1 2 3 4 TORONTO COMPUTER LEASING INQUIRY 5 6 7 8 ******************** 9 10 11 BEFORE: THE HONOURABLE MADAM JUSTICE DENISE BELLAMY, 12 COMMISSIONER 13 14 15 16 17 Held at: East York Civic Centre 18 850 Coxwell Avenue 19 Toronto, Ontario 20 M4C 5R1 21 22 ******************** 23 24 25 June 12th, 2003

2
  1                        APPEARANCES
  2  Ronald Manes   (np)     )Commission Counsel 
  3  Patrick Moore  (np)     )
  4  Daina Groskaufmanis     ) 
  5  Linda Rothstein  (np)   )City of Toronto 
  6  Lily Harmer    (np)     )
  7  Robert Centa            )
  8  Gordon Capern  (np)     )
  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          )Jim Andrew
 22  Jennifer Searle (np)    )
 23  
 24  Joyce Ihamaki           )Registrar
 25

1 TABLE OF CONTENTS 2 Page 3 4 Exhibits 4 5 6 JAMES ROBERT HART, Sworn 7 Examination-in-Chief 8 by Ms. Daina Groskaufmanis 26 9 Cross-Examination by Mr. William Anderson 85 10 Cross-Examination by Ms. Bay Ryley 108 11 Cross-Examination by Mr. David Moore 132 12 Cross-Examination By Mr. Hugh MacKenzie 183 13 14 Certificate of Transcript 201 15 16 17 18 19 20 21 22 23 24 25

1 EXHIBITS 2 No. Description Page 3 39 Unbound document "Re 4 standing - Mr. Orr, 5 Ms Leggieri - counsel." 6 2 pages 5 7 8 9 40 Bound document "Affidavit 10 of Jim Hart" tabs 1-25 27 11 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 session, 4 please be seated. 5 MADAM COMMISSIONER: Good morning. Ms. 6 Groskaufmanis...? 7 MS. DAINA GROSKAUFMANIS: Good morning, Madam 8 Commissioner. 9 MADAM COMMISSIONER: Morning. 10 MS. DAINA GROSKAUFMANIS: Mr. Jim Hart would 11 be our next witness, however, we've received a request for 12 limited standing on behalf of Paula Leggieri from her counsel 13 Jim Orr. I've distributed that letter to all counsel and 14 I've asked the Registrar to provide a copy to you, as well. 15 I understand our past practice is to make 16 those -- to make those requests for standing Exhibits. 17 MADAM COMMISSIONER: All right. So that 18 would be Exhibit number? 19 REGISTRAR: That would be Exhibit number 39. 20 MADAM COMMISSIONER: Thank you. 21 22 --- EXHIBIT NO. 39: Unbound document "Re standing - 23 Mr. Orr, Ms Leggieri - counsel". 24 2 pages 25

1 MS. DAINA GROSKAUFMANIS: Very briefly, Madam 2 Commissioner, Mr. Orr is seeking standing on behalf of Paula 3 Leggieri, only with respect to the segment of the evidence 4 dealing with the allegations that Ms. Leggieri has raised 5 with respect to reprisals against her employment and the 6 other allegations she raised when she testified before us in 7 April. 8 He goes on to state, that he does not expect 9 that this -- this limited standing would substantially add to 10 the length of the Inquiry and he's made a commitment to get 11 directly to the issues. 12 MADAM COMMISSIONER: Okay. All right. 13 I have this letter from Mr. Jim Orr, James 14 Orr, dated June 11th, 2003, it's an application for standing 15 from Ms. Paula Leggieri. On behalf of Ms. Leggieri, Mr. Orr 16 is asking for limited standing to conduct cross-examinations 17 during the segment of the Hearing which is being held 18 specifically to deal with the issues raised by Ms. Leggieri. 19 He has indicated that he does not believe that 20 his cross-examinations of the current City employees, 21 including Kathryn Bulko will substantially add to the length 22 of the Inquiry. Indeed, his letter says that if given 23 limited standing he will be getting directly to the issues. 24 Rule 8 of our Rules of Procedure, provide that 25 the Commissioner may grant standing to people who satisfy me

1 that they have a substantial and direct interest in the 2 subject matter of the Inquiry or whose participation may be 3 helpful to the Commission in fulfilling its mandate. 4 The Commissioner also determines on what terms 5 standing may be granted. This application for standing 6 arises as a result of the investigation into allegations made 7 by Ms. Leggieri. She alleges that she suffered adverse 8 employment consequences because she cooperated with this 9 Inquiry. 10 As I indicated in my ruling on April 8th, this 11 year, I take such allegations very seriously, because they 12 impugn the validity and process of the Inquiry. 13 The Rules of this Inquiry and the provisions 14 of the Public Inquiries Act are specifically intended to 15 encourage potential witnesses to come forward and assist in 16 every way. In particular, employee witnesses are protected 17 from any adverse employment action for cooperating with an 18 Inquiry. 19 I do not agree with Mr. Orr that his client 20 has a substantial and direct interest in the subject matter 21 of the Inquiry. Ms. Leggieri's concern is the harm she 22 alleges occurred as a result of her cooperation with the 23 Inquiry. 24 Ms. Leggieri's allegations relate to the 25 procedural protections provided by our rules and by the

1 Public Inquiries Act. In essence, her allegations touch on 2 the Inquiry's process, not the Inquiry subject matter which 3 is specified in our terms of reference. 4 Having said that, the absence of a direct and 5 substantial interest does not by itself decide the matter of 6 standing. The real question is whether Ms. Leggieri's 7 participation as a party through Counsel with limited 8 standing will be helpful to me in fulfilling my mandate. 9 I have concluded that her participation in a 10 limited way will assist. Our rules do not give standing to 11 everyone who is simply a witness. One can readily understand 12 why. Witnesses do not need standing simply to give evidence. 13 Practically speaking, it is not feasible to 14 give every witness standing or would many of them qualify for 15 it under the applicable rules. Indeed, if every witness at 16 an inquiry received standing, inquiries would be unmanageable 17 and prohibitively expensive. Inquiries would cease to play 18 their important role in ensuring public accountability and 19 good government. 20 Ms. Leggieri's circumstances, however, are 21 unique. She is more than simply a witness. She is a witness 22 who alleges her -- her cooperation with the Inquiry caused 23 her adverse employment consequences. This allegation strikes 24 at the heart of the inquiry process. 25 To preserve the integrity of our process, we

1 must explore her allegations. In these exceptional 2 circumstances, it may be helpful for me to have Ms. 3 Leggieri's perspective as advanced by her counsel. 4 For ex -- for example, I expect that her 5 lawyer's cross-examination will likely be informed by a 6 perspective different from any other counsel who is going to 7 cross-examine. I am comforted, also, by her counsel's 8 undertaking to focus directly on the issues. I am concerned, 9 though, about extending the length of this Inquiry. 10 The issue raised by Ms. Leggieri, while very 11 important, takes us away from the subject matter contained in 12 my Terms of Reference. I remain committed to fulfilling my 13 mandate in a timely and cost-efficient manner. This approach 14 applies equally to process issues and those issues directly 15 within our Terms of Reference. 16 Therefore, I must set reasonable limits on the 17 time and resources of this Inquiry that will be committed to 18 the issue raised by Ms. Leggieri. These limits will apply to 19 all counsel who intend to cross-examine. In setting these 20 limits, I have carefully considered Ms. Leggieri's 21 allegations and her evidence before me and the material and 22 information in response which were made available to me 23 through Commission Counsel. 24 Based on all the information available to me, 25 I conclude that one (1) week of Inquiry hearing time will be

1 ample to address Ms. Leggieri's allegations in their 2 entirety. During that week Counsel are not to delve into 3 issues related to the City of Toronto's Contract Management 4 Office, the administration of the leases or conduct or events 5 surrounding changes to the leases. Witnesses including Ms. 6 Bulko and Ms. Leggieri will be recalled at a later date to 7 address those issues. 8 Ms. Leggieri will be granted limited standing 9 to enable her counsel to cross-examine witnesses during the 10 week devoted to Ms. Leggieri's allegations. 11 I understand from Commission Counsel that Ms. 12 Leggieri has already received documentary disclosure after 13 having executed our standard confidentiality agreement. 14 As a condition of being granted this limited 15 standing, I expect Ms. Leggieri and her counsel to cooperate 16 fully with Commission Counsel to ensure that nothing 17 important is overlooked with respects to Ms. Leggieri's 18 allegations. 19 I expect all Counsel to cooperatively manage 20 the presentation of relevant witnesses to fit within the one 21 (1) week allocated to this issue. 22 Counsel are reminded that the purpose of 23 direct and cross-examination is to help me make 24 recommendations. I do not want to lose sight of that. There 25 comes a point at which this purpose is not served by

1 protracted or repetitive cross-examination. 2 The examination and cross-examination in this 3 segment must be kept within reasonable bounds. If Counsel 4 are unable to agree, as usual, I will assign time limits for 5 each witness -- I shouldn't say as usual because I haven't 6 done that in the past, but I'm setting aside one (1) week for 7 this. So if counsel can't agree as to how all of that's 8 going to take place then I will assign time limits for each 9 witness. 10 The one (1) week of hearing time devoted to 11 Ms. Leggieri's allegations will begin on Monday, June 16th 12 and end on Thursday, June 19th, 2003. 13 All right. We're ready. Ms. Groskaufmanis, 14 Mr. Hart. Thank you. 15 16 (BRIEF PAUSE) 17 18 MADAM COMMISSIONER: Good morning. 19 20 (BRIEF PAUSE) 21 22 JAMES ROBERT HART, Sworn: 23 24 25 IN THE MATTER OF THE TORONTO COMPUTER LEASING INQUIRY

1 AFFIDAVIT OF JIM HART 2 3 I, Jim Hart, of the City of Toronto, in the 4 Province of Ontario, MAKE OATH AND SAY: 5 6 1. From May 1998 to September 2001, I was the 7 Director, Council and Support Services at the City of Toronto 8 and as such, have knowledge of the matters hereinafter 9 deposed to. 10 11 2. As the Director, Council and Support Services, 12 I was responsible for administration of Clerk's and Council, 13 including overseeing finance, budget, accounts payable, 14 accounts receivable and information and technology. 15 16 Attached hereto and marked as Exhibit 1 is a true copy of the 17 Permanent Job Opportunity, Director, Council Services & 18 Management Services, dated April 23, 1998, (still to be 19 scanned and added to the database). 20 21 3. I received a Bachelor of Arts degree (Honours) 22 from York University in 1981, and have been working for 23 municipal government in Toronto since 1983. In 1989, I 24 became the Director, Council Services and Administration at 25 the Municipality of Metropolitan Toronto ("Metro"). In

1 September 2001, I became the Director of Executive Management 2 for the Office of the Chief Administrator Officer, for the 3 amalgamated City of Toronto. 4 5 MASTER LEASE 784 (THE COUNCILLORS LEASE) 6 7 4. I had no involvement in the preparation or 8 implementation of Master Equipment Lease Agreement No. 784: a 9 1997 lease with MFP Financial Services Ltd. ("MFP") to 10 provide new computers for the Council offices at the new 11 City. 12 13 5. I did not become involved in Master Lease 784 14 until 2000, by which time I had the overall IT 15 responsibilities for the computers for members of City 16 Council and their offices. 17 18 6. I was aware that Master Lease 784 would be 19 expiring at the end of 2000. Appreciating this, on May 17, 20 2000, I consulted with certain individuals at City Hall. 21 Among the people I met with at that early 2000 meeting were a 22 small group of executive assistants to city Councillors: 23 those who used the computers on a regular basis as well as 24 more casual users, and those with varying financial 25 perspectives.

1 Attached hereto and marked as Exhibit 2 is a true copy of 2 email from Roger Flemming, "Meeting with EAs" dated May 17, 3 2000, (still to be scanned and added to the database). 4 5 7. The general consensus at that meeting was that 6 Council offices required new computers as the hardware they 7 were using was now very much out-of-date. 8 9 8. A further meeting was arranged for May 24, 10 2000, to discuss the IT needs of members of Council and their 11 staff. All Councillors and their staff were invited to this 12 meeting. This meeting was not well attended, but the 13 consensus was the same: new computers were needed. 14 15 Attached hereto and marked as Exhibit 3 is a true copy of 16 email from Roger Flemming, "Council sub-group update" dated 17 May 25, 2000, (still to be scanned and added to the 18 database). 19 20 9. My office also received recommendations from 21 the Clerk's and corporate IT staff that the equipment in the 22 Council Offices did not meet current corporate standards. 23 24 10. The consensus was clear, and there appeared to 25 be no other choice: we had to replace the computer equipment.

1 11. I was advised by the Contract Management 2 Office ("CMO") and Corporate IT that all IT technology had to 3 be leased. IT leasing was done through the CMO. The process 4 was to go to the CMO, which would determine the requirements 5 and inform you of the total cost. 6 7 8 THE BUSINESS CASE 9 10 12. I instructed Roger Flemming, the Acting 11 Manager Information Systems, Council and Support Services, to 12 prepare a business case for the replacement of computer 13 equipment for Council Offices. The final version, Business 14 Case for Replacing the Computer Equipment in Councillor 15 Offices and the Mayor's Office is attached. 16 17 Attached hereto and marked as Exhibit 4 is a true copy of 18 Business Case for Replacing the Computer Equipment in 19 Councillor Offices and the Mayor's Office, dated October 16, 20 2000 Document Number COT029776. 21 22 13. I have been advised by Mr. Flemming, and 23 verily believe, that staff in the CMO provided him with much 24 of the data and information that is included in the Business 25 Case.

1 14. Three issues arose in the course of preparing 2 the business case: the length of the new lease, options for 3 dealing with the computers when they came off lease, and the 4 funding for the new lease. 5 6 (a) THE LENGTH OF THE LEASE 7 15. One of the first issues that arose was the 8 length of the lease. I wanted a three-year lease for 9 numerous reasons: to coincide with the term of Council and a 10 concern about switching computers in the middle of the 11 Council term; to keep warranties up-to-date; and to keep 12 equipment in line with industry standards. 13 14 16. However, Mr. Flemming informed me that Paula 15 Leggieri of the CMO told him, that all computers must be 16 leased for five years. 17 18 17. I reported to Jim Andrew, the Executive 19 Director of Information and Technology, that we had been 20 advised by Ms. Leggieri that computers must be leased for 21 five years, although my preference was for a three-year term. 22 23 Attached hereto and marked as Exhibit 5 is a true copy of a 24 May 18, 2000 e-mail string between Jim Hart, Roger Flemming 25 and Jim Andrew with the subject "Re: Council Computer

1 Leases", Document Number COT015514. 2 3 18. Through Mr. Andrew's intervention, issues 4 related to the term were resolved. The Councillors Office 5 computers would be leased for three years. 6 7 (b) END-OF-LEASE OPTIONS 8 19. The business case set out four options: "�Do 9 nothing, buy out existing lease, continue existing lease on 10 current equipment, lease new equipment through Contract 11 Management Office under the "Corporate Refresh Program." 12 The option of buying new computer equipment was not even 13 considered, because the CMO had told us that all information 14 and technology equipment must be leased. 15 16 20. The recommendation was to lease new computers. 17 18 21. Information and Technology staff used the term 19 "Corporate Refresh Program" to describe the process by which 20 equipment would be replaced when the existing lease on the 21 equipment ran out. The Business Case stated that the costs 22 associated with leasing the new equipment would be through 23 the "Corporate Refresh Program." 24 25 22. I was not presented with an opportunity to use

1 a leasing company other than MFP, nor was I given any 2 indication that there was an option to negotiate the lease 3 rates. Upon determining the equipment to be acquired, the 4 CMO would simply provide us with the lease rates. 5 6 23. Having recently purchased a desktop computer 7 for home use, in reviewing the Business Case, I noted to City 8 Clerk, Novina Wong, that the cost of leasing in the Business 9 Case seemed quite high compared to the purchase price for new 10 computers. However, I believed that we had no choice but to 11 lease through MFP at the rates provided. 12 13 (c) BUDGET 14 24. The business case states that, "The costs 15 associated with leasing this equipment has been provided 16 through the Corporate Refresh Program." "Corporate Refresh 17 Program" was the term used by IT staff to describe the 18 replacement process that takes place as leases expire. 19 20 25. We had proceeded to make arrangements for the 21 Councillor Office lease on the basis that funds were 22 available through a "Corporate Refresh Strategy." However, 23 in September 2000, I was advised in e-mail from Al Shultz, 24 the Director, Accounting Services, in the Finance Department, 25 that the leasing costs should come from the Council budget.

1 Attached hereto and marked as Exhibit 6 is a true copy of an 2 September 18, 2000 e-mail from Al Shultz to Jim Hart with the 3 subject "Computer Hardware/Software Council Offices", 4 Document Number COT015533. 5 6 26. The next day, I forwarded Mr. Shultz's message 7 to Mr. Andrew, asking him how the City Clerk's office should 8 proceed given that I had been advised by the Corporate IT 9 Division that there were funds available and Councillor 10 Lorenzo Berardinetti had already been so advised. 11 12 Attached hereto and marked as Exhibit 7 is a true copy of a 13 September 19, 2000 e-mail from Jim Hart to Jim Andrew with 14 the subject "Fwd: Computer Hardware/Software Council 15 Offices", Document Number COT015532. 16 17 27. Mr. Andrew responded to me by writing that 18 this was a change that "we would need to talk to [Chief 19 Financial Officer and Treasurer] Wanda [Liczyk]" about. 20 21 Attached hereto and marked as Exhibit 8 is a true copy of a 22 Sept 19, 2000 e-mail from Jim Andrew to Jim Hart with the 23 subject "Re: Fwd: Computer Hardware/Software Council 24 Offices." Document Number COT013786. 25

1 28. I am informed by Ms. Wong, and verily believe, 2 that she sought the advice of the Finance Department on how 3 to fund the lease renewal as it was not included in the 4 Council budget. Both she and Mr. Andrew were told that the 5 new hardware could be funded through a corporate account, 6 which information she said was given to her on June 30, 2000 7 by Mr. Shultz. In a confirming email, Ms. Wong stated that 8 based on this understanding, the decision was made to lease 9 the new equipment for a period of three years. No report was 10 given to City Council because the lease renewal was 11 consistent with the corporate IT strategy approved by 12 Council, and Ms. Wong had met with Councillor Berardinetti to 13 seek political input on the matter. 14 15 Attached hereto and marked as Exhibit 9 is a true copy of a 16 Sept 19, 2000 e-mail from Alan Shultz to Novina Wong, copy to 17 Jim Andrew and others, with the subject "Re: Fwd: Computer 18 Hardware/Software Council Offices", Document Number 19 COT015535. 20 21 29. Ms. Wong asked that the matter be dealt with 22 urgently. Master Lease 784 was three months away from 23 expiring, it was too late to bring the lease renewal to 24 committee, and the last meeting of City Council before the 25 municipal election was exactly two weeks away.

1 30. The issue of funding the Councillor Office 2 computers was eventually resolved. I was informed by Ms. 3 Wong, and verily believe, that it was agreed that the leasing 4 cost for 2000, 2001, 2002 and 2003 would be paid out of or 5 included in the Council budget. This conversation was 6 confirmed in e-mail dated September 29, 2000. 7 8 Attached hereto and marked as Exhibit 10 is a true copy of an 9 October 11, 2000 e-mail from Alan Shultz to Jim Hart with the 10 subject "Re: Council Computers", Document Number COT016312. 11 12 31. This agreement was formally approved by the 13 Chief Financial Officer and Treasurer, Ms. Liczyk, at a 14 meeting with on October 23, 2000, between Ms. Wong, Mr. 15 Flemming, Mr. Andrew, and Kathryn Bulko, the manager of the 16 CMO. 17 18 Attached hereto and marked as Exhibit 11 is a 19 true copy of an October 23, 2000 e-mail from Novina Wong to 20 Jim Hart with the subject "Council and Mayor's Office 21 Computers", Document Number COT013153. 22 23 COUNCIL AUTHORITY TO ENTER INTO A NEW LEASE WITH MFP 24 25 32. I believed that we would also have to get

1 approval from City Council to renew the lease. I asked Mr. 2 Flemming to prepare a report for the Administration 3 Committee. That report, with the subject, "Leasing of 4 Computer Equipment and Software for the new term of Council," 5 was dated June 28, 2000, and was forwarded to Ms. Wong. 6 7 Attached hereto and marked as Exhibit 12 is a true copy of a 8 June 28, 2000 staff report from the City Clerk and Executive 9 Director of Information and Technology to the Administration 10 Committee, with the subject "Leasing of Computer Equipment 11 and Software for the new term of Council." This report is 12 being scanned and will be added to the case database. 13 14 33. In the "Background" section, the Report refers 15 to the approval by Council at its meeting on July 27, 28, 29 16 and 30, 1999 of the Policy and Finance Committee report 17 "which recommended the leasing of all equipment within the 18 corporation." The Report goes on to states that "all 19 computer equipment for Council will be leased through 20 Corporate Services Contract Management Office (CMO)." 21 22 34. I have been informed by Mr. Flemming, and 23 verily believe, that he was provided this information by CMO 24 staff. 25

1 35. When it came time to finalize the Report, I am 2 advised by Mr. Flemming and verily believe that Mr. Andrew 3 told Mr. Flemming and the City Clerk, Ms. Wong, that the 4 report to the Administration Committee did not, in fact, need 5 to go the Administration Committee at all. Mr. Andrew stated 6 that at the July 1999 meeting, Council had approved a 7 "Corporate Refresh Strategy" and the leasing program, and so 8 the renewal did not require approval of the Administration 9 Committee or the full Council. 10 11 36. I was somewhat perplexed by this, but assumed 12 it must be correct. Staff from the Contract Management 13 Office, who administered the leases, said that there was 14 Council authority, and the Executive Director of Information 15 and Technology said there was authority. It did not seem 16 necessary for me to "go behind" these high-level 17 representations. 18 19 37. However, I asked my assistant to file the 20 report and note Mr. Andrew's instructions (the handwritten 21 note on the cover of the Report). 22 23 THE NEW LEASE: 838-10 24 25 38. Most of the computers leased under Master

1 Lease 784 were returned to MFP. 2 3 Attached hereto and marked as Exhibit 13 is a true copy of 4 email to John Mergalia, "Purchases for 784-1 and 2", dated 5 June 12, 2001. This document is being scanned and will be 6 added to the case database. 7 8 Attached hereto and marked as Exhibit 14 is a true copy of 9 email to John Mergalia, "Lease Returns Status", dated 10 February 28, 2001. This document is being scanned and will be 11 added to the case database. 12 13 Attached hereto and marked as Exhibit 15 is a true copy of 14 email to John Mergalia, "COT0 Lease 784 Returns to CLI", 15 dated March 14, 2001. This document is being scanned and will 16 be added to the case database. 17 18 Attached hereto and marked as Exhibit 16 is a true copy of 19 email to John Mergalia, "COT0 Lease 784 Returns to CLI", 20 dated March 19, 2001. This document is being scanned and will 21 be added to the case database. 22 23 Attached hereto and marked as Exhibit 17 is a true copy of 24 email to John Mergalia, "COT0 Lease 784 Returns to CLI", 25 dated March 23, 2001. This document is being scanned and will

1 be added to the case database. 2 3 Attached hereto and marked as Exhibit 18 is a true copy of 4 email to John Mergalia, "COT0 Lease 784 Returns to CLI", 5 dated April 2, 2001. This document is being scanned and will 6 be added to the case database. 7 8 Attached hereto and marked as Exhibit 19 is a true copy of 9 email to John Mergalia, "COT0 Lease 784 Returns to CLI", 10 dated June 21, 2001. This document is being scanned and will 11 be added to the case database. 12 13 Attached hereto and marked as Exhibit 20 is a true copy of a 14 spreadsheet "784-1" that details the disposition of the 15 equipment on this Equipment Schedule. This document is being 16 scanned and will be added to the case database. 17 18 39. I had no involvement in the purchase of 19 computers by individual members of City Council. The Contract 20 Management Office had arranged that Councillors were to do 21 this directly through MFP 22 23 40. The City entered into a new lease, Master 24 lease 838-10, with MFP for a 36-month term. The cost 25 commitment was $720,908 with a pre-tax quarterly payment of

1 $61,226.72. 2 3 Now shown to me (but not attached) is a true copy of 4 Equipment Schedule 838-10 between MFP Financial Services Ltd. 5 and the City of Toronto, dated January 1, 2001, Document 6 Number COT021629; a true copy of the lease summary, Document 7 Number COT021628, and a true copy of the Certificate of 8 Acceptance, Document Number COT021646, and found in the 9 Master Lease Books, volume 3, tabs 33, 34 and 35. 10 11 SWORN BEFORE ME at the City of Toronto in 12 the Province of Ontario on 13 March 28, 2003 JIM HART 14 A COMMISSIONER, ETC. 15 16 MADAM COMMISSIONER: Good morning. 17 THE WITNESS: Morning. 18 19 EXAMINATION-IN-CHIEF BY MS. DAINA GROSKAUFMANIS: 20 Q: Good morning, Mr. Hart. 21 A: Morning. 22 Q: Mr. Hart, you've provided us with an -- 23 oh, I'm sorry. Let me enter this as an exhibit first. 24 Madam Commissioner, you have a -- there's a book of documents 25 with Tab 1 through 25. With respect to Mr. Hart there's an

1 affidavit that precedes those documents sworn by Mr. Hart on 2 the 28th of March of this year and I would like to have that 3 entered as the next exhibit which I understand is Exhibit 40. 4 THE REGISTRAR: That's right. Exhibit 40. 5 6 --- EXHIBIT NO. 40: Bound document "Affidavit of Jim 7 Hart" tabs 1-25 8 9 MADAM COMMISSIONER: Thank you. 10 11 CONTINUED BY MS. DAINA GROSKAUFMANIS: 12 Q: Mr. Hart, do you have your exhibit -- that 13 Exhibit 40, your Affidavit before you? 14 A: Yes. I do. 15 Q: Mr. Hart, I understand from May of 1998 to 16 September 2001 you were the Director of Council and Support 17 Services for the City of Toronto? 18 A: That's correct. 19 Q: What is that position -- what's that 20 position about? 21 A: That position effectively handles the 22 administration of the clerks division of corporate services 23 as well as all the offices of members of Council. So that 24 would include things like budget, accounts payable and 25 receivable, IT. Everything that would be construed as

1 administrative. 2 Q: And we have, at Tab 1 of your book of 3 documents, your -- the job posting for that position. 4 MS. DAINA GROSKAUFMANIS: Madam Commissioner, 5 at the time that this Affidavit was sworn, that document was 6 not yet in our database. It now has a document number. It's 7 56780. 8 MADAM COMMISSIONER: Thank you. 9 10 CONTINUED BY MS. DAINA GROSKAUFMANIS: 11 Q: Mr. Hart, I'd like to ask you some 12 questions about the Councillor's computers and -- the -- the 13 computers for the Councillors and that lease? 14 A: Okay. 15 Q: I'm starting at paragraph 4 of your 16 Affidavit. I understand that you had no involvement in the 17 preparation or the implementation of Master Lease Agreement 18 784, that being the 1997 lease with MFP for the Councillors' 19 computers for the first -- for the first term of the 20 amalgamated City? 21 A: That's correct. 22 Q: When did you first become involved with 23 the lease for the Councillors' computers? 24 A: I guess it would have been some time early 25 in 2000 as I was aware that the lease for the council

1 computers expired in three (3) years' time which would mean 2 the end of 2000. So early in 2000 we started to have 3 conversations with finance and IT about replacement of the 4 Council computers or what to do with them. 5 Q: Did you have discussions with -- leaving 6 aside the discussions with finance and IT for a moment; did 7 you have discussions with anyone else about those 8 replacements? 9 A: Obviously, the first discussions would be 10 within the division itself, with the City Clerk. 11 Q: In paragraph 6, you state that on May the 12 17th of 2000, you consulted with certain individuals at City 13 Hall, initially being a small group of executive assistants 14 to City Councillors, those who used computers on a regular 15 basis as well as more casual users and to try to -- and those 16 with varying financial perspectives; that's correct? 17 A: That's correct. 18 Q: At Tab 2 of your book of documents there 19 is an e-mail from Roger Flemming, that appears to be an 20 update on that meeting. 21 Madam Commissioner, this is another document 22 that at the time, didn't have -- was not entered into our 23 database. 24 For some reason that I can't explain, it still 25 hasn't been entered in, nor has the document at Tab 3. I'll

1 make sure those are provided to Platinum Legal. 2 MADAM COMMISSIONER: Thank you. 3 4 CONTINUED BY MS. DAINA GROSKAUFMANIS: 5 Q: Mr. Hart, who is Roger Flemming? 6 A: Roger Flemming, at the time, was the 7 acting Manager of IT for the Clerk's Division. And he is 8 right now, as well. 9 MADAM COMMISSIONER: He's still Acting 10 Manager? 11 THE WITNESS: Acting Manager at that time, 12 yes. 13 MADAM COMMISSIONER: And is he still acting? 14 THE WITNESS: I believe he's the Manager, now. 15 MADAM COMMISSIONER: Manager now -- 16 THE WITNESS: I believe he is. I'm not 17 certain. 18 19 CONTINUED BY MS. DAINA GROSKAUFMANIS: 20 Q: And to whom did Mr. Flemming report? 21 A: Mr. Flemming reported to me. 22 Q: And you go on to say at paragraph 7 of 23 your Affidavit, that the general consensus at that meeting 24 was that the Council office required -- Councillor's offices 25 requires new computers?

1 A: That's correct. 2 Q: And then there was a further meeting held 3 on May the 24th, 2000 again to sort of, I guess, discuss the 4 IT needs of Council and their staff, and that all Councillors 5 and their staff were invited to this meeting, it wasn't well 6 attended, but the consensus was the same, that they needed 7 new computers -- Councillors needed new computers? 8 A: That's correct. I wasn't at that meeting. 9 Roger Flemming was at that meeting. 10 Q: And I take it, sir, that he reported back 11 to you, if I could just ask you to turn to the document at 12 Tab 3, of your Book. 13 This is an e-mail dated, May the 25th, 2000, 14 to Clerk's, IT, where he appears to give you a brief update 15 on a meeting that was held and in the third paragraph states: 16 "Not much new. They'll be happy with new 17 equipment and we'll need more and different 18 types of support. More to come on this." 19 A: Right. 20 Q: Did you have discussions with him outside 21 of this e-mail, as well? 22 A: We had discussions after that e-mail 23 obviously, with the City Clerk, to advise her what happened 24 at that meeting. 25 Q: And if I can say that in paragraph 9 of

1 your Affidavit, that your office also received 2 recommendations from Clerk and Corporate IT staff. Are those 3 the discussions you're talking about? 4 A: That's correct. 5 Q: And when it says that the equipment in the 6 Council's offices did not meet current corporate standards, 7 what does that mean? 8 A: The corporate standards at that time, the 9 computers that the Councillors were using at that time, were 10 three (3) years old. 11 The corporate standard had changed. The 12 computers in the Council offices were at least, at that point 13 in time, I think, two (2) versions old, compared to the 14 computers that were being acquired at that time. 15 So, they didn't meet the corporate standard of 16 computers being acquired at that time. 17 Q: Why does that matter? 18 A: The chief reason that it matters, is that 19 if you have computers that are a couple of versions old, if 20 you will, is that there are some forms of software that you 21 wouldn't necessarily be able to run, number one (1). 22 There were lots of problems with the printers, 23 in terms of breaking down, three (3) years for a printer is 24 usually, in a high volume environment, is usually pretty 25 good. Time to get a new one (1). And the computers

1 themselves, we had many complaints that they were running too 2 slow. 3 Q: And when you say that they were 4 applications that could not be run, is that accurate? 5 A: The accuracy of that, was based on 6 information from Clerks and Corporate IT, that if we didn't 7 upgrade to new computers, there would be applications coming 8 -- coming, okay, if not present, that the Council offices 9 would not be able to run. 10 So, they would obviously be able to run things 11 like their group wide e-mail, that would still be able to run 12 but other applications they would not be able to run. 13 Q: Okay. 14 MADAM COMMISSIONER: Who was making complaints 15 that the computers were running too slowly? 16 THE WITNESS: Many of the Council offices. I 17 didn't receive many of the complaints myself. I received 18 some. Most of the complaints would go to the IT group within 19 Clerks itself but certainly, there were -- there was a 20 general consensus that the computers were too slow. 21 MADAM COMMISSIONER: Okay. 22 THE WITNESS: And I think any of us that have 23 gone through that system ourselves, can attest to that. I 24 just bought a new computer myself, a few weeks ago. 25 The version -- the computer that I had was

1 very similar to what Councillors have right now and the speed 2 with which the new computer that I have runs, compared to the 3 old computer and the applications I can run, are dramatically 4 different. 5 6 CONTINUED BY MS. DAINA GROSKAUFMANIS: 7 Q: I don't want to belabour this point and I 8 just want to try to understand where there is and perhaps you 9 can help me understand, the difference between, I want 10 something new because its new -- 11 A: Right. 12 Q: -- because it's flashier, it's faster, 13 versus I need something new because I can't actually do my 14 work. 15 Can you help me understand in 2000 what -- 16 what kind of change are we're looking at? 17 A: Yeah, I think the comments that we were 18 getting from the offices at that point in time were -- a lot 19 of them were around printers. There were a lot of printer 20 breakdowns and if we looked at the IT calls at that time, 21 there were many IT calls for printer breakdowns. We were 22 spending a lot of time with printers. So the printer -- the 23 printer issue was fairly straightforward. 24 The computers themselves, the complaints were 25 that -- not that I can't do my work but that -- to run the

1 applications it takes too long. It's just taking me too long 2 to do my job. 3 And then when we coupled that issue with the 4 fact that the leases were expiring at the end of the year and 5 we had to do something anyway, then the issue at that point 6 in time becomes, well, what do you do? 7 Do you continue on with what you have that 8 isn't meeting the need of the customer and see how much that 9 costs to do that or do you upgrade to something new and see 10 what that costs and what the benefits will be and that's why 11 we got into an issue of a business case. 12 Q: Okay and which is where I'm going to take 13 you now. At Paragraph 12 of your Affidavit, you indicate 14 that you asked Roger Flemming to prepare a business case and 15 that business case is at Tab 4 of our book of documents. 16 It's Document 29776. 17 Before we get into the -- the guts of that 18 business case, and I am going to ask you some questions about 19 it. I just have some questions about business cases since we 20 actually haven't seen that many yet that have been presented 21 in the course of this Inquiry. 22 When -- when do you prepare a business case? 23 A: Well, you would pre -- prepare a business 24 case for any major acquisition and certainly, this is a major 25 acquisition. At that point in time, there is now City

1 policies around business cases and there's a -- there's a 2 Corporate Project Management framework in the organization 3 right now which has project charters and business cases. So, 4 it's very formalized now. 5 Back then it wasn't formalized so it would 6 depend very much upon the Director or manage -- manager's 7 judgment at that point in time but certainly for anything 8 high profile, highly sensitive or that involves a vast amount 9 of money -- in this case it wouldn't be considered a vast 10 amount but a substantial amount of money, you would 11 definitely prepare a business case and my opinion, in th -- 12 in this one, in particular, at a minimum it was at least 13 highly sensitive -- 14 Q: Why -- 15 A: Therefore -- 16 Q: -- would you -- oh, I'm sorry. 17 A: Anything related to the Council offices, 18 in my opinion, and involves money is sensitive. 19 Q: And who would give direction to prepare a 20 business case? 21 A: In this case, either myself or the City 22 Clerk could give direction. 23 Q: And what happens to this business case? 24 Where does it go? 25 A: Well, this business case, ideally, would

1 be a backup document, if you will, to a report that might go 2 to committee or Council. 3 Q: Would the business case itself go to 4 committee or Council? 5 A: It could, as an attachment. 6 Q: Is that a usual practice? 7 A: Then? 8 Q: Yes? 9 A: Not usual. 10 Q: Is it now? 11 A: I still would say it's not usual. I would 12 say it wouldn't go as an attachment but certainly the 13 information contained in this business case would go, 14 probably in the body of the report. It wouldn't look exactly 15 like this but certainly the justification from moving from 16 one system to another or entering into a project would be 17 included in the body of the report. 18 So the financial analysis that you see here 19 would be in the body of a report that's before Council now. 20 So, in essence, it wouldn't be segregated as a business case 21 but you would see it in the body. 22 Q: Okay. When you say that there's a 23 different procedure now, that there's a Corporate Project 24 Manager and there's corporate direction on when a business 25 case has --

1 A: Right. 2 Q: -- to be prepared, when did that -- when 3 did that corporate direction start? 4 A: My best guess is it started about two (2) 5 years ago. It certainly started before I started in the 6 CAO's office, which was September of 2001. It was before 7 that. There was a project management infrastructure put in 8 place then. 9 Roughly five hundred (500) staff across the 10 organization were trained in project management as of the end 11 of 2002, and after that, Corporate Management -- Project 12 Management position reports within the Corporate Services 13 Department framework. 14 Q: When you say -- and I apologize if my 15 question is too simplistic. When you say it's project 16 management, what do you mean by that? 17 A: I mean, it's project management training 18 for anybody in the organization that's involved in project 19 management. 20 So they go on courses, they learn about 21 project management, they learn what the essential components 22 of project management are, whether they're a project charter, 23 whether they're financial analysis. Regardless -- regardless 24 of what the components are, they learn all of those -- all of 25 those components and there are project management courses

1 being introduced into the City, as well, on top of that. 2 MADAM COMMISSIONER: Do you need a project 3 management course to get computers? 4 THE WITNESS: No, I think you need a project 5 management course if you're running a large project. I think 6 you need project management experience and you certainly need 7 some background in project management. 8 MADAM COMMISSIONER: What -- I'm missing the 9 point about what you would see as being the project here? 10 THE WITNESS: For the Council computers? 11 MADAM COMMISSIONER: Yes. 12 THE WITNESS: I would see the project -- if 13 you look at the project as a whole, there's the acquisition 14 of the computers, okay? Which is, in some ways, is maybe the 15 simple part. There's taking the computers that exist within 16 the Council offices and returning them and how do you do that 17 and how -- how do you time that. 18 There's the training that is involved in any 19 new computers that come in. Are there training requirements 20 and what are they? And there's obviously all of the 21 connections that have to be made and the rollout so that you 22 don't affect service. 23 So there are a number of components. Although 24 it sounds like fairly simple and straightforward it sometimes 25 involves a few more steps than you, at first, realize.

1 MADAM COMMISSIONER: Thanks. 2 3 CONTINUED BY MS. DAINA GROSKAUFMANIS: 4 Q: And just so I understand, project 5 management is not unique to the IT sphere; is it? 6 A: No. Not at all. 7 Q: So, going back to the business case, you 8 indicated that you gave direction to Mr. Flemming to prepare 9 it? 10 A: Correct. 11 Q: And that, I think I'm accurate in saying 12 that you also then said it would be there as a back up to -- 13 a back up to a report, for example, that would go to 14 Committee or Council? 15 A: Or an attachment. We hadn't gone that far 16 yet. 17 Q: Okay. And you would also be the person 18 who would be reviewing the business case or would that be 19 somebody else? 20 A: Myself and the City Clerk and ultimately, 21 obviously, Corporate IT would review it as well. 22 Q: How did Mr. -- do you know how 23 Mr. Flemming went about preparing the business case? 24 A: Much of -- well, certainly all of the 25 numbers that are contained in the business case, which, I

1 guess, are the essential element of the business case, were 2 obtained through the Contract Management Office. 3 Q: Do you know who in the Contract Management 4 Office provided him with that data? 5 A: Not absolutely. I know he had meetings 6 with Katherine Bulko so it would have been her and/or her 7 staff. 8 Q: And I will get into -- I will get into 9 that business case and ask you some questions about it. And 10 you state in paragraph 14 that there were, essentially, three 11 (3) issues that arose -- or three (3) issues that were -- 12 that were addressed in the business case, that being the 13 length of the new lease, what was going to happen with the 14 computers when they came off lease and how the new lease was 15 going to be funded? 16 A: Right. 17 Q: Let's take each of those in turn. Let's 18 start with the length of the lease. How long -- what was the 19 term of the existing lease, the one (1) that was going to -- 20 A: Three (3) years. 21 Q: And what did you want the new term to be? 22 A: Well, it made eminent sense to me for the 23 new term to be three (3) years, for a couple of reasons. One 24 (1) I believe that the Council report had indicated three (3) 25 year leases were the norm; that was one (1).

1 And, secondly, from my own practical 2 standpoint, it makes much more sense to more into new leases 3 at the end of a Council term than in the middle. Especially 4 if there's any movement of equipment or training involved. 5 To do that in the middle of a term is problematic and to do 6 that at the end of the term is -- is somewhat easier. 7 Q: You said that a Council report indicated 8 that the norm was three (3) years? 9 A: I had recalled at the time that there was 10 a Council report that made a recommendation that the City 11 could enter into three (3) year leases for computer 12 equipment. That's what was in my mind at that time. 13 Q: Did you actually review a Council report 14 at that time? 15 A: Yes. 16 Q: And we've heard a great deal about a -- a 17 Council report that recommended entering into three (3) year 18 leases with MFP -- 19 A: Right. 20 Q: -- is that the report that you're talking 21 about? 22 A: That's right. 23 Q: You also state in paragraph 15 that a 24 three (3) year lease kept warranties up to date and kept 25 equipment in line with industry standards?

1 A: Right. 2 Q: Is three (3) years a magic number for 3 warranties or industry standards? 4 A: That information came, I believe, through 5 the Contract Management Office. It certainly was passed on 6 to me by Roger Flemming. He felt very strongly that every 7 three (3) years was a very appropriate number in terms of 8 industry standards. That technology advances so quickly that 9 within a three (3) year period you're probably at least a 10 couple of generations behind anyway. 11 And that the value of equipment after three 12 (3) years is very minimal. In terms of keeping warranties up 13 to date, I believe at that point in time that the warranty 14 did cover the three (3) year period. That was my 15 understanding. 16 Q: In paragraph 16, you say that Mr. Flemming 17 informed you that Paula Leggieri in the Contract Management 18 Office told him that all computer though must be leased for 19 five (5) years. 20 A: The Council computers. He asked the 21 question relative to the Council computers -- 22 Q: Yes -- 23 A: -- and the answer that he got was five (5) 24 years. 25 Q: And why would that have been a problem?

1 A: It wasn't a major problem to me, I mean I 2 can work around anything, but my understanding at the point 3 in time was three (3) years. 4 So, I asked Roger to go back and ask the 5 question and in fact, I e-mailed Jim Andrew at the time, 6 stating that we'd been informed it was five (5) years and 7 that, you know, I can work around five (5) years and I had a 8 couple of options for that, but that I had thought it was 9 three (3) years and could we not exercise a three (3) year 10 arrangement for the Council offices. 11 And I think he e-mailed me back to say, it 12 would be three (3) years. 13 Q: Okay. And if I could just ask you to turn 14 up the document at Tab 5, I think that's the e-mail you're 15 talking about. It's document 15514. 16 A: Right. That's right. 17 Q: How was the issue resolved? 18 A: We decided to go with three (3) years, 19 based on Jim Andrews advice, at the time and based on our 20 wishes. 21 Q: And do you have any knowledge about how 22 Mr. Andrew resolved that issue between three (3) and five (5) 23 years? 24 A: At the time, I had just assumed it was an 25 error.

1 Q: Okay. 2 A: I never really thought much about it. 3 MADAM COMMISSIONER: You assumed the five (5) 4 years was an error? 5 THE WITNESS: Yeah, at that time, I really 6 didn't think much about it, I just assumed that she said five 7 (5) years and she was incorrect, and it was three (3) years 8 and I just moved on. 9 I just didn't give it a second thought, to be 10 honest with you. 11 12 (BRIEF PAUSE) 13 14 CONTINUED BY MS. DAINA GROSKAUFMANIS: 15 Q: Okay. Let's go to the second area that 16 you said was addressed in your business case, that being the 17 end of lease options. 18 In paragraph -- actually why don't we turn to 19 the business case, which is at Tab 4, it's document 29776. 20 At the fourth page of that business case, which is document 21 29779, about mid-way down the page, there's a heading that 22 says, options. 23 The first option being, do nothing. The 24 second option being, buy out the existing lease. The third 25 option being, continue leasing on current equipment. And the

1 fourth being, lease new equipment through the Contract 2 Management Office, under the corporate refresh program. 3 I'm just going to ask you a little bit about 4 each of those. 5 A: Sure. 6 Q: Do nothing, that seems pretty self 7 evident? 8 A: That's a simple one (1), yes. 9 Q: Is that really an option? 10 A: No, but has to be -- somebody would ask 11 the question, so it would have to be on the list. 12 Q: Because the leases expire and you've got 13 to make -- you have to something about it? 14 A: You have to make a decision, right. 15 Q: Okay. The second option being buy out the 16 existing lease. What's meant by that? 17 A: That would mean at the end of the lease, 18 we could buy the computers off of MFP for a certain amount of 19 money. And the option was to do that and then you would -- 20 you would continue on with those existing computers for 21 whatever period of time Council deemed appropriate. 22 Q: And why was -- what were the advantages or 23 the disadvantages of that option? 24 A: Well, the disadvantage is, as we spoke 25 earlier, would be not keeping up with current technology.

1 That's the obvious disadvantage. 2 The advantage is, obviously that it's less 3 expensive. But again, you don't have current technology. 4 And when we took a look at the actual cost to buy out the 5 current -- the old equipment, we thought that it was 6 prohibitive relative to what we would be getting, that it 7 wouldn't be worth doing that. 8 And I think you'll see some of the Councillors 9 when they looked at buying some of the equipment for 10 themselves, decided that that -- the value of buying the 11 computers was too much for them and they decided not to. 12 I think Councillor Balkissoon, the Chair of 13 Audit Committee, said that in his testimony, that he looked 14 at buying it and he thought it was too expensive, so he 15 decided not to. And we agreed. We didn't think it was a 16 good option. 17 Q: All right. The third option, continue 18 existing lease on current equipment. What does that mean? 19 A: We could lease, as an example, we could 20 extend the lease for an extra year. And maybe we would feel 21 that four (4) years or five (5) years is more appropriate, 22 and then we can move up the current technology at that point 23 in time. 24 We could obviously do that, but if I remember 25 correctly, to continue the lease for one (1) more year, I

1 think was about 81 percent of the cost of leasing new 2 equipment. So, when we looked at carrying on old equipment 3 to save 19 percent, we didn't think that that was a good 4 option. 5 Q: And the fourth option being lease new 6 equipment through the Contract Management under the corporate 7 refresh program? 8 A: That's correct. That's sort of the 9 obvious one. The computers go back and new computers come 10 in. 11 Q: What is the corporate refresh program? 12 A: Corporate refresh program, at that time, 13 was a sum of money that was sitting in a non-program account 14 to lease computer equipment and that computer equipment would 15 be refreshed, if you will, or upgraded, however you want to 16 call it, with new equipment on a cyclical basis. 17 And my understanding at that time of the 18 cyclical basis based on the Council report was a three (3) 19 year turnaround time. 20 Q: What do you -- let me ask you that in some 21 different pieces. What is a non-program account? 22 A: A non-program account is an account within 23 the overall City budget that isn't attributed to a single 24 department. 25 Q: Can you give me another example just so I

1 can understand what that might mean? 2 A: Well, it would be any -- if I can explain, 3 I guess, a little bit better. It would be any account that 4 -- where you would want to have a single manager or a single 5 department oversee the entire expense but the expense is 6 really attributed out to different departments. 7 So you want to have single control, single -- 8 single management of the expense, so you have corporate 9 standards for IT, for instance, you want to make sure the 10 whole organization follows the same corporate standard. 11 So if you send that money out to various 12 departments, it's a bit more difficult to maintain a 13 corporate standard when departments have control over their 14 own expenditures and what they acquire. 15 If you put it in a non-program account, you 16 can assign the responsibility to an individual, even though 17 the actual expense and the asset is attributed to different 18 departments. If that explains it better. 19 Q: And who would manage a non-program 20 account? 21 A: Well, it would depend on who the lead is. 22 In this case, obviously, it would be Corporate IT. 23 Q: And when you say that the Corporate IT 24 would manage the account, what would be the responsibility to 25 Corporate IT?

1 A: Responsibilities of Corporate IT, if I 2 used the Council computers as an example, would be that we 3 would put in a requisition to Corporate IT in terms of what 4 we required. Corporate IT would make sure that we got the 5 appropriate equipment, would let us know how much the 6 equipment is going to cost and would make sure that the 7 approvals were in place or tell us what -- what needs to be 8 done. 9 Q: What about keeping track of how much money 10 was being spent out of this non-program account? Who did 11 that? 12 A: That would be done by whoever managed the 13 entire account. I can't give you the who but obviously 14 within Corporate IT they would have to manage what was -- 15 what they were spending out of that account. 16 A department couldn't manage what they were 17 spending out of that account because they would -- they would 18 understand what they were spending relative to their own 19 department, assuming they had that information, but they 20 wouldn't know the corporate picture. 21 Q: And what would be the interaction or the 22 relationship between, let's say in this case, Corporate IT 23 and the Department of Finance? 24 A: Well, Finance -- I -- my -- this is an 25 assumption on my behalf. I assume that Finance would give

1 them the financial reports at the end of each month and they 2 would analyse how much had been spent out of the total 3 account. That's an assumption. 4 Q: Okay. 5 A: It's certainly what happens with my 6 budget. 7 Q: You also said that it was a pool of money 8 that was set aside in the -- in the non-program account? 9 A: Right. 10 Q: Do you know how much money? 11 A: No. At that time, no. 12 Q: Do you know wh -- which Information 13 Technology staff told you about the corporate refresh 14 program? 15 A: The corporate refresh program was a term 16 that was used by a number of -- a number of IT staff. 17 Certainly Jim Andrew used it. I remember him using it, sure. 18 If you're talking about where I heard it, I heard it from Jim 19 Andrew. 20 Q: I -- I'm going to get into a little bit 21 more into this when we -- when we deal with Budget. 22 A: Yeah. 23 Q: I'd just like to -- I'd like to finish up 24 this stuff -- 25 A: Right.

1 Q: -- about the end of lease options. 2 A: Right. 3 Q: We'll get into the budget a little bit 4 more. 5 You state in Paragraph 22 that you were not 6 presented with an opportunity to use a leasing company other 7 than MFP or that you had any option to negotiate the lease 8 rate and that the CMO simply provided you those rates? 9 A: That's correct. 10 Q: You -- you mentioned before about the cost 11 associated with each of the end of lease options and I think 12 -- I probably should have taken you to it at the time. 13 If I could ask you to turn back to Tab 4, that 14 being the business case, and to go to the seventh page in 15 that report. It's document 29782. 16 17 (BRIEF PAUSE) 18 19 Q: This being a heading "Cost Comparisons, 20 Lease Costs and Total Costs with the same four (4) options 21 outlined. Number one (1) being do nothing. Number two (2) 22 buy existing equipment outright. Number three (3) continue 23 existing lease for another year and option four (4) being to 24 -- a new three (3) year lease? 25 A: Right.

1 Q: The first table on that page, in the 2 middle of the page, appears to indicate the costs of -- of 3 those three (3) options. 4 A: Correct. 5 Q: The do nothing one (1) is actually not 6 applicable. As you said, it wasn't really an option at all? 7 A: Right. 8 Q: Option two (2), to buy the existing 9 equipment, was three hundred and eight thousand, seventy-five 10 dollars ($308, 075)? 11 A: Correct. 12 Q: And you would have paid that out and you 13 would have owned it at the end outright? 14 A: Right. Yeah. 15 Q: Option three (3) which is to -- to 16 continue the existing lease for another year is two hundred 17 and ninety-six thousand, two hundred and seven dollars 18 ($296,207)? 19 A: Correct. That's right. 20 Q: And it's actually the cheapest of the 21 three (3) real options; right? 22 A: Correct. 23 Q: And the third being option four (4) to 24 enter into a new lease at three hundred and sixty-seven 25 thousand, eight hundred and eighteen dollars ($367,818)?

1 A: Correct. 2 Q: Can I just understand, option four (4), 3 where it says three sixty-seven eight eighteen (367,818) is 4 that the total cost or is that the cost on some other -- for 5 some other term? 6 A: That's the annual lease cost. 7 Q: So each of the numbers in -- for options 8 two (2), three (3) and four (4) are what they would cost on 9 an annual -- what they would cost on an annual basis? 10 A: Well, except for the purchase, of course. 11 That's a one (1) time. 12 Q: So it's -- yes. That's what I meant. 13 A: Right. 14 Q: And then option three (3) being -- that 15 would be the cost of extending for one (1) year? 16 A: Right. 17 Q: And Option four (4) being -- that would be 18 the cost of a new lease payment for one (1) year? 19 A: Correct. 20 Q: And just to be clear, you were actually 21 recommending the most expensive option? 22 A: That's correct. 23 Q: For the reasons that you've already -- 24 A: Right. 25 Q: -- expressed to us, why you thought it

1 made sense? 2 A: That's right. 3 Q: Okay. Sir, did you -- did you review 4 these rates when you -- did you look at the -- you looked at 5 the business case? 6 A: Of course, yeah. 7 Q: Yes. Did you review these rates? 8 A: To what -- in what sense? 9 Q: Did you -- did you -- or did you direct 10 anyone to perform any financial analysis for these rates? 11 A: No. 12 Q: Where did the numbers come from? 13 A: The numbers came from the Contract 14 Management Office. 15 Q: And you say in paragraph 23 that you had 16 recently purchased -- 17 MADAM COMMISSIONER: Just before you go there. 18 MS. DAINA GROSKAUFMANIS: Yes. 19 MADAM COMMISSIONER: The numbers came from 20 the -- 21 THE WITNESS: The Contract Management Office. 22 MADAM COMMISSIONER: No. I understand that. 23 I'm well aware of that -- that one for now. Option two (2) 24 has an asterisk beside it. 308,075 asterisk. It's at page 25 29782.

1 THE WITNESS: Yeah. That's right. 2 MADAM COMMISSIONER: And who would have put 3 down the information that came below the asterisk, 4 "One time cost for obsolete equipment"? 5 THE WITNESS: I'm not 100 percent certain but 6 I'm relatively sure that would be Roger Flemming. 7 MADAM COMMISSIONER: Okay. Thanks. 8 9 CONTINUED BY MS. DAINA GROSKAUFMANIS: 10 Q: In paragraph 23 of your Affidavit, you 11 state that you had recently purchased a desk top computer for 12 your own home use and in reviewing the business case you 13 noted to the City Clerk, Novina Wong, that the cost of 14 leasing seemed quite high compared to the purchase price for 15 the new computers? 16 A: Correct. 17 Q: Do you recall having that discussion with 18 her? 19 A: Absolutely. 20 Q: Under what circumstances did you -- did 21 you have that discussion? 22 A: Well, when we got the business case we 23 were looking at the options and I'm a believer, in general, 24 of buying versus leasing or renting or anything else anyway, 25 that's just my own personal financial opinion. And when I

1 compared -- not to say that the financial cost of leasing it 2 was too high compared to other costs of leasing if you 3 compared it to other -- other vendors, I wasn't suggesting 4 that. But what I was suggesting was, in my mind, it would be 5 a better option to purchase outright new equipment. 6 Q: And when you -- when you said that, had 7 you -- had you looked into or were you aware of any of the 8 other costs that were associated with owning computer 9 equipment, for example, disposal costs? 10 A: Absolutely. 11 Q: But you didn't know -- this was -- you did 12 no financial analysis to actually determine whether buying 13 was a better option than leasing? 14 A: No. I just wanted it examined. 15 Q: What do you mean when you just wanted it 16 examined? 17 A: I would like to -- I wanted to put it 18 forward as an option. 19 Q: To purchase? 20 A: Right. 21 Q: But it's not listed as an option? 22 A: Right. And it's not listed as an option 23 because we were advised that there was no option, because the 24 report that went to Council recommended that all computer 25 equipment for the corporation be leased for three (3) years.

1 So, we were told that there was no option to 2 do anything other than lease. And we went back on that a 3 couple of times and we were told that a couple of times. 4 Q: When you say, you went back on it, who did 5 you go back on it to? 6 A: Roger Flemming went back to the Contract 7 Management Office, twice on the matter, at least, that I'm 8 aware of. 9 Q: Do you know with whom he spoke? 10 A: Kathryn Bulko. 11 Q: And, sir, I think you've already answered 12 it, but I just want to be clear. You yourself reviewed that 13 Council report that you now state said that all computer 14 equipment had to be leased? 15 A: Right. 16 Q: And that was your understanding, as well? 17 A: That's how I read that first 18 recommendation. 19 Q: Sir, when you reviewed that report, did 20 you understand that there was any dollar limit to the amount 21 of equipment that could be leased? 22 A: $43 million is how I read it for the 23 corporation. 24 Q: Would the lease request you were making, 25 did it fit into that $43 million?

1 A: My assumption would be that it would, that 2 that would be tagged on, if we were leasing equipment and the 3 authority I was given was that report, then obviously the 4 Contract Management Office would have to track the cost of 5 the Council computers against the $43 million. 6 Q: Did you ever make any specific inquiries 7 about whether the request you were making for Councillors 8 computers fit in with that $43 million? 9 A: That was my thought process in the 10 beginning, but as you -- as you -- as you're aware with some 11 of the e-mails that went back and forth, I was told fairly 12 early on, certainly before we incurred any expenses, that it 13 would be paid for out of the Council budget. 14 And once I was told that it would be funded 15 and paid for out of the Council budget, then the $43 million 16 became irrelevant. 17 Q: That brings us into some budget 18 discussions, so I want to hold those thoughts and I want to 19 explore that a bit more. 20 You certainly have said that the plan was to 21 replace those computers through a corporate refresh strategy? 22 A: Correct. 23 Q: Is that different than when you said it 24 was through the Councillor's -- through the Councillor's 25 budget? I'm not sure I understand what you meant when you

1 said that? 2 A: I don't think it's any different. My 3 understanding at the time was that there was a corporate 4 refresh strategy and that computers would be replaced on a 5 cyclical basis every three (3) years; that's one (1) issue. 6 A separate issue obviously would be where is 7 it paid from. I understood that there was a $43 million sum 8 of money to pay for corporate computers. 9 The advice I was given at that time, was to 10 set money aside within the Council budget to pay for it. So, 11 they're two (2) separate issues. 12 One (1) is a corporate refresh issue, how 13 often do you replace computers and how do you replace them, 14 do you lease, do you buy? And the second issue is where do 15 you pay for it. 16 Q: I'm sorry, Mr. Hart, I don't mean to be -- 17 I don't mean to -- but I just want to make sure I understand 18 this. 19 I get what you're saying about there was a 20 corporate refresh strategy that talked about frequently 21 computers had to be refreshed. 22 A: Right. 23 Q: You also said there was a pool of money 24 that was set aside to do this? 25 A: Correct.

1 Q: You then said you'd also have to set aside 2 money in the Councillor's budget? 3 A: Right. 4 Q: Okay. How does that setting aside money 5 in the Councillor's budget fit into the $43 million? 6 A: Okay. If you look at the trail of 7 discussions going back to, I think, around June 30th, if I 8 remember correctly or June of 2000 anyway, the City Clerk was 9 advised by finance, that there was funding available within 10 the corporate account for that. 11 I would assume the corporate account would 12 mean the $43 million. Then there were -- there were 13 conversations or e-mails back and forth for the next few 14 months, I believe, until probably about October, before the 15 final decision, was to fund it out of the Council budget. 16 So, we were originally advised that there was 17 money within the corporate account, which was my 18 understanding all along because obviously that's where it had 19 been paid for the last three (3) years because the first 20 three (3) years with Council, the first three (3) years of 21 the term, there were no monies within the Council budget. 22 So, obviously, they were paid out of a 23 corporate budget. So, my understanding was that it would 24 carry on. The decision at the end of the day was, that no, 25 that wouldn't carry on, that funding would be within the

1 Council budget. 2 Q: Let me take you to some of those 3 documents, just to make sure then that I, sort of, have the 4 string of how this worked. 5 If I could ask you to turn up the document at 6 Tab 6, it's document 15533. 7 A: Correct. 8 Q: And this is an e-mail from Al Shultz to 9 you dated Monday, September the 18th, 2000, where Mr. Shultz 10 writes: 11 "Your memo of September 14, 2000 refers to 12 the corporate refresh program. I am not 13 aware of any such program. During the 14 first term of Council, alternate financing 15 was arranged for Councillor's computer 16 leases. I'm not sure that alternate 17 computers -- I'm not sure that alternate 18 sources are to be used on an ongoing basis 19 and therefore the lease cost should be 20 budgeted within the Council budget." 21 Is this -- is this what you were referring to 22 when you said that issues arose about funding? 23 A: That's one of the string of e-mails, yes. 24 Q: If I could then ask you to turn to the 25 document at Tab 7. It's Document 15532.

1 MADAM COMMISSIONER: It didn't sound like you 2 were too happy about this turn of events, Mr. Hart? 3 THE WITNESS: Well, my main concern then, I 4 had a number of things to get ready for the upcoming Council. 5 We had a number of projects. This was just one of -- one of 6 very many and my main concern was to get computers into the 7 offices and I just wanted an answer one way or another on the 8 funding. I wasn't particularly concerned what the answer 9 was, I just wanted to move forward. 10 MADAM COMMISSIONER: Okay. So it didn't 11 effect your budget particularly? 12 THE WITNESS: It wouldn't -- at the end of the 13 day, if I had to put it in the Council budget, then I would 14 have to justify it before Council and if that was the 15 decision, I was prepared to do that but I needed a decision. 16 MADAM COMMISSIONER: Okay. 17 18 CONTINUED BY MS. DAINA GROSKAUFMANIS: 19 Q: The document at Tab 7, 15532, is from you 20 to Mr. Andew -- Mr. Andrew, where it appears that you have 21 forwarded an e-mail from Mr. Shultz indicating that funds are 22 not available for the Councillor's computers and that he's 23 not aware of any corporate refresh program. 24 You state in the second paragraph of th -- of 25 your e-mail:

1 "Given that we have already informed 2 Councillor Berardinetti that Finance has 3 advised that funds are available for this 4 purpose, how do you propose that we should 5 proceed?" 6 And if you turn to the document at Tab 8, 7 13786. Mr. Andrew appears to reply to you: 8 "This is a change. I think we will need to 9 talk to Wanda. I wish had achieved the 10 voice-mail." 11 A: He means archived. 12 Q: Okay. 13 14 (BRIEF PAUSE) 15 16 Q: Let me ask you a few questions. When you 17 say that you had already informed Councillor Berardinetti 18 that Finance has advised that funds are available, why did 19 you -- why had you informed Councillor Berardinetti? 20 A: Well, Councillor Berardinetti was the 21 Chair of the Admin Committee. This was a matter that would 22 be within his purview and I always keep a Chair of any 23 committee that's within their purview -- if there's an item 24 within their purview, up to date on what's happening. It's 25 as simple as that.

1 Q: Okay. And is this a matter of -- is this 2 a formal practice that you have or is this just one of those 3 things where you like to -- is this formalized in any way? 4 Did you have to do this or is it something -- one of those 5 things you just do because you do? 6 A: It's something I do. 7 Q: Let me turn you to the document that's at 8 Tab 9. It's Document 15535. 9 10 (BRIEF PAUSE) 11 12 Q: Halfway down the page is an e-mail from 13 Novina Wong, the City Clerk, and it appears to Mr. -- to Al 14 Shultz, copied to Mr. Andrew, Mr. Brittain, and copied to 15 you. I -- I don't intend to go through the e-mail because I 16 -- I take it this e-mail explains the situation that you've 17 already described to us? 18 A: Correct. 19 Q: That there was an understanding that there 20 would be money as apart of a corporate refresh strategy and 21 now there was some question about whether money was 22 available? 23 A: That's right. 24 Q: And, in fact, in the first paragraph in 25 the second-to-last sentence that begins with the word

1 "because": 2 "Because the initial three (3) year 3 contract was funded through Finance, both 4 Jim Andrew and I were given to understand 5 that Finance -- from Finance that the 6 replacements could, again, be funded 7 through a corporate account. In fact, you 8 called me on June 30th to confirm that 9 funds are available in an account called 10 Corporate Finance." 11 And I take it that's what you meant when those 12 discussions started in the summer of 2000? 13 A: That's correct. 14 Q: Were those discussions with you or those 15 discussions with Ms. Wong? Do you know? 16 A: Ms. Wong. 17 Q: Okay. Let me just -- let me just try to 18 understand how -- how this would affect your budget and how 19 this would affect the authority that was given by Council 20 before we get to how this situation was eventually resolved. 21 There was -- you understood there was 22 $43 million that was set aside as part of the corporate 23 refresh strategy; that's correct? 24 A: Correct. 25 Q: And how you were going to have to try to

1 find it in the Council budget; correct? 2 A: Not find it, put it in the Council budget. 3 Q: Put it in the Council budget. If you were 4 going to have to put it in the Council budget, does that mean 5 that the $43 million was -- what's that -- how did that 6 relate to the forty-three (43)? Does that mean the $43 7 million is exhausted or that it's not available or what does 8 it mean? 9 A: It means, to me, that it's not available 10 for this particular initiative. That's what it means. It 11 doesn't mean it's exhausted. 12 Q: Did you understand why it would not be 13 available for this particular initiative? 14 A: No. 15 Q: And if you had had to put it in your 16 Council budget, would that trigger any other obligations on 17 you, for example, reporting obligations? 18 A: In my mind, it would be, obviously, better 19 to report it out. That's why I drafted a report to Admin 20 Committee. That was my feeling that it would be better. 21 But I was given to understand that the 22 Corporate Refresh Program and the Council authority for the 23 three (3) years covered the authority to acquire the 24 equipment but I still had -- I wasn't concerned, at this 25 point in time, with the authority to acquire equipment

1 generally, if the three (3) year authority carried the day. 2 I was concerned, at this point in time, with 3 regard to the financing and the funding for which I had no 4 authority. And I wanted to get authority before, obviously, 5 before I had acquired the equipment. 6 Q: I'm going to get into that reporting out 7 requirement in a bit more and I apologize then for jumping 8 ahead. 9 Once there arose an issue with respect to how 10 this -- how this acquisition of Councillors' computers was 11 going to be funded, how did -- what were the next steps? How 12 did you try to resolve this issue? 13 A: Well, we had a number of conversations 14 back and forth. And I think, at the end of the day, there 15 was a meeting that the Clerk had with the CFO, with Jim 16 Andrew and couple of others, I believe, to discuss the range 17 of issues and at that meeting it was decided that it would be 18 paid for out of the Council budget. 19 And at the meeting I was directed to put 20 monies in for 2001 for the Council budget and there was some 21 minor expenses for the year 2000, because the term of Council 22 started December 1st, 2000 so there was some minor expenses 23 and we had sufficient funds within the Council budget -- we 24 were sufficiently underspent to be able to cover those 25 expenses. So I didn't have to acquire money for that.

1 So I took care of that within the existing 2 budget. And that for 2001 budget, that that would be taken 3 care of two (2) ways. One (1), I would put it in the Council 4 budget submission and two (2), the CFO would ensure that it 5 was addressed as part of the budget process. 6 Q: How does that -- that kind of a decision 7 affect the corporate refresh strategy and the $43 million 8 that was set aside for that -- or that you understood was set 9 aside for that? 10 A: Well, I understood, at that point in time, 11 that it didn't affect the 43 million at all because the 43 12 million was still set aside and this would be new monies that 13 would be approved, presumably approved by Council on top of 14 the 43 million. 15 Q: If I could ask you to turn up the 16 documents that's at Tab 11. It's document 13153. This is an 17 e-mail from Novina Wong to you? 18 A: Right. 19 Q: On October the 23rd, 2000, and also copied 20 to Joan Anderton, Jim Andrew, Wanda Liczyk and Al Shultz. 21 And she appears to be confirming a meeting that took place 22 with Mr. Andrew, Mr. Flemming, Ms. Bulko and Ms. Liczyk. 23 And I take it outlining exactly what you've 24 just told us about how these monies are now going to -- the 25 monies for the Councillors' computers are now going to be

1 part of the Council budget in 2001? 2 A: That's correct. 3 Q: Sir, did you -- I want to go back now to 4 that issue about reporting out. You now know it's going to 5 have to go into your Council -- into the budget that you 6 present to Council for the Councillors' offices; right? 7 A: Correct. 8 Q: When it goes into a budget, that's 9 spending authority, right? 10 A: That's correct. 11 Q: What about Council authority to actually 12 acquire these computers, on lease? 13 A: The Council authority to actually acquire 14 these computers on lease, we were advised was covered by the 15 report that was already adopted by Council. 16 Q: At Tab 32 though, you state that you -- 17 that you'd believed you would also have to get approval from 18 City Council to renew the lease and that you would -- 19 MADAM COMMISSIONER: -- Tab 32? 20 MS. DAINA GROSKAUFMANIS: -- I'm -- I'm sorry. 21 Paragraph 32. I apologize. 22 23 CONTINUED BY MS. DAINA GROSKAUFMANIS: 24 Q: You do state that you also believed 25 though, that you would have to get approval from City Council

1 to renew the lease, and that you asked Mr. Flemming to 2 prepare a report to the Administrative Committee, which is at 3 Tab 12, and again Madam Commissioner, there was no document 4 number at the time. It's document 56782, entitled, Leasing 5 of Computer Equipment and Software for the new term of 6 Council? 7 A: Correct. 8 Q: Couple of things here; the date of that, a 9 report, is June the 28th, 2000. The meeting with -- between 10 Mr. Andrew, and Ms. Liczyk, and Ms. Wong, and Mr. Flemming, 11 and Ms. Bulko, took place in October, 2000? 12 A: Correct. 13 Q: So this report was prepared before the -- 14 the corporate; the issue about monies in corporate refresh 15 were, ever an issue? 16 A: Correct. 17 Q: Why were you preparing this report in June 18 of 2000? 19 A: Because in June, that was about the time 20 that we were discussing the financing, and the issue of 21 moving forward, and the fact that we needed new computers. 22 So at that point in time it was my sense that we needed a 23 report to Council through the Administration Committee, and 24 that's why I asked Roger to draft a report at that point in 25 time.

1 And we had that draft, and we kept that draft 2 on file until we had all of the issues, particularly around 3 financing, sorted out. Because when we drafted this report 4 it was based on a number of assumptions but we didn't know 5 the answer when we were drafting this report. 6 We didn't know the issue about financing, what 7 was going to be decided, because at that point in time we 8 were still, as you recall, getting information that was in a 9 Corporate account, or it wasn't in a Corporate account. 10 Q: Okay. If -- If we could just turn to that 11 report for a second? The one that's at Tab 12? On the 12 second page of that report, under the heading, Background? 13 The first paragraph states: 14 "On July the 27th, 28th, 29th, and 15 30th, 1999, Council adopted, as amended, 16 Clause number 11 at Report No.4, the Policy 17 and Finance Committee, Entitled Leasing of 18 Computer Equipment and Software, 19 Information and Technology Products and 20 Services, which recommended the leasing of 21 all equipment within the Corporation." 22 We've heard a great deal about that report at 23 this inquiry. It goes on to state that: 24 "All computer equipment for Council will be 25 leased through the Corporate Services

1 Contract Management office, and its funding 2 requests reflects current pricing provided 3 by the CMO." 4 I'm just trying to understand. This was a 5 report about the -- the report that you proposed to send to 6 the Administration Committee, what authority did -- did you 7 think you were going to get from the Administration 8 Committee? 9 A: Okay. At this point in time, keep in mind 10 that I didn't know where the funding was for sure. So I 11 didn't know if it was in a Corporate account, or if it was 12 going to be in a Council account. 13 If it -- if the $43 million report authority 14 held up at the end of the day, and if I was advised that the 15 $43 million covered the Council computers, and the authority 16 covered acquisition of Council computers, then I wouldn't of 17 submitted this report at all because the authority would be 18 covered in the -- the other report. 19 So I had this report drafted with the 20 assumption of a worse case scenario, that I was told that 21 funding was not available in the $43 million. Then, what I 22 was really concerned about was the funding issue, more than 23 the authority, but I could reference the authority in this 24 report, and then Council could say yes, that authority 25 applies, or it doesn't apply.

1 That way I'm covered both on the funding 2 issue, and the authority issue by referencing the previous 3 authority; and then if it came up that -- that authority did 4 not apply, obviously, then I would know at that point in 5 time. But I had no reason at that time, to believe that the 6 authority didn't apply because that's what I was advised. 7 Q: Okay. Let -- let me make sure of got this 8 straight? 9 A: Okay. 10 Q: It was your assumption when you draft -- 11 when you had Mr. Flemming draft this report, in June of 2000, 12 that Council in July of 1999, had authorized leasing of all 13 computer hardware and software for the Corporation? 14 A: That's what we were advised, yes. 15 Q: You were further -- you further understood 16 that the cost -- that there was $43 million in spending 17 authority set aside for the leasing of all hardware and 18 software in that same July 1999 report, right? 19 A: Correct. 20 Q: You drafted or had Mr. Flemming draft this 21 June 2000 report, almost as -- as a backstop or as a -- 22 A: To be prepared. 23 Q: To be prepared in the event that you 24 couldn't -- there wasn't enough money or you somehow couldn't 25 access that $43 million that was authorized?

1 A: Correct, because at that point in time I 2 felt I would need authority if that was the case. 3 Q: But you did not draft this report for the 4 purposes of authorizing entering into the leasing agreement, 5 because that was already authorized? 6 A: Absolutely. 7 Q: Am I missing anything? 8 A: No. 9 Q: Okay. In Paragraph 35 you state that it w 10 -- came -- when it came time to finalize the report, you were 11 advised by Mr. Flemming that Mr. Andrew told Mr. Flemming and 12 the City Clerk, Ms. Wong, that the report to the 13 Administration Committee did not, in fact, need to go to the 14 Committee at all; that there had been a -- that at the July 15 1999 meeting, Council had approved a corporate refresh 16 strategy and the leasing program so the -- the -- there was 17 no need for such a report. 18 A: Correct. 19 Q: Okay. Thank you. Do you know when those 20 discussions took place? 21 A: I'm not positive. 22 Q: And have you asked Mr. Flemming when those 23 discussions took place? 24 A: Yes. 25 Q: Does he have any recollection?

1 A: He just recalls that it was during a golf 2 tour -- a major golf tournament, because he remembers Jim 3 Andrew talking about a major golf tournament that was on TV 4 on the weekend but he can't remember which one. 5 Q: Okay. Not -- 6 A: Sorry. 7 Q: It's okay. 8 A: That's the best I can do. 9 Q: Do you know whether it was before or after 10 -- you can put it before or after the discussions about -- 11 the budget discussions that were taking place in the fall of 12 2000, and where the money was going to be found? 13 A: It would have to be somewhere around that 14 time but I -- I couldn't pin it down for you, sorry. 15 16 (BRIEF PAUSE) 17 18 Q: So once it was -- I just want to 19 understand, you have this -- you have this report prepared in 20 June 2000 just to be ready? 21 A: Right. 22 Q: In October 2000 you have discussions with 23 Ms. Liczyk and others and its agreed that you're going to put 24 the funding for the Councillors' computers in the Council 25 budget for 2001, right?

1 A: Almost. I didn't have discussions but 2 that's right. 3 Q: That's right. It -- 4 A: Yes. 5 Q: That was -- but that was the agreement -- 6 A: Right. 7 Q: -- as you understand it? 8 A: That's right. 9 Q: So why don't you have to submit the 10 report? Why doesn't the report have to go to the Admin 11 Committee? 12 A: Because we're advised at that -- at that 13 meeting that the CFO will ensure that it's presented through 14 the Council and through the budget process as part of the 15 Council budget and that the funding portion of it will be 16 approved through that mechanism. 17 Q: So the funding for the Councillors' 18 computers is -- it will be authorized? 19 A: Right. Well, presume -- assuming that 20 Council approves it, yes. 21 Q: Okay. And it wouldn't be part of that $43 22 million that was authorized in 1999? 23 A: Correct. 24 Q: It is authorized through some other 25 mechanism?

1 A: Right. 2 Q: Okay. In Paragraph 36 and 37, you -- you 3 respond to Mr. Andrew's statement that this ma -- that this 4 report did not, in fact, have to go to the Administration 5 Committee and you state that you were perplexed by it and 6 that you, in fact, filed the report and kept Mr. Andrew's 7 instructions as a note on the report. 8 And I -- I -- that's the -- the handwritten 9 note very faint that precedes this and I -- I apologize, 10 Madam Commissioner, I expect this report -- this note may be 11 in our document database but I couldn't locate the number. 12 I'm not -- I'm not sure if it is. 13 MADAM COMMISSIONER: Do we know what it says? 14 MS. DAINA GROSKAUFMANIS: Yes. 15 THE WITNESS: I know what it says. 16 MADAM COMMISSIONER: You know what it says? 17 All right. Could you tell us what it says? 18 MS. DAINA GROSKAUFMANIS: It's the -- oh. 19 MADAM COMMISSIONER: Tab 12? 20 MS. DAINA GROSKAUFMANIS: Tab 12. The first 21 page of Tab 12. 22 THE WITNESS: Well, this -- 23 MADAM COMMISSIONER: It looks like a blank 24 page. For those of us over a certain age. Okay. Mr. Hart 25 can you read it?

1 THE WITNESS: Yes. I can still read my copy. 2 It says: 3 "Did not go to committee per Jim Andrew" 4 Per or re actually. It might say re. I think 5 it says "re". 6 7 CONTINUED BY MS. DAINA GROSKAUFMANIS: 8 Q: I'm trying to understand why you found it 9 perplexing and why you kept the report? 10 A: Well, because the only authority that was 11 around that I could see was the 43 million authority and 12 three (3) year leasing; okay? So, to me, that's a stand- 13 alone authority that one (1) can acquire computers. You have 14 the funding approved and you have the three (3) year term 15 approved. 16 My opinion was that if you go outside of that, 17 in other words, if the funding isn't part of whatever you're 18 doing or if it's something other than a three (3) year lease, 19 then that authority doesn't stand. And that was my opinion. 20 Q: But in this case, you were entering into 21 three (3) year leases -- 22 A: Right. 23 Q: -- so that wasn't a problem? 24 A: So that -- so that part of the authority 25 could carry.

1 Q: But the forty-three (43), I thought you 2 said that this was going to be something that came out of the 3 Councillors' budget for 2001? 4 A: Right. 5 Q: So why would -- and Ms. Liczyk represented 6 that that would be part of the 2001 budget process? 7 A: Right. 8 Q: Why would that not be a spending 9 authority? 10 A: Well, my concern was that we obviously had 11 to acquire equipment in December of 2000, because that's when 12 the Council term started. So we're acquiring equipment and 13 we're seeking Council authority for the spending within the 14 budget process for 2001. 15 So you're getting spending authority for the 16 equipment after you acquire it. 17 Q: Okay. And I take -- so you end up 18 entering into a new lease for Councillors' computers? 19 A: Right. 20 Q: That's being lease 838-10? 21 A: Yeah. 22 Q: And you go on, in paragraph 38, to say: 23 "Most of the computers that were leased 24 under the old Councillors' computer lease, 25 784, were in fact returned to MFP"?

1 A: Correct. 2 Q: Again, Madam Commissioner, the documents 3 that are attached; 13, 14, 15, 16, 17, 18, 19 and 20, did not 4 have document numbers at the time. 5 I can read those into the record now or I can 6 simply send an e-mail to all counsel with those document 7 numbers. 8 MADAM COMMISSIONER: Why don't you read them 9 into the -- are they very long. 10 MS. DAINA GROSKAUFMANIS: No. They're not. 11 There's six (6) of them. 12 MADAM COMMISSIONER: Okay. 13 MS. DAINA GROSKAUFMANIS: All right. At 14 Tab 13 the first document is document -- it's very -- looks 15 like an e-mail from John Mergalia to Lalit Sharma. It's 16 document 056801. 17 The e-mail at the following page from R. 18 Wickett to J. Mergalia is 56802. And then there is a chart, 19 it is 56803. At Tab 14, the first e-mail from Mr. Mergalia 20 to -- 21 MADAM COMMISSIONER: Just the chart is two (2) 22 pages, are they both 56803? 23 MS. DAINA GROSKAUFMANIS: No. The way that 24 our document database would go is the next one would be the 25 next consecutive number.

1 MADAM COMMISSIONER: So that would be 56804? 2 MS. DAINA GROSKAUFMANIS: It would, in fact, 3 be 04. But you find it by looking at 03. 4 MADAM COMMISSIONER: I see. Right. Okay. 5 Tab 14. 6 MS. DAINA GROSKAUFMANIS: At Tab 14 the first 7 e-mail from Mr. Mergalia to Lalit Sharma is 56805. 8 MADAM COMMISSIONER: Just for the -- we have - 9 - do you have the spelling of that, you're okay? Okay. 10 MS. DAINA GROSKAUFMANIS: And then the 11 following e-mail -- the following page is another e-mail from 12 Mr. Mergalia to R. Wickett. It's document 56806. The chart 13 that follows is 56807. 14 At Tab 15, I think you're seeing a pattern 15 here, Mr. Mergalia to Ms. Sharma is 56809. The e-mail from 16 Mr. Mergalia to Ms. Wickett is 56810. And the chart is 17 56811. 18 At Tab 16, the first e-mail is 56813. The 19 second e-mail is 56814. The chart is 56815. At Tab 17 the 20 e-mail is 56817. The second e-mail is 56818 and the one (1) 21 page chart is 56819. 22 At Tab 18 the first e-mail is 56820. The 23 second e-mail is 56821 and the one (1) page chart is 56822. 24 At Tab 19, the first e-mail is 56823, the second e-mail is 25 56824, the chart is 56825 and the document at Tab 20, which

1 is a thirteen (13) page chart, is 56788. 2 MADAM COMMISSIONER: Okay. Thank you. 3 4 CONTINUED BY MS. DAINA GROSKAUFMANIS: 5 Q: At Paragraph 39 of your Affidavit you 6 state that you had no involvement in the purchase of 7 computers by individual members of City Council and that the 8 Contract Management Office had arranged that Councillors were 9 to do this directly through MFP? 10 A: That's correct. 11 Q: And the City, as you've already said, 12 entered into a new lease with MFP for the Councillors' 13 computers, 838-10, thirty-six (36) month term. 14 In Paragraph 40 you say the cost commitment 15 was seven hundred and twenty thousand nine hundred and eight 16 dollars ($720,908) with a pre-tax orderly payment of sixty- 17 one thousand two hundred and twenty-six dollars and seventy- 18 two cents ($61,226.72) and Madam Commissioner, the mas -- the 19 numbers for the -- for those leases are in our master lease 20 volume book. I'm not proposing to -- to take you to them. 21 Thank you, Mr. Hart, those are my questions. 22 A: Thank you. 23 MADAM COMMISSIONER: Okay. Do people want to 24 start now? Hello -- 25 MS. BAY RYLEY: I was --

1 MADAM COMMISSIONER: -- Ms. Ryley? 2 MS. BAY RYLEY: I was going to ask for an 3 early lunch. 4 MADAM COMMISSIONER: Early lunch? 5 MS. BAY RYLEY: But it's pretty early. I just 6 -- there's -- there's some of the -- my concern is some of 7 the evidence about the -- Mr. Hart's -- 8 MADAM COMMISSIONER: I can take an early 9 morning break. I don't have a problem with that. 10 MS. BAY RYLEY: I just -- some of the evidence 11 that was his op -- his views on the 43 million were not in 12 the Affidavit and I would like a little time to look at that. 13 MADAM COMMISSIONER: Okay. Feel free to speak 14 to Ms. Groskaufmanis if you need anything more on that. I'm 15 not quite sure what that was but -- all right? So, who was 16 planning to go next? Did you have a plan? 17 MR. WILLIAM ANDERSON: I don't believe there 18 was a plan. 19 MADAM COMMISSIONER: There was -- there was no 20 plan? I'm quite happy if you want to take a morning recess 21 now. We would normally take it at 11:30. We could take it 22 now until twenty (20) to 12:00 and you can figure that out. 23 Do you want to do that? Okay. 24 All right. We'll back at twenty (20) to 25 12:00.

1 THE REGISTRAR: The Inquiry will recess until 2 twenty (20) to 12:00. 3 4 --- Upon recessing at 11:18 a.m. 5 --- Upon resuming at 11:40 a.m. 6 7 THE REGISTRAR: The Inquiry will resume. 8 Please be seated. 9 MADAM COMMISSIONER: Mr. Anderson, you 10 obviously won the draw. 11 MR. WILLIAM ANDERSON: Well, I wouldn't put it 12 that way. 13 MADAM COMMISSIONER: Mr. Hart, this is 14 Bill Anderson and he's the lawyer for Wanda Liczyk. 15 THE WITNESS: Mr. Hart. 16 17 CROSS-EXAMINATION BY MR. WILLIAM ANDERSON: 18 Q: I'd like to take you briefly to the job 19 description that was provided to us at Tab 1 of your brief of 20 materials. 21 A: Okay. 22 Q: I take it, from the job description that 23 was in place at the time, that you were a member of the 24 senior management team in the Clerk's Office? 25 A: That's correct. <