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 May 12th, 2003

2
  1                        APPEARANCES
  2  Ronald Manes            )Commission Counsel 
  3  Patrick Moore  (np)     )
  4  Daina Groskaufmanis     ) 
  5  Linda Rothstein         )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      (np)     )
 16  William Anderson        )Wanda Liczyk
 17  Valerie Dyer            )Dell Computers
 18  Jennifer Lynch   (np)   )
 19  Edward Greenspan (np)   )Jeff Lyons
 20  Todd White              )
 21  Hugh MacKenzie          )Jim Andrew
 22  Jennifer Searle (np)    )
 23  Bryan McPhadden (np)    )Brendan Power
 24  
 25  Joyce Ihamaki           )Registrar

1 TABLE OF CONTENTS 2 Page 3 4 Jeffrey Stephen Lyons, Resumes, 5 Continued Examination-In-Chief by 6 Mr. Ronald Manes 5 7 8 Certificate of Transcript 200 9 10 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. 6 MR. RONALD MANES: Good morning, Commissioner. 7 8 (BRIEF PAUSE) 9 10 MADAM COMMISSIONER: Good morning, Mr. Moore. 11 Nice to see you. 12 MR. DAVID MOORE: Good morning, good morning. 13 It's nice to see you too. 14 MADAM COMMISSIONER: You didn't have to say 15 that back. I didn't -- I wasn't trying to make you say that. 16 MR. DAVID MOORE: No, no. No, no. You 17 know -- 18 19 (BRIEF PAUSE) 20 21 MADAM COMMISSIONER: But I should have just 22 accepted it, shouldn't I? Thank you. 23 MR. DAVID MOORE: That's all right. I mean, 24 after -- after a few weeks you, kind of, have got to get back 25 in the swing of things.

1 MADAM COMMISSIONER: And you too, Mr. 2 MacKenzie. 3 MR. HUGH MACKENZIE: Good morning, 4 Commissioner. 5 MADAM COMMISSIONER: Good morning. Yes, Mr. 6 Manes, I think I've -- I've finished saying good morning. 7 8 (BRIEF PAUSE) 9 10 (JEFFREY LYONS RESUMES) 11 12 CONTINUED EXAMINATION-IN-CHIEF BY MR. RONALD MANES: 13 Q: Good morning, Mr. Lyons. 14 A: Good morning. 15 Q: I'd like to speak with you about the 16 circumstances under which you were retained by DFS. 17 A: Okay. 18 Q: Dell Financial Services. We're referring 19 to them as DFS during these proceedings. 20 A: Yes. 21 Q: Can you tell us how it came to pass that 22 you were retained by them? 23 A: Through Dell Computer. 24 Q: All right. Can you expand on that? 25 A: Well, it was a breakfast meeting with a

1 representative from Dell Computer and Mr. Barrett from Dell 2 Financial Services. 3 Q: That representatives name is? 4 A: Mr. Kelly. 5 Q: Can you recall his first name? 6 A: David. 7 Q: What was his capacity at Dell Computer at 8 the time? 9 A: He was a senior representative in the 10 public sector for Ontario. 11 Q: You'd done work with him? 12 A: Yes. 13 Q: In their successful attempt to obtain the 14 hardware supply contract with the City? 15 A: I did many things. 16 Q: This is the only one that I'm interested 17 in. 18 A: Hardware? What do you mean by hardware? 19 Q: Desktops. Supply of desktops to the City. 20 A: I think -- I think I was involved, yes. 21 Q: I'm sorry. You think you were involved? 22 A: If they were selling desktops to the City, 23 you meant? 24 Q: Yes. 25 A: I think I was involved in some meetings.

1 Q: Well, to the extent that Mr. Kelly 2 arranged this meeting with you and Mr. Barrett? 3 A: Yes. 4 Q: Was it your impression that Mr. Kelly was 5 of the view that you did a good job for Dell Computer? 6 A: I think so. 7 Q: Was it your impression that he was 8 recommending that DFS retain your services? 9 A: Yes. 10 Q: Did you have a discussion with Mr. Kelly 11 about DFS prior to going to meet Mr. Barrett? 12 A: I'm sure I had a telephone conversation, 13 at least. 14 Q: Do you remember what was said during that 15 telephone conversation, for example, did he talk to you about 16 what DFS did, what its interest was in possibly retaining 17 you, anything like that? 18 A: No, I can't recollect. It was an 19 introduction and a further business opportunity. 20 Q: What did you understand, Mr. Barrett's 21 capacity was at DFS? 22 A: He was the President. 23 Q: All right. What did you understand the 24 relationship was between Dell Computers and DFS? 25 A: Well, DFS was, to me, either a subsidiary

1 or sister company of Dell Computer. 2 Q: I believe when you first wrote Irene 3 Payne, you described it as Dell Computer Corporation, 4 including Dell Financial Services, is that the way you looked 5 at it? 6 A: Yes. 7 Q: All right. So, you go to this meeting, 8 Mr. Kelly, yourself, Mr. Barrett, what do you discuss, do you 9 recall? 10 A: It wasn't very much. It was more like a 11 friendly breakfast. We chatted more about, you know, general 12 issues, not necessarily about the companies. 13 And they told me they were proceeding on this 14 project for the City of Toronto and we talked about fees and 15 that was the breakfast. 16 Q: Let's take those one (1) at a time. They 17 told you they were proceeding on this project at the City of 18 Toronto, what project was that? 19 A: Leasing. 20 Q: Is that related to -- just to cut through 21 this, that's related to the 1999 leasing RFQ, that's what 22 they were interested in? 23 A: That's what I subsequently ascertained. 24 Q: All right. And you discussed fees? 25 A: Yes.

1 Q: Tell us what that discussion was? 2 A: Well, it was to be three thousand dollars 3 ($3000) a month for six (6) months. 4 Q: Now, this meeting, from what I understand 5 from Sue Cross' notes, and anyone here can correct me if I'm 6 wrong, that it was sometime before February 10th? Does that 7 help you at all with the -- 8 A: Well the meeting was in February. That I 9 recall. 10 Q: All right. So, the retainer was, I take 11 it, to carry you through the process to the conclusion that 12 -- at the point where they would have won or loss, DFS? 13 A: Yes. 14 Q: The deal that you had with Dell without 15 going into the particulars of that, that retainer was in 16 writing? 17 A: Yes. 18 Q: And that provided for the terms of the 19 agreement, including the amount, et cetera? 20 A: Yes. 21 Q: All right. Now, this deal with DFS was 22 that in writing? 23 A: Yes. 24 Q: Now, unfortunately, we don't have those 25 documents, you don't have the DFS file, right?

1 A: Right. 2 Q: So, give me the -- to the best of your 3 recollection, would the contract with DFS be -- that is the 4 retainer be similar to the one (1) you entered into with Dell 5 Computer? 6 A: It was less formal. If I recall, Dell 7 Computer actually prepared their own agreement, Dell 8 Financial didn't. 9 Q: So, when you say, it was in writing, is it 10 something that you exchanged in letters to -- to Mr. Barrett, 11 or how did that work? 12 A: Yes, yes, letters to Mr. Barrett; a letter 13 to Mr. Barrett. 14 Q: Can you recall, to the best of your 15 recollection, I appreciate this is a while ago, as to what 16 your letter said? 17 A: Well, We'd say we would provide certain 18 consulting services, and -- and the fee would be three 19 thousand dollars ($3000) a month for a period of six (6) 20 months, commencing sometime after that meeting in February. 21 Q: If you want to just turn to your binder, 22 Volume 1. 23 MADAM COMMISSIONER: Which tab, Mr. Manes, 24 please? 25 MR. RONALD MANES: It would be Tab 3.

1 2 CONTINUED BY MR. RONALD MANES: 3 Q: Now, this is Begdoc 40455. And I 4 appreciate that this is the letter that you sent to Irene 5 Payne, with respect to MFP, but in terms of the way in which 6 this letter is set out, would that be, basically, the kind of 7 letter that you would have sent to -- to Mr. Barrett? 8 A: Yes, but I might have only been 9 referencing a particular -- particular service, which was the 10 City of Toronto. 11 Q: All right. You don't have any 12 recollection as to whether you specified a particular service 13 or not, but you might have, such as the City of Toronto? 14 A: I might have. 15 Q: All right. And this letter talks about 16 strategic advice and liaison, would that be the kind of words 17 that you would have used in the -- 18 A: Not -- 19 Q: -- the letter? 20 A: -- necessarily. I mean, I used, sort of, 21 consulting services, including strategic advice, liaison, but 22 it's generally that. 23 Q: All right. And then it's -- then you go 24 on in this next paragraph to talk about the number of months, 25 like you said, and the amount per month, plus GST and the

1 effective date? 2 A: Yes. 3 Q: Same kind -- same kind -- 4 A: Yes. 5 Q: -- of letter? All right. Now, when you 6 sent out -- out that letter, did you intend that those be all 7 the financial terms? 8 A: Yes, I mean, at that point, yes. 9 Q: All right. Now, can you describe for us 10 what it is that you essentially were going to do for DFS, or 11 told DFS you could do for them? 12 A: Well, in this letter? 13 Q: No. Just apart from that, and the 14 conversation you had with Mr. Barrett, Mr. Kelly, or a 15 conversation you had with Mr. Marentette? 16 A: Well, this was -- I don't know whether 17 they had done business at the City before. So, they 18 basically, I think, wanted assistance in, sort of, the lay 19 the land and I think they wanted some meetings with the 20 important players in this proposal; or was it an RFQ, I can't 21 remember what came out subsequently. 22 But, in any event, basically it was that. 23 Q: Well, let's just referencing your website 24 description of your services, not going to the actual 25 document.

1 Basically, you're talking about navigating the 2 -- the process, navigating them through the process? 3 A: Well, having -- giving them a better 4 understanding of the process, yes. 5 Q: And when I say, navigate, I'm just using 6 that -- from your website it talks about navigating -- 7 A: Oh, okay. 8 Q: -- the labyrinth -- 9 A: Well, -- 10 Q: -- of here, city bureaucracy? 11 A: Well, that's a word you could use. 12 Q: All right. And you're going to open 13 doors, to a certain extent, the best you can? 14 A: For -- to -- yes. 15 Q: All right and you're -- you're going to 16 assist them in meeting key decision makers in the City? 17 A: Yes. 18 Q: And as best as you can, use your influence 19 throughout the process? 20 A: Yes. 21 Q: And all of this was in order to and the 22 fee that you were being paid was in order to assist them in 23 being successful in their bid? 24 A: Yes. 25 Q: All right and you also would help them

1 monitor the process or you would monitor the process as their 2 RFQ response proceeds through the system? 3 A: Our office would. 4 Q: All right. 5 A: Not necessarily myself. 6 Q: Your office would report to you? 7 A: Most of the time. Sometimes they dealt 8 just directly with the client. 9 Q: All right. In that -- in that kind of 10 situation, would you make any memorandum to the file when 11 you'd met Mr. Barrett, Mr. Kelly, for example? Would you go 12 back and make a memorandum file or just dictate a letter? 13 A: I would dictate a letter. 14 Q: All right. If you turn to Volume 2, Tab 15 10 for a moment. 16 17 (BRIEF PAUSE) 18 19 Q: That is a registration under the Lobbyist 20 Registration Act of Dell Computer Corporation. 21 A: Yes. 22 Q: And that is dated Tuesday, February 2nd, 23 1999. 24 A: Yes. 25 Q: Now, I take it that when you registered

1 Dell Computer Corporation, from what your evidence has been, 2 that would include DFS? 3 A: No, we would probably do a separate 4 registration, I would think. 5 Q: Well, you said that -- that you considered 6 DFS a subsidiary or sister company but are you saying that 7 you would have done a separate registration because we 8 haven't been able to find that? 9 A: No, because I never did any work for them 10 at the Province. 11 Q: I see. So, this would then, relate, then, 12 to your registration only for Dell Computer? 13 A: Right. 14 Q: And here, just taking this registration 15 for a moment, in the first -- in Section B, your name Jeffrey 16 Lyons and your firm name Morrison, Brown and Sosnovitch? 17 A: Yes. 18 Q: Correct? And then the name of your 19 client, Dell Computer? 20 A: Right. 21 22 (BRIEF PAUSE) 23 24 Q: Now, subsequent to entering into a 25 relationship with DFS, you entered into a relationship with

1 -- with MFP? 2 A: Correct. 3 Q: At the time you were discussing your 4 retainer with DFS and in particular, Mr. Barrett, was there 5 any discussion about MFP? 6 A: No. 7 Q: Did Mr. Barrett ever tell you that he 8 didn't think that DFS had much of a chance against MFP at the 9 City? 10 A: We never had those discussions. 11 Q: All right. The answer, I guess, is -- 12 A: No. 13 Q: -- no, you didn't? All right. When you 14 were talking to Mr. Barrett, Mr. Kelly, did you ever talk at 15 all about the competition that DFS would face? 16 A: Not -- no. 17 Q: Not -- not then and not ever or was there 18 -- were there points in your relationship that you did talk 19 about the competition with Mr. Marentette, Mr. Simone, Mr. 20 Barrett? 21 MADAM COMMISSIONER: You asked him initially 22 only about Mr. Barrett. 23 MR. RONALD MANES: Yes and -- and I was 24 talking about -- subsequent to that meeting. 25

1 CONTINUED BY MR. RONALD MANES: 2 Q: Were there any times that you talked about 3 the competition with Mr. Barrett, Mr. Simone, Mr. Marentette? 4 A: We might have, but, the competitor I 5 thought was GE Capital. 6 Q: Because of their success at the Province? 7 A: Well, they're the big leasing corporation, 8 and they're always the major competitor. 9 Q: All right. Now, the retainer that you had 10 with MFP, if you turn to your Volume 1, and looks at Tab 3 11 and 4, Tab 3 is 40455, it's the first Tab I'll refer you to. 12 That's the letter we just referred to, letter 13 March 11th, '99? 14 A: Yes. 15 Q: "Personal and Confidential to Ms. Irene 16 Payne" and signed by yourself. I take it there was -- this 17 was your -- this would be a file copy? 18 A: It could be. 19 Q: All right. There's no letterhead on it. 20 A: So, it's probably a file copy. 21 Q: It would have said, like your other 22 letters, it would have said, Morrison, Brown and Sosnovitch, 23 Jeffrey Lyons QC Counsel? 24 A: Possibly, yes. 25 Q: Well, In that -- in that letter you refer

1 to a meeting at this office, I take it, it's your office on 2 March the 11th, 1999. 3 Can you tell us, how -- what are the 4 circumstances that lead up to that meeting with Ms. Payne? 5 A: I think -- I don't know who contacted who, 6 but, Dell Computer, in particular, but, there were others had 7 suggested that perhaps I should be doing work with MFP. 8 And so this meeting was organized -- but, what 9 puzzles me is I thought it was at their offices, but, maybe 10 it was also at my office, I can't remember. 11 Q: Who at Dell Computer suggested that you 12 ought to be doing business with MFP? 13 A: It was actually, if I recall maybe more 14 than one (1) but I remember Mr. Kelly being one (1). 15 Q: So, Mr. Kelly, would have referred you to 16 DFS and MFP? 17 A: Right. 18 Q: And what did you -- well, first of all, 19 who did you meet with at the meeting in your office? 20 A: Irene Payne, I think a John Rollock -- 21 Q: Yes -- 22 A: -- and I think Mr. Domi was there. 23 Q: Now, did you know, Ms. Payne before? 24 A: No, I don't think so. 25 Q: Mr. Rollock?

1 A: No. 2 Q: Mr. Domi? 3 A: I've spoken to him, but, I don't know if 4 I had met him before. 5 Q: Spoken to him while he was at MFP? 6 A: Yeah, it was in that same period of time, 7 maybe a month before. 8 Q: Did he speak to you about you representing 9 MFP, do you recall? 10 A: He could have. 11 Q: All right. Other than speaking with him, 12 I take it you'd never met him? 13 A: No. 14 Q: Now, you meet in your office and what is 15 it that you discuss in terms of assisting MFP? 16 A: I'm going to have to correct myself. 17 Because I remember the meeting -- the original meeting being 18 at MFP. I'm wondering what she says here in her letter. 19 Q: This is -- 20 A: Anyway that's my recollection. Your 21 office, I think was a typo, but, anyway. 22 Q: Let me just stop you there, so we have it 23 clear on the record. Your recollection is -- is that the 24 meeting was at -- 25 A: MFP.

1 Q: -- MFP's office? 2 A: Right. 3 Q: And not at your office. All right. Did 4 you go out there alone, or were you accompanied by anybody? 5 A: Maybe Ms. Cross was with me, I can't 6 remember. 7 Q: All right. And could you give your best 8 recollection as to what was discussed? 9 A: Well, they asked me what I was doing in 10 the information technology area, and who did I know, what did 11 I do at the Province. 12 And I think they were quite impressed that I 13 was doing work for Dell Computer. And they also were 14 interested in other client systems integration. 15 And then she talked about her team, what they 16 were doing, various municipalities in the Province, et 17 cetera. 18 We didn't get into any spec -- specifics, but 19 they were -- and then they were talking about waste, they 20 wanted to get into waste, leasing of waste sites, or I didn't 21 really quite -- some -- some recollection, they wanted to get 22 into this waste area. 23 They sort of had more of a discussion about 24 that than anything else. 25 Q: Well, in any event, when you sent them a

1 letter which states that you're prepared to act on their 2 behalf, it was with respect to -- and I'm just quoting here, 3 "Provincial and Municipal levels of 4 government." 5 A: Right. 6 Q: It doesn't go on to specify particular 7 municipalities, or it doesn't go on to specify what 8 particular work you're going to do for these munic -- on 9 these municipal levels of government, it says nothing about 10 waste. 11 A: No, it was more generic. 12 Q: All right. You say, you talked about 13 various municipalities, I take it that would include the City 14 of Toronto? 15 A: We had discussed it, but it could have 16 been. 17 Q: All right. In any event, you sent this 18 letter. I take it that's, sort of, a usual practice -- 19 A: Yes. 20 Q: -- when you have a meeting like this? All 21 right. 22 A: Yeah, it's a general letter that I send. 23 Q: And then you expect a letter back 24 confirming it, and that's what you got, it take it, at Tab 25 number 4, Begdoc 40454?

1 A: That's correct. 2 Q: Now, this is a letter dated March 16th, 3 1999, and it's addressed, 4 "Jeffrey S. Lyons, QC Counsel, Morrison 5 Brown -- Brown and Sosnovitch, Barristers 6 and Solicitors." 7 and then the address. When you went to see 8 Ms. Payne, Mr. Rollock, Mr. Domi, did you give them your 9 card, business card? 10 A: Yes. 11 Q: And your business card says, 12 "Morrison Brown Sosnovitch, Barristers and 13 Solicitors. Jeffrey S. Lyons QC Counsel." 14 A: Something like that. 15 Q: All right. It's just to help me as well, 16 when you went to see DFS, Mr. Barrett, Mr. Kelly, and have 17 that meeting with them, would you have given your business 18 card to them? 19 A: Yes. 20 Q: All right. Same one? 21 A: Yes. 22 Q: All right. And this letter confirms that 23 MFP Financial Services will employ consulting services from 24 Morrison Brown Sosnovitch, commencing March 15th, 1999, and 25 ending on June 15th, 1999.

1 That was the agreement? 2 A: Yes. 3 Q: And then it provides that you will act on 4 behalf -- on our behalf, to provide strategic advice and 5 liaison at both the Provincial and Municipal levels of 6 government? 7 A: Yes. 8 Q: At a monthly consulting fee of seventy- 9 five hundred dollars ($7500), plus GST, payable upon receipt 10 of invoice? 11 A: Yes. 12 Q: Now, let me just ask you a few questions 13 about this. First of all, you're not employed personally 14 here but rather your law firm, Morrison Brown and Sosnovitch, 15 is? Is that right? 16 A: Well, the invoice would come from them, 17 yes. 18 Q: Morrison Brown and Sosnovitch would -- 19 would be the one -- the firm -- the law firm that MFP pays? 20 A: Yes. 21 Q: And then you as counsel would have some 22 kind of arrangement in relation to that payment? 23 A: Yes. 24 Q: All right. In any event, the -- the law 25 firm is employed for consulting services commencing March

1 15th, 1999 and ending on June 15th, 1999? 2 A: Yes. 3 Q: That's what it said? That's a period -- 4 three (3) month period that ends a few days after the leasing 5 RFQ is -- is due by the proposers? Did you know that at the 6 time that you were -- 7 A: No, this was just a trial period of three 8 (3) months and if it worked, we were going to extend it. 9 Q: So basically it's a three (3) month trial 10 period? 11 A: Yes, and that's what I do with a number of 12 clients. 13 Q: All right. Now, this may be difficult for 14 you, but the -- the deal that you had with DFS was for three 15 thousand dollars ($3,000) a month and this is for seventy- 16 five hundred dollars ($7,500) a month. What's the difference 17 in what you're doing for them in terms of the quantity of 18 work or the quality of work that would account for the -- for 19 the difference in the amount of the retainer? 20 A: Well, DFS was introduced to me by their 21 parent or sister company, Dell Computer so I saw those just 22 as an adjunct for work I was doing for Dell. 23 Q: As a? 24 A: Adjunct to work -- 25 Q: Yes.

1 A: -- I was doing for Dell. MFP was an 2 entirely different, new client. 3 Q: All right. When you calculate the fees on 4 -- on this, you don't -- you're not charging an hourly rate? 5 A: No. 6 Q: It's just a monthly fee based on what your 7 services are worth to the -- to the consumer, I take it? 8 A: Yes. 9 Q: All right. Now, this particular retainer 10 sort of -- sort of goes bad at one point, doesn't it? 11 A: Yes. 12 Q: If you go to Tab -- Tab 9. The -- I 13 hesitated to say and it wouldn't -- be anything but an 14 omission. That March 11th, 1999 letter from Ms. -- to Ms. 15 Payne, 40455, that says: 16 "I have also disclosed to you that we act 17 for Dell Computer Corporation, which 18 includes Dell Financial Services." 19 A: Yes. 20 Q: So as far as you were concerned, you had 21 disclosed your relationship with Dell Computer? 22 A: Yes. 23 Q: Including Dell Financial Services and you 24 then went -- went on your merry way consulting? 25 A: Yes.

1 Q: Only to have, according to this May 26, 2 1999 letter, 40449 -- only to have a total breakdown in your 3 relationship with Ms. Payne arising out of your 4 representation of DFS? 5 A: Yes. 6 Q: Now, I know you responded to -- to this 7 letter and we'll get to that in a moment, but did you, 8 according to your letter, have a telephone discussion with 9 Ms. Payne before receiving this May 26, 1999 letter from her? 10 A: I'm not sure. I think she was out of town 11 and she tried to get a hold of me and I think the same day as 12 I received this letter is you'll see it signed by her 13 assistant, because I think she dictated it and had it 14 delivered to me. 15 Q: Yes. If you go to Tab 10, Volume -- still 16 Volume 1 -- 17 A: Yes. 18 Q: -- 40445. That's your response to Ms. 19 Payne, May 27th, 1999. And it says: 20 "I acknowledge our conversation yesterday 21 afternoon." 22 That's the one (1) I was -- when I was 23 referring to your -- 24 A: Oh, I see. 25 Q: -- letter.

1 (BRIEF PAUSE) 2 3 A: Well then we spoke. 4 Q: All right. Do you remember what you spoke 5 about before she wrote you this May 26th, 1999 letter, 40449? 6 A: Well, she was obviously upset. I mean my 7 recollection is vague about it and it's probably what I said 8 there. I said I don't agree with you, I've told you this 9 already and I'm going to review my correspondence. It was 10 some kind of conversation, like that. 11 Q: All right. 12 A: I tried to be very civil about it, so the 13 first thing you do is when you get that kind of call from a 14 client, is you just say look at, let me go and look at my 15 notes. 16 You're raising a point and I'll get back to 17 you. 18 Q: All right. 19 A: And before I could do that, I think I got 20 that letter. 21 Q: This letter says: 22 "I wish to express my total disappointment 23 with your current actions in representing 24 Dell Financial Limited as a consultant and 25 lobbyist with the City of Toronto,

1 specifically, but, more generally at either 2 the provincial or municipal level of 3 Government. You have already confirmed 4 this to me, in spite of the fact that you 5 agreed contractually to represent MFP 6 Financial Services at the municipal and 7 provincial levels of Government." 8 Let's just take that -- take that paragraph. 9 A: Yes. 10 Q: What's wrong with that statement that she 11 makes? What is Ms. Payne confused by, as far as you're 12 concerned? 13 A: Well, the obvious point being, I do 14 represent Dell Financial and I disclosed it to her. 15 Q: Did you ever disclose to her that you 16 represented Dell Financial at the City of Toronto, 17 specifically? 18 A: Working on the City of Toronto contract, I 19 don't know whether we ever got into the specifics. 20 Q: All right. She appears to be upset that 21 you're working at the City of Toronto specifically, when MFP 22 is also vying for that business? 23 A: Yeah, but, you know what, as a 24 professional, it's not your business to go around telling 25 people what you're working on, you know, that's confidential

1 to your client. 2 That wasn't something that was in the 3 marketplace, if I recall, at that time. It was, you know -- 4 anyway -- 5 Q: So, the bottom line here, is that you did 6 not disclose to Ms. Payne, that you were specifically working 7 on the City of Toronto leasing RFQ, which was in competition 8 with the MFP? 9 A: Right. 10 Q: All right. And from what you're saying, 11 you did not feel any -- under any obligation to do so? 12 A: Right. 13 14 (BRIEF PAUSE) 15 16 Q: And the next paragraph, MFP Financial 17 Services entered into a contract with Morrison, Brown, 18 Sosnovitch, commencing March the 15th, '99 and ending on June 19 the 15th, '99, that's true? 20 A: Yes. 21 Q: "At the time of this agreement, you 22 represented to us that you were 23 representing Dell Financial -- Dell 24 Computer Corporation and had successfully 25 done so at the City of Toronto."

1 That's true? 2 A: Yes. 3 Q: "We understood this to be a hardware 4 division of the company." 5 That's true? 6 A: Yes. 7 Q: "You also confirmed to us that you would 8 not in anyway represent or provide similar 9 services to MFP Financial Services 10 competitors." 11 Is that true? 12 A: Not true. 13 Q: So, I take it that at the time that you 14 were engaged by Ms. Payne, on behalf of MFP, to do consulting 15 services for MFP at the provincial and municipal level. 16 You knew that they could be competing for City 17 of Toronto business? 18 A: First of all, this business with MFP was 19 more for the provincial. The only reason I talked about 20 municipal, at that point, was that they had some work to do 21 with the Toronto School Board. 22 So, there was no discussion of anything else. 23 They were more focussed on the Province. 24 Q: At the time that you entered into that -- 25 to that agreement with them, however, you agreed to act for

1 them at the provincial and municipal level, correct? 2 A: It says that in the letter. 3 Q: Well, that's what you agreed to? 4 A: Right. 5 Q: And that's the agreement that she -- that 6 Ms. Payne confirmed? 7 A: Right. 8 Q: All right. And that municipal level 9 includes the City of Toronto? 10 A: Could. 11 Q: And is it right to say that MFP and DFS, 12 were both in the IT leasing business? 13 A: Yes. 14 Q: And insofar as, those two (2) companies 15 were concerned, they were competitors in the IT leasing 16 business? 17 A: Yes. 18 Q: So, you find yourself representing 19 competitors in the same business, generally, at the same 20 period of time? 21 A: Do you want to repeat that question? 22 Q: You find yourself in the position of 23 representing competitors in the same business, generally, at 24 the same period of time? 25 A: Yes.

1 Q: You have duties to both, confidentiality? 2 A: Yes. 3 Q: Duties to make your best efforts? 4 A: Yes. 5 Q: Next paragraph, 6 "We therefore consider your decision to 7 provide consulting and lobbying services to 8 our competitor, Dell Financial Service, on 9 a major technology financing deal with the 10 City of Toronto to be in breach of contract 11 with MFP Financial Services." 12 Do you agree with that statement? 13 A: No. 14 15 (BRIEF PAUSE) 16 17 Q: I take it that you would say that it is 18 perfectly open to you to represent two (2) competitors that 19 end up in competition on a specific piece of business? 20 A: But, I didn't act for them both. So, I 21 don't understand your question. 22 Q: Well, you acted for MFP? 23 A: Yes, but not on this -- what's it, City 24 of -- City of Toronto leasing contract. 25 Q: Well, but you acted for MFP at the

1 provincial and municipal levels? 2 A: Yes, but I didn't act for them on this 3 particular bid. 4 Q: Well, I'm just -- 5 A: So, I'm just trying to clarify it, so that 6 we don't get myself trapped in -- in an answer here. 7 Q: No, it's not -- it's not -- I appreciate 8 you don't -- that you're saying that you did not represent 9 MFP in the City of Toronto leasing RFQ -- 10 A: Right. 11 Q: -- that's what you're saying? 12 A: Right. 13 Q: But -- 14 A: I did represent Dell Financial Services. 15 Q: But in -- but, in terms of Dell Financial 16 Services, if you look at what you wrote to Dell -- what your, 17 rather, agreement with Dell Financial Services was. 18 You don't recall whether it specified City of 19 Toronto, or potential leasing RFQ, or not? 20 A: No, I think it was a specific retainer. I 21 just don't know how we worded it. 22 Q: All right and taking that just forward. 23 So you -- when you meet with MFP and you agree to act at the 24 provincial and municipal levels, did you not think it was 25 important to say, but we can not act for you on any City of

1 Toronto IT business, especially the -- the upcoming 1999 2 leasing RFQ there? 3 A: Well, they never mentioned it to me and I 4 didn't even think that -- I didn't know much about MFP when I 5 went to that first meeting. I just knew that they were in 6 the leasing business and I really had -- had some knowledge 7 about Dell's, but I didn't even know who their competitors 8 were and I was more concerned, you know, that there wasn't a 9 conflict and so, with Dell, because I didn't really -- Dell 10 encouraged this meeting with MFP. 11 When I left the premises, because of my 12 concern and because I like to be careful about conflicts and 13 I actually phoned Dell and I asked them, are you sure you 14 want me to act for MFP? You know, can I do this? And they 15 said, fine and I was satisified and -- 16 Q: Now, tell me something. If the 17 relationship you have with MFP and any client is to be 18 confidential, how is it that you would call a competitor of 19 MFP, Dell, and ask for their permission to act for MFP? 20 A: Well, that's -- you know, there's 21 something erroneous in that question because the answer is 22 Dell Computer does a lot of business with MFP. They're one 23 of their major suppliers. 24 Q: But you're retained by -- by DFS? Didn't 25 you tell me that?

1 A: Yes. 2 Q: All right. Did you call DFS, i.e., Mr. 3 Barrett and talk to Mr. Barrett? 4 A: No, because this relationship was through 5 Dell Computer. 6 Q: I see. 7 A: They were -- 8 Q: All right. 9 A: They were the client. You know, the -- 10 this whole Dell Financial was an adjunct to what I was doing 11 for Dell Computer. 12 Q: I hear you. The answer to my question is 13 you did not make a call to DFS -- 14 A: Yes. 15 Q: -- to disclose this situation? 16 A: No. 17 Q: You made the call to Dell Computer? 18 A: Right. 19 Q: All right. Did you -- did you tell, then, 20 Ms. Payne that you had gotten clearance from Dell Computer to 21 act on MFP's behalf? 22 A: No. 23 Q: Did you tell Ms. Payne that you had sought 24 clearance from Dell Computer to act on behalf of MFP? 25 A: No.

1 Q: Continuing on in the third paragraph, 2 second sentence: 3 "We take this matter very seriously and are 4 prepared to take whatever action we deem 5 necessary to prevent any financial harm 6 that may accrue to us from your actions." 7 Did you take that to mean that she was -- Ms. 8 Payne was threatening a lawsuit? 9 A: Well, she was obviously very upset, you 10 can see, from her letter. So, I saw all that and that's why 11 I responded immediately. 12 Q: All right and she goes on to say this: 13 "We also consider that a professional of 14 your standing within the legal community of 15 Ontario would consider your actions 16 inappropriate and beneath the standards of 17 the Law Society of Upper Canada." 18 What did you take from that sentence? 19 A: That she was -- that she was wrong and if 20 I felt that she was right, I would have probably terminated 21 my relationship with -- with both of them. 22 Q: So you -- 23 A: And I did terminate my relationship with 24 her -- with her company. 25 Q: Well, Dell Computer is a big -- big client

1 of yours? 2 A: No, no. Not Dell Computer. Dell Computer 3 didn't do anything. 4 Q: I thought you said -- 5 A: I'm talking about Dell Financial Services. 6 MADAM COMMISSIONER: With her, I think you 7 said. 8 MR. RONALD MANES: Yes, with her. 9 10 CONTINUED BY MR. RONALD MANES: 11 Q: But I'd -- I thought you said that Dell 12 Computer, Dell Financial, you treated all as one? 13 A: No, but Dell Computer is just a supplier 14 of hardware, they're not in the leasing business. It's 15 another arm of theirs. 16 Q: In this last sentence, did that suggest to 17 you that, Ms. Payne, felt that you were acting as a lawyer, 18 in representing MFP and doing your lobbying activities? 19 A: I can't speak for her. I mean she made 20 those comments, but, I never acted in any legal basis for it, 21 other than providing lobbying or consulting services. 22 Q: No, but, you didn't provide those 23 services, according to the confirmation, Mr. Lyons, those 24 services were provided by Morrison, Brown and Sosnovitch? 25 A: Well, then me on behalf of them.

1 Q: Morrison, Brown and Sosnovitch are lawyers 2 and you're a lawyer who is Counsel to that firm, right? 3 A: Yes. 4 5 (BRIEF PAUSE) 6 7 Q: Now, then as you said before you respond 8 to that letter, the day after you receive it, May 27th, 1999, 9 40445. 10 A: Yes. 11 Q: And you attach the file copy of that March 12 11th, 1999 letter, which we have referred to as Begdoc 40455, 13 and that's in our Tab 3. 14 You refer back to that letter and you say, you 15 attach a file copy and you say: 16 "You will note in the first paragraph I 17 have also disclosed to you that we act for 18 Dell Computer Corporation, which includes 19 Dell Financial Services." 20 A: Right. 21 Q: Now, next paragraph, 22 "At all times prior to the correspondence 23 exchanged, I have conveyed to you that I 24 would not be looking at representing MFP 25 Financial Services Limited in areas of

1 Information and Technology, but, other 2 areas such waste et cetera." 3 Now, let me just stop you there. Where in 4 anything that you have sent to Ms. Payne, have you said that 5 you would not be representing MFP Financial Services in areas 6 of Information Technology? 7 A: Well, that's what I understood when I met 8 with her because she was really on this kick about waste and 9 that's all she talked to me about at that meeting. 10 Q: Well, I appreciate you're saying, but, 11 just going back to your own words -- 12 MADAM COMMISSIONER: Just so you know, Mr. 13 Manes, I think you said DFS, and you meant MFP. 14 MR. RONALD MANES: All right. 15 MADAM COMMISSIONER: All right. 16 17 CONTINUED BY MR. RONALD MANES: 18 Q: Going back to your own words, go back to 19 your initial letter to which you refer, this May 27th, 1999 20 letter, the initial letter -- 21 MADAM COMMISSIONER: Where again? 22 MR. RONALD MANES: Tab 3, 40455. 23 24 (BRIEF PAUSE) 25

1 THE WITNESS: What's the Tab? 2 MR. RONALD MANES: That's Tab 3, Mr. Lyons. 3 4 CONTINUED BY MR. RONALD MANES: 5 Q: First sentence: 6 "I'm prepared to act on your behalf with 7 respect to strategic advice and liaison at 8 both the provincial and municipal levels of 9 Government." 10 Now, period. No where in that letter, do you 11 say, but, I'm not going to act for you in anything at the 12 provincial and municipal level, in relation to Information 13 and Technology? 14 A: Well, we discussed whether I would make a 15 general retainer letter and that's what I put forward to her. 16 But, that's -- I'm just recollecting my conversation and 17 subsequent letter. 18 Q: All right. Just going on what you wrote 19 here, let's just take the next sentence: 20 "When you asked me to make representations 21 at the Toronto School Board, I undertook 22 the assignment only in view of the fact 23 that Dell Computer Corporation and Dell 24 Financial Services, had no interest in 25 pursuing same."

1 Let's just stop there. When was it that Ms. 2 Payne or anyone on behalf of MFP, asked you to make 3 representations to Toronto School Board? 4 A: Sometime in that period of time. I'm 5 still looking for -- what tab are you at? 6 MADAM COMMISSIONER: It's a Tab 10. 7 MR. RONALD MANES: I'm back at Tab 10, again, 8 Mr. Lyons. 9 THE WITNESS: Sorry, okay. 10 MR. RONALD MANES: 40445. 11 THE WITNESS: Sometime in that period. 12 13 CONTINUED BY MR. RONALD MANES: 14 Q: Sometime after you had met, and you had 15 agreed on your retainer, et cetera, and exchanged those 16 letters? 17 A: Yes. 18 Q: So, now I take it that that's been done, 19 and at some point somebody asked you to make representations 20 to the Toronto School Board? 21 A: Yes. 22 Q: Somebody from MFP? 23 A: Yes. 24 Q: Do you recall who that was; was it Mr. 25 Rollock, Mr. Domi, Ms. Payne?

1 A: Irene Payne. 2 Q: All right. And then, I take it, what you 3 did, according to this letter is you checked with Dell 4 Computer Corporation, and DFS, to ensure that they had no 5 interest in pursuing that? 6 A: That's possible. I can't recollect. 7 Q: All right. Well, this is just -- I'm just 8 reading what it says. 9 A: Right. 10 Q: Let me read it to you, 11 "I undertook the assignment, only in view 12 of the fact that Dell Computer Corporation, 13 and Dell Financial Services had no interest 14 in pursuing the same." 15 A: Well, it might have, you know, later who 16 knows, they might have been the computers that they sold to 17 MFP, but I don't think MFP was even successful. I can't 18 remember. 19 Q: All right. To go back to this -- this 20 sentence again, it is true that you checked with Dell 21 Computer Corporation and Dell Financial Services to ensure 22 that they had no interest in -- in pursuing the school -- 23 Toronto School Board work? 24 A: Yes. 25 Q: And is this the first time that you ever

1 told Ms. Payne that you were checking with DFS or Dell 2 Computer on -- or a getting a clearance from them to act on 3 DFS' -- on MFP's behalf, with respect to the Toronto School 4 Board? 5 A: Well, I'd already disclosed it. I didn't 6 feel I had to keep disclosing it. 7 Q: You -- you already disclosed what, sir? 8 A: In my original letter, that we did work 9 for Dell Financial Services. 10 Q: Yes, I understand that, but this is -- you 11 say nothing in that original letter, or in anything with DFS 12 about the Toronto School Board work, correct, specifically? 13 A: Yes. 14 Q: All right. Now, as I understand it, the 15 issue came up, and according to this letter, you would have 16 checked with Dell to see if it was okay for you to act, you 17 didn't -- wouldn't want a conflict, right? 18 A: If that letter says that, yes. 19 Q: All right. My -- my question to you is 20 this: In -- in talking with Dell Computer Corporation, and 21 Dell Financial Services, you would have had to tell them 22 that MFP was interested in the Toronto School Board; wouldn't 23 you? 24 A: Not necessarily. 25 Q: Well, how could you clear it with them,

1 clear that conflict, unless you told them that they were -- 2 that MFP was interested in the -- in the -- 3 A: I might have just asked -- 4 Q: -- Toronto School Board? 5 A: -- are you looking -- looking at the 6 School Board? They may say, no, we're not bidding on that. 7 Q: Were you authorized to go to -- authorized 8 by Ms. Payne to go to Dell Computer Corporation, Dell 9 Financial Services to seek clearance for you to act for MFP 10 on the Toronto School Board? 11 A: Do you want to repeat that question? 12 Q: Were you authorized by MFP to go to Dell 13 Computer to seek authorization -- Dell Financial Services to 14 seek authorization to do this Toronto School Board work for 15 MFP? 16 A: Well, I'm not sure I understand your 17 question. 18 Q: Did you -- did you tell Ms. Payne -- did 19 you tell Ms. Payne that you -- that before you were going to 20 do this Toronto School Board work, you were going to check it 21 out with Dell Computer Corporation, or -- 22 A: No. 23 Q: -- and Dell Financial Services? Yes, or 24 no? 25 A: No.

1 Q: All right. 2 MADAM COMMISSIONER: Mr. Lyons, just so I 3 understand. When you were checking this out with Dell 4 Computer Corporation and Dell Financial Services, were you 5 checking it out with two (2) different people, or just one 6 (1) person? 7 Were you checking it out with someone from 8 Dell Computer, and someone else from DFS, or was it 9 both -- the one person that you'd been dealing with -- 10 THE WITNESS: Well, I -- I spoke to this one 11 (1) gentleman from Dell Computer. See, what you have to 12 understand, it was an incestuous relationship between MFP and 13 Dell because they -- they fed off of each other. More Dell 14 off of MFP, actually and so that's the kind of relationship 15 that existed and probably the one that you had to protect all 16 the time was Dell Financial Services because they were just a 17 small orphan of, which I learned later -- I didn't learn at 18 the time how big the business was that they did with MFP. 19 MADAM COMMISSIONER: With Dell Financial, you 20 mean or Dell Computer? With Dell Computer? 21 THE WITNESS: Well, they all did -- yeah, they 22 all sort of -- it was all entwined, I guess. 23 MADAM COMMISSIONER: So when you say in your 24 letter that you undertook the assignment only in view of the 25 fact that Dell Computer and DFS had no interest. I'm just

1 wondering, did you phone each one of -- Dell Computer -- 2 THE WITNESS: Oh, no. I -- 3 MADAM COMMISSIONER: -- and DFS? 4 THE WITNESS: I just ascertained whether they 5 were bidding on it. I don't know who I asked if they were 6 pursuing anything with the school board and you know, it 7 would just be that kind of question. 8 MADAM COMMISSIONER: From someone at DFS? 9 THE WITNESS: Could have been. 10 MADAM COMMISSIONER: Or Dell Computer? 11 THE WITNESS: It must have been DFS, I would 12 think but -- 13 MADAM COMMISSIONER: Okay. 14 THE WITNESS: I'm not sure. 15 MADAM COMMISSIONER: All right. Thanks. 16 17 CONTINUED BY MR. RONALD MANES: 18 Q: I'll just ask a few questions arising out 19 of that, Mr. Lyons. When you say it must have been someone 20 at DFS, why do you -- why do you say that? 21 A: Because it's leasing. 22 Q: I appreciate that but if it's leasing, 23 then why did you have to -- why did you put in your letter 24 Dell Computer Corporation? 25 A: I don't know. I -- that's what I put in

1 there. 2 Q: Well, is it -- is it possible that you 3 only went to Dell Computer Corporation or a representative of 4 them to talk about the Toronto School Board and did not 5 approach DFS? Is that possible? 6 A: It's possible. 7 Q: Now, with that point, let's go to the next 8 page. From what this first paragraph on the second page 9 says, you -- 10 MADAM COMMISSIONER: Mr. Manes, I just want to 11 make sure Mr. Lyons is on the -- 12 MR. RONALD MANES: I'm at Tab 10, still, Mr. 13 Lyons and it's 40446. 14 15 (BRIEF PAUSE) 16 17 THE WITNESS: Yes, I see it. 18 19 CONTINUED BY MR. RONALD MANES: 20 Q: Am I right in reading this sentence to say 21 -- without reading the full sentence, that MFP at that point, 22 May 27th, 1999, hasn't paid for any services? 23 A: They hadn't. They did ultimately, but 24 they hadn't at that point. 25 Q: All right. Did they ultimately pay for

1 your -- for your services from March 15th to May 27th, 1999? 2 A: No, they just paid me for one month and it 3 was really for the work I did on the Toronto School Board. 4 Q: All right. Now, it's just for -- it's 5 information here. If you go to Tab 11. 6 A: Hmm hmm. 7 Q: 40448. 8 A: Hmm hmm. 9 Q: Included in the materials is a fax dated 10 May 27th, '99 to Mr. Louis S Levy, from yourself and that, of 11 course, May 27th, 1999 date you wrote back to Ms. Payne. 12 There's nothing -- no letter attached to this fax or 13 anything. Can you tell me what that -- who is Mr. Louis 14 Levy? 15 A: Oh, he's an accountant. 16 Q: Did -- does he have anything to do with 17 this response to Ms. Payne? 18 A: Not to my knowledge. 19 Q: So, if it's -- if it's in here, it's 20 irrelevant to this? 21 A: It's irrelevant. 22 Q: All right. 23 MADAM COMMISSIONER: This is -- Mr. Manes, is 24 this something we got from Mr. Lyons? Is that -- 25 MR. RONALD MANES: I'm sorry, Commissioner?

1 MADAM COMMISSIONER: Is this something that we 2 received from Mr. Lyons? 3 MR. RONALD MANES: As I -- as I recall, yes. 4 I'm not certain of that. Ms. Groskaufmanis is shaking her 5 head yes, it's one of the documents we received. 6 MADAM COMMISSIONER: She's nodding her head 7 yes. 8 MR. RONALD MANES: Nodding her head. 9 MADAM COMMISSIONER: Nodding her head. 10 11 CONTINUED BY MR. RONALD MANES: 12 Q: All right. So in any event, Mr. Lyons, 13 this is not relevant to what we're discussing here? 14 A: Yes. 15 Q: All right. Now, if you then go to 40443, 16 and that is at Tab 14 -- 17 A: Hmm hmm. 18 19 (BRIEF PAUSE) 20 21 Q: That's a letter dated September 10th? 22 A: Yes. 23 Q: 1999? 24 A: Yes. 25 Q: Again, Mr. Jeffrey Lyons, Counsel Morrison

1 Brown and Sosnovitch. 2 "Dear Jeffrey". 3 This is signed for Irene Payne by Ms. Vivaldo? 4 A: Yes. 5 Q: "Dear Jeffrey, it was nice to see you 6 again at the Premier's golf charity and I 7 appreciate your time to meet with Hal Shaw 8 and myself last week, to discuss rebuilding 9 our association with EDS and Systemshouse." 10 What's that all about? 11 A: MFP wanted to do more business with EDS 12 and Systemshouse. 13 Q: A client of yours? 14 A: Yes. 15 Q: And did you meet up at the Premier's golf 16 tournament? 17 A: Yes. 18 Q: Did Mr. Domi have anything to do with that 19 Premier's golf tournament? 20 A: Not to my recollection. 21 Q: All right. You met with Hal Shaw and Ms. 22 Payne? 23 A: Yes, we actually had a very lengthy 24 conversation. 25 Q: I take it you patched up?

1 A: Right. 2 Q: And then went on to talk about rebuilding 3 their association, I take it MFP's association with EDS and 4 Systemshouse, right? 5 A: Yeah, it was -- 6 Q: What's the mean, rebuilding? 7 A: I didn't -- well, they must have, I think 8 at the time, had some disconnect and they wanted to 9 reconnect. 10 Q: All right. And -- 11 MADAM COMMISSIONER: Are these two (2) 12 separate clients, EDS and Systemshouse? 13 THE WITNESS: Yes. Sometimes that's just what 14 you end up doing. Is just working with clients. As I was 15 indicating the other day. 16 17 CONTINUED BY MR. RONALD MANES: 18 Q: So, last sentence says: 19 "Jeff, I look forward to a mutually 20 beneficial working relationship with you 21 for a long time." 22 A: Hmm hmm -- yes. 23 Q: Now, as I understand it, from September 24 10th, 1999 to January 15th, approximately, 2002, you 25 continued to act on behalf of MFP?

1 A: Yes. 2 Q: And was your retainer the same, seventy- 3 five hundred dollars ($7,500) a month? 4 A: Yes. 5 Q: All right. There's a -- if you go to Tab 6 36 in your Volume 2 -- 7 8 (BRIEF PAUSE) 9 10 Q: This has gone through a number of 11 refinements. These are calls from Jim Andrew to Jeffrey 12 Lyons. The first two (2) pages, one (1) and two (2). And 13 the third page, are calls from Jeffrey Lyons to Jim Andrew. 14 Are we all on the same pages? 15 A: I see them, yes. 16 Q: All right. 17 MADAM COMMISSIONER: Mr. Lyons, can I ask you 18 something? You name keeps getting spelled in two (2) 19 different ways -- 20 THE WITNESS: It's R-E-Y. That's what my 21 birth certificate says. 22 MADAM COMMISSIONER: J-E-F-F-R-E-Y. 23 THE WITNESS: Right. But, I spell it usually 24 E-R-Y. 25 MADAM COMMISSIONER: So you're the cause then?

1 THE WITNESS: Right. So, if I had a passport, 2 I'd have to say the truth and I'm here so -- 3 MADAM COMMISSIONER: Okay -- 4 THE WITNESS: -- that's what my birth 5 certificate says. 6 MADAM COMMISSIONER: All right. I thought we 7 were making a mistake on the spelling. 8 All right. Okay. 9 THE WITNESS: Mr. Manes do you -- 10 MADAM COMMISSIONER: Pardon? 11 THE WITNESS: No, it's just -- 12 MADAM COMMISSIONER: No I thought it was our 13 mistake, but now I understand why we've made that. 14 All right. 15 Mr. Manes? 16 MR. RONALD MANES: Yes, thank you, 17 Commissioner. 18 19 CONTINUED BY MR. RONALD MANES: 20 Q: If you will go down to September 15th, 21 1999, it's call 30, see that? 22 A: Hmm hmm. 23 Q: Have you seen this -- have you looked 24 through these calls? 25 A: Yes.

1 Q: All right. September 15th, '99 at 12:03, 2 just after lunch, there is a telephone call between you, from 3 Jim Andrew to you at 5:06. Do you recall what that telephone 4 discussion was about? 5 A: No. 6 Q: It's a -- compared to the others, if you 7 look, I mean, there's -- there's one, January 4th, '99, for 8 nine (9) minutes, and this one is five (5) minutes, but from 9 what I can see there's -- those are the two (2) longest 10 telephone calls by far, that you've ever had with Mr. Andrew. 11 And I'm just wondering whether this telephone 12 call had anything to do with you becoming -- you again, 13 representing MFP? 14 A: No, you must understand, Mr. Manes, a 15 number of clients and I -- in the Information Technology 16 field, at that time I had four (4) or five (5) different 17 clients. 18 So, I couldn't relate these phone calls to any 19 particular client. 20 Q: Is it -- is it possible that in passing 21 you told Mr. Andrew that you were again representing MFP? 22 A: I don't think -- once they had that 23 leasing contract, which they won earlier, right; MFP? 24 Q: Yes. 25 A: I don't think they became a major player

1 in the IT area. I mean, wouldn't they be more interested in 2 software, hardware? 3 Q: I don't know about that, but I -- I guess 4 my only question is, whether you would have said something to 5 Mr. Andrew in your networking and discussions with him 6 about -- 7 A: I can't -- 8 Q: -- representing MFP? 9 A: It's possible, but that phone call, I 10 couldn't relate that to anything. 11 Q: All right. Now, can you tell us what you 12 did to earn your fee for DFS? 13 A: For DFS, it started in February. First, 14 was to be educated, as I -- I really didn't know much about 15 what they were doing, or what this was all about. 16 So, I remember going to their office. And I 17 think Mr. Barrett was at the first meeting, and these two (2) 18 other gentlemen; Marentette and Simone were there. 19 I think it was more, they walked me through 20 the whole issue of -- of leasing, the cost involved, et 21 cetera. Sort of like an educational seminar, almost. 22 And then -- you wanted to hear the whole 23 process? 24 Q: Well, let me just stop you there. Thanks 25 for that pause. You say, walked you through the whole

1 process, do you mean that Simone and Marentette and Barrett 2 walked you through what the -- basically, the leasing process 3 is? 4 A: What they were trying to do, and what the 5 advantages were. And, I guess, the whole problem with 6 computers is part of it, is the whole issue of depreciation, 7 you know, there's all these issues we got into. 8 I mean, I was just trying to get a -- not a 9 deep knowledge of it, just a cursory understanding of it. 10 Q: The -- at the -- at that time, and anytime 11 subsequent, did you -- you tell Mr. Barrett, Mr. Marentette, 12 Mr. Simone, that you were acting for another IT leasing 13 company, MFP? 14 A: No, because it had no relevance. 15 Q: As far as you were concerned? 16 A: Yes. 17 Q: All right. Now, you've -- you've met 18 them, they -- that is, Marentette, Simone, and -- and 19 Barrett. They walked you through the leasing business as 20 best as they could. 21 Did they talk to you about the advantages of 22 leasing over purchasing? 23 A: Yes. 24 Q: Did they talk to you about how DFS 25 compared to other leasing companies in the market?

1 A: No. 2 Q: They didn't talk about something called a 3 value proposition? 4 A: Can't -- 5 Q: Mr. Lyons? 6 A: That doesn't -- doesn't recollect. 7 Q: So, as far as you can recollect, there was 8 a walkthrough, a discussion of advantages of leasing but no 9 discussion of -- of competition? 10 A: No. 11 Q: But did you bring up the fact that, you 12 know, DFS had -- 13 A: DFS had -- 14 Q: -- other competitors that you know? 15 A: DFS' problem was, and I think they 16 recognized that, they didn't really have much of a profile. 17 Everybody knew about Dell Computer but nobody heard much 18 about Dell Financial and the other issues was, is the City 19 even prepared to lease. 20 Q: All right but you say there's -- there was 21 no discussion about the competition that they might face at 22 the City of Toronto? 23 A: Well, the only one -- I remember I kept 24 saying to them, you're going to have a big bidder like GE 25 Capital and how are you going to get recognized when you're

1 dealing with competitors like that and that was the only 2 competitor I really think of because when you talk leasing, 3 in those days it was always GE Capital. I mean, they 4 dominated the market. 5 Q: Did Mr. Barrett, at that point, ever say 6 something about, yeah, GE Capital is a big competitor but 7 we're -- we see our prime competitor as MFP? No? 8 A: I never heard that. I never heard that. 9 Q: All right. 10 11 (BRIEF PAUSE) 12 13 Q: All right. So you have this initial 14 meeting and they walk you through advantages, have some more 15 chitchat? 16 A: Hmm hmm. Yes. 17 Q: Anything else you can recall from that 18 meeting? 19 A: No. 20 Q: All right. Now, that meeting is how long? 21 A: Forty-five (45) minutes. 22 Q: All right. That's at their place or your 23 place? 24 A: It was always at their place, if I -- if I 25 remember.

1 Q: All right and then what do you do? 2 A: I -- I don't remember every meeting but 3 the next big meeting that we organized is a meeting at the 4 Commissioner of Finance's office and my office organizes that 5 and I think that's the only other time I saw Mr. Barrett. He 6 came to that meeting. 7 Q: Mr...? 8 A: Barrett. 9 Q: Yes. 10 A: He came to that meeting and he was there. 11 I think a Mr. Mortensen from Dell was there, Computer. I'm 12 not sure if Jim Andrew, the Director of IT, was there. Ms. 13 Cross from my office was there to take notes and Mr. 14 Marentette, I think, was there. 15 Q: We're going to go to those notes in a 16 moment. I just want to get an idea of everything that you 17 did. Were you in the habit of taking Ms. Cross to meetings? 18 A: If there was -- if there was a big meeting 19 like that and I needed notes, yes. 20 Q: Ms. Cross testified that when there were 21 discussions regarding retainers or financial arrangements 22 between you, the law firm and the -- the clients, she was 23 asked to leave. Is that a correct statement? 24 A: Not quite. I mean, she -- I don't know if 25 she felt comfortable being there so she sometimes would not

1 stay but I'd discussed it in front of her, as much as maybe 2 she wasn't present there sometimes, too. 3 Q: It's your evidence that you discussed 4 financial arrangements, these are clients, in front of her? 5 A: I could have. 6 Q: Do you have any specific recollection of 7 that? 8 A: No, I mean, generally, she wasn't there 9 but I -- it wasn't that I barred her from come -- from 10 coming. I mean, she could have come. 11 Q: But she testified that -- that she was 12 excused from the meeting. Would that be a wrong -- 13 A: Could have been on one or two (2) 14 occasions that I'd done that. 15 Q: Okay. 16 A: None of that's wrong. 17 Q: Mr. Marentette said that he had about 18 between five (5) and ten (10) meetings with you. Would that 19 accord with your recollection? 20 A: Well, it wasn't ten (10). Maybe five (5). 21 Q: All right. 22 23 (BRIEF PAUSE) 24 25 Q: All right. So -- so you had -- you had

1 this initial meeting. You had a meeting at the Commissioner 2 of Finance? That would be Ms. Liczyk, correct? 3 A: Yes. 4 Q: And you had approximately five (5) 5 meetings with Mr. Marentette? 6 A: Yes. 7 Q: I understand that you had a meeting with 8 Mr. Marentette and Mr. Jakobek? 9 A: Yes. 10 Q: All right. Are there any other meetings 11 that you had that you can recall? 12 A: No. 13 Q: Now, these five (5) meetings that you had 14 with Mr. Marentette, on the average how long would that have 15 lasted? 16 A: Half an hour. 17 Q: All right. And the meeting with Mr. 18 Jakobek, best recollection? 19 A: No more than half an hour. 20 Q: If Mr. Marentette testified he thought it 21 was fifteen (15) minutes, would you disagree with that? 22 A: It was probably somewhere between -- well, 23 I can't remember. It wouldn't be fifteen (15) minutes, but, 24 it could have been twenty (20) minutes. 25 Q: All right. Other than those five (5)

1 meetings, meeting with Mr. Jakobek, then there's the meeting 2 that you had with Mr. Marentette and Mr. Simone, and that was 3 how long? 4 A: Half an hour. 5 Q: All right. Now, other than those 6 meetings, any other meetings that you can think of? 7 A: No. 8 Q: All right. Now, your major role here, I 9 take it, was to set up and attend these important meetings 10 with the key people like Ms. Liczyk and -- 11 A: Yes. 12 Q: -- and Mr. Jakobek? 13 A: Yes. 14 Q: And to liaise with your client, who on the 15 day to day basis, I understand it was Mr. Marentette? 16 A: Yes. 17 Q: So, setting up and attending the meeting, 18 well, the setting up of the meeting, your office would do, I 19 take it? 20 A: Yes. 21 Q: All right. So, in terms of what you did, 22 attending the meetings, and what else would you have done 23 personally, other than attend these meetings? 24 A: Oh, I might -- they might get my opinion 25 on some strategy what they were doing. They might want some

1 of my intelligence, what I was hearing if I heard anything. 2 Q: That would be in either -- either you 3 convey that at the meetings or you might do that by 4 telephone? 5 A: Absolutely. 6 Q: All right. Do you have any idea, I know 7 this may be difficult for you -- first of all, did you take 8 many telephone calls from Mr. Marentette, Mr. Simone, Mr. 9 Barrett? 10 A: I never spoke to Mr. Barrett. Mr. Barrett 11 wasn't that interested and Mr. Simone, I didn't speak to that 12 much. It was usually Mr. Marentette. 13 Q: Best of your recollection, how many times 14 would you have spoken on the phone to Mr. Marentette? 15 A: Seven (7), eight (8). 16 Q: All right. Short conversations, long 17 conversations? How would your characterize -- 18 A: Short. 19 Q: All right. 20 A: I mean I remember even phoning him a 21 couple of times at home, that's my recollection. 22 Q: All right. Not to put too fine an head on 23 this, but, when you say a short conversation, are you talking 24 about a couple of minutes? 25 A: Something like that.

1 Q: All right. The people that you set up 2 these meetings with, that is Ms. Liczyk and Mr. Jakobek, I 3 take it that in your view, given your experience in municipal 4 level and your expertise in procurement, these were the 5 people that you felt were they key decision makers? 6 A: Yes. 7 Q: Now, all of those meetings, discussions, 8 telephone discussions, identifying key decision makers, 9 strategizing, et cetera, those were all included in your 10 monthly retainer? 11 A: Yes. 12 Q: And all those meetings, and other 13 communications, strategizing, were for the sole purpose of 14 achieving a win, a victory -- 15 A: Yes. 16 Q: -- a success in the DFS proposal, and the 17 City of Toronto leasing RFQ, right? 18 A: Yes. 19 Q: Okay. Now, could you tell me just 20 briefly, why it is that you thought Mr. Jakobek was a key 21 decision maker at the City on this leasing RFQ? 22 A: Well, at our meeting with the treasurer, 23 or Commissioner of Finance on this issue of purchase, as 24 opposed to leasing, she had mentioned, you know, that you 25 better get the political level on side, and the key person in

1 that would be the Budget Chief, or the Budget Committee 2 because they have to be moving something from capital to 3 operating. 4 And when you're moving -- moving from capital 5 to operation, you know, it's -- it would be a decision that 6 he would probably have some bearing on, or his committee. 7 Q: Did you -- did you know, as well, that 8 from your experience obviously at the City, that Mr. Jakobek 9 sat on the Policy and Finance Committee; by virtue of the 10 fact that he was the Budget Chief? 11 A: Yes. 12 Q: All right. Did you ever see the City of 13 Toronto leasing RFQ? 14 A: No. 15 Q: In Ms. Cross' notes, if you turn to those. 16 At Tab 4, Page 6. See Cross' notes -- 17 MADAM COMMISSIONER: Tab 4? 18 MR. RONALD MANES: Tab 4, Page 6. 19 20 CONTINUED BY MR. RONALD MANES: 21 Q: There's a note that she's contributed for 22 us. 23 "Scott Marentette, the City of Toronto RFP 24 has been released today. Will have in 25 hands tomorrow."

1 Now, we know that the -- that the -- it's 2 actually an RFQ, was released on May 31st. But whether it's 3 May 31st, or this is June the 1st, as she recollected, did 4 you know about this conversation, or whatever it was, that 5 related to the release of the RFQ? 6 A: No. 7 Q: Well -- 8 A: It says, RFP, here? 9 Q: Yes, you're quite right. 10 A: An RFQ and an RFP are very different. 11 Q: Yes, but my -- this entry relates, we've 12 heard, to the RFQ. 13 A: But would they have an had an RFP 14 subsequently. Didn't this leasing contract have an RFP to 15 it? 16 Q: No, actually it didn't, sir. This is the 17 only one that we're dealing with right now, around May 31st, 18 or June 1st, and with Scott Marentette, your -- your client, 19 is the RFQ for the City of Toronto? 20 A: So, you -- you're telling me there never 21 was an RFP for this? 22 Q: That's what I'm telling you. 23 A: Very strange. 24 Q: Well, look now -- 25 MADAM COMMISSIONER: So --

1 MR. RONALD MANES: -- you're supposed to be 2 the -- 3 MADAM COMMISSIONER: Just help me with why you 4 think that's strange and then we'll take the morning break. 5 MR. RONALD MANES: All right. 6 MADAM COMMISSIONER: All right? 7 THE WITNESS: I'd like to explain that 8 because -- 9 MADAM COMMISSIONER: Yeah. 10 THE WITNESS: -- you want help with your -- 11 MADAM COMMISSIONER: Exactly. 12 THE WITNESS: The -- RFQ is just a Request for 13 Qualifications. It never is a proposal and what it is, is 14 you're looking for a list of competent bidders and you would 15 usually get maybe thirty (30) people and out of it -- well, 16 I'll give you an example. Not thirty (30), it could be five 17 (5) and out of it you'd pick a short list of people to bid 18 and then you'd put the RFP together. So how this all 19 happened, I'm asking the question myself. 20 21 CONTINUED BY MR. RONALD MANES: 22 Q: Well, isn't that something that you're 23 employed to do? To find out how -- 24 A: Well, I'm just asking the question -- 25 Q: -- it all happened?

1 A: Not -- not necessarily. If they -- I 2 still find this very puzzling that they would just have had 3 an RFQ and not an RFP. 4 Q: Well, why do you say that the Q in RFQ 5 means qualification? I thought the Q in RFQ meant quotes, 6 Request for Quotes. 7 A: Oh, is that what it meant? Oh, well 8 that -- 9 Q: That's what it said. 10 A: Then that's my misunderstanding. Okay, 11 now it makes sense. 12 MADAM COMMISSIONER: All right. Why don't 13 we -- 14 THE WITNESS: If you had said that, I could 15 have shortened this conversation. 16 MADAM COMMISSIONER: You mean before or now? 17 THE WITNESS: Hmm? 18 MADAM COMMISSIONER: You mean before or now? 19 THE WITNESS: Yeah. 20 MADAM COMMISSIONER: All right. Why don't we 21 take the morning recess and we'll be back at ten (10) to. 22 THE REGISTRAR: The Inquiry will recess until 23 ten (10) to 12:00. 24 25 --- Upon recessing at 11:30 a.m.

1 --- Upon resuming at 11:50 a.m. 2 3 REGISTRAR: The Inquiry will resume. Please 4 be seated. 5 6 (BRIEF PAUSE) 7 8 MADAM COMMISSIONER: Mr. Manes? 9 MR. RONALD MANES: We're going to move on from 10 the RFQ to Dell's response. Dell's response is in your 11 Volume 1, Mr. Lyons. 12 MADAM COMMISSIONER: Dell Financial? 13 MR. RONALD MANES: Yes, Dell Financial, DFS, 14 sorry, DFS. 15 16 CONTINUED BY MR. RONALD MANES: 17 Q: And that is Tab 35, Volume 1, Begdoc 3979. 18 19 (BRIEF PAUSE) 20 21 Q: Did you ever see that response? 22 A: I don't recollect seeing it. 23 Q: Did you ever -- do you recollect ever 24 seeing a draft response, or anything like that? 25 A: I don't remember, but, it's possible. I

1 mean they might have discussed some part of it they wanted to 2 submit. 3 I mean it wouldn't have been technical 4 matters, it might have been some of the -- just looking at it 5 now, maybe the letter. 6 Q: Yes. Maybe the letter, the accompanying 7 letter here? 8 A: Maybe, I don't know. This does not look 9 familiar to me. 10 Q: All right. Now, there is a response here 11 from MFP as well, as Tab 36, that's 23413. 12 13 (BRIEF PAUSE) 14 15 Q: Did you ever see that response, or a draft 16 of it? 17 A: No. 18 Q: The -- 19 A: I don't think I saw the first one (1) 20 either, because there's a Janet Lee and I don't even know who 21 she was. 22 Q: All right. 23 A: I was just looking at -- anyway, sorry. 24 Q: Did you know, you were lobbying for DFS at 25 the City for this leasing RFQ -- did you know at any point

1 that MFP was going to bid? 2 A: I don't think so. I don't remember 3 knowing any of the bidders, other than I thought that -- 4 what's their names, GE Capital, I just assumed they'd be 5 bidding. 6 But, we never really -- they were more 7 concerned about making sure that they sort of, had it all 8 together to make their bid. 9 They never really got into their competition 10 much or at all. 11 Q: Well, did you know that MFP had supplied 12 the leasing services for the Councillor's computers? 13 A: No. 14 Q: Isn't that a piece of important 15 information that you would want to know as a lobbyist on 16 behalf of your client, that a competitor is already supplied 17 to the City? 18 A: I just didn't know that. I know that they 19 had new computers, but, I thought they bought them -- are you 20 sure they -- I still to this day, think they bought them. 21 Q: All right. No, we know that they leased 22 them, in fact, in the -- in this MFP response, at Tab 36, the 23 -- the lease agreement with the City, is actually attached to 24 this response, but that needn't concern you because you 25 didn't know that they were -- they had provided the lease

1 that leased computers to the City, correct? 2 A: Right. 3 Q: I wonder if you could share with us, given 4 your experience and expertise in procurement. There's a lot 5 of discussion here about blackout periods, could you tell us 6 your -- your best opinion or observation, as to what a 7 blackout period is? 8 A: When the RFP is submitted, it's just 9 generally known, I don't know whether it says so, it's just a 10 rule that you really can't talk to anybody on any level of 11 Government once the bids are in. 12 It wouldn't be necessarily just for the City. 13 Q: So, could -- all right. So, according to 14 your -- your definition, after June 11th, you shouldn't be 15 talking to anybody from the City? 16 A: That's right. 17 Q: All right. If you're -- if you're a 18 bidder, or a lobbyist for a bidder? 19 A: Right. 20 Q: Now, you were talking before about the 21 meeting that you had set up in, as you say, the Commissioner 22 of Finances Office, Ms. Liczyk? 23 A: Yes. 24 Q: And we have Sue Cross' notes, a date of 25 April 23rd, 1999, does that sound right?

1 A: Yes. 2 Q: All right. Now, just to assist you in 3 your recollection of that, if you go to Ms. Cross' notes, at 4 Tab number 3. 5 If I might just have a moment, Commissioner? 6 7 (BRIEF PAUSE) 8 9 Q: That would be Tab number 3, and you will 10 see it at Page 14. And there's some transcriptions as well, 11 following the handwritten pages. 12 And do you see it, Mr. Lyons, it goes from 14 13 to, I believe it's 24? 14 A: Yes. 15 Q: Now, first of all, as Ms. Cross described 16 it, what she would do is she would attend at the meeting, 17 take notes, as best as she could; they weren't a transcript, 18 or anything like that. 19 She would go back to the office. She would 20 summarize them in some fashion, send them to you by way of 21 memorandum, you would correct it or not, and then it would be 22 sent back, she placed it in a file which was located behind 23 the administrative assistant's desk, in here would be 24 Dell -- the DFS file. 25 Is all of that --

1 A: Yes. 2 Q: -- correct? All right. Now, you see 3 these notes at Page 1, and again, you'll see that you may be 4 able to follow as well from the transcript of it; some of 5 it's been corrected a little bit, but I'll point that out to 6 you. 7 In these notes, it says that, 8 "Meeting with Wanda, Dell Financial. 9 Jeff --" 10 Meaning you I take it, Mr. Mortensen, Scott 11 Marentette, Gord Barrett, Jim Andrew. 12 MADAM COMMISSIONER: The she is -- should be 13 me. 14 MR. RONALD MANES: Me. Right? 15 THE WITNESS: Yes. 16 17 CONTINUED BY MR. RONALD MANES: 18 Q: Now, you said that you didn't recall 19 whether or not Mr. Andrew was there. Was that from your own 20 recollection or from something that you read or were advised 21 about in the -- 22 A: No, it's just my own -- 23 Q: -- proceeding? 24 A: -- recollection. 25 Q: All right. If you can tell me from your

1 experience with Ms. Cross, would she come to the meeting and, 2 in effect, note everybody that was there or would she do that 3 before coming to the meeting? 4 A: No, she would do it at the meeting. 5 Q: All right. Did Ms. Cross know Jim Andrew? 6 A: Yes. 7 Q: All right. Now, if you can, separate from 8 looking at this -- this book and we'll go through it in some 9 detail. Can you tell me, first of all, how long was that 10 meeting? I think you said previously it was -- let me find 11 my notes here. I don't know if I noted it. I thought it was 12 forty-five (45) minutes but I don't want to -- 13 A: No, it would have been at least that 14 because there was a lot of people involved. 15 Q: All right. 16 A: There was a lot of people involved. 17 Q: What's the best -- your best estimate for 18 that? 19 A: Probably an hour, I'm thinking. 20 Q: All right and for you, an hour meeting is 21 -- is a long meeting? 22 A: Yes. 23 Q: All right. Now, do you recall, first of 24 all, what was the purpose of the meeting and who invited all 25 these people.

1 A: Well, the purpose was to introduce Dell 2 Financial to the powers that be, which would be her and Jim 3 Andrew. Although, Jim Andrew probably knew Dell Computer, he 4 might not have known Dell Financial and -- and was to -- as 5 we said, to sell -- sell them on who Dell Financial is. 6 At the time of these bids, is trying to sort 7 of -- to develop a profile for your own company because 8 sometimes it's dominated by the big players and they would be 9 a smaller player. 10 So they would be telling them about their 11 story. They might have had a PowerPoint presentation. 12 Q: Do you -- do you remember whether they did 13 or not? 14 A: They -- I remember Scott was using some 15 kind of presentation. 16 Q: And what's your -- what's your role at 17 this kind of introductory meeting where you're basically just 18 there to tell them all about your client? 19 A: I think to sort of facilitate; to sort of 20 -- you know, so people feel comfortable. You know, and so 21 the meeting harmonizes, you might say, and people, sort of, 22 get the information they want and hopefully they're able to 23 work together. 24 Q: Is -- am I right in saying that your main 25 function is getting these people together to talk?

1 A: Yes. 2 Q: And then when you're at that meeting, 3 you're not a leasing expert by any stretch of the 4 imagination. You're there to, hopefully, make things go 5 smoothly? 6 A: Yes. 7 Q: Okay and every once in a while, when you 8 think you can do that, you put your two (2) cents in. 9 Otherwise, you don't say anything? 10 A: Yes. 11 Q: All right. Now, what do you remember 12 about the meeting -- the issues at the meeting that were 13 brought up by Ms. Liczyk or any of the other attendees? 14 A: Well, are you asking me for Ms. Cross' 15 notes or my own recollection? 16 Q: No, just your own recollection. 17 A: Well, I remember, as I already said, 18 introducing the company to the scene, you might say. 19 Secondly of all was getting into this issue of leasing as 20 opposed to purchasing because it was sort of known that, how 21 I found out -- I didn't think the Treasurer was interested in 22 leasing. No, it was the Budget Committee, actually and then 23 the other question was -- that's about all I can remember. I 24 mean -- 25 Q: All right. Well, we'll -- we'll go

1 through the notes. I don't -- 2 A: I mean, there might have been o -- other 3 technical stuff. I just don't remember. 4 Q: All right. You said that you didn't 5 remember or recall how you'd know, but you didn't think that 6 the Treasurer was interested in leasing. Can you -- first of 7 all, did you share that information with your clients, DFS? 8 A: Well, I said to them, from the beginning 9 there must have been some investigation I did, is that I 10 don't know if the staff are really interested in leasing. 11 There's a -- you know, there as a feeling that 12 with IT that around the City that it was costing a lot of 13 money, because they kept having to update their equipment, 14 which is a just a fact of life with IT. 15 But, it's hard when you're spending those 16 dollars. And -- so then you wonder why they wouldn't be 17 interested in leasing, but, they seem to be sold on this idea 18 of still purchasing. 19 I don't know -- oh -- I remember, Wanda once 20 told me that she thought the City could borrow cheaper than a 21 leasing company. I remember her telling me that once. 22 Q: Just to your best recollection, when would 23 that have been? We're talking '99 here -- 24 A: When Wanda told me that? 25 Q: Yes, when Ms. Liczyk told you that?

1 A: Probably early on. 2 Q: Early on in 1999? 3 A: Probably when I started looking into this. 4 Q: I see -- 5 A: I might have spoken to her or ran into her 6 or whatever, but, I remember that was her argument. That is, 7 if they had to borrow, why wouldn't they just borrow 8 themselves as a municipality, as opposed to leasing. 9 Q: Interesting enough, if you go -- just on 10 that particular issue, page 14, look at the first -- 11 A: Are you talking about Ms. Cross' notes? 12 Q: Yes. 13 A: Yes. 14 Q: Look at the first entry there: 15 "Wanda - sold on the idea." 16 What does that mean to you? 17 A: Well, I can't tell you what Susan Cross 18 wrote. But, it could -- I'd just be speculating. 19 Q: Well, did Ms. Liczyk say anything at that 20 meeting that would be -- that would suggest to Ms. Cross or 21 yourself, that she was sold on the idea of leasing? 22 A: I think that she was looking at leasing 23 then. Because I remember she said, that you better get the 24 political level on side. That was one (1) of the things I 25 remember from a meeting.

1 So, that would be my sense, that she might 2 have been coming around. 3 Q: Well, do you think she was coming around 4 as a result of your interventions or -- 5 A: No -- 6 Q: -- just -- 7 A: -- no I don't -- 8 Q: -- by virtue of some process? 9 A: Beg your pardon? 10 Q: She was coming around by virtue of some 11 kind of process I take it? 12 A: I mean she'd obviously been thinking about 13 it. That was my sense. 14 Q: Well, you also said that the Budget Chief, 15 I take that to be Mr. Jakobek, wasn't particularly interested 16 in leasing? 17 A: No. 18 Q: Well, where did you get that information? 19 What was his problem with leasing? 20 A: I just -- just had heard that he was very 21 negative on IT anyway. He always complained about these IT 22 companies, that he thought that they were ripping off the 23 City because they were always putting in new equipment. 24 And he -- when anything -- any idea they had, 25 he usually was very negative. So, I don't know where I found

1 out about this, I think it was more from hearing about 2 Wanda's view that leasing was not a preference for the City. 3 And I don't know where I got that from. 4 Q: What -- 5 A: I think it was from her actually. 6 Q: Do you know, whether was anything at this 7 meeting that particularly turned her around? 8 A: No, I don't think this meeting was -- I 9 think what the meeting ended up establishing was, they found 10 out about Dell Financial this company does leasing, and that 11 they feel that with this -- with their -- you know, their 12 wherewithal, I guess is the best word to use, that they would 13 be a suitable partner for the City. 14 Q: Well, if that -- if that apart from, you 15 know, these notes, is that all you can recollect, as to that 16 -- the main thrust of Dell's pitch, DFS's pitch? 17 MADAM COMMISSIONER: Mr. Manes, in fairness to 18 Mr. Lyons, you didn't ask him to look at the notes to see if 19 they assist in his memory, at all. You asked him to 20 remember. 21 MR. RONALD MANES: No, I appreciate that. 22 That's what I'm just asking -- 23 MADAM COMMISSIONER: You said, apart from 24 these notes. 25 MR. RONALD MANES: Yes, apart from the notes.

1 If he just has any independent recollection of what the 2 thrust of Dell's -- Dell's -- DFS' main pitch was. 3 4 CONTINUED BY MR. RONALD MANES: 5 Q: Do you -- do you recall what -- what your 6 clients main pitch was, and why it's better than everybody 7 else? 8 A: They got off on some discussions, I mean, 9 you know, it's hard. You put me in front with Susan's notes 10 here, and I'm sort of skimming them and, you know, so now I'm 11 trying to deal with my recollections, as opposed to the 12 little notes here. 13 I'll try and deal with my recollection, as 14 opposed to looking at these notes. And my recollection was 15 that they -- they were finding out about Dell Financial 16 Services, they were finding out about leasing as opposed to 17 purchasing, and then they were getting into a lot more 18 technical issues. 19 And they did have a relationship with Dell 20 Computers. So, there was, sort of, this synergy of Dell 21 Computer doing some of the talking for Dell Financial as to 22 some of the abilities that they had. 23 I don't know, I mean, I'm not being very clear 24 because that's all I can remember. 25 Q: I appreciate that. The -- Mr. Mortensen

1 would have been talking about Dell Computers -- 2 A: Right. 3 Q: -- involvement in this. And Mr. 4 Marentette would have been talking about the -- the DFS' 5 involvement -- 6 A: Right. 7 Q: -- with Dell Computer. 8 A: It was sort of a teaming that they were 9 doing. 10 Q: In terms of the information that you were 11 getting about what the Budget Chief thought, and about 12 leasing, what Ms. Liczyk thought about -- this is leasing IT. 13 Was Mr. Andrew of any assistance to you in 14 getting this information? 15 A: You mean, information on this leasing? 16 Q: Yes, whether this -- what they -- what the 17 staff's inclinations were, whether to lease or to buy? 18 A: I don't know if I got any information from 19 him because this was really more in the finance department. 20 I mean, I guess the only role he has leasing 21 of hardware, right, so that would be in the IT department, 22 and he would be part of the process. 23 But, I don't even know what his view was on 24 purchasing or leasing, still to this day. I assume he was 25 happy with leasing.

1 Q: The -- according to this Tab 36, in your 2 Volume 2 -- 3 A: Hmm hmm. 4 MADAM COMMISSIONER: Before we go there, Mr. 5 Lyons, when Sue Cross took notes, did she take as people were 6 talking; is that when she would take her notes, or did she do 7 it at the end of the day? 8 THE WITNESS: No, no. She -- she would do it 9 then, and then she'd go back and prepare a memo. Now, if she 10 didn't do it the same day, it wasn't as good because her 11 memory would get more faulty. 12 MADAM COMMISSIONER: Right. 13 THE WITNESS: But hopefully she did it at the 14 end of the day, but you know what happens, they get busy. 15 MADAM COMMISSIONER: But when she went to the 16 meeting, she started taking the notes -- 17 THE WITNESS: Right. 18 MADAM COMMISSIONER: -- and take it all the 19 way through, pretty much. Is that what would happen then? 20 THE WITNESS: Right. 21 MADAM COMMISSIONER: And, okay. Thanks. 22 THE WITNESS: So, I'm going to 36. 23 24 CONTINUED BY MR. RONALD MANES: 25 Q: 36. These are just --

1 A: Oh, the phone calls. 2 Q: -- the phone calls. And you'll see that 3 there is a number of phone calls from -- from you, from Mr. 4 Andrew to you, right through -- well, I'm just going to -- to 5 one section here, right to June the 8th, '99. 6 It looks like about every -- January, 7 February, March, April, May, June. Every month there's -- 8 there's some kind of telephone discussion, in that early 9 period. 10 And then, if you look at Page 3, there's 11 another one from you to Mr. Andrew, June 7th, '99. And I'm 12 just wondering, in all those telephone calls, discussions, 13 weren't you ever discussing your client, DFS? 14 A: You know what, I had three (3), or four 15 (4) software vendors at that time, plus a major integrator, 16 and, you know, I was doing work for Dell Computer. 17 It's possible, but it just wasn't -- I had a 18 lot of different things going on. It just wasn't, you know, 19 until I got into this issue, until we got close to it, I 20 didn't even realize how big a contract it was even. 21 And I just didn't -- I might of spoken to him 22 about it, it's quite possible. We were friendly. I mean, I 23 might have asked him about it, but I had other major issues, 24 I remember, at the time, going on. 25 Q: Did you find out at this meeting, April

1 23rd, how big of contract this was, as you put it? 2 A: This April 23rd meeting? 3 Q: Yes. 4 A: That's when I started to realize, 5 actually, that there was a lot of money involved. 6 Q: You didn't know that at the beginning when 7 you -- 8 A: No. 9 Q: -- when you accepted the retainer? 10 A: No, I didn't know anything. I just knew 11 they were, so what's leasing? So you lease a computer. I 12 mean -- I just didn't even think. Purchasing is always a 13 bigger number in my head because you're -- purchasing this 14 big -- well, small, whatever, right? 15 Q: Hmm hmm. 16 A: And leasing always to me was an 17 inexpensive thing, so I never paid much -- you know, it's 18 just a layman's view of things. 19 Q: The -- did you come to an understanding of 20 how big this was or could be? This contract. 21 A: Did I? 22 Q: Yeah. 23 A: As I went through the process. 24 Q: How much? 25 A: How much it was?

1 Q: How much did you -- did you think it was 2 worth, this contract? 3 A: By -- it was worth a lot at the end. I 4 mean, I don't know what it was worth. It was worth millions. 5 I never thought it was -- 6 Q: Was it ten (10), twenty (20), fifty (50), 7 one hundred (100)? 8 A: I think -- well, it was worth -- someone 9 -- wasn't it worth 100 million or something? 10 Q: When you say someone, do you recall ever 11 discussing how much this was worth with Mr. Marentette or Mr. 12 Simone? 13 A: Well, that one discussion we had in which 14 I asked for a success fee it was discussed. 15 Q: Hmm hmm. 16 A: But I don't remember the number he gave 17 me. It was a lot but I knew by the time I met him, it was 18 already worth a lot. 19 Q: All right. 20 A: I couldn't put -- it was -- it was just 21 worth a lot. 22 Q: All right. If you go back to this April 23 23rd meeting. 24 A: Hmm hmm. 25 Q: You've told us everything you recollect

1 independently. If you look at these notes -- 2 A: No April -- 3 Q: Maybe these can -- you can take them. 4 A: These are Susan Cross notes again? 5 Q: These are Susan Cross notes again, Mr. 6 Lyons, at Tab 3. 7 A: Yeah, I got it. Okay. 8 Q: Now, here there's a note that it looks as 9 if it: 10 "Wanda --" 11 And then if you look down: 12 "-- - has been burned in the past with 13 computer leasing but has also learned a 14 lot." 15 Do you remember any discussion with Ms. Liczyk 16 about b