detail contained in the expense report, an 9 example of which would be perhaps at February -- the February 10 1999 report, am I right that you would make no further review 11 of the receipts beyond what was contained in the expense 12 report? 13 A: When it hit my desk, my understanding was 14 that the sales managers had reviewed it, Ms. Vivaldo had gone 15 into detail reviewing it and that they felt comfortable with 16 it. Quite honestly, I didn't go into any level of detail. 17 Q: Is -- is it fair to say, Ms. Payne, that 18 you would have done no detailed review of the individual 19 expenses being submitted by your sales reps? 20 A: No detailed review. 21 Q: You relied exclusively on Mr. Rollock and 22 Ms. Vivaldo for that review? 23 A: I think so. 24 Q: Well, I'm interested -- let me just 25 understand, if we can just walk through the process using th

1 -- this bundle of documents at Tabs, I guess, 12 through 24 2 as an example of that. 3 Tell me the routing of that document. Where 4 would -- where would have s -- I take it it would have 5 started on Mr. Domi's desk, is that right? 6 A: Yes. 7 Q: Where does it go from there? 8 A: It would have gone to the sales manager 9 and from there it could be -- from there to myself. 10 Q: So th -- the extent of the review done by 11 HR would be, if I can call it, in the form of spot lines. 12 A: That's right. It would go to HR probably 13 after my signature. 14 Q: Would all the forms go to HR or just some 15 of them? 16 A: I'm not sure. I know I had HR come back 17 to me with a number of them. 18 Q: Who established the policy by which HR 19 became involved in the process? 20 A: I would think it would be either the 21 management team or Peter or Bob Wright who was the CFO. 22 Q: Is that process -- and when I say that, I 23 mean was the HR involvement in the expense review process in 24 place in 1998 or 1999? 25 A: Yes.

1 Q: Do you have any evidence that people in 2 HR reviewed any of Mr. Domi's? 3 A: No. 4 5 (BRIEF PAUSE) 6 7 Q: So am I right then -- if I could use, Ms. 8 Payne, th -- the February 1999 expense report contained at 9 Tab 17 in Volume 3, as an example. Am I right that what you 10 would be looking for in this document would simply be Ms. 11 Vivaldo's initials? 12 A: Yes. 13 Q: So you would do no review of the contents 14 of the report beyond that? 15 A: No, I delegated that responsibility. 16 Q: So, for example, you wouldn't have 17 noticed in February of 1999 that Mr. Domi purported to have 18 entertained Vince, who I assume is Mr. Nigro, Tom Jakobek, 19 Vince again, the Godfreys, and Vince again. You would have 20 had no contemporaneous knowledge of that? 21 A: No. 22 Q: Y -- your eyes didn't advert to that when 23 you were signing the document yourself, Ms. Payne? 24 A: No. 25

1 (BRIEF PAUSE) 2 3 Q: And similarly then, with the expense 4 report at Tab 12 of Volume which is the one for May of 1999? 5 I take -- 6 A: Sorry, Tab 10? 7 Q: Tab 12. 8 9 (BRIEF PAUSE) 10 11 Q: Are we there Ms. Payne? 12 A: Yes. 13 Q: Thank you. When I look at the detail or 14 if I can suggest, the absence of detail, in this expense 15 report as to who was being entertained, I mean you agree with 16 me, Ms. Payne, on the face of this document there is no 17 detail whatsoever about who was being entertained by Mr. 18 Domi? 19 A: That's right. 20 Q: So, you would have not had any idea at 21 all, when you signed this document, who he'd been out with 22 and what he was doing? 23 A: That's interesting, looking at these two 24 (2) documents, one (1) is a manual, handwritten, the other is 25 automated. And I'm not too sure if Dash actually input this

1 on the automated form. I would suggest that he probably had 2 somebody input that for him. 3 So, whatever -- whatever -- whoever did it for 4 him, took the more automated approach and maybe that's why 5 instead of having detail in the remarks area, that he's gone 6 to signing in -- or sorry -- putting the names on the 7 expenses. 8 Q: I appreciate what he's done, Ms. Payne, 9 I'm interested in the level of review that you did, because 10 you're the one (1) approving the expenses for the Company. 11 MR. DAVID MOORE: Well, in fairness, My 12 Friend, is asking all these questions in minute detail about 13 all these documents. The witness left the Company in 14 December 2000 or 1999 and she's trying to give explanations 15 the best she can two and a half years later. 16 THE WITNESS: It's actually -- it's actually 17 three (3) years. 18 MR. DAVID MOORE: Whatever -- 19 THE WITNESS: But, anyway -- yes, it's a long 20 time. 21 MADAM COMMISSIONER: I understand, Ms. Payne, 22 to be saying that her level of review was that she had 23 delegated the actual looking at the details of it to her 24 sales manager, who was then John Rollock. 25 That it would then, from John Rollock go to

1 Christine Vivaldo, for her to make sure that there was 2 nothing out of the ordinary and from there it would go to Ms. 3 Payne. 4 And Ms. Payne would look to make sure that Mr. 5 Rollock, or whoever the sales manager's signature or initial 6 was there, and Ms. Vivaldo's initial was there and then she'd 7 sign it. 8 THE WITNESS: Yes. 9 MADAM COMMISSIONER: Is that right? 10 MR. GORDON CAPERN: I've got that evidence, 11 Commissioner, thank you. 12 I just wanted to make, just one (1) final 13 point about that, I guess. 14 15 CONTINUED BY MR. GORDON CAPERN: 16 Q: Ms. Payne, given the scope of the review 17 that you did, which is to say, to look for Ms. Vivaldo's 18 initials and Mr. Rollock's initials, it didn't really matter 19 whether or not, there was any detail on the form as to who 20 had been entertaining, at all, did it? 21 As long as their initials were there, you were 22 prepared to sign it? 23 A: Well, I would assume that they had done, 24 you know, they had entertained our customers and as I 25 mentioned last week, we trusted our sales force to do the

1 right thing for the company. 2 And in this situation, you have to understand 3 that I had twenty nine (29) of these, plus all the management 4 staff as well. So, I didn't go through every detail. 5 In fact, you know, we're running a company 6 with a billion in assets, a budget of almost three hundred 7 million (300,000,000), you don't micro manage it. You rely 8 on your people to do the right thing. 9 And you have support staff to make sure that 10 the checks and balances are in place. 11 Q: My question, Ms. Payne, was a simple one, 12 which is doesn't really matter for the purposes of your 13 review and approval of the documents, juxtaposing, if I can 14 the May 1999 report with the February report, it doesn't 15 matter for your purposes the degree of detail in the report. 16 Because you're going to sign those documents, 17 as long as Ms. Vivaldo's initial appears on it and Mr. 18 Rollock's initial appears on it, isn't that right? 19 A: I wouldn't say it doesn't matter because 20 I'm a lot more conscientious than that. I would suggest that 21 I trusted the staff to do their evaluation, to do the detail 22 work, that they would say it's okay and signed, then I would 23 approve it. 24 Q: You trusted Ms. Vivaldo? 25 A: Yes.

1 Q: And you trusted Mr. Rollock to do their 2 job -- 3 A: Yes -- 4 Q: -- in the review? 5 A: Yes. 6 Q: As a result of which, you didn't need to 7 do the review? 8 A: That's right. 9 Q: So, in effect, the approval if I can call 10 it that, of the expenses, although you're signature 11 ultimately appears on the document, the approval was, in 12 fact, done by Ms. Vivaldo and Mr. Rollock? 13 A: The review was done by those individuals. 14 Q: And as long as they approved it, you would 15 approve it, isn't that right? 16 A: Yes. 17 Q: So, the approval, Ms. Payne, was in fact 18 done by Ms. Vivaldo and Mr. Rollock, do you agree with that? 19 A: The approval -- my signature is on the 20 approval. I was the last person to look at it. They were to 21 review it and sign off on it. 22 Q: All your signature indicates, Ms. Payne, 23 if I've got your evidence right, is that you saw the 24 document, you saw Ms. Vivaldo's initials on it, you saw Mr. 25 Rollock's initials on it and you sign it yourself. That's

1 all it indicates, isn't it? 2 A: Yes. 3 Q: Your signature doesn't give any 4 indication to the company that you've done any degree of 5 analysis on your own. Isn't that right? 6 A: Yes. 7 Q: That all the analysis has, in fact, been 8 done by Ms. Vivaldo? 9 A: And sales management. 10 Q: So I suggest to you, Ms. Payne, in fact, 11 you delegated the approvals to those two (2) people. You 12 agree with that? On those facts as you've just testified? 13 A: Yes. 14 Q: And that was not your company's 15 expectations, Ms. Payne. That's not what you told us 16 yesterday. You told us yesterday that your company's 17 expectation was that you were doing the approvals. 18 A: The company's expectation was that I 19 would finally approve it, which I did. 20 Q: I take it that included in that was their 21 final expectation that the expenses that you were approving 22 were consistent with the company's policies? 23 A: Yes. 24 Q: They were looking to you for that? 25 A: Yes.

1 Q: Now, I want to understand a little bit 2 more about Ms. Vivaldo and Mr. Rollock. Ms. Vivaldo you 3 described as your executive assistant on a number of 4 occasions. How long had she been at the company as at 5 December 1998? 6 A: I'm not sure what day she started. I 7 think it was in the fall of '97. I'm not sure. 8 Q: So sh -- she'd been with the company for 9 just over a year at the time Mr. Domi was hired? 10 A: I'm not sure. 11 Q: And Mr. Rollock, we went over yesterday 12 when he came into the company. Can you tell me, please, 13 first of all, what training did you give Ms. Vivaldo with 14 respect to the company's expense policies to assist her in 15 doing her analysis? 16 A: There was very little training at MFP. 17 Q: So you gave her no training? 18 A: She had worked in this capacity for two 19 (2) or three (3) large companies. A very senior level; very 20 capable. 21 Q: Did you give her a copy of the expense 22 policies? 23 A: She would have received those through HR. 24 Q: Well, independent of that, Ms. Payne, did 25 you make separate inquiries to make sure that she had

1 received those expense policies, given what you were asking 2 her to do? 3 A: No. 4 Q: You were relying on the training or 5 information that she received from HR? 6 A: Right. 7 Q: Is the same true of Mr. Rollock? 8 A: Yes. 9 Q: Did you sit either of them down at any 10 time and explain to them some of the sensitivities that might 11 attach to the approval of particular types of expenses? 12 A: No, but they knew my feelings on doing 13 the right thing and they -- I felt that they knew th -- the 14 image of the co -- the company's policy in this area. 15 Q: Wh -- what did you think they understood 16 about your version of doing the right thing as to -- 17 A: First of all, they were very capable 18 individuals. They'd been in -- working in large 19 organizations prior to this. They had a lot of 20 responsibilities in those organizations that they had worked 21 for prior to MFP. In fact, MFP was a very small company in 22 comparison to their previous employees. 23 As I mentioned, John was at IBM and Christine 24 was a senior executive assistant for the president of a large 25 organization. I'm not sure which but I'm sure you can check

1 that. 2 My understanding was that they were totally 3 capable of reviewing expenses and supporting -- or bringing 4 to my attention if there was an issue, which neither of them 5 did. 6 Q: What was the basis of your conclusion 7 that -- that one (1) or the either -- or either of them would 8 have brought troublesome expenses to you for your attention? 9 How did you reach that conclusion? 10 A: Well, they were aware that I had had 11 situations where HR had done spot checks and brought it to my 12 attention and we had terminated employees. One (1) 13 particular one that I remember. So they knew it was an area 14 that we were very conscientious about. 15 Q: What was -- if you don't mind me asking, 16 what was the expense that had caused the problem before, that 17 had caused the issue with HR? 18 A: It was one (1) of the managers of the 19 department, not the sales team, one (1) of the managers of 20 the department who had put through an expense for something 21 they bought for their own use, and it was brought to my 22 attention by HR. 23 Q: So, was that at a time when you were 24 approving expenses? 25 A: Yes.

1 Q: So, that one (1) had slipped through the 2 cracks? 3 A: Yes. 4 Q: Was Ms. Vivaldo doing the review for you 5 at that time, or were you doing it on your own? 6 A: Not sure. 7 Q: So, it might have been your mistake? 8 A: Yes. 9 10 (BRIEF PAUSE) 11 12 Q: So, I take it that, from your 13 understanding you would have expected both Ms. Vivaldo and 14 Mr. Rollock to be alive to -- put a couple of issues to you - 15 - first of all, the types of expenses that were being 16 incurred by sales people, is that right? 17 A: Yes. 18 Q: So, for example, knowing what we know 19 about MFP's gift policy, you would have expected both Mr. 20 Rollock and Ms. Vivaldo to be alive to the fact that it was 21 inappropriate for sales people to be buying expensive gifts 22 for customers? 23 A: Yes. 24 Q: And if I can just step away from the 25 issue, the fact that it violates MFP's policy, I take it that

1 you expectation based on your prior experience with other 2 employers, is that both Mr. Rollock and Ms. Vivaldo, would 3 have been alive to the fact that there's a bit of a -- if I 4 can put it this way, that it sort of offends our 5 sensibilities, a little bit that we would give a lavish gift 6 to a customer? 7 A: Yes. 8 Q: So, even if they weren't specifically 9 aware of MFP's policy, you would have expected them to 10 exercise judgment, which would have told them, independent of 11 the policy, that that gift was probably offside? 12 A: Yes. 13 Q: So, using the pen that Mr. MacKenzie 14 referred to in his examination of you yesterday, as an 15 example, that would have been something that you would have 16 expected Mr. Rollock and Ms. Vivaldo to have caught? 17 A: Had they been there, yes. 18 Q: That's right. That would have been 19 something that would have been caught. And that's, if I've 20 got it right, that's both because it offends the MFP policy 21 and because it offends our good judgment, is that right? 22 A: Yes. 23 MADAM COMMISSIONER: When you say, yes, if 24 they had been there, were they there at that time, during the 25 Cartier pen incident?

1 THE WITNESS: I don't think so. 2 MR. GORDON CAPERN: I was just using that as 3 an example, Commissioner. 4 MR. FRED CHENOWETH: And I don't know that the 5 witness said that the pen was caught. I think that she said 6 that the pen should have been caught. 7 MADAM COMMISSIONER: Yes. But, I think that 8 is understood. But I thought she said that she thought that 9 it should have been caught if both Mr. Rollock and Ms. 10 Vivaldi (sic) were there, at that time. 11 I was just asking, because I don't know the 12 answer, were they there at that time? 13 THE WITNESS: I'm not sure what month that 14 was, but they left shortly after I left. 15 16 CONTINUED BY MR. GORDON CAPERN: 17 Q: Just if I can carry that forward, that 18 subject, whoever replaced you and Rollock and Vivaldo team, 19 and did the expense approvals after you left, you would have 20 expected that that was something your replacement would have 21 caught, as well? 22 A: Yes. 23 Q: Am I right that the -- the one (1) of the 24 second sensitivities that Ms. Vivaldo and Mr. Rollock would 25 be looking for, is that there's a legitimate business purpose

1 to the expense? 2 A: I don't think they would have gone into 3 too much detail on that. We were, as a company, as I 4 mentioned earlier, we were kind of lax in that area. But, we 5 were also again trusting the judgment of the individual 6 We were less than two hundred (200) people. 7 We were a small firm. You know, the whole philosophy behind 8 the company was do the right thing. 9 We expected the sales force to do the right 10 thing and, you know, I feel that they would have done the -- 11 to the best of their capability, a review. They would check 12 the numbers, they would check the amount of the receipts. If 13 they saw something that they didn't seem right, they would 14 have brought it to my attention. 15 There were -- there were situations, not with 16 Dash, but with other representatives at the -- at the company 17 that they were brought to my attention and I would follow up 18 on it with the -- with the appropriate people. 19 Q: And that was other than the expenses that 20 are -- that are the subject of this inquiry? 21 A: Yes. 22 Q: So with respect to the, if I can call it 23 the underlying business purpose of the expense itself, that 24 was something that, as a matter of practice, you had to rely 25 on the sales people were giving -- the fact that they would

1 be submitting a receipt, you would have an underlying 2 assumption that it was for legitimate business purposes. 3 A: Yes. 4 Q: And I guess the two (2) that sort of came 5 out in yesterday's testimony that I wanted to follow up on 6 were -- specifically were the -- the incident in which Mr. 7 MacKenzie suggested to you that Mr. Domi had purchased drinks 8 for Mr. Andrew and one (1) of Mr. Andrew's colleagues at 9 Harbor 60 restaurant, when Mr. Domi had not himself been 10 present and hadn't discussed MFP business. That's Number 1. 11 Number 2 is the breakfast meeting at the Caf� 12 Victoria between Mr. Andrew and Mr. Godfrey, which I 13 understood Mr. Domi did not attend but nevertheless picked up 14 the -- the tab for that. Again, assuming for the moment that 15 those facts are proven, ultimately, what's your view of the 16 propriety in those as business expenses. 17 A: If the individual wasn't at the meeting, 18 then it shouldn't have been processed as an expense. 19 Q: So -- so the fault in that circumstance, 20 if I can call it that, lies with Mr. Domi as -- as distinct 21 from Ms. Vivaldo and Mr. Rollock. 22 A: I'd have to question him as to why he 23 would do that. 24 MADAM COMMISSIONER: You'd have to question 25 as to what, sorry?

1 THE WITNESS: As to why he would process 2 that. 3 4 CONTINUED BY MR. GORDON CAPERN: 5 Q: Do you know whether Ms. Vivaldo, as a 6 practice, would go and speak to the individual sales reps to 7 review, on an item-by-item basis, what expenses they had 8 submitted? 9 A: No. 10 Q: You know that she did not do that? 11 A: I'm not sure but I would -- I would doubt 12 it. 13 Q: Okay. That would be very time-consuming 14 when a person had twenty-nine (29) sales reps. She would be 15 doing that level of her detail review for all twenty-nine 16 (29), is that right? 17 A: Yes, plus the support staff. 18 Q: I see. So there were expenses incurred 19 by support staff, in addition to the sales staff? 20 A: Yes. 21 Q: So she had a significant work load on 22 that, did she not? 23 A: Yes. 24 25 (BRIEF PAUSE)

1 Q: Now, just to -- to make sure I 2 understand, Ms. -- it sounded to me ye -- from your testimony 3 yesterday about the -- about the pen, as an example, that at 4 least instinctively, you know the sense of what is an 5 acceptable business expense and what is not? Is that fair to 6 say? 7 A: Yes. 8 Q: That -- that may be -- in part, be formed 9 by your MFP policy itself, but in addition to that, you have 10 your own gut instincts, if I can call it that, about what -- 11 about what's onside and what's offside. Is that right? 12 A: Yes. 13 Q: Are you able to articulate, Ms. Payne, 14 where the line gets drawn between being onside and being 15 offside? 16 A: Entertainment is acceptable. 17 Q: Would that be any form of entertainment? 18 A: Not any form. You know, within -- within 19 guidelines of, you know, hockey games, baseball games, golf 20 tournaments, theatre, boat trips. You know, pretty well 21 entertaining, as I mentioned many times throughout this, it - 22 - it's really industry standard. Not only in our industry, 23 but in most industries. If you had any sales and marketing 24 background, you'd understand that that's the way it is. 25 Q: So, if I can just stop you there for a

1 second. I take it that you're referring to a -- I may be 2 using the wrong language, but you're referring to socially 3 palatable entertainment. Is that -- 4 A: Yes. 5 Q: -- fair to say? 6 A: Yes. 7 Q: So, I mean, for example, we wouldn't want 8 to see MFP sales people off doing socially unpalatable 9 entertainment, if I can put it that gently. 10 MR. FRED CHENOWETH: I wonder how helpful 11 this really is, that the word socially palatable is -- is 12 that the word socially palatable is -- is so vague as in my 13 view, as to be of no assistance at all. 14 And the question to Ms. Payne is so general in 15 nature, as to be really quite unhelpful. 16 MADAM COMMISSIONER: I would prefer Mr. 17 Capern not give illustrations of socially unpalatable 18 conduct. He would prefer that, I'm sure he could do it. 19 MR. FRED CHENOWETH: Well, again -- again -- 20 again, I think it's general. 21 MADAM COMMISSIONER: I think the general 22 sense of what Ms. Payne is saying is that there are certain 23 standards in the industry, and that there are certain things 24 that one can do, she's given illustrations of things like 25 hockey games and boat trips to -- sort of generally, but I

1 mean I think there are things that one could do in this very 2 good City, that some say are not palatable, and I think that 3 Ms. Payne is saying that if Mr. Capern were to give her some 4 illustrations, which I don't think are necessary, that she'd 5 probably say that she would prefer that MFP not be involved 6 in that. 7 THE WITNESS: Yes. 8 MR. GORDON CAPERN: And, Commissioner, I -- I 9 had thought last night whether I should use illustrations or 10 not, and I that just perhaps it would be -- 11 MR. WILLIAM ANDERSON: But I guess the 12 secondary point with respect to that issue is that there's 13 absolutely no evidence of any unpalatable social event, so 14 that's why I don't think it's relevant to go down that road. 15 MR. GORDON CAPERN: And I'm simply asking the 16 witness to try and block off -- I'm not for a moment -- 17 MADAM COMMISSIONER: You are just ask -- Mr. 18 Capern, if I understood what you were saying, you were asking 19 her what would be considered acceptable and what would not 20 and she said entertainment is acceptable, and then these 21 illustrations of entertainment. You hadn't got beyond that 22 yet, you were just -- 23 MR. GORDON CAPERN: Precisely. 24 MADAM COMMISSIONER: -- on entertainment. 25 MR. GORDON CAPERN: That's right, and I don't

1 -- you know, I'm not here to -- I mean I -- I've been mindful 2 throughout this, I think, of the intent to be continually 3 mindful of the concerns that are expressed when questions are 4 put to witnesses in a way that might be viewed as 5 inflammatory, where there is not backup examples that we'll 6 hear about over the next four (4) to six (6) months, and I 7 don't want to go down that road so I'm mindful about -- 8 MADAM COMMISSIONER: I -- 9 MR. GORDON CAPERN: Thank you. 10 11 CONTINUED BY MR. GORDON CAPERN: 12 Q: And I just want to -- when I use the 13 phrase socially unpalatable, Ms. Payne, I take it that that 14 would include activities that might bring embarrassment to 15 MFP as a public company? 16 A: Yes. 17 Q: Right. So that, I think is 18 entertainment, so if I'm right about the entertainment 19 expenses, you would say that they need -- they -- as long as 20 they're socially palatable, to use my words, they need to 21 have a -- a business purpose for MFP; is that right? 22 A: Yes. 23 Q: And beyond that, are there any other 24 restrictions that should apply to entertainment expenses? 25 A: No.

1 Q: You'll -- you'll agree with me, I take 2 it, Ms. Payne, that on entertainment expenses, in particular, 3 you would want to be mindful of your customer's policies 4 about their employees being entertained? 5 A: Yes. 6 Q: So you would want MFP's entertaining 7 activities to be consistent with the policies of the customer 8 as well as MFP's policies; right? 9 A: Yes. 10 Q: Yeah, because -- just to step away from 11 that for a second, I take it that to the extent, for example, 12 that MFP was seen to be participating in conduct that was 13 offside of a customer's policy, that might reflect badly on 14 MFP? 15 A: Well we -- we assume that the customers 16 knew their policies. There was no intent of MFP, any of the 17 staff at MFP, to do anything that didn't make sense for 18 either the client or our own image as a public company, as 19 you mentioned. 20 So we didn't follow every policy two thousand 21 (2000) and some clients, however, you know, we -- we trusted 22 in our people, that they would follow the direction or the 23 leadership of the company. And Peter Wolfraim is probably 24 one of the most conservative individuals in -- in this whole 25 area. And he -- he portrayed that throughout his management

1 team, or the style throughout his management team, and we all 2 took that. 3 And in fact, as I mentioned the other day, you 4 know, expenses were -- ranged from the lowest, you know, as 5 little as fifteen hundred (1500) to whatever. And there was 6 a bit different style by reps, for instance, Dash Domi would 7 take the clients out to the hockey games, that was his sport. 8 We had guys who, you know, lots of golf, you 9 know, with foursomes and/or tournaments. So it was the style 10 of the individual that -- but to our knowledge, that they 11 wouldn't do anything that was wrong for the client or for our 12 company. 13 Q: Just going back to the question I asked 14 you, Ms. Payne, and I guess what you're saying in effect is, 15 that you would not want MFP sales people to knowingly violate 16 a customer's entertainment policy? 17 A: No. 18 Q: You agree with me on that? 19 A: Yes. 20 Q: Okay. And just if I can unpack a little 21 bit about the -- about the specific entertainment expenses in 22 this case, just for a moment. You've read Mr. Wolfraim's 23 testimony with respect to the Philadelphia and Montreal 24 hockey games? 25 A: Yes.

1 Q: You agree, I take it, that those were 2 expenses that you directly approved; is that right? 3 A: Yes. 4 Q: And you had knowledge of them concurrent 5 with them occurring? 6 A: Yes. 7 Q: The knowledge that those events were 8 going on? 9 A: Yes. 10 Q: Now, you've heard Mr. Wolfraim say to the 11 Commissioner that he viewed those expenses as pushing the 12 envelope? 13 A: Well, I find that kind of strange 14 actually, because he was aware of these events, and if he 15 didn't support it, he could have cancelled it. 16 MADAM COMMISSIONER: He was what, sorry? 17 THE WITNESS: He was aware of these events. 18 MADAM COMMISSIONER: And what -- if he didn't 19 support it, he could cancel it? 20 THE WITNESS: Cancel it. 21 22 CONTINUED BY MR. GORDON CAPERN: 23 Q: Okay, I think she's saying he was silent. 24 That that -- is that right, Ms. Payne, he was entirely 25 silent?

1 A: Yes. 2 Q: And I guess just to be fair to you, Ms. 3 Payne, that informed as I am by my own experience in these 4 things, that -- that there might be varying views within an 5 organization about whether a particular expense is pushing 6 the envelope or not? 7 A: Yes. 8 Q: And in some respects, Ms. Payne, we have 9 to rely on our gut instincts to tell us whether we're on or 10 offside the line on entertainment expenses; is that right? 11 A: Yes. 12 Q: So expenses that, generally speaking, get 13 exposed publicly that might cause embarrassment to a customer 14 to MFP, you'd agree with me that our gut instinct should tell 15 us that those should not occur, that type of entertainment? 16 A: Sorry, which type of entertainment? 17 Q: To the extent that -- that entertainment 18 expenses might have the possibility of causing embarrassment 19 to either MFP or its customers, regardless of whether there's 20 a business purpose or not, you would agree that those types 21 of expenses should be avoided, as a matter of practice? 22 A: Yes. 23 Q: And where we come with the -- if I can 24 say it, this would be Philadelphia and Montreal hockey games 25 as an example, with the benefit of hindsight in seeing the

1 reaction that you've seen publicly to those events, Ms. 2 Payne, would you have made a different decision at the time? 3 A: I'm not sure. 4 5 (BRIEF PAUSE) 6 7 Q: We've got the entertainment expense 8 basket, if I can call it that, I think we've got that fairly 9 well defined what is acceptable and not for you. 10 Are there any types of other expenses that you 11 view as being appropriate types of expenses for promotion of 12 business? 13 14 (BRIEF PAUSE) 15 16 A: Travel expenses. 17 Q: Travel for what purpose? 18 A: Well, we'd have people flying to North 19 Bay, to the States to take customers to see a -- another 20 customer of ours. You know, those types of things, that 21 there'd be flight expenses on the some of the expense sheets. 22 Q: I'm just wondering if we can use the 23 Hawaii trip as an example, just for a moment. I take it you 24 would not have classified -- assuming for the minute that Ms. 25 Liczyk had actually attended that event, which she didn't,

1 how would you classify that type of expense? 2 A: Well in that type of expense we would -- 3 if Wanda had agreed to go to that event, we would have 4 suggested to her to check her process internally, because we 5 had done this before with clients in the States, and they 6 paid their own accommodations, and their own -- their own 7 flights, because they felt it was beneficial to them in 8 building a relationship. 9 So, I would assume had she agreed to it, she 10 would have talked to her management team and got their 11 approval. And this, again, is industry standard. 12 For instance, you b -- you look at a Compaq or 13 an IBM, many of the times public sector -- large public 14 sector accounts, would go down to the states to Houston and 15 or wherever IBM's site is and would meet with their 16 management teams, look at product availability, to look at 17 new product three (3) to five (5) years out and many of these 18 clients, and remember this is my Digital days, would pay 19 their own way. 20 So, inviting them is one (1) thing. Whether 21 th -- MFP paid or not, obviously it has to be approved by the 22 appropriate management team. 23 Q: Th -- that's very helpful, Ms. Payne, and 24 I thank you for that. What I understand is -- from that that 25 -- that there were sensitivities around the invitation of Ms.

1 -- to Ms. Liczyk to attend the Hawaii trip. 2 A: There was sensitivity. 3 Q: You were sensitive, in that circumstance, 4 to the possibility that had Ms. Liczyk accepted the trip on 5 an expenses-paid basis, that might have offended some 6 internal policy at the City of Toronto, is that right? 7 A: I would be very surprised if -- for Wanda 8 to have agreed to have MFP pay for it. 9 She is a very senior person in the City. She 10 had a budget, but it's kind of travel and expense. I'm not 11 sure what the marketing budget is for the City, but I'm sure 12 it's significant. So I would assume that she would have paid 13 for it through her own budget. 14 Q: And th -- that, I take it, would have 15 been to, at least in part, to avoid the perception that Ms. 16 Liczyk was being, you know, lavishly entertained by a 17 supplier of the City, is that right? 18 A: Hmm hmm. 19 Q: And that would have been a concern both 20 of Ms. Liczyk's and yours? 21 A: Yes. 22 Q: So in that circumstance you -- am I right 23 that you, in particular, you personally adverted to that risk 24 and encouraged Ms. Liczyk to review her internal policies to 25 determine whether or not she could accept the invitation.

1 A: No. First of all, we would find out 2 whether she would attend and she refused immediately based on 3 her calendar, she's a very busy lady -- based on her calendar 4 and her -- being that it was not timely. So wh -- we didn't 5 go to the point of even suggesting to -- for her to check her 6 policies. 7 Y -- you don't have to do that with senior 8 people. Senior people in those organizations would know 9 that. So my understanding is that she -- she couldn't 10 attend, mainly because of her tight schedule. 11 Q: Let me ask you a hypothetical -- what if 12 Ms. Liczyk had accepted? 13 A: Then, first of all, she'd probably want 14 to see what we -- what presentations we had in mind for her 15 to do. She'd want to understand the detail of that. She'd 16 want to understand the timing of it and -- and also, the 17 whole of process of getting her there. So we never got to 18 that point. 19 Q: But had you gotten to that point? 20 Assuming for the minute, for the moment, that she'd accepted 21 the invitation, and assuming further that she had been 22 satisfied with the itinerary and the agenda for the meetings 23 that would take place in -- in Hawaii and her participation 24 in those -- in that agenda. 25 Assuming you'd gotten by all of those hurdles,

1 and you'd gotten down to brass tacks as to who was paying for 2 the trip, what would you have done then? 3 A: Well, we would have probably booked the 4 trip and invoiced the City for the expenses. 5 Q: Would you -- 6 A: Or her assistant or her management team 7 would have booked the trip for her and made the necessary 8 arrangements because I -- I wouldn't think that anybody could 9 stay in Hawaii for five (5) or six (6) as an executive of the 10 City. I do believe that she could have come in and out for a 11 day and presented, if it was appropriate. She thought it 12 wasn't appropriate. 13 The feedback I have of -- of -- of her style, 14 is that she's very much by the book. So my understanding -- 15 that came from way earlier in the days of dealing with the 16 City. So, if that's the case, I can't -- couldn't imagine 17 her not following through with what her organization's 18 process would be. 19 Q: My -- my question was, let's assume for 20 the purposes of discussion today that she had agreed to go on 21 the trip and there had been silence between the two (2) of 22 you as to who was paying for it. How would you have resolved 23 that issue? 24 A: I would have asked -- I would have met 25 with her to discuss it.

1 Q: About who's going to pay? 2 A: I would have met with her to discuss the 3 agenda and the process of payment, yes. 4 Q: And what would you have said to her about 5 payment? 6 A: I would have said, you know, it's best 7 that you check through your organization to make sure that -- 8 and she would have done this anyway, if she were interested, 9 to review how your management teams feel about this. 10 And we dealt with many executives in the 11 Province of Ontario, who had similar situations. And they 12 would check with their policies and they'd either come back 13 and say, we'll pay for our own trip, and this happened 14 throughout the industry. 15 It happens with most of the organizations I've 16 worked with and it is industry standard. So, they would 17 check with their own organizations and see if it made sense 18 and that's the process. 19 Q: So, then let's take it one (1) step down 20 the road and say that she'd accepted not only your 21 invitation, but she said, and you guys are paying. What 22 would you have said then? 23 A: I would have been totally shocked. 24 Q: Because that would offend your 25 sensibilities the MFP should pay for and be seen to be paying

1 for a senior City official? 2 A: Yes. 3 4 (BRIEF PAUSE) 5 6 Q: So, if I can apply that rationale to the 7 hockey games, for a moment. This is where I have a little 8 trouble rationalizing that answer. I'm troubled -- I'm 9 troubled by it, assuming for the moment that there had 10 actually been City employees on or representatives of the 11 City on the flights to Philadelphia and Montreal. 12 Is it your expectation that those flights 13 would all have been paid for by the City employees? 14 A: I'm not sure whether they paid for them, 15 or not. 16 MADAM COMMISSIONER: I think the question was, 17 was it your expectation that it would be paid for? 18 THE WITNESS: I actually see that more of an 19 entertainment and hockey games would be entertainment. 20 21 CONTINUED BY MR. GORDON CAPERN: 22 Q: So -- 23 A: If there were City officials on the 24 flight, which I doubt there were, and I'm not sure of that 25 and I'm not sure who attended those.

1 If there were, I'd heard that they -- it had 2 been suggested they would be paying for their own ticket. 3 But, I don't know that detail. 4 Q: Right, but as I understand it, Ms. Payne, 5 what I'm interested in getting at, isn't what actually 6 happened and how we unpack it. 7 I presume, if you don't know who was on the 8 planes at all, you don't know what happened with who paid for 9 what after the fact, isn't that correct? 10 A: Yes. 11 Q: So, let me just talk to you then, about 12 what your expectation would be on a trip like the 13 Philadelphia trip and the Montreal trip. 14 Are you saying to me that, that had there been 15 invitations extended to City employees on that trip, and 16 representatives of the City, including Councillor Jakobek, 17 that the invitations would have been extended on the basis 18 that they should be paying for the trip? 19 A: Yes, if they're senior executives, yes. 20 Q: That was the nature of the invitation you 21 think was extended? 22 A: I would have thought so. 23 Q: Do you have any evidence that that was the 24 nature of the invitation that was extended? 25 A: No.

1 Q: I'm going to suggest to you, Ms. Payne, 2 that the invitation that was, in fact, extended or may have, 3 in fact, been extended was that people who were going on 4 these flights, was all expenses paid by MFP, isn't that 5 right? 6 A: I'm not sure. 7 Q: I do want to be fair again with Mr. 8 Anderson's objection, that I anticipate that there will be 9 some evidence at the Inquiry downstream about Ms. Liczyk 10 attending and paying for her tickets, so I don't want to 11 leave that on the record, without having that out there. 12 13 (BRIEF PAUSE) 14 15 Q: Ms. Payne, was there -- I just want to 16 make sure I properly understood your evidence with respect to 17 any spending limit that might have been imposed on sales reps 18 in -- for promotional expenses. 19 As I understood your testimony, in your 20 examination by Mr. Manes, and Commissioner, you'll forgive 21 me, I don't know whether this is on January the 9th or the 22 10th, I only have a page number from the transcript, and it's 23 -- it's page 100 of the transcript, and over to page 101. 24 And the question that was put to you was 25 whether or not you put any financial limitation on sale

1 representatives in their promotional expenses, and I 2 understood your answer to be that you did not invoke any such 3 limitations on what sales representatives could spend on an 4 annual basis? 5 A: Since I joined MFP in 1989. 6 Q: That's been a consistent policy of the 7 company? 8 A: Yes. 9 Q: So stepping away from that issue just for 10 a moment, what -- the basis on which the sales reps would 11 have been operating, did -- did MFP in fact have a budget -- 12 and I take it on an annual basis you would -- you would 13 participate in the budget process at MFP; is that correct? 14 A: Yes. 15 Q: And that -- am I right that that process 16 would have been carried out under the supervision of Mr. 17 Wright as the CFO? 18 A: Yes. 19 Q: And on an annual basis, would there have 20 been a budget set aside for business development expenses or 21 promotional expenses? 22 A: Yes. 23 Q: Are you able to assist us in what the 24 overall promotional expense budget was for MFP in 1998 and 25 1999?

1 A: No, I don't know the number. However, I 2 was never made aware that I over -- I was never made aware 3 that I exceeded -- over exceeded my budget. In fact, I'm 4 sure that I under-budget. 5 Q: So, just stepping away, if I can, from 6 what the sales reps were told about any financial limitations 7 that would have been imposed on them, I take it you were 8 given some, if I can call it, a chunk of money in the budget, 9 that was for business development expenses? 10 A: Yes. 11 Q: And your colleagues on the management 12 team would have expected that in the aggregate you would come 13 in at or below budget for promotional expenses on an annual 14 basis? 15 A: Yes. 16 Q: And just, can you help us in all the 17 orders of magnitude on the total budget, I mean, are we 18 talking $5 million, $10 million, a million dollars, do you 19 think? 20 A: Right now, no, I don't have that 21 information. 22 Q: All right. Perhaps Mr. Moore and I can 23 discuss that -- 24 MR. DAVID MOORE: Well, I -- I -- I will 25 discuss that, I mean I -- I am concerned that -- that what is

1 an Inquiry called on the City of Toronto, primarily relating 2 to the City of Toronto, it appears to be becoming an inquiry 3 into every practice and budget item and what not of MFP 4 several years ago, and we -- I think have been fully 5 cooperative with any requests from Commission Counsel for 6 what has been deemed to be appropriate. 7 But I'll -- I'll consider that and then in the 8 context of -- of how far all of this is going to go, in terms 9 of the -- the Inquiry. But I'll -- I'll endeavour to discuss 10 it further with My Friend. 11 MR. GORDON CAPERN: I guess to -- to narrow 12 the relevance to the Inquiry, because I'm sensitive to the 13 point raised by Mr. Moore, I guess I'd like to, if I can 14 offer this witness -- what I'm interested in are really a 15 couple of -- of facts. 16 I'm mainly interested in the -- the proportion 17 of the budget that would have been allocated to the promotion 18 efforts for the City of Toronto, whether we're talking, you 19 know, 1 percent of the budget or 10 percent or 20 percent, I 20 just need to know orders of magnitude and what that would 21 have been. I don't want to get into an overreaching inquiry. 22 MR. DAVID MOORE: And that -- that assumes 23 there was some conscious proportion allocated. I -- I'll 24 talk to My Friend about it and I'll -- I'll -- from an MFP 25 approach, we want to get all the facts on the table, but --

1 but we don't want to lose sight of the forest for the trees, 2 if I can put it that way. So, I'll leave it at that. 3 MADAM COMMISSIONER: Mr. Manes, you wanted to 4 say -- 5 MR. RONALD MANES: Well, just an observation 6 that there -- Mr. Cavalluzzo introduced yesterday into issue, 7 industry standards in general, and Ms. Payne has referred to 8 industry standards a number of times in -- in her evidence. 9 It would be helpful to know as to what MFP's 10 budget was as it related to industry standards, and whether 11 it was within industry standards, and in particular, where 12 Mr. Domi's entertainment was concerned, we had -- we've 13 redacted other entertainment that Mr. Domi did in relation to 14 other clients, and I -- I take it for example, the Province. 15 And it would be of assistance to know how that 16 compared -- that kind of entertainment compared to Mr. Domi's 17 entertainment of City officials, so that we could then 18 overall look at that within -- in the context of industry -- 19 industry standards. 20 Commissioner, we do intend to ask witnesses 21 from Dell Financial and from Bombardier about this expression 22 of industry standards and this kind of information would be 23 helpful information to them, as well. 24 MADAM COMMISSIONER: Thank you. 25 MR. DAVID MOORE: That -- that's fine, and

1 I'll discuss that with Mr. Manes. I -- I mean, I informally 2 questioned on industry standard and other entertainment 3 practices was -- did not come up the first time when Mr. 4 Cavalluzzo alluded to it yesterday and it's informally been - 5 - been discussed, not at any great length. 6 I am mindful of Mr. Manes' initial response 7 yesterday, mainly that in the size of it, Commission Counsel 8 didn't intend to get into the details of that. Now that may 9 be a matter of further discussion and -- and perhaps some new 10 fiscal context, it will be too. 11 MADAM COMMISSIONER: I'm took it, after Mr. 12 Cavalluzzo addressed this issue yesterday and I mentioned to 13 him that there would be witnesses coming from the industry, 14 some competitors and I thought I heard you say that you had 15 some concerns about this, as well, and that you wanted to 16 talk to Mr. Manes about it. 17 MR. DAVID MOORE: That's right. 18 MADAM COMMISSIONER: Okay. All right. Well, 19 we'll -- Mr. Moore, I think we'll be talking to you and/or 20 Mr. Manes and probably somebody at MFP about how that's 21 going. Thank you. 22 23 CONTINUED BY MR. GORDON CAPERN: 24 Q: From your own perspective, Ms. Payne, 25 having been handed the -- the chunk of money as I referred to

1 loosely by your budget group for upcoming promotional 2 expenses. Did you notionally allocate that chunk among your 3 sales force? 4 A: No. 5 Q: So there was no attempt, for example, to 6 assign greater or lesser budgets to particular sales people? 7 A: Well, actually that was something that I 8 would have liked to have implemented. When we changed the 9 com plan, that's one of the initiatives I wanted to talk with 10 Peter on, was to get the sales force more organized from the 11 point of view of a budget within the sales management place. 12 It was the first initiative. 13 The second was looking at the com plan, the 14 third was allocating accounts and expenses. That for sure 15 needed to be done. 16 Q: That was part of your ongoing effort to 17 align the sales people's effort with -- and results with what 18 they actually cost the company to -- to have their clients? 19 A: Yes. 20 Q: If I can put it that way. 21 A: Well, to align the sales force. How they 22 are competent, how they work within the -- with their -- 23 within their customer base, to align it more closely with the 24 corporate goals in the company. 25 Q: But I take it included in that would have

1 been -- you would have wanted to have business people's or 2 these sales person's business development expenses to be a 3 relevant factor in their compensation? 4 A: Right. 5 Q: So the an -- the answer to my question 6 was that you did not do any such allocation at the time? 7 A: No. 8 Q: Do you have any expectation, Ms. Payne, 9 about the use of the budget by the sales force? Use of the 10 money that you would give them? 11 A: As I mentioned yesterday, we had a 12 marketing budget and the marketing budget really was -- I 13 worked with Janis Cowie on that. Janis Cowie reported to 14 Peter because Peter worked with the PR firms that we brought 15 in to do the annual reports and the -- the corporate 16 brochures, etc. 17 So the budget was managed between Peter and I 18 and Janis on the marketing side and I'm not sure in the -- 19 when the budget was allocated to the mar -- sales and 20 marketing, whether it was broken up into sales expenses 21 versus marketing or it was just one (1) -- one (1) number. 22 Q: I take it in that answer, you're -- 23 you're distinguishing, in some respects, larger marketing 24 initiatives the company would undertake from the individual 25 efforts of the sales people. Is that right?

1 A: Yes. 2 Q: And you're not sure whether the -- the 3 budget that you were given would have included the marketing 4 component or not. 5 A: I can't remember. 6 Q: All right. Now, going back to my 7 question, about -- about the sales force itself, did you have 8 a specific expectation about what they would be doing? Did 9 you want them out on the road spending that money? 10 A: I wanted them out on the road, preferably 11 trying to get business, providing financial solutions to our 12 customer base and doing the right thing for the company and 13 the client. 14 Q: I understand. I guess -- I guess, again, 15 am I -- I'm right, am I not, one (1) of the ways that you 16 could have been tracking efforts that were being -- sales 17 efforts that were being undertaken by your sales staff was to 18 monitor the expenses that they were incurring on a monthly 19 basis, am I right? 20 A: We didn't judge it like that. 21 Q: I'm not asking if you did, I'm asking -- 22 I'm saying that you could have. 23 A: Yes. 24 Q: And -- and I'm right that it's possible 25 that your sales managers, who were responsible for your sales

1 people, could also have been doing that? 2 A: It's possible. 3 Q: So, for example, Mr. Rollock, could have 4 been using the expense reports filed by Mr. Domi to keep a 5 handle on what Mr. Domi's promotional efforts were? 6 A: Yes. 7 Q: Am I right that you're not sure whether he 8 did or did not use the expense reports for that purpose? 9 A: I'm not sure. 10 Q: For example, using -- at Tab 17 again, the 11 February report -- 12 MADAM COMMISSIONER: Of Volume? 13 MR. GORDON CAPERN: Tab 17, Volume 3, 14 Commissioner, thank you. 15 MADAM COMMISSIONER: Volume 3. 16 MR. GORDON CAPERN: Yes, and again the second 17 page in -- 18 MADAM COMMISSIONER: Right -- 19 MR. GORDON CAPERN: -- the February '99 report, 20 COT025572. 21 22 (BRIEF PAUSE) 23 24 CONTINUED BY MR. GORDON CAPERN: 25 Q: Do you have that Ms. Payne?

1 A: Oh, sorry, yes. 2 Q: Just to use this as an example, it would 3 have been open to Mr. Rollock to learn from this document 4 that Mr. Domi was doing, at least for the month of February, 5 entertainment of City of Toronto officials? 6 A: Yes. 7 Q: So, it would have been open to Mr. Rollock 8 to be aware of the fact that Mr. Domi was pursuing that 9 business in February of 1999, right? 10 A: Yes. 11 Q: And it would have been open to him to know 12 that among the people he was purportedly entertaining was 13 Councillor Jakobek? 14 A: Yes. 15 Q: And Mr. Nigro? 16 A: Yes. 17 Q: And indeed, I suggest Ms. Payne, that one 18 (1) of the reasons why your sales force would provide the 19 level of detail that they do in these reports is so that they 20 could show their supervisors that they are, in fact, out on 21 the road trying to get business? 22 A: Yes. 23 Q: So, from Mr. Domi's perspective, for 24 example, his expectation would be that Mr. Rollock would 25 notice that he was entertaining Mr. Jakobek and Mr. Nigro?

1 A: Yes. 2 Q: And I presume, Ms. Payne, that he would 3 also note that you would similarly notice that, is that not 4 fair to say? 5 A: Yes. 6 Q: In some respects, this document, from Mr. 7 Domi's perspective, is one (1) of the ways in which he can 8 communicate with you and Mr. Rollock about what he is doing? 9 A: That's right. 10 Q: Was there any minimum amount that you 11 expected your sales force to be spending on an annual or a 12 monthly basis for promotional expenses? 13 A: As I mentioned yesterday, they varied from 14 a thousand dollars ($1000) to three or four thousand dollars 15 ($3000 - $4000). And it depended on what they were -- 16 Q: Sorry, is that per month or per year? 17 A: Per month. 18 Q: Per month. 19 A: It also depended on the customer, type of 20 deal, the timing, you know, there was all kinds of variables. 21 For instance, you know, you may do a seminar for a client and 22 there's ten (10) people attending the seminar and then you 23 have a dinner after it. That would be, you know, you 24 wouldn't do that every month, but you could do it two (2) or 25 three (3) times a year.

1 So, there really wasn't any guidelines as to 2 how much you should spend. And as I mentioned earlier, they 3 did range from low to higher. 4 But it's never been my understanding of the 5 company to put down people who spent sixteen hundred dollars 6 ($1600), you know, we never had anything like that ever in 7 the company, because part of our business was to work with 8 the clients, do the entertaining so we got to know them 9 better and we could provide them with better solutions. 10 Q: I guess I actually put the question around 11 the other way, Ms. Payne, it was about a minimum expectation, 12 not a maximum expectation. 13 Was there a minimum amount that you would be 14 looking for, for a sales person to have spent on an annual 15 basis as evidence of the efforts that they had taken to sell? 16 A: No, not that I'm aware of. 17 Q: But for example, if you were confronted 18 with a sales person who had spent little or nothing on a 19 promotional budget on a particular year, that would be of 20 concern to you, I take it? 21 A: Yes, wondering what they've done. 22 Q: And so in that respect at least, the 23 sales force at MFP would be alive to the fact that they 24 should be -- at least seem to be spending the promotional 25 budget?

1 A: Seen to be spending the promotional 2 budget, you know do the right thing for the company. 3 Q: I -- appropriately was what was implied 4 that, but I appreciate you point that out, but the point is 5 that -- that from the -- from the sales person's perspective 6 at MFP, their expectation would have been that they needed to 7 be seen to be doing appropriate levels and appropriate types 8 of promotional work? 9 A: Yes. 10 Q: Do you have any idea how Mr. Domi's 1999 11 promotional expenses compare with other sales staff from that 12 year? 13 A: I'm afraid based on the fact that he -- 14 he included in with his expenses all of the hockey games, the 15 box that we -- we rented -- I'm not sure if we rented it or 16 we paid for it up front. But he would sign off on all of 17 those -- all of those, so his may appear on a high end 18 because of that. 19 If you take that out, I would suggest that he 20 was in the ballpark with some of the reps. 21 Q: We've actually struggled a little bit 22 with the expense reports, Ms. Payne, and I want maybe just 23 some help with clarifying this at this point since you've 24 raised it. 25 The tickets themselves, the -- the -- to the

1 extent that MFP actually acquired tickets to games that would 2 have come with the box that you had an interest in at the -- 3 the Air Canada Centre; those tickets themselves, I take it, 4 were not submitted by the -- by the individual salesperson as 5 part of their expense report; is that correct? 6 A: I think it may have been that we paid up 7 front for the box. 8 Q: Yes. 9 A: So there was six (6) hockey games and 10 six (6) -- I don't know whether is was hockey games, maybe -- 11 I'm not sure. I think that may have gone through as an 12 expense. 13 Where his expenses would have -- what his 14 expenses would have included is all of the -- the catering 15 and the drinks and so on that were consumed at those boxes. 16 In -- in a lot of those cases there were 17 private sector accounts, even maybe in some cases, and I'm 18 just using this an example, there could be two (2) people 19 that Dash Domi had invited, but there could be eighteen (18) 20 people there. Dash would pick up the tab for that. 21 And this is something that I've -- I've 22 mentioned to the appropriate people at MFP, to really break 23 that out. 24 Q: And that's in part so that you can better 25 track the -- the allocation of expenses to particular

1 customers; is that right? 2 A: Yes. 3 Q: So, for example, if Mr. Domi on a 4 particular night at the -- at the box at the Air Canada 5 Centre, was entertaining four (4) different clients, your 6 expectation would be that the expenses attendant with that 7 would -- would go to the -- would be notionally allocated to 8 four (4) customers? 9 A: Right, they should have been. 10 Q: And you say in part that the -- that the 11 expenses that are shown at the Inquiry here to be allocated 12 to Mr. Domi, and in particular to the City of Toronto, may be 13 inflated because of the fact that he may have merged multiple 14 clients into one (1) expense report or more than one (1) 15 expense report for these games? 16 A: Yes. 17 Q: Am I right, nevertheless, that -- that -- 18 let me just ask you on a different note, because I don't know 19 the answer. Would -- would it have been the case that in the 20 box on those nights, that there might also have been 21 additional MFP sales people there, or would there have been a 22 night that would have been solely for Mr. Domi and his 23 customers? 24 A: No, there will be other sales people 25 there, potentially other sales people.

1 Q: And I take it as well, there might have 2 been senior executives in MFP's box from time to time as 3 well? 4 A: Yes. 5 Q: Mr. Wolfraim would have gone from time to 6 time? 7 A: Yes. 8 Q: Did you go? 9 A: Yes. 10 Q: Were you in attendance at any of the 11 games that are -- that are subject of the -- of the testimony 12 so far? 13 A: I don't think so. 14 Q: Do you recall being at any hockey games 15 in April of 1999? 16 A: No. 17 Q: Were you ever at hockey games with any 18 people from the City of Toronto, that you can remember? 19 A: No. 20 Q: So just to go back to the question that I 21 asked, and bearing in mind the -- the caveat that you've 22 added into the analysis, which is the potential inflation of 23 Mr. Domi's expenses, as a result of his practice of 24 periodically picking up the tab for what may have been indeed 25 other clients and indeed other sales people. With that

1 caveat heard, do you have any sense of how Mr. Domi's 2 promotional expenses in 1999 compared to other sales staff at 3 MFP? 4 A: I would think that he would be in line 5 with some of the other reps. I haven't seen a comparison but 6 I don't think it was, to my knowledge, extremely high. 7 Q: But wh -- what did -- if you can help me 8 with this, do you have any sense would he be in the top third 9 in terms of expenses? In the top quarter? 10 A: I only have his expenses here and you 11 know, it's been three (3) years since I left the company. I 12 would think that he would be in the top 30 or 40 percent of 13 the sales force. Actually, probably -- no, I would think 14 more close to the -- it would be 50 percent. It would be the 15 -- that some reps were -- didn't use expenses, for whatever 16 reason. They went outside of them and those reps that didn't 17 use it p -- per the fact that they would -- however they were 18 managing their accounts. 19 But I would say in the -- you know, in the 50 20 percent -- the top 50 percent of the reps who claimed all the 21 time that's -- that's all I can remember. 22 Q: You would expect that the hunters would 23 be the ones with the bigger -- 24 A: No. 25 Q: No?

1 A: Not necessarily. 2 Q: It varied? There's no correlation -- 3 A: No. 4 Q: -- between hunters expenses and farmers 5 expenses? 6 A: No. The main thing -- I would think the 7 farmers would be in the same ball park. 8 Q: The question I neglected to ask you when 9 we were back talking about the training or limited training, 10 I guess, if any that got Ms. -- Ms. Vivaldo and Mr. Rollock 11 about approving expenses. 12 I want to ask you specifically about -- it's 13 now -- I've got a couple of names. There's the open period, 14 the blackout period, the silent period. If I can call it the 15 blackout period. We're talking about the period when, from 16 your perspective, there ought not to be contact with City 17 officials by MFP. We're going to come to that later and see 18 exactly what it is. 19 MR. DAVID MOORE: I understood that there was 20 a question of entertainment of City officials. 21 MADAM COMMISSIONER: I think it wasn't, as we 22 agreed the other day, it wasn't contact because the RFP 23 specifically asks for the contact person. 24 MR. GORDON CAPERN: I misspoke, Commissioner. 25 I apologize.

1 CONTINUED BY MR. GORDON CAPERN: 2 Q: The -- dealing with the entertainment -- 3 th -- that's what I'm interested in in regards to the 4 question, so I apologize to My Friend for that. 5 The -- did you give Ms. Vivaldo and Mr. 6 Rollock any specific instructions to be alert to the approval 7 of expenses -- entertainment expenses that had apparently 8 occurred during the blackout period? 9 A: No. However, I would think expenses for 10 the blackout period came in two (2) or three (3) months after 11 the blackout period. I noticed on one of these expenses that 12 it was a fuel expense that Christine -- Christine's date of 13 review was August something. So, you know, it was way after 14 the blackout period and I'm not sure whether they would even 15 think about it that way. 16 Q: Th -- that's a concern, Ms. Payne. We 17 need to unpack that a little bit because I just want to 18 understand. First of all, did -- did -- from your 19 understanding, did -- did Ms. Vivaldo and Mr. Rollock both 20 have an appreciation for the fact that entertainment ought 21 not to be occurring -- 22 A: Yes. 23 Q: Let me come straight to the point. Did 24 they understand that entertainment of City officials ought 25 not to be happening during the blackout period?

1 A: It's my understanding that they would. 2 Q: They would have understood that as the 3 rules of general application for customers who are involved 4 in a tendering process as the City of Toronto was? 5 A: My understanding is that they would. 6 Q: Wh -- what's the basis of your 7 understanding? 8 A: The basis of my understanding is that 9 they were knowledgeable in the -- in the government process. 10 Q: Did you ever have specific discussions 11 with either of them about the blackout period about what 12 ought to occur and what ought not -- not to occur during the 13 blackout period? 14 A: I don't remember any conversation. 15 Q: So your assumption that they would know 16 about that is based exclusively on their experience in 17 industry? 18 A: Yes. 19 Q: And you certainly didn't take any eff -- 20 make any effort to explain that to them direct? 21 A: Not to my knowledge. 22 Q: And just unpacking that a little further, 23 you said Ms. -- dealing first with Ms. Vivaldo, she had, as 24 you, I think, have testified, twenty nine (29) sales people 25 whose reports she would be reviewing on a monthly basis?

1 A: Yes. 2 Q: Assuming that they were submitted? 3 A: Yes. 4 Q: And in addition to that, she would approve 5 the expenses for the support staff? 6 A: Yes. 7 Q: She would -- and would those people 8 generally have been approving expenses on a monthly basis, or 9 submitting expenses on a monthly basis to her? 10 A: The support staff? 11 Q: Yes? 12 A: Yes. 13 Q: And if I've got the number right, at the 14 relevant time, there would be, including the sales staff, 15 that would have been about eighty (80) people? 16 A: No. 17 Q: What's the number? 18 A: The number is twenty nine (29) plus the 19 three (3) operations managers, okay, three (3) operations 20 managers of the three (3) divisions and Rob Wilkinson would 21 be responsible for the business analysts. 22 So there would be probably four (4) or five 23 (5) additional, over and above the twenty nine (29). 24 Q: So, we're talking of a number in the low 25 thirties (30's) then approximately. And that, on a monthly

1 basis, she would be reviewing expense claims from a large 2 number of those, is that right? 3 A: Yes. 4 Q: Was it your expectation that Ms. Vivaldo 5 would have her head around all of the projects that those 6 sales people were working on, on a month to month basis? 7 A: I'm not sure. 8 Q: So, there's a risk, is there not that Ms. 9 Vivaldo, might not have been alive to the fact that at a 10 particular point in time you were in a blackout period? 11 A: I don't think we'd rely on Christine 12 Vivaldo to look at the blackout period. I think we'd rely on 13 the sales reps and the sales manager. 14 Q: So the -- if I can put it like this, 15 assuming for a moment, because we're going to come to Mr. 16 Domi in a moment about the blackout period. 17 But, assuming for the moment that Mr. Domi has 18 done a bad thing and submitted a -- entertained a customer's 19 employee during a blackout period, the company's first line 20 of reaction or response to that would be at the sales manager 21 level, is that right? 22 A: Yes. 23 Q: So, your expectation would be that Mr. 24 Rollock would, and if I've got the rationale behind this 25 right, Mr. Rollock is Mr. Domi's manager, is that right?

1 A: Yes. 2 Q: He's got Mr. Domi -- he knows what Mr. 3 Domi is doing on the ground, is that right? 4 A: He would be aware of what he was doing. 5 Q: So you would have expected Mr. Rollock to 6 be alive to the fact, that one (1) of Mr. Domi's customers 7 was, in effect, in a blackout period? 8 A: He would have been aware. The other 9 person that who would have been aware would be Rob Wilkinson. 10 Because Rob Wilkinson, as we've seen through the expenses, 11 would -- was with Dash on a number of occasions with these 12 customer meetings. 13 Rob understood the process. He understood the 14 government policy, he understood our policies. He was a 15 first employee of MFP. 16 I'm not so sure, after having said that, that 17 any of those expenses really included a customer at the 18 blackout. Because we were all aware that that was not the 19 way -- it's not acceptable. 20 Q: We're going to come to that -- we're going 21 to come to that in due course, Ms. Payne. I do want to spend 22 a bit of time with you on that, probably this afternoon. 23 MADAM COMMISSIONER: Is this a good time for a 24 break? 25 MR. GORDON CAPERN: It's an excellent time.

1 MADAM COMMISSIONER: Okay. Recess until ten 2 (10) to 12:00. All right. 3 THE REGISTRAR: The inquiry is in recess until 4 ten (10) to 12:00. 5 6 -- Upon recessing at 11:32 a.m. 7 8 --- Upon resuming at 11:50 a.m. 9 10 THE REGISTRAR: The Inquiry will resume, 11 please be seated. 12 13 (BRIEF PAUSE) 14 15 MADAM COMMISSIONER: Okay. 16 MR. GORDON CAPERN: We're just missing Mr. 17 Chenoweth at the moment, Commissioner, should I proceed or -- 18 MADAM COMMISSIONER: Oh. 19 20 (BRIEF PAUSE) 21 22 MR. RONALD MANES: Mr. Chenoweth is on the 23 phone outside. 24 MADAM COMMISSIONER: Well, I think he can see 25 that we're here, so ...

1 (BRIEF PAUSE) 2 3 CONTINUED BY MR. GORDON CAPERN: 4 Q: Ms. Payne, to what extent were you aware 5 of the efforts that Mr. Domi was undertaking to pursue the 6 City business in the period between January and May of 1999? 7 A: I'm not sure, but the amount of time he 8 spent on it, he had other account responsibilities. So he 9 would spend some time, and I think at that time he was 10 probably working with Rob Ashbourne on the account, but the 11 amount of time, I'm not sure. 12 Q: I guess my question, Ms. Payne, was 13 directed more along the lines of what we were talking about 14 with the expense reports and the salesperson's expectations, 15 that that would be at least in part informing his immediate 16 supervisor, Mr. Rollock, and potentially you, about what he 17 was doing. 18 What I want to do is just ask more generally, 19 did Mr. Domi keep you apprised of what he was doing at the 20 City? 21 A: He would mention that he had met with the 22 appropriate people, that he was working to understand how the 23 organization worked. I can't remember him telling me, you 24 know, every meeting he'd had. 25 I know he spent time on a number of other

1 accounts as well, so, I never got details of them. 2 Q: So, all right, just -- you didn't get 3 information from him on a detailed basis, of what he was -- 4 about the activities in which he was engaged to pursue the 5 City business, is that what you're saying? 6 A: Yes. 7 Q: Just stepping back to the topic that I 8 was on prior to the break, which is the issue of the 9 knowledge of the blackout period, and any entertaining 10 expenses that ought to be incurred first, and then submitted 11 during that period. 12 Am I right that you had no discussion with Mr. 13 Domi in which you gave him specific instructions about 14 entertainment during the blackout period? 15 A: Not that I remember. 16 Q: You would have relied exclusively on the 17 HR staff to do that? 18 A: No. 19 Q: You would have relied on Mr. Rollock to 20 do that, in part? 21 A: I would have relied on a number of 22 resources. There were probably six (6) reps who worked in 23 the Provincial -- in the Government team. 24 Q: You'll agree with me that prior to his 25 employment at MFP, Mr. Domi didn't appear to have any

1 experience in sales to the Government? 2 A: That's right. 3 Q: And so you'll agree with me that it was 4 likely in those circumstances, that he may not have been 5 sensitive to issues like the propriety of entertaining the 6 City officials during blackout periods? 7 A: No, I believe he was sensitive. 8 Q: What is the basis of that belief? 9 A: Because there was enough people on the 10 team that were sensitive to it, and he was quick to pick up 11 what was right and wrong. 12 Q: So you -- you think that he would have 13 known immediately upon his employment or shortly thereafter, 14 that entertaining City staff or City representatives during 15 the blackout period would have been inappropriate? 16 A: Certainly with respect to a municipal 17 client. 18 Q: So certainly by the time you were in fact 19 in the blackout period, you think he would have been aware of 20 that? 21 A: That's my understanding. 22 Q: And that comes from what? Your 23 discussions with Mr. Rollock? 24 A: No, it comes from the fact that he was 25 working within a team who had extensive experience in working

1 with the Government. And the person who was most close to 2 him in the -- in responding to the RFP, actually the two (2) 3 individuals were Rob Wilkinson, who was very much aware of 4 it, and Sandy Pessione, who was also most aware of it. 5 Q: So you assume that one (1) or more of 6 that team would have made sure that Mr. Domi knew that? 7 A: Yes. 8 Q: But you have no direct knowledge that 9 they in fact did? 10 A: No. 11 12 (BRIEF PAUSE) 13 14 Q: And again, just assuming for the moment 15 that any such entertaining had occurred during the blackout 16 period, that would have been something which you would have 17 expected Mr. Rollock to pick up on? 18 A: Yes. 19 Q: And I take it your expectation would have 20 been that Mr. Rollock adverted to the fact that there was 21 entertaining going on during the black out period, that he 22 ought have taken steps to warn Mr. Domi not to do it again? 23 A: That would be my understanding. 24 Q: And he would have directly warned him 25 that it was inappropriate?

1 A: Yes. 2 Q: I take it it's also something that he 3 would have brought to your attention as his supervisor? 4 A: Not necessarily. 5 Q: Do you think he ought to have? 6 A: If he thought there was a problem. 7 8 (BRIEF PAUSE) 9 10 Q: I touched briefly yesterday, Ms. Payne, 11 on what I advanced as four (4) considerations that ought to 12 apply in the -- in -- MFP's dealings with the City of Toronto 13 and those were, I think you agreed with me on these and I'll 14 just put them back to you so that we're all on the same page. 15 The first of them was the need to have Council 16 approval. 17 The second was knowledge of the purchasing 18 by-laws and the need to tender -- the City's general need to 19 tender its supply -- or its purchasing. 20 Third was the presence of conflict of interest 21 guidelines and the fourth was the confidentiality that 22 attaches to bids -- bids, at least on your evidence, during 23 the black out period. 24 Now, I asked Mr. Ashbourne about those 25 specifically when I cross-examined him in December and I

1 asked him whether he agreed with me that it was incumbent on 2 all persons wanting to do business with the City of Toronto 3 to know and understand these by-laws and policies to the best 4 of their abilities. 5 Mr. Ashbourne said that it was -- he answered 6 yes, it is incumbent. 7 MR. DAVID MOORE: I don't necessarily agree 8 with that characterization but surely the better and fairer 9 and most useful of dealing with that topic is to ask the 10 witness' view and you as Commissioner, can to the extent you 11 need, if necessary, to make a finding about any one (1) of 12 those issues you can. 13 But -- but I would have thought the -- the 14 most appropriate way when we asked this witness what is her 15 view. Simple, direct and -- and -- and take that evidence in 16 conjuncture with the rest of the record. 17 MADAM COMMISSIONER: Okay. It's cross- 18 examination. I think there are a number of different ways 19 that one could do this. One is to do it precisely as you 20 suggest. Another is to -- to give her the advantage of 21 knowing what someone else who worked for the same company 22 said just a few weeks ago. I don't have a problem with 23 either way, actually. 24 MR. DAVID MOORE: All right. Well, I just -- 25 I just register -- I don't necessarily agree with My Friend's

1 characterization of -- of everything that Mr. Ashbourne said. 2 MADAM COMMISSIONER: Well, if you don't agree 3 with what he's saying -- what he's putting to Ms. Payne, then 4 that's important because if he's going to put something to 5 her that Mr. Ashbourne said when I was here, then we ha -- 6 it's incumbent upon him, as I know he knows -- I'm sure 7 knows, to make sure it's accurate. 8 MR. GORDON CAPERN: Perhaps, if I could -- 9 MADAM COMMISSIONER: I -- I -- 10 MR. GORDON CAPERN: -- to assist Mr. Moore in 11 his concern, Commissioner. I have in front of me the cut and 12 paste of what Mr. Ashbourne's actual testimony was and I'm 13 happy to read that back for Mr. Moore's edification. I was 14 about to ask a question that he wants me to ask, in any 15 event. 16 MR. DAVID MOORE: All right, that's fine. 17 18 CONTINUED BY MR. GORDON CAPERN: 19 Q: Now, the question I put to Mr. Ashbourne 20 was this and it's at -- Ca -- Commissioner, I'm sorry. I 21 don't know whether this was on December -- which date on 22 December it was. I'll come back and tell you precisely after 23 the break. I can tell you that whatever day it was, it was 24 on Page 47 of the transcript during my examination of Mr. 25 Ashbourne.

1 I said -- I asked him this: 2 "Q: Now, just going over these, I have 3 given you four (4), if I can call them 4 broad categories, Mr. Ashbourne, of these 5 special considerations if I can call them 6 that. 7 The first that I gave you was a coun -- 8 was Council's approval of spending. The 9 second I gave you was the purchasing 10 by-laws and the need to tender. The third 11 I gave you was the presence of a conflict 12 of interest guidelines and the fourth was a 13 protection of confidential bid information. 14 You agree with me, sir, that it is 15 incumbent on all persons wanting to do 16 business with the City of Toronto to know 17 and understand the bylaws and policies to 18 the best of their abilities? 19 Answer: Yes. 20 And that would apply to MFP, sir? 21 Yes. 22 Question: And to all of its employees? 23 Answer: Yes." 24 And I take it from your, at least in part, 25 your answers yesterday, Ms. Payne, that you agree with what

1 Mr. Ashbourne says? 2 A: Yes. 3 MADAM COMMISSIONER: That was on December 4 17th. 5 MR. GORDON CAPERN: Thank you Commissioner. 6 7 CONTINUED BY MR. GORDON CAPERN: 8 Q: Now, in early 1998, Ms. Payne, I presume 9 that you knew that a new City of Toronto had been formed from 10 the amalgamation of the former municipalities? You were 11 alive to that? 12 A: Yes. 13 Q: And can I ask you directly, Ms. Payne, as 14 a Senior Vice President of Marketing and Sales at MFP, at the 15 relevant time, what steps if any, you had taken to learn and 16 understand the conflict of interest guidelines that were in 17 place at any of the former municipalities that formed upon 18 amalgamation this new City of Toronto? 19 A: I'm not sure. 20 Q: Is it fair to say, you didn't take any 21 steps to inform yourself about what those conflict of 22 interest guidelines were? 23 A: I think it's safe to say that I would 24 expect the people who were assigned to that account to 25 understand that.

1 Q: That would include Mr. Ashbourne and Mr. 2 Domi? 3 A: That's right. 4 Q: Did you tell either of Mr. Ashbourne or 5 Mr. Domi that they should go and inform themselves about the 6 City's conflict of interest guidelines? 7 A: Not that I remember. 8 Q: And I take it that you certainly didn't 9 conduct any training on the City's conflict of interest 10 guidelines for any of your sales staff that might have been 11 involved -- 12 A: No. 13 Q: -- with the City bid? That's correct? 14 A: That's right. 15 Q: And to your knowledge, you're not aware of 16 any such training taking place formally or informally at MFP? 17 A: There was very little training. 18 Q: So the answer is, you're not aware of any 19 specifically directed -- 20 A: I'm not aware of -- 21 Q: -- at the City of Toronto conflict of 22 interest guidelines? 23 A: I'm not aware of any. 24 MR. WILLIAM ANDERSON: As a point of 25 clarification, perhaps Counsel could explain what conflict of

1 interest guidelines he's referring to. Because I didn't 2 understand there to be any conflict of interest guidelines at 3 the time. 4 MADAM COMMISSIONER: Well, as I understood it 5 from Michael Garrett, that there were -- that each person in 6 the amalgamated City wa