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 13th, 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               )
 16  William Anderson        )Wanda Liczyk
 17  Valerie Dyer            )Dell Computers
 18  Jennifer Lynch          )
 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 Exhibits 4 5 JEFFREY STEPHEN LYONS, Resumes, 6 Cross-Examination by Ms. Valerie Dyer 5 7 Cross-Examination by Mr. Hugh MacKenzie 25 8 Cross-Examination by Mr. William Anderson 42 9 Cross-Examination by Ms. Bay Ryley 64 10 Cross-Examination by Ms. Linda Rothstein 68 11 12 Certificate of Transcript 281 13 14 15 16 17 18 19 20 21 22 23 24 25

1 EXHIBITS 2 No. Description Page 3 32, Volume II Unbound document 87 4 titled "Jeff Lyons" 5 Additional tabs 37 and 38 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

1 --- Upon commencing at 10:00 a.m. 2 3 THE REGISTRAR: The Inquiry is now in session. 4 Please be seated. 5 MADAM COMMISSIONER: Good morning. Ms. Dyer, 6 are you next? 7 MS. VALERIE DYER: I am, thank you. 8 MADAM COMMISSIONER: Mr. Lyons, this is 9 Valerie Dyer and she is the lawyer for Dell Computer 10 Corporation. 11 THE WITNESS: Thank you. 12 13 CROSS-EXAMINATION BY MS. VALERIE DYER: 14 Q: Good morning, Mr. Lyons. 15 A: Good morning. 16 Q: I just want to clarify some of your 17 evidence in the last couple of days and to some extent, get 18 your comments on evidence of other people. May -- and, of 19 course, focussing on my client which is Dell Computer 20 Corporation. 21 At various times yesterday, you described the 22 relationship between my client, Dell Computer, and DFS as 23 follows: You said DFS was either a subsidiary or a sister 24 company and that you were introduced by another client who 25 was part of this company. So I just want to take those

1 separately, one at a time. 2 With respect to whether DFS was a subsidiary 3 company. The evidence here before the Commissioner from Mr. 4 Barrett and from Mr. Simone has been that DFS was, in 1999 5 until November 1999, a 100 percent subsidiary of Newcourt 6 Credit Group and you, sir, I take it have no facts, no 7 evidence, to the contrary? 8 A: Yes. 9 Q: And so you would accept that evidence as 10 accurate? 11 A: Yes. 12 Q: With respect to the allegation that it was 13 a sister company, I take it you're using that term 14 colloquially, as a layman, because as a lawyer you know 15 there's no such thing as a sister company? 16 A: Yes. 17 Q: And with respect to whether DFS is 18 affiliated, which some people refer to as sister companies, 19 there is no evidence that DFS and Dell Computer Corporation 20 in Canada were at any time affiliated? Do you have any 21 evidence? 22 A: No. 23 Q: So when you said it was either a 24 subsidiary or sister company, you were just using that phrase 25 loosely?

1 A: Yes, and that's what I thought the 2 relationship was at the time but I didn't make the inquiries 3 or have the knowledge of the others. 4 Q: Right and when you filed the registration 5 -- the provincial registration of lobbyist for Dell Computer 6 Corporation, my client, there is a box on that form to fill 7 out if there are any subsidiaries you represent. Do you 8 remember that? 9 A: That's possible. 10 Q: Okay. Let's take a look at it. Volume 2. 11 A: Hmm hmm. 12 Q: Tab 10. 13 14 (BRIEF PAUSE) 15 16 Q: Do you have that in front of you, sir? 17 A: Yes. 18 Q: Okay. At the top of the page, it's the 19 file -- initial filing date Tuesday, February 2nd, 1999. 20 A: Hmm hmm. 21 Q: Bottom section of the page, Section D, 22 Other beneficiaries, D1 Subsidiaries. 23 A: Yes. 24 Q: And it requires you to record, if your 25 client is a corporation, for each subsidiary of the

1 corporation that has a direct interest in the outcome of your 2 activities on behalf of your client, give subsidiary 3 information and you didn't fill anything out? 4 A: Yes. 5 Q: So, as of the time you first filed this 6 document through to its termination date, Janu -- June 7, 7 2001, you never registered any representation of DFS as a 8 subsidiary of Dell Computer Corporation? 9 A: Yes, and I never was doing work for Dell 10 Financial Services at the province. 11 Q: Okay. Now, at another time in your 12 testimony yesterday you said that your work for DFS was, just 13 an adjunct for work I was doing for Dell? 14 A: Yes. 15 Q: Or that the whole Dell Financial was just 16 an adjunct -- sorry -- that DFS was an adjunct to Dell 17 Computers. So one is an adjunct to the work and the other, 18 the company was an adjunct. 19 A: Yes. 20 Q: Okay. So let's deal with the second one 21 first. Would you agree with me, sir, that DFS is not an 22 adjunct of Dell Computer Corporation? 23 A: Yes. 24 Q: Okay. And then when you say that it's an 25 adjunct for the work, I would take that, perhaps, as an add-

1 on to the work you were doing for Dell? 2 A: Yes. 3 Q: But it was not such an add-on that you 4 included the work for DFS under the monthly fee that Dell 5 Computer Corporation was already paying you, correct? 6 A: That's correct. 7 Q: There were two (2) separate fees, correct? 8 A: Correct. 9 Q: There were two (2) separate contracts, 10 correct? 11 A: Correct. 12 Q: There was not a sharing of the cost that 13 Dell Computer Corporation had an obligation to pay you? It 14 wasn't a sharing of that cost between the two (2) companies, 15 was it? 16 A: That's right. 17 Q: Now, when Mr. Barrett gave his testimony 18 and he was going from his recollection without any documents, 19 he testified that the DFS fee, quote: 20 "Could have been part of their overall fee" 21 Close quote and that his general recollection 22 was that DFS was, quote: 23 "Part of the Dell fee" 24 Close quote. Now, sir, that wasn't the deal 25 you had with DFS, was it?

1 A: No. 2 Q: There was, as you just said, two (2) 3 separate fees, two (2) separate contracts, correct? 4 A: Right. 5 Q: Okay. Now, I'd like to move to your 6 testimony yesterday concerning MFP and Dell. 7 And without getting into any of the details, 8 just on a large scale view, I understood from your evidence 9 and from the evidence of other people at this Inquiry, that 10 MFP has acted as the leasing company for customers who 11 specify and use computers manufactured by Dell Computer 12 Corporation, correct? 13 A: Right. 14 Q: And would you agree that where a customer, 15 such as a school board, specifies Dell equipment that either 16 MFP or DFS or any other leasing company can come in and 17 provide the lease financing? 18 A: Right. 19 Q: So, the customer chooses the equipment and 20 the customer chooses the leasing company? 21 A: Right. 22 Q: Now, yesterday you described the 23 relationship between MFP and Dell Computer as incestuous and 24 I just want to deal with that. First of all, you'll agree, 25 of course, that two (2) corporations can't commit incest?

1 MADAM COMMISSIONER: Well -- 2 THE WITNESS: That's -- that's correct. 3 4 CONTINUED BY MS. VALERIE DYER: 5 Q: That's pretty obvious and if Dell is -- if 6 Dell Computer is getting sales leads or opportunities from 7 MFP, there's nothing the matter with that? 8 A: Right. 9 Q: And if MFP is getting leasing leads or 10 leasing opportunities from Dell Computer because the 11 equipment is already in place, say at the City of Toronto, 12 there's nothing the matter with that? 13 A: Absolutely. 14 Q: So when you said the relationship was 15 incestuous, did you just mean that the two (2) companies 16 worked together from time to time? 17 A: Yes. 18 Q: Okay. 19 MADAM COMMISSIONER: Can you just help me a 20 little bit with that, Mr. Lyons, because if the -- if the two 21 (2) companies -- there are companies that can work together 22 from time to time that one wouldn't describe as incestuous. 23 Was there something about this that made you 24 feel that you would prefer to use that adjective for -- for 25 them as opposed to other companies that you have? You have

1 other clients who work together and -- 2 THE WITNESS: No, I think it was too strong a 3 word to use and they did have a good relationship. That's 4 all I can say. 5 MADAM COMMISSIONER: Okay. 6 THE WITNESS: It was a very good relationship, 7 was my sense. 8 MADAM COMMISSIONER: Okay. 9 10 CONTINUED BY MS. VALERIE DYER: 11 Q: Now, as I understood your evidence, one of 12 the reasons that you met with and ultimately were retained by 13 MFP is because Dave Kelly or somebody from Dell Computer 14 suggested you might want to talk to them? 15 A: Ye -- 16 Q: Is that fair? 17 A: That was one of the -- th -- that was part 18 of it, right. 19 Q: Right. And you were -- you were 20 questioned by the Commissioner yesterday and also by Mr. 21 Manes about calling my client, Dell Computer Corporation, to 22 clear conflicts as well as calls to D -- to DFS and after you 23 said in answer to the Commissioner's question that it must 24 have been DFS you had called about the Toronto District 25 School Board, Mr. Manes followed up and you said, well, it

1 was possible you called Dell Computer and so my question for 2 you is since both MFP and DFS have acted as the lease finance 3 companies for customers that lease Dell equipment, why would 4 you ever have to clear a conflict with Dell Computer 5 Corporation, my client? 6 A: I agree. I mean, I didn't think that I 7 had to. 8 Q: You didn't think you had any conflict -- 9 A: Right. 10 Q: -- to clear with Dell Computer? 11 A: R -- right, because they were a customer. 12 Q: Right. And you wouldn't call Dell 13 Computer to clear a potential conflict, correct? 14 A: Not in that type of situation. 15 Q: Right. Mr. Manes asked you, sort of, late 16 in the day that when it came time to consulting on the DFS 17 matter, you would often call Dell Computer people, and you 18 said, sometimes, and he went on to something else. 19 I just want to deal with that. As I 20 understood your evidence, the retainer you had from DFS was 21 related to the City of Toronto leasing RFQ, is that right? 22 A: Yes. 23 Q: And with respect to the work you did for 24 DFS on the City of Toronto leasing RFQ, you gave the evidence 25 of the various discussions you had with Mr. Marentette and

1 Mr. Barrett and others? 2 A: Yes. 3 Q: Leaving aside the first meeting, I 4 understand a meeting -- a breakfast meeting where you were 5 introduced, did you call anyone at Dell Computer about the 6 City of Toronto leasing RFQ on which you were advising DFS? 7 A: Well, I do recall I said in the meeting of 8 April 23rd, I think it was that date -- 9 Q: Yes -- 10 A: -- that Mr. Mortensen from Dell Computer 11 was present. 12 Q: Yes, I'm going to come to that meeting 13 shortly. But other than that meeting, am I right that there 14 were no calls or inquiries that you made to my client about 15 this leasing RFQ? 16 A: Not that I can recollect. Now, don't 17 forget that when I went to those meetings at Dell Computer, 18 you would sometimes see the Dell Computer people, you might 19 be chatting with -- with them as well as Dell Financial. 20 But I have no recollection of any specific 21 conversation. It's just casual conversation you might have 22 as you walk around their office, which you know are very 23 open. 24 Q: You might have or you might not have. 25 You're just speculating.

1 A: This is easily said, right. 2 Q: Right. And you said you went to the Dell 3 Computer office, we've heard evidence here that Dell Computer 4 and Dell Financial Services had a space sharing and cost 5 sharing arrangement, correct? Or did you know that? 6 A: Well, I didn't know that -- 7 Q: Okay -- 8 A: -- but they did have an office sharing. 9 Q: Okay. Well, accept that -- assume for the 10 moment that Mr. Barrett's evidence is truthful, when you said 11 you went to the Dell Computer office, what you're doing is 12 you're going with respect to the City of Toronto leasing RFQ 13 -- 14 A: Right -- 15 Q: -- you're going to the office address to 16 meet with DFS people? 17 A: Right. 18 Q: And it's possible and it might have 19 happened, but, you don't know if you ever saw anybody from 20 Dell Computer on your way to that meeting, correct? 21 A: Right. 22 Q: Okay. Then let's deal with the April 23rd 23 meeting. And I'd ask you to take Sue Cross' binder, which is 24 I think Exhibit 31. 25 A: Which Tab?

1 Q: Tab 3, page 14. 2 A: Yes. 3 Q: Now, with Mr. Manes yesterday, I believe, 4 he established that the notes of this particular meeting run 5 from pages 14 to 24, well you could just perhaps turn up page 6 24, if you wanted to, to satisfy yourself. 7 8 (BRIEF PAUSE) 9 10 Q: Okay. And did you review these notes 11 before coming to give your testimony at this Hearing? 12 A: I read them, but these are not my notes, 13 they're her notes -- 14 Q: Yes -- 15 A: -- so they're just what they are. 16 Q: All right. But am I right, sir, that you 17 were -- you read through these notes to see if they did 18 refresh your memory as to anything that happened at the 19 meeting? 20 A: Yes. 21 Q: And to the extent that it refreshed your 22 memory, you could give evidence, if it doesn't refresh your 23 memory, they're just her notes? 24 A: Right. 25 Q: Okay. So, what we have is your best

1 recollection of what happened at that meeting, with the 2 assistance of these notes, correct? 3 A: Yes. 4 Q: Okay. Let's look at page 14. At page 14, 5 it starts with listing the participants that included a 6 representative of my client, Mr. Mortensen. 7 The second bullet or hyphen down says: 8 "Issue is they bought some equipment from 9 SAP now have to find a way to pay for it." 10 If you just keep your finger there and flip 11 over to page 22. 12 At 22, you have the handwriting page, it will 13 be a little easier to see where the -- how it's set up. 14 There's a slash at the top, it says: 15 "Very web based company." 16 And then it says: 17 "Jim - automated interfaces, Dell has SAP 18 compatible." 19 Now, looking at those two (2) notes, does -- 20 do you have any recollection of the SAP accounting software 21 and SAP compatible hardware being discussed at this meeting? 22 A: No. 23 Q: If you look at this note at page 22, where 24 it says: 25 "Jim - automated interfaces."

1 Do you have any recollection of Jim Andrew 2 making any comment about automated interfaces or Dell being a 3 very computer -- very web based company or anything like 4 that? 5 A: I have no recollection. 6 Q: Do you have any recollection of anything 7 that Mr. Andrew said at the meeting? 8 A: No. 9 Q: Could I ask you to turn back to page 14, 10 please? 11 12 (BRIEF PAUSE) 13 14 Q: If you look at page 14, about the third 15 bullet down, I have the type written copy which makes it 16 easier to say it's the third paragraph. 17 And what it says is: 18 "Scott - four thousand (4000) new Dell 19 desktops re-deploy eight thousand (8000) 20 new desktops." 21 You see that? 22 A: Yes. 23 MADAM COMMISSIONER: Sorry page 14? 24 THE WITNESS: 17. 25 MS. VALERIE DYER: 17.

1 MADAM COMMISSIONER: Thank you. 2 3 (BRIEF PAUSE) 4 5 CONTINUED BY MS. VALERIE DYER: 6 Q: Now, with the benefit of this note, 7 does -- do you have any recollection of Scott Marentette 8 addressing the meeting and talking about four thousand (4000) 9 new Dell desktops and re-deploying eight thousand (8000) new 10 desktops? 11 A: Some recollection. 12 Q: And without the note, can you tell -- did 13 you have any recollection of what Mr. Marentette had to say? 14 A: Not much, but I thought that Dell had sold 15 some four thousand (4000) computers to the City, prior to 16 that, that's sort of my only recollection, in that context. 17 Q: All right. If you then skip the next 18 note, and it says: 19 "Refer to page 3 of handout." 20 Do you recall any handout that Mr. Marentette 21 had at the meeting? 22 A: No. 23 Q: And the discussion that follows quote: 24 ""Bulldoze" [close quote] - going from mis- 25 mash of today a standardized system

1 platform." 2 Is there a recollection of anybody addressing 3 that issue? 4 A: No. 5 6 (BRIEF PAUSE) 7 8 Q: Mr. Lyons, can you, by looking at these 9 notes, tell anything that was said by my client, Bruce 10 Mortensen? 11 A: No. 12 Q: Now, you said yesterday that there was 13 sort of a synergy with Dell doing some of the -- Dell 14 Computer doing some of the talking for Dell Financial, as to 15 the abilities that they had. 16 You said: 17 "I don't know, I mean I'm not being very 18 clear, because that's all I can remember." 19 Is it fair to say, you have a -- just a 20 general recollection that Bruce Mortensen might have said 21 something at the meeting? 22 A: Yes. I mean he knew some of these people. 23 Q: All right. But do you have -- is it fair 24 to say, you have no specific recollection of anything 25 specifically that Mr. Mortensen said?

1 A: No, I have no recollection. 2 Q: And Mr. Lyons, I understand that if Bruce 3 Mortensen were called to testify, he would say that you 4 chaired the meeting or facilitated the discussion, and that 5 he said very little after the initial introductions were made 6 and the initial chitchat. 7 Do you have any recollections to the contrary? 8 A: I wouldn't quarrel with that. 9 Q: Thank you. 10 11 (BRIEF PAUSE) 12 13 Q: Now, there was some evidence given before 14 you were called through Mr. Simone, to the effect that you, 15 Mr. Lyons, were foisted upon DFS and foisted by Dell Computer 16 and then when your counsel was asking the questions, he 17 changed it and asked Mr. Simone to confirm that he had been 18 forced to work with you. At another point, he suggested you 19 had been ordered by Dell Computer to work with DFS. 20 Now, my question for you, sir, is did you ever 21 get any order from my client that you had to work with DFS? 22 A: No, not whatsoever. 23 Q: Right. You were not forced to work for 24 DFS, were you, sir? 25 A: No.

1 Q: You were not acting against your will when 2 you took on this consulting assignment for DFS, were you? 3 A: Absolutely not. 4 Q: No, you were pleased to have the work and 5 the additional fees, correct? 6 A: Yes, and I thought that Dell Computer was 7 a marquee client to have, so I was very happy to have the 8 work. 9 Q: Thank you. Those are my questions. 10 MADAM COMMISSIONER: Just with respect to that 11 last one, Mr. Lyons. I'm not quite sure, you may have said 12 this the other day, but why Dell Financial was charged three 13 thousand (3,000) as opposed to the amount that you were 14 charging DCC, Dell? 15 THE WITNESS: Well, it was a one-off situation 16 and it was, in my mind, an adjunct, as I had said. It 17 probably appears they're not an adjunct to their relationship 18 -- financial relationship, but it was, sort of, that 19 association. So I felt that that was adding on to what I was 20 doing already but on a specific project. 21 MADAM COMMISSIONER: Okay. So y -- okay. All 22 right. 23 MS. VALERIE DYER: Maybe I could just follow 24 up with that. 25

1 CONTINUED BY MS. VALERIE DYER: 2 Q: We've heard some evidence that there would 3 be -- there would be no fee paid by DFS to Dell Computer on 4 the City of Toronto deal. Was that disclosed to you? 5 A: No fee paid -- say -- just say that again? 6 Q: There w -- Mr. Barrett testified that 7 there would be no payment of an origination fee on this 8 particular deal by DFS to Dell Computer. Did you have any 9 knowledge of -- 10 A: I had no knowledge of that. 11 Q: Right. Okay and so when you say that it's 12 an add-on, would you see a benefit to Dell Computer if DFS 13 was the leasing company that had the leases and the ability 14 to refresh equipment, from time to time, at the request of 15 the City? 16 A: I would assume that they would be a 17 customer. 18 Q: Right and did you see any benefit to Dell 19 Computer if DFS won this -- won this particular leasing RFQ? 20 A: Only in the sense that I thought Dell 21 Computer owned something of Dell Financial. You say they 22 don't. Because I would imagine that Dell was the best pr -- 23 well, I'm not a salesperson for Dell but they had the b -- in 24 my mind, the cheapest product and best product. So I think 25 they could have sold it to anybody.

1 Q: Okay and the City of Toronto decided that 2 it was the -- the computer desktops of choice for the Y2K 3 rollout, so the City of Toronto must have shared your opinion 4 that this was the best equipment at the best possible price 5 for their needs? 6 A: Absolutely. 7 MADAM COMMISSIONER: Just before you leave, 8 Ms. Dyer. Mr. Lyons, I just wanted to ask you, was the -- 9 the contract with DFS, was that for three (3) months or six 10 (6) -- was three (3) -- 11 THE WITNESS: Six (6) months, I thought. 12 MADAM COMMISSIONER: Six (6) months? Okay and 13 if that was in February -- okay. I thought, for some reason, 14 you s -- somebody had said it was three (3) months. It was 15 six (6) months contract? Okay. 16 THE WITNESS: I thought it was six (6). 17 MADAM COMMISSIONER: All right. So it didn't 18 run out before the -- before the decision was made to -- to 19 give the contract to MFP? 20 THE WITNESS: I think it ran out around -- 21 MADAM COMMISSIONER: Around that time? 22 THE WITNESS: -- that time. Yeah. 23 MADAM COMMISSIONER: All right. Okay. 24 MS. VALERIE DYER: Thank you. 25 MADAM COMMISSIONER: Thank you.

1 (BRIEF PAUSE) 2 3 MADAM COMMISSIONER: Okay. Mr. Lyons, this is 4 Hugh MacKenzie and he's the lawyer for Jim Andrew. 5 THE WITNESS: I got to meet them all. They've 6 all introduced themselves to me. 7 MADAM COMMISSIONER: Oh, have they? All 8 right. 9 THE WITNESS: They're very -- 10 MADAM COMMISSIONER: Okay. 11 THE WITNESS: -- well, in a sense, they're 12 members of the same bar. 13 MADAM COMMISSIONER: I don't get to see any of 14 that when I come in, so. 15 MR. HUGH MACKENZIE: Let me just add, Mr. 16 Lyons, before yesterday you had never met me? 17 THE WITNESS: No. 18 MR. HUGH MACKENZIE: Thank you. 19 THE WITNESS: But I do know the law firm. 20 MR. HUGH MACKENZIE: Thank you. 21 THE WITNESS: It's a good law firm. 22 MR. HUGH MACKENZIE: It's just -- I had to 23 clarify that point. 24 25 CROSS-EXAMINATION BY MR. HUGH MACKENZIE:

1 Q: Sir, I'd like to take you through a few 2 issues. The first thing I'd like to deal with is the Brother 3 Jeff Golf Tournament in August -- August 16th, 1999? 4 A: Hmm hmm. 5 Q: And there are two (2) references to this. 6 One (1) is Volume 2, Tab 25. The second Volume 1, Tab 12, 7 Begdoc is 13656. 8 MADAM COMMISSIONER: 13656? 9 10 CONTINUED BY MR. HUGH MACKENZIE: 11 Q: So, there's no need to go to them. 12 A: Okay. 13 Q: I'm not going to get that specific. 14 A: Okay. 15 Q: I understand that the Brother Jeff Golf 16 Tournament is a charity event? 17 A: Yes. 18 Q: And that the charity involved is prostate 19 cancer? 20 A: Absolutely. 21 Q: And I understand from Jim Andrew that 22 there was a fee to be paid of a hundred and fifty dollars 23 ($150)? 24 A: Yes. 25 Q: And I further understand from Mr. Andrew,

1 that that fee was paid by him personally? 2 A: It probably was and probably it was made 3 out to the Prostate Cancer Research Foundation. 4 Q: And I further understand that he was 5 provided a tax receipt? 6 A: Yes. 7 Q: Okay. I also understand from, Mr. Andrew, 8 that he took the day off as a vacation day, you wouldn't know 9 anything about that? 10 A: I wouldn't know that. 11 Q: Okay. Have you any policies with respect 12 to that sort of thing? 13 A: No. 14 MADAM COMMISSIONER: Him? 15 THE WITNESS: Well, if you think I'm going to 16 pay him to take -- no. 17 MR. HUGH MACKENZIE: Isn't that why they call 18 you Brother Jeff? 19 MADAM COMMISSIONER: Would you know Mr. Lyons, 20 whether he had paid personally? Would you know that? 21 THE WITNESS: I think they had to really. I 22 mean the City couldn't pay. 23 MADAM COMMISSIONER: But would you know that 24 yourself, whether -- 25 THE WITNESS: No, I'm probably guessing. But

1 I remember the cheques were payable right to the Foundation, 2 so they could get the receipt and I didn't know anything more 3 than that. 4 5 CONTINUED BY MR. HUGH MACKENZIE: 6 Q: But, if Mr. Andrew, were to produce the 7 receipt, sir, would that demonstrate that he himself had paid 8 the fee? 9 A: I'm not questioning it really. I mean I 10 think he did. Who else would have paid? 11 Q: Okay. 12 A: I mean -- 13 Q: The Brother Jeff Golf Day, sir, it's 14 generally well attended by staff and politicians? 15 A: Many -- and friends. 16 Q: And friends. The Police Chief was there 17 in '99? 18 A: Yes. 19 Q: Councillor Balkissoon was there in '99? 20 A: Yes, he came a couple of times. 21 Q: Councillor Moeser? 22 A: Yes. 23 Q: Wanda Liczyk? 24 A: Yes. 25 Q: Jim Andrew?

1 A: Yes. 2 Q: Jeff Griffiths, the auditor? 3 A: Yes. 4 Q: And Mr. Manes asked you if you had golfed 5 with Jim Andrew that day? 6 A: I didn't. 7 Q: No. Jim will say that he golfed with 8 Wanda Liczyk, David Thoms from Dell Computer and Councillor 9 Moeser. You would have no information -- 10 A: I'd have no -- I can't recollect that. 11 Q: Okay. Sir, I'd like to deal with the 12 issue of confidential reports and documents. 13 A: Yes. 14 Q: What I'd like to do is give my 15 understanding as to how these are dealt with and I'd like 16 your comments on each of the various points that I make, if I 17 could. 18 First, confidential reports or document are 19 printed on purplish paper? 20 A: That's what I understand. 21 Q: Okay. Second, is they bear a watermark 22 that is placed diagonally across the page and the watermark 23 says confidential? 24 A: Yes. 25 Q: Third, the copies of these documents are

1 distributed according to a pre-determined circulation list? 2 A: That I don't know. 3 Q: Okay. So, you wouldn't know what the 4 membership on that list entailed, would you? 5 A: No. 6 Q: Okay. Sir, did you ever ask Jim Andrew 7 for a copy of the confidential documentation related to the 8 IT leasing RFQ? 9 A: No. 10 Q: Did Jim Andrew provide you with a copy or 11 copies of confidential information related to the IT leasing 12 RFQ? 13 A: No. 14 Q: Did you on any occasion request 15 confidential information from Jim Andrew that related to the 16 June 1999 RFQ? 17 A: No. 18 Q: Did Jim Andrew on any occasion, provide 19 you with confidential information related to the June 1999 IT 20 RFQ? 21 A: No. 22 Q: Mr. Manes took you through five (5) phone 23 calls on July 16th and July 19th and the listing of those 24 phone calls is at Volume 2, Tab 36, there's no Begdoc number. 25 A: Yes, I've seen them.

1 Q: Jim Andrew will say with certainty that 2 these did not involve a request for information on your part, 3 of his providing you with information on the contents of the 4 report of July 1999, to the Policy and Finance Committee. 5 Yesterday, with Mr. Manes, you said that it 6 was possible that this had been the subject of one (1) or 7 more of those conversations. 8 Sir, in your opinion, is it probable that this 9 was not the subject of your and Jim Andrew's phone calls on 10 those dates? 11 A: Yes and now, I remember if -- if that was 12 the blackout period, then I wouldn't be making calls to 13 anybody and -- so if that's the blackout period, I definitely 14 wouldn't have spoken to him about that. 15 Q: Would there be something that you could 16 talk to Mr. Andrew about during that blackout period? 17 A: Well, there could be a number of things. 18 It might have been nothing even to do with any issue. It -- 19 you know, I can't tell you, but it wasn't that. 20 Q: Okay. 21 A: That was the blackout period, I 22 understand. 23 Q: As I understand, sir, the blackout period 24 extended from the 11th of June, 1999 to the 27th of July -- 25 A: Then --

1 Q: -- 1999. 2 A: Then we didn't speak about it. 3 Q: Okay. Now, I'd like to deal just with the 4 point that was raised yesterday with respect to comments by 5 Sue Cross that there -- there would be access to confidential 6 documents following Council or committee meetings. 7 And again, I'd like to give you my 8 understanding, sir, and ask for your comments, if you have 9 them. 10 MADAM COMMISSIONER: I don't think she said -- 11 in fairness to Ms. Cross, I don't think she said that there 12 would always be access but that sometimes things were left 13 behind. 14 THE WITNESS: Yes. I think -- 15 MR. HUGH MACKENZIE: Yeah. 16 MADAM COMMISSIONER: In fairness to her. 17 MR. HUGH MACKENZIE: Okay. Thank you. 18 19 CONTINUED BY MR. HUGH MACKENZIE: 20 Q: My understanding, sir, is that staff of 21 the Clerk's office attend Council and committee meetings. 22 Are you aware of that? 23 A: Clerk and -- 24 Q: The Clerk's office? 25 A: Yes. That who -- who attends?

1 Q: That the members of the staff of the 2 Clerk's office attend? 3 A: Yes. 4 Q: My understanding, as well, sir, is that 5 following these meetings of Council or committees, that Clerk 6 staff circulate around the room and pick up all documents 7 left behind? 8 A: I -- I -- I -- yes. 9 Q: Okay. Third, the meeting room or chamber 10 is locked down shortly after the meeting ends, by Clerk 11 staff? 12 A: I've heard that. 13 Q: Okay. The fourth point, sir, has to do 14 with tickets -- sports tickets, et cetera. On your first day 15 of testimony, Mr. Manes asked you if you had any recollection 16 of having provided sports or games tickets to either Jim 17 Andrew or his son. He specifically asked you about hockey or 18 basketball game tickets and do you recall any other tickets 19 given to Jim Andrew or hi -- to Jim Andrew for his son? 20 A: No, I mean, if he wanted -- if he asked 21 for tickets, I would provide them but it wasn't something 22 they asked. It might have -- it might have been, in my 23 recollection, a couple of times, if that. 24 Q: Okay. Jim Andrew will say that on one 25 occasion, he telephoned you and asked you if you'd be able to

1 obtain two (2) Buffalo Bill tickets for his sons and that 2 you did. So, you have no complaint with that -- 3 A: No, I wouldn't -- 4 Q: -- Mr. Andrew's testimony? 5 A: I do recall that, actually. 6 Q: Okay. 7 A: Because that was unusual. 8 Q: Why was that unusual? 9 A: No, because it was a game in Buffalo. 10 That's why I remember. 11 Q: Yesterday, sir, you mentioned to Mr. Manes 12 that at your first meeting with MFP people at MFP, that they 13 had appeared quite interested in the busi -- business of a 14 systems integration client. 15 A: Yes. 16 Q: Do you recall if the name of that client 17 were Prescient International? 18 A: Never heard of it. 19 Q: Okay. Was the name Karim Kassam 20 mentioned? 21 A: No, not at that meeting. 22 Q: Okay. Now, yesterday you mentioned to Mr. 23 Manes that you had no recollection of Jim Andrew being at the 24 meeting of April 23rd, 1999. Is that still your 25 recollection?

1 A: That's still my recollection. 2 Q: Okay. 3 A: I wasn't sure he was there. 4 Q: Jim Andrew will say that he met with Bruce 5 Mortensen of Dell Computer at the City Hall coffee shop on 6 April 22nd, 1999, at 8:30 a.m. 7 MADAM COMMISSIONER: On which day? Sorry. 8 MR. HUGH MACKENZIE: On April 22nd -- 9 MADAM COMMISSIONER: Hmm hmm. 10 MR. HUGH MACKENZIE: -- 1999, at 8:30 a.m. at 11 the City Hall coffee shop. 12 13 CONTINUED BY MR. HUGH MACKENZIE: 14 Q: Were you aware of that meeting, sir? 15 A: No. 16 Q: Okay. 17 A: Sorry, no. 18 Q: If I could turn you, sir, to your Tab 17 19 in Volume 2. 20 A: Okay. 21 Q: And I'm really hoping that my pages are in 22 order, I'm just not certain but if you could turn to the 23 second page of that. Is that the page, sir, that at the top 24 says: 25 "Meeting with Wanda - Dell Financial"

1 A: That's the one (1) that's been referenced. 2 MADAM COMMISSIONER: I don't seem to be right, 3 Volume 2, Tab? 4 MR. HUGH MACKENZIE: It's Volume 2, Tab 17, 5 Commissioner. 6 MADAM COMMISSIONER: Oh, I'm sorry. And the 7 second page is it? 8 MR. HUGH MACKENZIE: Yes, please. 9 MADAM COMMISSIONER: All right. I'm there. 10 11 CONTINUED BY MR. HUGH MACKENZIE: 12 Q: Now, if my reading of that is meeting with 13 Wanda - Dell Financial and then it says: 14 "Jeff/Bruce Mortensen, Scott Marentette, 15 Gord Barrett." 16 And then it says, it looks like, S-H-E -- 17 MADAM COMMISSIONER: It's actually me. It's 18 me. 19 MR. HUGH MACKENZIE: Me -- 20 MADAM COMMISSIONER: It was Sue Cross saying, 21 me. 22 MR. HUGH MACKENZIE: Okay. 23 24 (BRIEF PAUSE) 25

1 CONTINUED BY MR. HUGH MACKENZIE: 2 Q: And then Jim Andrew. Jim Andrew's 3 recollection is that he did not attend that meeting. Have 4 you any recollection, at all? 5 A: No, I mean I'm not sure he attended 6 either. I mean I just saw it here, and I assumed that that's 7 what happened. 8 Q: I look at that, me, and it looks like S-H- 9 R or S-H-E, which to me would -- 10 MADAM COMMISSIONER: Mr. MacKenzie, when Ms. 11 Cross was here. 12 MR. HUGH MACKENZIE: Yes? 13 MADAM COMMISSIONER: These are her notes and 14 she testified that it was, me. 15 MR. HUGH MACKENZIE: Okay. 16 MADAM COMMISSIONER: That she had written it 17 down as, me. We all thought it was, she, as well. 18 19 (BRIEF PAUSE) 20 21 CONTINUED BY MR. HUGH MACKENZIE: 22 Q: Sir, if you could turn to the fifth 23 page -- 24 A: Hmm hmm. 25 Q: -- of that document, it says:

1 "Jim - based on yesterday spoke about 2 integrating software into the same lease, 3 make the hardware software one (1) core 4 commodity." 5 And then it sets out the reason. 6 A: Hmm hmm. 7 Q: What if any recollections do you have with 8 respect to that comment, sir? 9 A: No recollection, sorry. 10 Q: Just a few general questions left, sir. 11 In 1999, how often did you formally meet with Jim Andrew, 12 either with or without clients? 13 A: That would be hard to guess. It wouldn't 14 be a lot. But, to -- like -- was it five (5) times, I don't 15 know. 16 Q: Okay. 17 A: Something like that. I don't recall a lot 18 of meetings. 19 Q: Much has been said about the role of 20 bureaucrats and serving the public interest. And I just 21 would like to ask you a few questions about that. 22 What if any observations did you make, as to 23 whether or how or how well Jim Andrew, in his position as 24 Executive Director of the Information Technology for the 25 City, served the interests of the public?

1 A: Well, he sure knew his business. That's a 2 good start. He had an understanding, I mean, frankly for me, 3 who is not very skilled in technology, I didn't even 4 understand totally sometimes what he was talking about. 5 But I learned a lot just listening to him. 6 And he seemed to have a good understanding of the whole 7 marketplace, which was so varied between all these different 8 companies, from software to hardware to platforms, et cetera. 9 So -- and it was a whole new City, you know, 10 so there was a lot to be done. You know, and it was a major 11 -- it was a major corporation. I mean it's one (1) of the 12 big governments, it is fourth or fifth biggest government in 13 Canada, sixth, somebody said. 14 And he seemed to be very much knowing what he 15 was doing and I guess the best reaction is what the private 16 sector thought of him. 17 They thought he was confident, they sort of 18 felt that when they talked to him, he knew what he was doing 19 and he dealt fairly. I didn't hear anything negative. 20 Q: Okay. What if any observations, did you 21 make, sir, as to whether, how or how well, Lana Viinamae or 22 others in the IT division served the interests of the public? 23 A: Well, as I said the other day, was that 24 she was the nuts and bolts of the operation. I mean, Jim was 25 sort of running the department, I don't know how many

1 employees they had and Lana sort of, was doing the more 2 detailed work. 3 And she was very highly regarded. I didn't 4 see her as much as I would see Jim, but I know that she was 5 well regarded in the industry. 6 I mean I think what you sort of get out of all 7 this, is that you really have to understand this area. I 8 mean, it's a very sophisticated area of technology and I 9 don't get -- you don't hear that today, which you used to 10 hear. I mean, it's just not the same and I think a lot of it 11 was due to Jim and Lana. 12 Q: On any occasions -- 13 MADAM COMMISSIONER: What -- what -- Mr. 14 Lyons, I don't -- I don't understand what you mean. 15 THE WITNESS: No, I just say in those days and 16 it was a big, of course they had a lot of work to do, it was 17 Y2K, but I mean, I got the impression, just talking to ano -- 18 these weren't even clients of mine. Just people from Sun 19 Microsystems to Peoplesoft (phonetic), some of the other ones 20 that you'd just be meeting and they were always impressed 21 which the way IT was being run and I just don't hear that 22 anymore. That's all I can tell you. 23 So the proof was, obviously, it was working at 24 some point and -- 25 MADAM COMMISSIONER: Are you hearing the

1 opposite now or are you just -- 2 THE WITNESS: Yeah, I'm hearing -- 3 MADAM COMMISSIONER: -- not hearing anything? 4 THE WITNESS: I'm not hearing anything 5 positive -- 6 MADAM COMMISSIONER: Okay. 7 THE WITNESS: -- to be quite honest and I 8 don't think there's much business being done there but I -- I 9 can't tell you that. I'm just guessing. 10 11 CONTINUED BY MR. HUGH MACKENZIE: 12 Q: Sir, on any occasion while in the position 13 of Executive Director of IT for the City, did you observe Mr. 14 Andrew preferring the interests of others over the public 15 interest? 16 A: No. 17 Q: On any occasion while -- while Mr. Andrew 18 was the Executive Director of IT, did you observe Lana 19 Viinamae or other staff of the IT division preferring 20 interest of others over the public interest? 21 A: No. 22 Q: On any occasion did you witness or hear 23 from any source of any behaviour or activity on the part of 24 Jim Andrew or anyone in his office that you believed was 25 untoward, unethical, or inappropriate?

1 A: No, it was good staff, in that respect. 2 Q: Thank you. Those are my questions. 3 MADAM COMMISSIONER: Thank you. Mr. Anderson, 4 for, you know I guess, Wanda Liczyk. 5 THE WITNESS: He's from Stapells, I know that. 6 MADAM COMMISSIONER: I'm sorry? 7 THE WITNESS: Or has it changed? 8 MR. WILLIAM ANDERSON: It did change. 9 THE WITNESS: Oh, sorry. There's a McMurtry 10 in there somewhere, I think. 11 12 (BRIEF PAUSE) 13 14 CROSS-EXAMINATION BY MR. WILLIAM ANDERSON: 15 Q: Mr. Lyons, I'm going to ask you some 16 questions about this meeting which we understand took place 17 on April the 23rd, 1999. 18 A: Yes. 19 Q: In your book of documents, you don't have 20 to turn this up unless we need to make reference to it, it 21 appears that the meeting was set up by Ms. Liczyk's secretary 22 for Ms. Liczyk. 23 A: Yes, that was my recollection. 24 Q: And it appears that the meeting was 25 scheduled to take place for one (1) hour and that's

1 consistent with your recollection? 2 A: Yes. 3 Q: And that it took place in Ms. Liczyk's 4 office? 5 A: Yes. 6 Q: And there was nothing secret about this 7 meeting? 8 A: No. 9 Q: You've been to hundreds of these types of 10 meetings? 11 A: Oh, for sure. 12 Q: All right and you would have met with any 13 number of the Commissioners are the City of Toronto over the 14 course of your practice? 15 A: Yes. 16 Q: And would have met with tens or hundreds 17 of City Councillors over the course of your practice? 18 A: Yes. 19 Q: Okay. And the point of this meeting, 20 according to evidence that I believe we heard from you -- was 21 to introduce the people at Dell Financial to Ms. Liczyk to 22 try to raise their profile? 23 A: Yes. 24 Q: Do you have Ms. Cross' book of documents 25 in front of you? Tab 3.

1 A: I have them now. 2 Q: I believe on Page 21. This is part of the 3 discussion you were having with Ms. Liczyk that was 4 specifically about Dell Financial. All right? 5 And it talks about being 70 percent Dell, 30 6 percent Newcourt. That Michael Dell started two (2) years 7 ago. Dell picks partners, used to have loose relationships, 8 more and more control of the system. Sort of the background 9 information -- 10 A: Yes -- 11 Q: -- about Dell Financial. And then there's 12 a pitch at the bottom of the page, DFS second to none in the 13 world? Isn't that what it says at the bottom of the page? 14 A: It says second to none. 15 MADAM COMMISSIONER: It the work place -- in 16 the world? 17 THE WITNESS: Well, let me see here. 18 19 CONTINUED BY MR. WILLIAM ANDERSON: 20 Q: Second to none, somewhere and something, I 21 take it. This was part of the sales pitch on behalf of DFS. 22 A: Yeah, work or world, I don't know. 23 Q: And then next it says it's backed by 24 Newcourt? 25 A: Yes.

1 Q: And everyone knows who Newcourt is? 2 A: Right. 3 Q: So, it has significant resources behind 4 it, so it would be capable of satisfying the City's 5 requirements in relating to leasing? 6 A: Yes. 7 Q: But the majority of this meeting had to do 8 with listening to the City and specifically to Ms. Liczyk 9 about what the issues were that had to be addressed at the 10 City of Toronto, listening to what she said, and then to 11 fashion solutions for the City of Toronto. Would you agree 12 with that? 13 A: Hmm hmm, yes. 14 Q: That's part of the intelligence gathering? 15 A: Right. 16 Q: And there's nothing unusual or untoward 17 about someone who wants to do business with the City of 18 Toronto, trying to find out exactly what the problems or 19 issues are that are being addressed by the City of Toronto? 20 A: Right. No, I mean you have to do that. 21 Q: Right. If you don't know what the issues 22 are, then you can't assist the City of Toronto in fixing them 23 or setting up a process, right? 24 A: Right. 25 Q: Now, at this meeting on April the 23rd,

1 you had understood that Ms. Liczyk was a little reluctant 2 with respect to entering into a leasing program? 3 A: That was my understanding. 4 Q: And she said, according to the note, 5 something to the effect that she had been burned before with 6 leasing, do you recall that? 7 A: I think in the note that Ms. Cross 8 prepared, right. 9 Q: Do you remember Ms. Liczyk talking about 10 an experience she had in North York where the payments for 11 leased assets were extended beyond the life of the asset? 12 A: Sorry, I don't remember that. 13 Q: Okay, did she mention anything about IBM 14 and a five (5) year lease? 15 A: I just don't remember that. 16 Q: Do you remember her saying that she wanted 17 to make sure that the lease payments would be tied to the 18 life of the assets? 19 A: Sorry -- I just don't remember. I mean 20 it's like very vague, but I just don't remember. 21 Q: That's possible that that was one (1) of 22 her stated goals, though? 23 A: Could have happened -- could have been 24 said. 25 Q: Okay. And you will also recall her saying

1 something about that the City can borrow money -- 2 A: That I remember. 3 Q: -- less expensive than -- 4 A: That I remember. 5 Q: Do you also recall further discussion with 6 respect to leasing and this would have been on behalf of the 7 DFS representatives, that one (1) of the advantages of 8 leasing and why it could be less expensive, was because there 9 was a tax shield, do you remember any discussion about 10 capital cost allowance or a tax shield? 11 A: For the City, you mean? 12 Q: Yes? 13 A: You mean the zero tax increase? 14 Q: No, we'll get to that in a minute. What 15 I'm talking about specifically, is a private corporation 16 being able to take advantage of capital cost allowance, 17 because it's a taxable entity, versus the City of Toronto 18 which doesn't pay taxes, so accordingly, there is no capital 19 cost allowance. 20 Do you remember any discussion about that? 21 A: I don't -- I mean I know that theory. 22 Because that's what you do when you, sort of, want to lease 23 like subway cars et cetera. 24 And there is a tax advantage. But I don't 25 remember it in this discussion, but it could have happened.

1 I know the theory, that's all I can say. 2 Q: And you mention subway cars. Is that 3 another area that the City of Toronto was looking at to do 4 leasing? 5 A: Yes. 6 Q: And do you know whether or not, that was 7 Councillor's Moscoe's initiative? 8 A: No. 9 Q: Do you recall, who it was that instigated 10 those discussions about subway car leasing? 11 A: No. I don't know it was even done. 12 Q: But you know that there was considerable 13 discussion at the City of Toronto -- 14 A: Right -- 15 Q: -- in relation to subway car leasing? 16 A: Right. 17 Q: And at that time, what was Councillor's 18 Moscoe's position? 19 A: Gee -- I couldn't tell you. 20 Q: Do you recall whether or not he was 21 currently sitting as the chair of the TTC? 22 A: It's possible. 23 Q: Okay. And do you recall whether or not 24 the City of Toronto staff were also looking into or requested 25 to look into the concept of fleet leasing?

1 A: Yes. 2 Q: Do you recall whose initiative that was? 3 A: It could have been staff. 4 Q: Or it could have been Council? You don't 5 recall? 6 A: I don't recall. 7 Q: Okay. But we know there were at least 8 three (3) different areas where the staff were looking into 9 or possibly requested to look into leasing versus other forms 10 of financing at the City of Toronto? 11 A: Yes. 12 Q: Okay and we know that in relation to some 13 of that financing, that the concept of capital cost allowance 14 or tax shield was discussed? 15 A: Well, I heard about it, though I wasn't 16 involved at all, on the issue of the subway cars and I've 17 heard it before with other areas, not even at the City of 18 Toronto and I just know the concept. 19 Q: Right. And purportedly, that lowers the 20 cost of leasing to the cost of borrowing or underneath the 21 cost of borrowing? 22 A: It reduces -- just say that to me once 23 more, sorry. 24 Q: That the concept of a tax shield or the 25 capital cost allowance would reduce the cost of leasing to

1 the level of borrowing or beneath -- 2 A: Yeah. 3 Q: -- the level of borrowing. 4 A: Because of the tax shield. 5 Q: Right. 6 A: Yes. 7 Q: And you'd have to do a financial analysis 8 on whether or not leasing made sense in the specific context 9 which was being addressed? 10 A: Yes. 11 Q: All right. 12 MADAM COMMISSIONER: I don't think anyone is 13 expecting you to be a tax expert, Mr. Lyons. 14 THE WITNESS: No, I -- 15 MADAM COMMISSIONER: So don't worry too much 16 about this. 17 THE WITNESS: Yeah. I have no expertise. I 18 just know the general parameters. 19 MADAM COMMISSIONER: Okay. 20 THE WITNESS: If it gets any more specific, 21 I'll be saying I don't know. 22 23 (BRIEF PAUSE) 24 25 CONTINUED BY MR. WILLIAM ANDERSON:

1 Q: At that meeting, do you recall any further 2 discussion about residual values of the assets? 3 A: They -- that's always been discussed in 4 leasing of computers, I know. 5 Q: All right. 6 A: But I don't know anything more than that. 7 Q: At Page 20 of Ms. Cross' notes ... 8 9 (BRIEF PAUSE) 10 11 Q: At the bottom of that page, to me it looks 12 like: 13 "20 percent at thirty-six (36) month lease, 14 pay 80 percent of PC" 15 And then something else. 16 MADAM COMMISSIONER: Residual? 17 18 CONTINUED BY MR. WILLIAM ANDERSON: 19 Q: "Pay 80 percent of PC plus residual" 20 Do you remember a discussion about only paying 21 80 percent of the cost of the equipment? 22 A: No. 23 Q: Do you remember talking about the City 24 saving money because it would have no disposal costs in 25 relation to this leased assets -- the leased assets?

1 A: I'm sorry. I'm going to ask you to repeat 2 that one. 3 Q: Sure. Do you remember any discussion 4 about the City being able to save money because it has no 5 disposal cost in relation to the leased assets? 6 A: No, I don't remember that. 7 Q: Okay. If you had looked just above that 8 reference that I took you to, the 20 percent -- 9 A: Hmm hmm. 10 Q: Something like, do not -- ownership. 11 "Do not have the problem of what to do with 12 end of life boxes" 13 Do you remember any discussions about the end 14 of the life of the boxes? 15 A: Yeah. I mean, that was part of the 16 residual. That's all I remember. 17 Q: Okay and right above that: 18 "Try to centralize, simplify deployment and 19 asset tracking" 20 Do you remember talking about that at all? 21 A: No. 22 Q: No? This really wasn't part of your 23 mandate at the meeting? 24 A: No, my mandate was to have the meeting, to 25 discuss issues which were of concern to the City and DFS,

1 which -- on this bid -- potential bid I mean, and that was 2 it. 3 Q: All right and if I can take you back to 4 Page 14 of those notes at the bottom. 5 A: Hmm hmm. 6 Q: It says -- the second last, sort of, 7 notation: 8 "Look for ideas on this. She is open but 9 with a refreshing --" 10 Something or other. 11 A: Hmm hmm. 12 Q: That's in reference to Ms. Liczyk. She's 13 open to the concept and she's looking for ideas, is that 14 right? 15 A: Yes. 16 Q: Okay. And that was her job, as the CFO, 17 to be open to different ideas with respect to financing asset 18 acquisitions at the City of Toronto? 19 A: Yes. 20 Q: There was nothing unusual about that? 21 A: No. 22 Q: And at this point in time, she hadn't made 23 up her mind whether or not leasing was the preferable form of 24 financing vehicle, had she? 25 A: My recollection is, is that I don't think

1 she had made up her mind. 2 Q: And did she -- 3 A: She was leaning that way, you had that 4 sense after the meeting. 5 Q: And did she indicate to you that her staff 6 were looking into an analysis of debenture financing versus 7 lease financing? 8 A: I can't remember that. 9 Q: Okay. Did she indicate to you that her 10 staff had already determined that they couldn't ten (10) year 11 debenture these assets because they were like a commodity? 12 Do you remember any discussion? 13 A: I never heard -- I never heard that. I 14 don't remember that, I should say. 15 Q: It's possible that she might have talked 16 about that? 17 A: It's possible. 18 Q: You do recall some discussion occurring 19 with respect to these types of assets being a commodity? 20 A: That's possible. 21 22 (BRIEF PAUSE) 23 24 Q: At page 24 of Ms. Cross' notes, it says: 25 "Approach it as if it was your company, as

1 if you were Wanda, what would you do." 2 So, you're being asked to put yourself into 3 the shoes of the CFO and come up with solutions that would 4 work for the City of Toronto, correct? 5 A: Yes. 6 Q: Okay. 7 A: I assume that's what it -- 8 Q: And then next it says: 9 "Comes down to a financial analysis." 10 And next: 11 "The objective of refresh." 12 So, what Ms. Liczyk was telling you or DFS at 13 the time, was, the most important thing was that you come up 14 with a financial -- financially sound program, with a proper 15 refresh strategy, right? 16 A: Those are Susan's notes. I can't tell you 17 other than that's her notes. 18 Q: Do you recall the nature of discussions 19 like that? That it's a financial analysis with a refresh 20 strategy, and if you can propose something, the City of 21 Toronto would be interested in looking at that type of 22 proposal? 23 A: That's possible. I can't remember. 24 Q: If you turn back one (1) page to page 23. 25 The third notation there:

1 "Would need to [something] with the City's 2 financial constraints are. Show a variety 3 of solutions." 4 MADAM COMMISSIONER: Need to clarify. 5 MR. WILLIAM ANDERSON: We've determine that's 6 now, clarify? 7 MADAM COMMISSIONER: Yes. 8 MR. WILLIAM ANDERSON: Makes sense. 9 10 CONTINUED BY MR. WILLIAM ANDERSON: 11 Q: "Need to clarify what the City's financial 12 constraints are, show a variety of 13 solutions." 14 Do you remember any discussion about being 15 requested to show a variety of different solutions in order 16 to solve these problems? 17 A: No, I don't. 18 Q: But it's quite possible that there was a 19 discussion along those lines? 20 A: It's quite possible. 21 Q: All right. And, in fact, that would be, 22 sort of, ordinary in the course of a meeting like this, is 23 that you'd -- you'd ask the prospective supplier to be 24 creative about problem solving? 25 A: Absolutely. That you would do with many

1 issues. 2 Q: Sure. Now, there was another topic and it 3 was raised by Commission Counsel yesterday, with respect to 4 this concept of transferring the cost from the capital side 5 to the operating side of the budget. 6 A: Yes. 7 Q: Okay. And that was a change in policy on 8 behalf of the City of Toronto? 9 A: I would think so. 10 Q: Well, I think you've given evidence before 11 you'd never known the City of Toronto to do leasing in the IT 12 area? 13 A: Yes, that's true. 14 Q: And they were purchasing computers 15 outright? 16 A: That's what -- yes. 17 Q: Right. And there was a change in the 18 philosophy of the IT department, probably the Finance 19 department that these types of assets were more like a 20 commodity, right, like office supplies, it said in the notes? 21 A: Yes. That's true. 22 Q: Okay. And there was a talk -- there was 23 talk in your evidence yesterday, about a three (3) year 24 spike, $30 million, right? 25 A: Yeah.

1 Q: Do you recall that? 2 A: Yes. 3 Q: And you'd have to go back -- and Mr. Manes 4 asked you, you'd have to go back and have the $30 million 5 approved as part of capital budget expenditures? 6 A: Yes. 7 Q: Okay and if you treated computer equipment 8 like a commodity it would become part of the operating 9 budget? 10 A: Treated -- 11 Q: If you treated computer equipment like a 12 commodity and not a capital expense, you'd put it in the 13 operating budget each year? 14 A: I thought you said that wasn't -- they 15 called it a commodity in the capital budget? I'm sorry. I 16 misunder -- what did you call it in the capital budget? 17 Q: That it was a capital expenditure. You'd 18 take $30 million, treat it as a capital expenditure and then 19 finance it through debentures or other type of -- 20 A: Oh, okay. 21 Q: -- long term finance. 22 A: And this would be called a commodity in 23 leasing? I don't -- 24 Q: It would -- 25 A: I don't quarrel with that.

1 Q: It would be treated like a commodity and 2 put into the operating budget. 3 A: That's possible. 4 Q: All right and Mr. Manes suggested to you 5 that if you treated it like a capital expenditure, you'd have 6 to go back to City Council every three (3) years to get the 7 extra $30 million? 8 A: Yes. 9 Q: But if you treated it as an operating 10 expenditure, would the staff not also have to go back to City 11 Council every single year and approve those expenditures as 12 part of the operating budget? 13 A: Yes. 14 Q: All right. So if the City of Toronto 15 wanted to acquire another $30 million worth of IT hardware -- 16 A: Hmm hmm. 17 Q: -- the departments would put it as part of 18 their budgets -- 19 A: Yes. 20 Q: -- which would ultimately go to the Budget 21 Committee. 22 A: Yes. 23 Q: Right? They would review all of those 24 expenditures on an annual basis, right? 25 A: Yes.

1 Q: And then approve them or not approve them? 2 A: Yes. 3 Q: And if the City of Toronto made a decision 4 not to acquire any more computer equipment, hardware or 5 software, then they could tell the operating departments that 6 they weren't going to fund those expenditures on an annual 7 basis? 8 A: Yes. 9 Q: Okay. The only thing that gets locked 10 into the budget are the payments for the equipment which has 11 already been acquired? 12 A: Yes. 13 Q: All right but you'd agree with me, that 14 equipment had to be paid for regardless of whether or not it 15 was financed through leasing or financed through debenturing 16 or otherwise? 17 A: It had to be paid for. 18 Q: All right. 19 A: Sure. 20 Q: Right. So there was never any suggestion 21 in this meeting that what the City staff were trying to do 22 was to acquire computer hardware and software without the 23 approval of City Council? 24 A: No. 25 Q: No. In fact, what they were trying to do

1 was to equalize payments over the course of time so you 2 wouldn't see the spikes? 3 A: Yes. 4 Q: Right and you wouldn't have those spikes 5 -- 6 A: That's what I said. 7 Q: -- like with debentures? 8 A: Yes. 9 Q: Right and part of that was because they 10 were looking at a zero (0) tax increase? 11 A: Yes. 12 Q: And that was a policy decision that was 13 made by City Council and not staff? 14 A: Yes. 15 MADAM COMMISSIONER: Was that a policy 16 decision made by City Council or was that an election 17 promise? 18 19 CONTINUED BY MR. WILLIAM ANDERSON: 20 Q: Who decides on what the annual budget is 21 for the City of Toronto, City Council or staff? 22 A: City Council. 23 Q: Right. They vote on accepting an 24 operating budget each year? 25 A: Yes.

1 Q: All right. So ultimately, while the Mayor 2 may have made certain promises in relation to a zero (0) tax 3 increase, who ultimately votes on the annual budget? 4 A: The Council. 5 Q: And the Council then has directed staff by 6 virtue of those bus -- budgets to try to accomplish zero (0) 7 tax increases from year to year? That was the mantra, that 8 was the mandate that was imposed on the City staff? 9 A: Yes. 10 Q: Now, had you lobbied Ms. Liczyk at any 11 time in the past prior to this DFS deal? 12 A: Yes, I'd spoken to her on other issues. 13 Q: All right. One of those was the finance 14 package for the -- the Finance Department? 15 A: I don't remember that. 16 Q: When the City of Toronto chose the SAP 17 program system. 18 A: Oh, yes, and I was representing a client 19 who was a competitor. 20 Q: All right and ultimately your client was 21 not successful? 22 A: That's right. 23 Q: All right and I guess, ultimately in this 24 case, your client, DFF -- DFS, was not successful? 25 A: That's right.

1 Q: All right. And there was also some 2 lobbying going on, on your part, on behalf of MFP with 3 respect to fleet leasing? 4 A: Not with Wanda, I didn't. We just 5 monitored the issue really, more than anything else. 6 Q: Okay. And the ultimate decision on behalf 7 of the finance staff at the City of Toronto within the 8 context of fleet leasing, leasing wasn't a viable financing 9 vehicle; right? 10 A: Is that what they decided? 11 Q: Oh, so you don't know one (1) way or the 12 other? 13 A: No. 14 Q: Okay. So, your leg up or advantage on 15 behalf of your client is to -- 16 A: I thought they just put it over, anyway, 17 that's all right, go ahead. 18 Q: I think there was some resolutions and 19 recommendations -- 20 A: Okay. 21 Q: -- with respect to that issue. 22 A: Sorry, go ahead. 23 Q: Okay. Your leg up or advantage to your 24 client is that they get to acquire information about the 25 City's processes and some of the issues facing the City, and

64
  1  they can respond to those?
  2                 A:  Hmm hmm, yes.
  3                 Q:  And you don't make any assurances or
  4  guarantees on behalf of any of your clients, that you're
  5  going to be able to close a deal for them?
  6                 A:  No, I mean the -- they're not getting 
  7  that.
  8                 Q:  Right.  That's up to them?
  9                 A:  That's right.
 10                 Q:  Okay, those are my questions, thank you.
 11                 MADAM COMMISSIONER:  Thank you.  Do we have --
 12  Ms. Ryley, you're next?  All right.  Ms. Bay Ryley on behalf
 13  of Lana Viinamae.
 14  
 15                       (BRIEF PAUSE)
 16  
 17  CROSS-EXAMINATION BY MS. BAY RYLEY:
 18                 Q:  Good morning.
 19                 A:  Good morning.
 20                 Q:  You've stated in your testimony last
 21  Thursday, and also today that you -- you thought Lana
 22  Viinamae was -- was excellent, and that she was highly
 23  regarded in the -- in the public and private sector?
 24                 A:  Yes.
 25                 Q:  So, in your opinion Ms. Viinamae was well

1 qualified to fill the position of Executive Director of IT 2 after Jim Andrew left? 3 A: Absolutely. 4 Q: And that was -- that was your opinion and 5 the view of your IT clients? 6 A: Not just -- the industry, not just my 7 clients. 8 Q: So, any -- any calls that you might have 9 made to people in the Mayor's office or others at the City 10 about Ms. Viinamae were on your own initiative? 11 A: Yes. 12 Q: Ms. Viinamae never asked you to help her 13 get the Executive Director position? 14 A: No, I just heard about it and I heard that 15 they weren't appointing her, and I thought what -- that just 16 didn't make any sense, and I felt that I knew enough of the 17 companies in that area that I should speak to somebody, 18 because you'd want some continuity going on, and she was very 19 good, and I was sorry that Jim left, but he had his reasons. 20 Q: So these calls were made after the 21 decision had been made, and not before that time; is that 22 right? 23 A: Well, I can't remember when they were, 24 before or after, I thought it was -- well, I don't remember. 25 Q: And -- and as far as you're aware, Lana

1 Viinamae would not -- she would not have even known that 2 you'd made calls inquiring as to why she didn't get the 3 position? 4 A: That she wouldn't have known I made these 5 calls? 6 Q: She -- she wouldn't have known that you 7 even did make a call? 8 A: She probably wouldn't know. 9 Q: And -- and Ms. Viinamae has never asked 10 you to do anything like that for her or to do any favours for 11 her? 12 A: No. 13 Q: And you never -- you never told her that 14 you could get her that job, did you? 15 A: No, I wouldn't do that. 16 Q: And -- and you've never been in a position 17 to get anyone a job at the City of Toronto? 18 A: No, I just make my point and just hope 19 that when they're weighing it, they've got my view, what I 20 hear from the industry. 21 Q: So you could never promise or guarantee -- 22 A: No, no. 23 Q: -- to anyone that they would -- that you 24 could get them a job at the City, would you? 25 A: No.

1 Q: Thank you. 2 MADAM COMMISSIONER: Okay, next, Ms. Rothstein 3 for the City of Toronto. 4 MR. DAVID MOORE: Yes, Ms. Rothstein and I 5 have had a discussion based on the evidence of this witness 6 at this point, I have no questions of the witness. 7 MADAM COMMISSIONER: Okay. 8 MR. DAVID MOORE: Ms. Rothstein indicated, and 9 we discussed this informally, that she expects to be some 10 time with the witness, and I think it's fair without getting 11 into details, it's unlikely there's going to be very much 12 directed to MFP related issues. And so I'm -- I'm content to 13 proceed on that basis. 14 We have an informal understanding that if 15 something specific arises out of her questioning that may 16 impact upon MFP, I'm reserving my right to seek leave to 17 ask -- 18 MADAM COMMISSIONER: All right. 19 MR. DAVID MOORE: -- some focussed questions, 20 if I have to. 21 MADAM COMMISSIONER: Okay, thank you very 22 much, Mr. Moore. 23 Ms. Rothstein, Mr. Moore says you're going to 24 be some time, I haven't asked everyone else how long they 25 were going to be, because I could tell that they weren't

1 going to be very long. Do you have any sense of how long you 2 think you might be? 3 MS. LINDA ROTHSTEIN: I -- I think half a day, 4 maybe a bit more than that. 5 MADAM COMMISSIONER: Okay, thank you. 6 MS. LINDA ROTHSTEIN: I've got all this stuff 7 and I don't know where to put it all so just give me a 8 minute. 9 10 (BRIEF PAUSE) 11 12 CROSS-EXAMINATION BY MS. LINDA ROTHSTEIN: 13 Q: Mr. Lyons, I'd like to just go back to the 14 issue of fundraising, and ask you a few questions about that, 15 that perhaps require some further explanation. 16 I understood you to tell Mr. Manes last 17 Thursday that raising money for elections was part of your 18 job as a lobbyist, sir? 19 A: I didn't say that it's a part of my job, 20 it's something I enjoy doing. 21 Q: You testified that on average, a candidate 22 for City Council will have to spend twenty-five thousand 23 dollars ($25,000) to have a chance of being successful? 24 A: Yes. 25 Q: And am I right that there are no limits on

1 the total amount of money that a candidate can raise? 2 A: Yes, because the balance goes into the 3 City though, isn't there -- when it's over? 4 Q: There are limits on the amount that they 5 can raise from any one (1) person, seven hundred and fifty 6 dollars ($750) for a Councillor, twenty-five hundred dollars 7 ($2500) for the Mayor; right? 8 A: Right. 9 Q: But the only limits are on the amount that 10 they can spend of the total amount raised? 11 A: Right, I would agree with that. 12 Q: Okay, and the surplus, which is what I 13 think you were about to refer to, of the amount raised, less 14 the amount spent, is given to the Clerk's office, and it's 15 held for the next election? 16 A: Yes. 17 Q: Now you told Mr. Manes last Thursday, that 18 clients from time to time approach you and ask you for advice 19 on making donations to candidates; true? 20 A: True. 21 Q: And I understand, sir, that from time to 22 time you also approach your clients unsolicited, about 23 campaign donations? 24 A: Yes. 25 Q: And am I right, sir, that you have a lot

1 of other contacts with people that are friends, or 2 professional colleagues, people in corporations or just 3 individuals who you think might be interested in what goes on 4 at City Hall, and from time to time you solicit donations 5 from them, for candidates? 6 A: Yes. 7 Q: And as part of the democratic process, you 8 feel free to make those suggestions? 9 A: Yes. 10 Q: And am I right, Mr. Lyons, that in each 11 case you encourage the individual or the corporation to make 12 the donation by sending the donation to your office, so that 13 you can send the donation to the Councillor or candidate 14 under your letterhead, cheque from the client sent to the 15 Councillor or Mayor's office with a letter from you? 16 A: Sometimes, and sometimes they send it 17 directly. 18 Q: But to the extent possible, Mr. Lyons, you 19 try to get some recognition for the fact that you've 20 solicited those funds? 21 A: Well, it may be recognition, it's just 22 that we have to coordinate the tickets that we are given 23 through our office, otherwise we can't keep track, and we 24 don't want people coming to these events that haven't paid. 25 Q: Well, I'm not talking about events yet,

1 we'll talk about that in a moment. 2 I'm talking about soliciting donations of 3 upwards to seven hundred and fifty dollars ($750) per person, 4 or twenty-five hundred dollars ($2500) in the case of a 5 donation to the Mayor. And I'm saying to you, sir, that it 6 is common practice for you to send on that donation say from 7 Dell Computer Corporation, with a letter on your letterhead? 8 A: Sometimes, yes. 9 Q: And that would ensure that the Councillor 10 or the Councillor's staff member, or the Mayor or the Mayor's 11 staff member is aware that you've had some role in soliciting 12 that donation? 13 A: I can't answer that, but possibly. 14 Q: Isn't that the reason you do it, sir? 15 A: No. 16 Q: Well, surely, Mr. Lyons, it's a very easy 17 thing to tell your clients or your friends or your colleagues 18 to just forward the cheque directly to the Councillor? 19 A: Could. 20 Q: Yeah. And the point is that you want to 21 demonstrate to some degree, that you've been instrumental in 22 delivering this funding to the candidate? 23 A: That could be an interpretation. 24 Q: Isn't it true, Mr. Lyons, that you try and 25 there's nothing wrong with it, it's not against --

1 A: Absolut -- 2 Q: -- the law, just a minute, to make your 3 role to staff and the Councillors visible? 4 A: There is nothing wrong with it, I agree. 5 Q: Right. You do not choose, if given the 6 choice, to act invisibly in this regard, correct? 7 A: No -- yes. Yes, correct. 8 Q: Now, tell me, Mr. Lyons, in 1997, do you 9 remember how many candidates you supported or asked your 10 clients to support? 11 A: No, I can't remember. 12 Q: Approximately? Is it five (5)? Is it ten 13 (10)? Is it fifteen (15)? Is it more? 14 A: Fifteen (15) might be more like it. 15 Q: But around fifteen (15)? Is that the best 16 recollection that you have? 17 A: Something like that. 18 Q: Okay. In 2000, how many candidates did 19 you suggest your clients should support? 20 A: Maybe around that. It could be twenty 21 (20). It was somewhere in that area. 22 Q: And is it -- isn't it true, sir, that you 23 could collect as many as twenty (20) cheques per Councillor? 24 A: No. I never collected that amount. 25 Q: What's the most you've ever collected for

1 a single Councillor from all of the possible sources 2 available to you? 3 A: It may be three (3) or four thousand 4 dollars ($4,000). 5 Q: What's the number of cheques? 6 A: Well, you can calculate that as well as I. 7 I -- it's five hundred (500), seven-fifty (750). I don't 8 know. 9 Q: You're telling me, Mr. Lyons, you've never 10 collected on behalf of a single candidate as much as fifteen 11 thousand dollars ($15,000)? 12 A: Absolutely not. 13 Q: That's impossible? 14 A: That's impossible. 15 Q: You've never even had a hand in collecting 16 that amount? 17 A: Not to my knowledge. 18 Q: I'm making suggestions. 19 A: Not to my knowledge. 20 Q: You also raised funds by organizing fund 21 raisers for candidates? 22 A: I would participate. I don't know if I 23 organized it. 24 Q: Well, don't you actually provide advice on 25 venue to Councillors?

1 A: Hmm hmm. L -- on the odd occasion, yes, I 2 have. 3 Q: Yeah and don't you actually arrange the 4 venue if asked? 5 A: On the odd occasion. Very rarely. 6 Q: And don't you then send out unsolicited 7 invitations or tickets to such events to your clients and 8 others who you know? 9 A: I've done that. 10 Q: Isn't this why fundraising is, in fact, 11 part of the lobbying business, Mr. Lyons? 12 A: If you want to do it. It isn't part -- 13 some people don't do it. 14 Q: But if you do do it? If you do do it, 15 doesn't it assist you as a lobbyist because in the end you 16 get some kind of credit from Councillors for having raised 17 the funds? They give you some credit for that, sir? 18 A: You probably get credit, yes. 19 Q: Yeah. You are at least viewed favourably 20 by those Councillors whom you have assisted to raise campaign 21 funds. Isn't that true? 22 A: You could get credit. 23 Q: And you are viewed favourably, sir, by 24 those Councillors whom you have assisted to raise funds? 25 A: You hope so. I don't know.

1 Q: It may increase your influence? 2 A: Yes. 3 Q: You said, Mr. Lyons, last Thursday in 4 answer to Mr. Manes' questions and I don't know if you were 5 being self-effacing or not, sir, that other people have as 6 much or more influence than you do at City Hall and you also 7 said that you don't think that you are very influential. 8 Looking back at the period '97 to 2000 -- the 9 end of 2000, who do you say had as much influence as you at 10 City Hall? 11 A: I -- there were other groups there that 12 would have. I'm not saying individuals. 13 Q: Okay. You can't think of another 14 individual who would have had -- 15 A: Right. 16 Q: -- more influence than you? 17 A: There were interest groups, as I've 18 expanded upon previously, who would have great influence with 19 certain members of Council. Far greater than I would have. 20 Q: But you can't think of another individual? 21 A: That's correct. 22 Q: Yes. 23 A: I mean, there might be a modus operandi 24 behind these interest groups, I just don't know who these 25 people are.

1 Q: Right. 2 A: You read them -- about them in the paper 3 and I suppose you read about these same groups in this -- and 4 these names that I see. That's all I can tell you. 5 Q: Well, just so we do understand that you 6 and I are talking in the same language. When you talk about 7 these groups, just give me three (3) examples, sir. 8 A: Well, some environment group. 9 Q: Okay. 10 A: The Secord (phonetic) Perks or Parks, 11 whatever he calls himself. 12 Q: Yeah. 13 A: The unions -- could be CUPE. 14 Q: Do they negotiate success fees, sir? 15 A: Who -- who represent -- they represent 16 themselves. They have paid lobbyists on staff. 17 Q: Do those paid lobbyists get success fees, 18 to your knowledge, sir? 19 A: I doubt it, because they're paid -- they 20 pay a lot of money for these people. 21 Q: Do you know how much they're paid? 22 A: I have no idea, but I would suspect 23 they're well paid. 24 Q: So, it is true, in fact, when you're not 25 being self-deprecating, Mr. Lyons, that you have or you

1 certainly did, have stature as an opinion leader at City 2 Hall? 3 A: Yes. 4 Q: And that stature you have exists apart 5 from any status that you have as a representative of a 6 particular client, even a marquee client like Dell Computer? 7 A: As an opinion leader? 8 Q: That stature that you have as an opinion 9 leader, as an influential person? 10 A: Well, if you're an opinion leader, I 11 imagine that my opinion would have more weight than others. 12 Q: And the point that I'm making with you, 13 Mr. Lyons, it's not a big one (1), is that your status as an 14 opinion leader or an influential person exists apart from any 15 status you have as a representative of a particular client; 16 right? 17 A: Yes. You've got to remember something, 18 everything that you're premising, I've been involved in 19 politics for forty (40) years, so it's not just what you did 20 yesterday, it's the long term involvement, that people would 21 know you -- that you understand it and you have an opinion, 22 based on those years of experience. 23 Q: That's my point. My point is, Mr. Lyons, 24 that you trade on your experience and your stature over the 25 years as you put it --

1 A: Yes, that's fair. 2 Q: -- in order to pitch new clients? 3 A: That's fair. 4 Q: Your stature is your competitive advantage 5 when compared to other lobbyists? 6 A: That's absolutely true, because the rest 7 are very young, and don't have anything near the experience 8 as you've indicated. 9 Q: You've told the press that the fact of 10 donations from corporations or clients or individuals 11 increases the goodwill of those individuals with the 12 Councillors -- 13 A: Yes. 14 Q: -- whom they support? 15 A: Yes. 16 Q: And I take it, Mr. Lyons, that this means 17 that all other things being equal, a business that supports a 18 particular Councillor with a financial contribution is more 19 likely to receive a meeting or a fair hearing from that 20 Councillor on their story? 21 A: Yes. 22 Q: And -- and it may mean that they're even 23 more likely to persuade a Councillor of the merit of their 24 position? 25 A: Well, as I've said, I've had too much

1 respect for the Councillors to think other than the fact that 2 they're getting a fair hearing. 3 Q: But you know that that entirely depends on 4 the individual Councillor, does it not, sir? 5 A: Yes, that's -- I've told you my opinion, I 6 respect them too much for otherwise. 7 Q: And you don't apologize, Mr. Lyons, for 8 any of this, do you? These are the facts of life, as you put 9 it? 10 A: I have no apologies. 11 Q: In the end, some Councillor may be more 12 affected by the fact of a campaign donation, others less so, 13 but that's the way of the world? 14 A: Well, I've told you my opinion and -- 15 Q: And you agree with that, Mr. Lyons, don't 16 you? 17 A: What's that? 18 Q: Some Councillor may be more affected by 19 the fact of a campaign donation or a group of them, solicited 20 through you, others less so, it varies? 21 A: Well, that's possible, but I told you I 22 don't feel that that exists, I have too much respect for the 23 people I give the donations to. 24 Q: You'd certainly never own up to that. 25 A: That's your opinion.

1 Q: I take it as a lobbyist it's important for 2 you to build good relationships with the staff of the City of 3 Toronto? 4 A: Yes. 5 Q: And you've made it a point to get to know 6 as many of them as you can? 7 A: Yes. 8 Q: And to talk shop with them? 9 A: Yes. 10 Q: And where pers -- and where possible, to 11 even get to know them a bit personally; is that fair, sir? 12 A: Well, I don't know about personally, but I 13 get to know them. 14 Q: Well, you talk about things beyond the 15 work that they do, you might talk about -- 16 A: Yes, well, that's standard conversation if 17 you're meeting somebody. 18 Q: Yeah. 19 A: You might talk about the weather, you 20 might talk about sports, whatever. 21 Q: Their families even? 22 A: Could. 23 Q: Yeah. And in the past, I take it, Mr. 24 Lyons, that you thought nothing of inviting staff for lunch, 25 that was something that was completely proper, and you did

1 without the slightest apology; am I right, sir? 2 A: Invite them for lunch? 3 Q: Yeah? 4 A: I have no apologies for inviting them for 5 lunch. 6 Q: And in fact, you thought nothing of 7 inviting the CAO for dinner; right, according to you? 8 A: No, I saw nothing wrong with that. 9 Q: You fully expected that the CAO would and 10 should accept such an invitation from you? 11 A: So what -- so what was wrong with that? 12 Q: It wouldn't matter whether you had any 13 specific business to discuss or not? 14 A: Yes, that's fine. 15 Q: On your evidence, it was a measure, I 16 suppose, of your influence and power that Mr. Garrett was 17 prepared to have dinner with you simply because you wanted 18 it? 19 A: I didn't perceive it as that, I just 20 wanted to know the man. 21 Q: Well, accepting your evidence, sir, how 22 many other lawyers in the City of Toronto would have been in 23 the position of being able to request dinner with Mr. Garrett 24 and him acceding to that request? 25 A: Oh, I'm sure a few of them, especially in

1 the Municipal law field, that wouldn't be a problem. 2 Q: To talk about business, but just to talk, 3 do you think there were very many, Mr. Lyons? 4 A: There wouldn't be very many. 5 Q: And I take it, Mr. Lyons, that you would 6 invite staff to social events from time to time, like your 7 golf tournament? 8 A: Well, they paid to participate -- 9 Q: I understand -- 10 A: It was a good cause. 11 Q: -- I understand. 12 A: And I invited them, I invited a lot of 13 people. 14 Q: Did you invite staff to other social 15 events, like galas and arts balls and that sort of thing? 16 A: Occasionally, not very often. 17 Q: What sort of things did you see fit to 18 invite staff to, sir? 19 A: I -- I'm trying to recollect. It wasn't 20 -- I don't know if I ever did, I'm just thinking whether I 21 did. 22 Actually, to answer your question, I don't 23 think I ever have. It might have been where a client bought 24 a table and I might have -- they might have invited somebody 25 from the City, that's possible.

1 Q: What about Councillors, sir, did you 2 invite them to those type of social events? 3 A: Oh, I -- I -- again, yes, on occasion I've 4 invited them -- 5 Q: Yeah. 6 A: -- for charitable functions. 7 Q: Do you remember to those charitable 8 functions, some sort of dinner, I take it, in the ordinary 9 course, who paid for those tickets? 10 A: For an invitation for a Councillor? 11 Q: Yeah? 12 A: Myself, or a client, I don't know. Or 13 another person. 14 Q: You didn't expect the Councillor to pay 15 their own way in those situations, sir, am I right? 16 A: Generally, no. 17 Q: Your view, I take it, Mr. Lyons, was that 18 this is a perfectly appropriate way to meet staff, build 19 relationships, and do business with the City? 20 A: Yes. 21 Q: And you also thought that it sort of went 22 with your job to provide advice to members of senior staff 23 from time to time, about their careers -- 24 A: Their careers -- 25 Q: -- prospects --

1 A: -- if they sought my advice, I'd give it, 2 for sure. 3 Q: And where you thought they were promising, 4 you felt free to express your views to anyone who would 5 listen, and take steps to perhaps assist that person in 6 getting a promotion? 7 A: Well, if it was good for the City. As 8 you've heard evidence about Lana Viinamae, I thought this is 9 good for the City. I mean, you do want to make sure the City 10 works well, and it's functioning properly, and it has all the 11 right people. And if you can recommend somebody that's good, 12 you just don't do it to promote some individual that doesn't 13 have the abilities. 14 Q: And I take it, Mr. Lyons, therefore you 15 saw nothing or you see absolutely nothing wrong with your 16 friend Mr. Godfrey having lunch with Jim Andrew to discuss 17 the possibility of a promotion to Commissioner? 18 A: Well, you're going to have to speak to Mr. 19 Godfrey, I can't answer that. 20 Q: No, but if -- if Mr. Andrew had wanted to 21 have lunch with you to discuss that same thing, you would 22 have felt quite comfortable saying sure? 23 A: If he wanted to ask my advice, sure I'd 24 meet with him. 25 Q: And you're surely not critical of Mr.

1 Godfrey deciding to do that? 2 A: I don't -- I can't give my opinion about 3 what others do, I'll give you my own opinion. 4 Q: Why is it that you can't give me your 5 opinion about that? 6 A: Because I don't see why I have to give an 7 opinion about somebody else's -- if you want an opinion you 8 can ask me about a lot of people, but I don't -- 9 Q: Well, does Mr. Godfrey stand in a 10 different position than you do? 11 A: Well, he does his own business and I do 12 mine, I don't know what he does. I mean, I know what he 13 does, I should say. 14 Q: But the point I'm making, Mr. Lyons, is in 15 your world view, there's nothing wrong with individuals who 16 represent private interests, who have never sworn an oath of 17 office, and owe no legal obligation to the institution of the 18 City of Toronto, from mucking in, to hiring and firing of 19 staff; right? 20 MR. TODD WHITE: Your Honour, that's an unfair 21 question, a totally unfair question, mucking in, in hiring 22 and firing. 23 24 CONTINUED BY MS. LINDA ROTHSTEIN: 25 Q: Mr. Lyons, do you see anything wrong with

1 someone in your position trying to persuade others that 2 someone should be promoted? 3 A: Not in the terms you're putting it. If 4 people ask for my advice, I give them advice. If -- if I 5 feel that someone is good and I will sometimes venture forth 6 and even propose to others that that person is good. Mucking 7 -- what were these other words you used? 8 Q: Mucking in to the hiring and firing of 9 staff. 10 A: Mucking in? Well, I don't know what the 11 word mucking in means. 12 Q: Well, you phone the mayor's office about 13 Ms. Viinamae? 14 A: Yes. 15 Q: And you phoned Councillors, did you not? 16 Mr. Miller and Mr. Berardinetti? 17 A: About Lana Viinamae? 18 Q: Yes. 19 A: I could have. 20 Q: And you were attempting to persuade them 21 to go to bat for Len Vin -- Lana Viinamae, right? 22 A: Yeah, because I thought what was going on 23 at the City wasn't right. 24 Q: Right. You wanted them to take on the 25 Commissioner, Joan Anderton, right?

1 A: Yes. 2 Q: You wanted them -- 3 A: Well, Mr. Berardinetti was already having 4 his issues with her, I think. So, yes. 5 Q: But the point of your calls to Mr. 6 Berardinetti and Mr. Miller were to attempt to persuade them 7 to persuade Joan Anderton that she should promote Lana 8 Viinamae and not the person that she was proposing to 9 promote, correct? 10 A: I d -- something like that. I don't 11 remember whether it was happening or it was -- there was 12 another person. She was the interim director so they should 13 have made her the permanent director and that's all my 14 argument was. 15 Q: And that's not mucking in, sir? 16 A: Well, I -- if you want to get me a 17 dictionary and I'll look up the word mucking. 18 Q: Time for a break, Commissioner? Or 19 rather, yes. Commissioner? 20 A: So you can get your dictionary? 21 Q: I will. Let's see if we find it. 22 Interfering, Mr. Lyons? Do you feel more comfortable with 23 that? 24 A: No, that's even worse. 25 MADAM COMMISSIONER: Well, with that we'll

1 break until ten (10) to. 2 THE REGISTRAR: The Inquiry will recess until 3 ten (10) to 12:00. 4 5 --- Upon recessing at 11:30 a.m. 6 7 --- Upon resuming at 11:50 a.m. 8 9 THE REGISTRAR: The Inquiry will resume. 10 Please be seated. 11 MADAM COMMISSIONER: Ms. Groskaufmanis? 12 MS. DAINA GROSKAUFMANIS: Commissioner, just 13 before we begin, Madam Registrar has reminded me that two (2) 14 extra tabs have been added to Mr. Lyons Volume 2 and I should 15 identify those on the record. They are Tabs 37 and 38. 16 Tab 37, it does -- it has not yet been scanned 17 so it does not have a Begdoc number, is the retainer letter 18 between Mr. Lyons and Dell Computer dated November the 10th, 19 1998, as well as, an -- one invoice and a cancelled cheque 20 from Morrison Brown Sosnovitch and the cheque payable to that 21 law firm in payment of the account. 22 Tab 38 is a receipt from Mr. Domi's expenses. 23 It's Document 25697. 24 MADAM COMMISSIONER: Okay. All right, Ms. 25 Rothstein?

1 (BRIEF PAUSE) 2 3 CONTINUED BY MS. LINDA ROTHSTEIN: 4 Q: Mr. Lyons, Lana Viinamae's interest in 5 becoming the Executive Director of the IT Department 6 following the departure of Mr. Andrew. Did you never tell 7 her that you viewed her as the best candidate for that job? 8 A: I don't think so. 9 Q: Never told her that you thought you could 10 put in a good word for her in some of the right places? 11 A: Well, I know that I had expressed many 12 times that I thought she was doing a great job at the City. 13 Q: And you may have expressed that to her? 14 A: Yes. 15 Q: You certainly did express that to her? 16 A: If I said I did, yes. 17 Q: And you don't think you also went so far 18 as to say you were going to try and put in a good word for 19 her where you could? 20 A: I don't know, but this issue of whether 21 I'm putting in a good word, you've got to remember, the City 22 of Toronto is a public corporation. 23 Q: Hmm hmm. 24 A: I'm a tax payer. I have a right to make 25 those points. It's not as if I'm interfering in some private

1 corporation w