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

90
  1  corporation with this word mucking that you use, the only
  2  thing I regret is that I didn't phone more Councillors to
  3  help this woman.  I -- I pay my taxes, I'm entitled to have
  4  good management at the City -- 
  5                 Q:  And so -- 
  6                 A:  -- that's what I was exactly doing as
  7  you're going to say, for Ms. Viinamae, because I thought the
  8  City, who I have to pay taxes, should have good Government. 
  9  And I'm always interested in espousing that cause.
 10                 Q:  So your view is that every taxpayer should
 11  have the right and have the entitlement to express their
 12  views to the Mayor's office -- 
 13                 A:  Yes.
 14                 Q:  -- to Councillors -- 
 15                 A:  Absolutely.
 16                 Q:  -- just let me finish my question.  Let me
 17  finish my question, about the respective strengths and
 18  weaknesses of proposed senior public servants?
 19                 A:  Absolutely.
 20                 Q:  Right.  And if Lana Viinamae told Margaret
 21  Dougherty, the Coordinator of the City's Communications
 22  Department, that you had promised Lana Viinamae that she
 23  would get the job, you'd have no idea why that would have
 24  been said?
 25                 A:  Well, I don't even know who you're talking

1 about. 2 Q: Well, if Lana Viinamae said to somebody at 3 the City of Toronto that you'd promised that job to her, you 4 can't explain that comment? 5 A: It's not true. 6 Q: Well, you don't know what Lana Viinamae 7 said, Mr. Lyons? 8 A: Nor do you. 9 Q: If it's true that that's what Lana 10 Viinamae said, you can't explain that comment, sir? 11 A: I can't explain that comment. 12 Q: And when you were expressing your views to 13 those who would listen, do I understand you to be saying that 14 you were expressing your personal views, the views of your 15 clients, the views of the industry, or all three (3)? 16 A: Certainly my views, and I certainly put -- 17 had the views of the industry. 18 Q: And do you assume, sir, that as a private 19 citizen for these purposes, you would in fact be made privy 20 to the weaknesses of any particular public servant, that the 21 weaknesses that might be evident to the administration of the 22 City of Toronto, would all be made available to you? 23 A: Would I know about weaknesses? 24 Q: Yeah? 25 A: Sure, I would know about weaknesses.

92
  1                 Q:  You assume that if there were members of
  2  the senior administration of the City of Toronto who had
  3  concerns about the performance of a public servant, that you
  4  would know about that?
  5                 A:  No, I -- I -- not necessarily would know
  6  about it, but -- 
  7                 Q:  You wouldn't know about it; right?  That
  8  information would be considered private human resources
  9  information that wouldn't be shared with you?
 10                 A:  Oh -- 
 11                 MR. TODD WHITE:  Your Honour, I think that's
 12  an unfair question, because implicit in his answer is that if
 13  a -- if a person that he knows or encourages, he may know
 14  their weaknesses too.  I think that's all he's saying, not
 15  that he -- 
 16                 MS. LINDA ROTHSTEIN:  Ms. -- Commissioner, I
 17  think I made the question much simpler and different than
 18  that.
 19                 I'm suggesting to Mr. Lyons that you may have
 20  some knowledge about weaknesses based on your own
 21  observations; correct?
 22                 THE WITNESS:  Weaknesses based on my own
 23  observations?  Yes.
 24  
 25  CONTINUED BY MS. LINDA ROTHSTEIN:

1 Q: Yes. But you wouldn't necessarily know if 2 your observations about the weaknesses of the particular 3 public servant are shared by the rest of the civil service; 4 correct? 5 A: No, you're right. 6 Q: You wouldn't expect to have that kind 7 of -- 8 A: Well -- 9 Q: -- insider human resources information; am 10 I right, sir? 11 A: That's right. 12 MADAM COMMISSIONER: You were just going to 13 say something, Mr. Lyons -- 14 THE WITNESS: Well, I mean, the only 15 information I would have is what I formed on my own or what 16 people told me. I wouldn't have any HR reports, or whatever 17 you call them. 18 19 CONTINUED BY MS. LINDA ROTHSTEIN: 20 Q: And when you said earlier, Mr. Lyons, that 21 what you were doing was motivated by the best interests of 22 the City of Toronto, let's just be clear about what you mean 23 by that. 24 It's absolutely true, sir, that you are not an 25 elected official?

94
  1                 A:  Yes.
  2                 Q:  You took no oath of office?
  3                 A:  Yes.
  4                 Q:  You are not a public servant with
  5  fiduciary obligations to protect the City of Toronto?
  6                 A:  Yes.
  7                 Q:  Or the interests of its taxpayers?
  8                 A:  Well, no, I'm -- I should have to have the
  9  interests of the taxpayers, I'm one (1).
 10                 Q:  Well, you may have your own view about
 11  what the interests of the taxpayers are, but you do not hold
 12  any legal or fiduciary or indeed, moral obligation, to
 13  protect those interests, do you?
 14                 A:  No.
 15                 Q:  You act -- 
 16                 A:  Moral, I'd have to argue with you.
 17                 Q:  -- you act for private interests, Mr.
 18  Lyon?
 19                 A:  I act for private interest, but I also
 20  have my own views.
 21                 Q:  I understand that, but you act for private
 22  interests, sir?
 23                 A:  Yeah.
 24                 Q:  That's what takes you to City Hall isn't
 25  it?

95
  1                 A:  To -- on an ongoing basis from time to
  2  time, yes.
  3                 Q:  That's what your job is at City Hall,
  4  acting for private interests?
  5                 A:  Yes.
  6                 Q:  Now, in terms of access to staff, Mr.
  7  Lyons, you told Mr. Manes that one (1) of your main jobs when
  8  you act for those private interests, is to ensure that they
  9  have a level playing field?
 10                 A:  Yes.
 11                 Q:  And in describing what you saw as a flaw
 12  in the lobbying disclosure system that was part of the City's
 13  procurement policies or is part of the City's procurement
 14  policies, you said, that one (1) of the flaws is that staff
 15  members are not required to report contact for lobbying
 16  purposes?
 17                 A:  Yes.
 18                 Q:  And your concern was, as I understood it,
 19  was that staff can lobby against your clients?
 20                 A:  Yes.
 21                 Q:  And they can do that in secret, if I heard
 22  you correctly?
 23                 A:  Yes.
 24                 Q:  And you say, Mr. Lyons, that this
 25  shouldn't happen unless you and your clients have a right to

96
  1  respond?
  2                 A:  Yes.
  3                 Q:  And you said, and this is quote:
  4                   "What is good for the goose is good for the
  5                   gander."
  6                 Remember that?
  7                 A:  Do remember it.
  8                 Q:  What you're saying, Mr. Lyons, is that you
  9  and your private interest clients, should be treated the same
 10  way as public servants of the City of Toronto when it comes
 11  to access to members of City Council?
 12                 A:  Absolutely.
 13                 Q:  That you and public servants, who have a
 14  fiduciary obligation to the public interest, are goose and
 15  gander?
 16                 A:  Yes.
 17                 Q:  When staff speak to Councillors, they are
 18  lobbying just like you?
 19                 A:  Yes.
 20                 Q:  For the same purpose --
 21                 A:  Not all the time, sometimes.
 22                 Q:  For the same purpose, in the same form, is
 23  that right?
 24                 A:  I've said to you, as I've said to Mr.
 25  Manes, in a perfect world the staff are supposed to be the

1 most objective people doing their professional jobs and 2 representing the true facts and all facts to their decision 3 makers. 4 That's a perfect world. Now, I'm sure you 5 believe that we live in a perfect world. And if that's the 6 case, what you're getting is -- 7 Q: No, I don't -- 8 A: -- it isn't sauce for the goose, it isn't 9 sauce for the gander. 10 Q: Mr. Lyons, leaving aside for the moment, 11 the potential that some staff may actually breach their 12 fiduciary obligation. 13 A: Right. 14 Q: If we leave that aside for the moment, you 15 certainly agree that public servants have a job to do when 16 they meet with Councillors? They have an obligation to tell 17 truth to power, don't they? 18 A: Right. 19 Q: You have no such obligation, Mr. Lyons? 20 A: Well, no such obligation, but my job is to 21 advocate for my clients. 22 Q: And that's not necessarily the same as 23 telling truth to power, is it? 24 A: Well, hopefully my clients are telling the 25 truth. I do.

1 Q: Mr. Lyons, you have no idea whether or not 2 every single one (1) of your client's value propositions is 3 in the best interest of the City of Toronto or not? 4 A: Nor is every staff person that goes to 5 speak to a politician has a totally honest proposition. 6 Q: Mr. Lyons, you told the Commissioner that 7 when it came to the issue of leasing computer equipment, you 8 never came to a conclusion about whether or not it was in the 9 best interest of the City of Toronto or not, isn't that what 10 you said? Or should I read you from the transcript? 11 A: Just why don't you repeat your question 12 and you don't have to do more. 13 Q: When it came to the issue of whether the 14 City should lease computer equipment or continue to buy it, 15 you never came to a conclusion about whether leasing was in 16 the best interest of the City of Toronto, did you? 17 A: I did. I thought leasing -- I did tell 18 you that, Mr. Manes, I think you should check your notes. I 19 said leasing was preferable because of the spiking. 20 Remember that little analogy I gave you, were 21 you listening? I assume you were. 22 Q: What I heard you say, Mr. Lyons was, 23 question at page 92: 24 "All right, I guess, and my question is, 25 what is being said here to your

1 recollection, if you have one (1), is that 2 if you have leasing contracts, you don't 3 have to cut the IT budget, or you cannot? 4 A: Yes, that would be -- leasing would be 5 preferable, just my own sense of it. 6 Q: All right. 7 A: Now, whether the City should have 8 finance leasing, I don't know. That's 9 another issue." 10 You came to a personal opinion, that leasing 11 sounded okay, but you weren't trying to assess whether it was 12 actually in the best financial interest of the City of 13 Toronto, were you? 14 A: In my opinion, it was. And actually, I 15 was -- but that was my view. And you know, I wanted -- the 16 staff had their view and that's what came to the conclusion 17 in, leasing was preferable. 18 But when Wanda Liczyk, for instance, said to 19 me, that they can borrow cheaper than a leasing company, that 20 made some sense to me too. 21 So, I'm just telling you, I don't -- what I 22 try to do, is find out what is really is the right thing to 23 do. 24 And when I represent clients, we always say 25 the right -- do the right thing. I'm not here to try and

100

1 jade it or promote something that's improper. 2 Q: Right. 3 A: That's just not the way I do business and 4 if that's a client, I don't want to represent that client. 5 Q: So you're telling us, Mr. Lyons, that you 6 turn down lobbying clients? 7 A: I have. 8 Q: Because you don't think that their views 9 are right? 10 A: Their views or what they propose makes any 11 sense. 12 Q: They're views that you don't personally 13 share? 14 A: It doesn't have to be my views. They may 15 have a very -- they may -- I may not agree with them but they 16 may -- what they're proposing may make excellence sense and 17 so I say, fine, we'll represent that point of view. 18 Q: Mr. Lyons, I am suggesting to you that 19 when you advocate on behalf of a client, you don't have to 20 drill down very hard to determine whether they're advocating 21 something that is absolutely in the best interest of the City 22 of Toronto in every objective way, do you? 23 A: Well, I try to make sure that it is good 24 for the City. 25 Q: And is five (5) hours enough of an

101

1 attempt, sir? 2 A: It was. 3 MR. TODD WHITE: That's not a fair question. 4 5 CONTINUED BY MS. LINDA ROTHSTEIN: 6 Q: Well, how much time did you spend in the 7 case of computer leasing, coming to the conclusion -- the 8 sense that you had, that it was, in fact, in the best 9 interest of the City of Toronto? How many hours did you 10 spend on that project, Mr. Lyons? 11 A: Far more than Mr. Manes estimated. That 12 was just questions he asked me and I saw him carefully 13 marking down those half hours. There was numerous more phone 14 calls. There was my staff involvement, following this 15 through committees. When I started thinking about it last 16 night, I came to the conclusion it was probably about 17 seventy-five (75) hours of time put in on that file. 18 Q: Really? 19 A: Absolutely. 20 Q: Okay. Well, we're going to walk you 21 through all seventy-five, Mr. Lyons. 22 A: Okay. Well, you have to get -- 23 Q: Well, some of that -- 24 A: -- my staff here. I'm not the one that 25 can answer all these hours.

102

1 Q: Well, we may have to do that, as well but 2 you came to the conclusion last night that it was seventy- 3 five (75) hours and I'm going to get the benefit of your 4 analysis of that in a moment. 5 Isn't it true, Mr. Lyons -- 6 MR. TODD WHITE: Well, Your Honour, perhaps My 7 Friend who objected to, you know, the tone of questionings 8 and sarcasm and editorial comments. Perhaps My Friend could 9 do the same. 10 MS. LINDA ROTHSTEIN: I'd be happy to talk to 11 Mr. Lyons in a polite and professional way. I thought I was 12 doing so, Commissioner. 13 THE WITNESS: I don't think so. 14 MS. LINDA ROTHSTEIN: Mr. Lyons -- 15 MADAM COMMISSIONER: I certainly didn't 16 experience the tone from Ms. Rothstein, as I -- as we heard 17 the other day, Mr. White but in any event, as I understand 18 what Ms. Rothstein is saying is that it may be that she'll 19 have to go through some of the seventy-five (75) hours. 20 Whether or not she wants staff to be here to 21 testify is not up to her. Ultimately it is up to Commission 22 -- Commission Counsel and that -- I'll just -- that's all I 23 have to say on that. Okay? 24 25 CONTINUED BY MS. LINDA ROTHSTEIN:

103

1 Q: Mr. Lyons, it's certainly true that staff 2 never stand to profit from promoting a particular view to a 3 particular Councillor? 4 A: Staff s -- 5 Q: They don't stand to profit financially, 6 sir? 7 A: Not to my knowledge. 8 Q: They certainly can't earn success fees, 9 can they? 10 A: No. 11 Q: Your relationship with MBS in 1999, you've 12 told us you weren't a partner? 13 A: Yes. 14 Q: Do I understand that to mean, Mr. Lyons, 15 that you take no share in the p -- you took no share of their 16 profits? 17 A: Yes. 18 Q: But you contributed to their expenses? 19 A: Yes. 20 Q: You generated your own revenue? 21 A: Yes. 22 Q: You kept your own books? 23 A: I kept my records. 24 Q: Kept your own accounting books? 25 A: Yes.

104

1 Q: You had a bookkeeper, an accountant, 2 someone of that kind, Mr. Lyons -- 3 A: Wh -- 4 Q: -- to assist you with keeping financial 5 records? 6 A: That was my own accountant. 7 Q: Okay. That was Mr. Levy (phonetic), was 8 it? 9 A: Yes. 10 Q: You got some kind of remuneration from MBS 11 for referring work? 12 A: Yes. 13 Q: When Ms. Cross testified, Mr. Lyons, she 14 said that sometimes you opened files in the name of a 15 numbered company and sometimes you opened files in the name 16 of the law firm MBS. 17 A: Yes. 18 Q: Can you assist us as to when you did one 19 and when you did the other? 20 A: No, I can't. 21 Q: There was no practice? 22 A: No practice. It depended on -- some 23 nature of what I was doing. It made -- 24 Q: Depended on -- 25 A: -- some of these numbered files might be

105
  1  business -- business related, which I'm not sure should be
  2  the subject here but we can talk about that.
  3                 Q:  Well, it may or may not be.  Until I
  4  understand what you're saying, Mr. Lyons, I can't be sure
  5  that it's relevant or not.  I'm actually just trying to
  6  understand what the numbered company was and why some 
  7  files --
  8                 A:  Was because --
  9                 Q:  -- was opened in that --
 10                 A:  -- it was business related activities that
 11  I was carrying on.
 12                 Q:  Just tell us what sort of business related
 13  activities?  Not lobbying or yes lobbying?
 14                 A:  It could have been a form of lobbying but
 15  it totally wasn't that.  It was some other work I was doing
 16  with some public relations -- 
 17                 Q:  What's the difference -- 
 18                 A:  -- relations.
 19                 Q:  -- between public relations and lobbying,
 20  sir?
 21                 A:  It was investor relations, I was working
 22  on a couple of stock opportunities with companies, private
 23  companies.
 24                 Q:  Did it have anything to do with your
 25  lobbying practice?

106

1 A: Not that I can recollect. 2 Q: Well, think about it, it's not that long 3 ago? 4 A: Yes, it was. I'm sorry, I can't help you 5 more than that. 6 MADAM COMMISSIONER: Maybe you're being put on 7 the spot right now to answer this, Mr. Lyons, if you want -- 8 I suspect from what Ms. Rothstein said, that she's going to 9 be here this afternoon anyway, so if you think of anything at 10 lunch time -- 11 THE WITNESS: I don't have anything more to 12 say than that. 13 MR. TODD WHITE: Your Honour -- 14 MADAM COMMISSIONER: Okay. 15 MR. TODD WHITE: -- I don't see the relevance 16 of any of this, I don't think -- 17 MADAM COMMISSIONER: Well, I'm not sure 18 either, and that's why I was letting Ms. Rothstein go until I 19 heard a little bit more. 20 But Mr. Lyons said he wasn't sure what the 21 relevance was either, and in any event, he can't recollect 22 anything -- whether it had anything to do with his lobbying 23 practice and has nothing more to say on that. I think that's 24 probably where we are unless there's some other relevance 25 that I'm not aware of.

107

1 2 CONTINUED BY MS. LINDA ROTHSTEIN: 3 Q: Are you saying, Mr. Lyons, that all the 4 lobbying files, like the Dell file and the DFS file and the 5 MFP file were all opened in the name of MBS, the law firm? 6 A: That's my recollection. 7 Q: But just on that point, when you say 8 that's my recollection, I mean weren't you -- 9 A: That's my recollection. 10 Q: -- was -- was there any rhyme or reason to 11 how you did this? 12 A: No, I had -- it depended on what business 13 I was doing, if it was lobbying it would generally be in the 14 firm of Morrison, Brown, Sosnovitch, I've answered that. 15 Q: I'm just trying to understand why there'd 16 be any exceptions to that rule, sir? 17 MR. TODD WHITE: Again, Your Honour -- 18 THE WITNESS: I don't -- 19 MR. TODD WHITE: -- don't see the relevance of 20 any of this, and his personal, you know -- 21 MS. LINDA ROTHSTEIN: Well -- 22 THE WITNESS: I find this very unusual, Madam 23 Commissioner. 24 MADAM COMMISSIONER: I guess that -- well I'll 25 hear from Ms. Rothstein, at first blush I don't have any

108

1 difficulty with the questions about whether it was with the 2 law firm, whether they were -- the files were raised with the 3 law firm, we've already heard evidence on that, in any event. 4 I'm just not sure where you're going, Ms. 5 Rothstein. 6 MS. LINDA ROTHSTEIN: Let me -- let me 7 continue. 8 9 CONTINUED BY MS. LINDA ROTHSTEIN: 10 Q: You do not have your DFS or Dell Computer 11 file? 12 MR. TODD WHITE: Well perhaps you could deal 13 with an objection instead of -- 14 MS. LINDA ROTHSTEIN: Well, I'm going to 15 continue -- 16 MR. TODD WHITE: -- keep asking the questions. 17 THE WITNESS: Yes, this is getting -- 18 MADAM COMMISSIONER: I want -- I just -- I 19 asked her what the relevance was she said she's going to 20 continue. Mr. Lyons, don't answer any questions -- 21 THE WITNESS: I'm not answering anymore 22 questions. 23 MADAM COMMISSIONER: -- until you hear what 24 she says. 25 MS. LINDA ROTHSTEIN: Commissioner, I meant I

109

1 was going to continue in an area that isn't objectionable, as 2 far as I understand it, I'm going to move on. 3 MADAM COMMISSIONER: Well, that wasn't 4 immediately clear. 5 MS. LINDA ROTHSTEIN: All right. 6 7 CONTINUED BY MS. LINDA ROTHSTEIN: 8 Q: You do not have your DFS or Dell Computer 9 files, as I understand it? 10 A: Yes. 11 Q: You testified on Thursday that you 12 destroyed your DFS file shortly after your retainer ended? 13 A: Yes. 14 Q: That would have been you think, in July of 15 1999? 16 A: Sometime after that. 17 Q: You did not personally destroy that file? 18 A: No. 19 Q: You would have directed someone to do 20 that? 21 A: One (1) of my staff. 22 Q: Who? 23 A: I -- it could have been my secretary, it 24 could have been another individual. 25 Q: Who are the names, who's the possible

110

1 category of persons? 2 A: It was either a Gail Miltonberg, or an 3 employee named Nab Mangat. 4 Q: Okay, is there anyone else who you could 5 have directed to destroy that file, Mr. Lyons? 6 A: I don't think so. 7 Q: The file that you maintained for DFS would 8 have contained correspondence to and from your client? 9 A: I assume. 10 Q: Is there any doubt about that? 11 A: No, I mean, it's what it would have had. 12 Q: It would have -- it would have contained 13 correspondence to and from others on behalf of your client? 14 A: To and from my client, and possibly 15 others. 16 Q: And correspondence that you wrote to 17 others on your client's behalf? 18 A: It's possible. 19 Q: And telephone messages that had been 20 transcribed and summarized for the file? 21 A: Yes. 22 Q: Ms. Cross told us that she would get 23 messages forwarded from you that she was supposed to 24 transcribe and place in memo form on the file. That was your 25 practice, Mr. Lyons, for important messages?

111

1 A: Sometimes, yes, that would happen. 2 Q: And those times would be times when you 3 thought when you got the message, that it was important and 4 worth preserving, sir? 5 A: Yes. 6 Q: Your file would have contained summaries 7 of meetings that you had attended, yes? 8 A: Hmm hmm, yes. 9 Q: Did you ever take notes during your own 10 meetings, Mr. Lyons? 11 A: Occasionally. 12 Q: So, those handwritten notes, would be in 13 the file, if you made them? 14 A: Yes. 15 Q: Did you ever come back from a meeting, was 16 it your practice, sir, to come back from a meeting and 17 dictate a memo to file about the meeting? 18 A: Sometimes. 19 Q: Okay. And when Ms. Cross attended, her 20 job was to take her handwritten notes and prepare some kind 21 of summary of the meeting and put it in the file? 22 A: Yes. 23 Q: She fairly and accurately described that 24 process to the Commissioner, did she? 25 A: Yes.

112

1 Q: And just on the point of her notes, Mr. 2 Lyons, while we're -- while we're here. You've looked at her 3 notes, at least for a -- at least -- have you gone through 4 her notes, in any detail? 5 A: Well, I couldn't understand her 6 handwritten notes -- 7 Q: Okay -- 8 A: -- so what was transcribed, I looked at. 9 Q: Okay. 10 A: And we've sort of been through that, you 11 know, not exhaustively, but what everybody's asked -- talked 12 about. 13 Q: But to the best of your recollection, Mr. 14 Lyons, has Ms. Cross accurately recorded things that were 15 discussed, messages that she received, to the best of your 16 knowledge and recollection? 17 A: Her -- if she did the memos in a timely 18 basis, they were good. If they -- if she waited a few days, 19 then you know, her memory wasn't as good. 20 And usually I wanted her to do them right 21 after the meeting. 22 Q: But -- so at the time, you were content 23 with what she was doing, I take it? 24 A: Right, no she did a good job. 25 Q: But looking at her handwritten notes,

113

1 which is all we have today, Mr. Lyons, did anything strike 2 you as being inaccurate, in error? 3 A: I can't recollect. Because you know what? 4 I tried looking at these notes, and I found them impossible 5 and then I think there was some dialogue to get them 6 transcribed -- or they were transcribed already and I never 7 really looked at the written notes after that. 8 Q: Would you do me a favour, Mr. Lyons? I 9 think it would help the Commissioner, it can be done even 10 after you're finished your evidence. 11 If there's a single note that strikes you as 12 absolutely in error and inaccurate in some way, will you 13 bring that to our attention? 14 A: I'll try to. 15 Q: You'll try to, or you already know of 16 some, sir? 17 A: No, I don't. 18 Q: Okay. Thank you. You sometime made notes 19 to file, I take it, by dictating to your assistant to remind 20 you of followup that was needed and people that you needed to 21 meet? 22 A: Sometimes I -- sometimes I would tell my 23 secretary to do that, yes. 24 Q: Client documents were in the file? 25 A: Client documents were in the file, yeah,

114

1 you're talking about Dell Financial Services? 2 Q: Hmm hmm? 3 A: Well, yeah. 4 Q: Would the presentation that you received 5 from Scott Marentette be in the file? 6 A: Probably. 7 Q: And the relevant City documents like the 8 RFQ? 9 A: No, I don't think I ever had the RFQ. 10 Q: Okay. And likewise, you don't think you 11 ever had DFS's response to the RFQ? 12 A: Not to my recollection. 13 Q: And also in the file would be, as you've 14 said, your retainer letter, yes? 15 A: I would think so. 16 Q: And your accounts? 17 A: Yes. 18 Q: Am I right, Mr. Lyons, that everything 19 that was actually generated by your office in typewritten 20 form, would have been created electronically? In 1999? 21 A: I'm not sure about that. Was it? I don't 22 know the answer to that. 23 Q: Those documents would have been generated 24 on MBS computers? 25 A: Yes, I think they had computers -- they

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1 did some changes through that period of time. I'm not -- I 2 don't recollect what they had in 1999. 3 Q: Were you using MBS computers, Mr. Lyons? 4 A: Not me. 5 Q: Your staff? 6 A: They were using a computer, yes. 7 Q: Owned by MBS? 8 A: Yes. 9 Q: Left at MBS when you departed MBS? 10 A: Could have been. I think at that time, 11 I'd already purchased a couple of computers. We were already 12 starting our new business. 13 Q: When did you purchase new computers, Mr. 14 Lyons? 15 A: Oh, it would have been just a few months 16 before we moved, maybe. 17 Q: But not in 1999? 18 A: Not in 1999, no. 19 Q: The computers that were used to generate 20 documents in 1999, remained the property of MBS when you 21 departed? 22 A: I would assume so. 23 Q: Did you take a copy of any of that 24 electronic data with you when you left, sir? 25 A: No, no.

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1 Q: Have you made any inquiries of MBS to 2 determine the whereabouts of that electronic data? 3 A: Yes. 4 Q: And what have you learned? 5 A: It's been wiped clean because they had too 6 much data storage. So, they had -- when we left, I think 7 they eliminated everything. 8 Q: Who did you speak to about that and when, 9 Mr. Lyons? 10 A: I didn't, it was somebody in my office who 11 looked after that. I don't understand computers enough to 12 even know that. 13 Q: Who was it who looked after that, Mr. 14 Lyons? 15 A: In my office? 16 Q: Yes. 17 A: Mr. Mangat. 18 Q: And that was after this issue arose? That 19 is to say, the Inquiry was commenced and there was some 20 concern about obtaining the electronic data from that office? 21 Is that when you made the inquiries? 22 A: It could have been. Earlier than that. I 23 don't know when. 24 Q: But why would it have been any earlier 25 than the launching of the Inquiry?

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1 A: Well, maybe there was something in the 2 newspaper and we were probably trying to see what material -- 3 it must have been around the time. Not -- not MFP because I 4 wasn't concerned about that. It might have been around the 5 time that this allegation occurred that we started looking 6 for the files -- for the -- 7 Q: That was after the Inquiry -- 8 A: Start -- 9 Q: -- had already -- 10 A: Yeah. 11 Q: -- been announced, Mr. Lyons. 12 A: Right. Okay, whatever. I'm not 13 quarrelling with the date, I'm just saying I can't remember. 14 Q: In fact, you met with Commission Counsel, 15 as I understand it, in the summer of last year? 16 A: Yes. 17 Q: Before there was any news in the newspaper 18 about the allegation that you just mentioned? 19 A: Yes. 20 Q: And so you're saying that as a result of 21 your meetings with Commission Counsel, you ma -- you had Mr. 22 Mangat make inquiries of MBS? 23 A: It could have been earlier. I'm not sure 24 if it was at the time or when this whole thing started. I'm 25 just not sure.

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1 Q: But I'm just trying to understand from 2 you, Mr. Lyons, why? What reason there would have been for 3 looking for the electronic data that was reflected in your 4 DFS file any earlier than the announcement of the Inquiry? 5 A: And maybe I didn't. I didn't really do 6 this. I'm just thinking what Mr. -- I recall some 7 conversation I had with Mr. Mangat about where these -- it 8 wasn't just -- it wasn't about these files. I remember 9 trying to find out about another file and we were looking for 10 some material and we couldn't find it and that's when I found 11 out and I don't think it had anything to do with DFS or Dell 12 Computer. 13 Q: Did Mr. Mangat inquire into the 14 availability of backup systems or do you know? 15 A: I don't know. 16 Q: Did Mr. Mangat inquire as to whether there 17 was any relevant data in any form that remains on the MBS 18 servers or backups or do you know? 19 A: I think that he did but I won't answer 20 that for sure. I think he did, though. 21 Q: Mr. Lyons, the MFP file -- 22 A: Hmm hmm. 23 Q: -- that you produced to Commission Counsel 24 contained twenty-nine (29) documents totalling, I don't know, 25 less than fifty (50) pages. Does that seem about right?

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1 A: It could have been. 2 Q: Would your DFS file have been any bigger 3 than that? 4 A: You have to remember, we don't always keep 5 a lot of documents around. My theory is this stuff is very 6 confidential, what we have from our client. If we're not 7 using it, just don't keep it. 8 Q: So the answer to my question is that the 9 DFS file would very unlikely have been any bigger than the 10 MFP file, correct? 11 A: Probably. I -- you know, I would assume 12 that, yes. 13 Q: It certainly wouldn't have taken up a 14 drawer of a filing cabinet or -- 15 A: Well -- 16 Q: -- half a drawer? 17 A: No, we'd have a lot of documents that we 18 would get rid of, like City of Toronto documents that were 19 all public documents that our clients had and we would always 20 be pruning those files and I'm sure that's what we probably 21 did. 22 Q: Just help me with that, Mr. Lyons. What 23 City of Toronto documents did you have in the case of DFS 24 that you had to prune? 25 A: No, we had no documents. I -- you're

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1 asking about my general files or -- 2 Q: I'm asking about DFS. 3 A: DFS was -- that's -- might have had very 4 little in terms of documents. 5 Q: At most an inch thick, sir? 6 A: How do I know? I don't remember. Do you 7 remember? 8 Q: Reconstructing what you know. You were 9 the lobbyist on the piece. Reconstructing the events as best 10 as you can, isn't it likely that your DFS file -- look at the 11 M -- look at the MFP one in comparison, you acted for them a 12 lot longer, was no more than an inch thick? 13 A: M -- I don't -- I don't know. 14 Q: It doesn't make sense to you, Mr. Lyons? 15 A: No, I just don't have a better answer for 16 you. Sorry. 17 Q: How much bigger than an inch is it 18 possible that it was? 19 A: Maybe it was five-eighths of an inch or an 20 inch and three-eights. 21 Q: Okay. It was in the range of a couple of 22 inches? 23 A: Oh, maybe a centimetre more than that. 24 I'm not sure. 25 Q: There are many reasons to keep files,

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1 aren't there? 2 A: Why would you -- yes, there are reasons to 3 keep files. 4 Q: And you keep them while a matter 5 progresses as a starting point because you can't possibly 6 keep all the information that you obtain in your head. 7 That's what you've been telling the Commissioner for the past 8 couple of days isn't it? 9 MR. TODD WHITE: No, it's not, that's not what 10 he said. 11 12 CONTINUED BY MS. LINDA ROTHSTEIN: 13 Q: Haven't you been telling the Commissioner 14 that you don't remember the details of this matter, Mr. 15 Lyons? 16 MADAM COMMISSIONER: But he hasn't said that 17 he's been keeping the files because he can't keep it in his 18 head. 19 MS. LINDA ROTHSTEIN: I agree with that, 20 Commissioner, I'm drawing an inference from what he said, and 21 that was the point of my question. 22 23 CONTINUED BY MS. LINDA ROTHSTEIN: 24 Q: But, Mr. Lyons, in case it wasn't fair to 25 you, sir. Isn't one (1) of the reasons that you keep the

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1 file for an ongoing matter is the simple point that you can't 2 possibly keep all the information in your head? 3 A: That would be a reason. 4 Q: And isn't it true, Mr. Lyons, that it's 5 even harder to keep the information after the file has been 6 closed? 7 A: Yes, because I'm not acting anymore. 8 Q: And isn't it also true, Mr. Lyons, that at 9 least some of the information that you collect during a 10 lobbying campaign is of value to you and your client, even 11 after a specific matter is over? 12 A: You said the fundraising, you're talking 13 about? 14 Q: No, the information that you collect 15 during a lobbying campaign, sorry, I used the campaign word 16 and that may have confused you. I'm suggesting to you, Mr. 17 Lyons, that surely some of the information that you collect 18 during a lobbying campaign on behalf of a client, is of some 19 value to you or to that client, even after the specific 20 matter is over? 21 A: I never keep files after I'm finished, 22 unless it's an ongoing project. 23 Q: Are you telling the Commissioner that none 24 of the information that you collect in the course of a 25 lobbying retainer is of value in the future?

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1 A: If it is, if it was like some report that 2 was generic to other files, then I would copy it and put it 3 in the other file. But we just don't keep the files around. 4 Q: And it might be of some benefit in 5 understanding possible future work with the same company 6 surely? 7 A: No. 8 Q: No. It's of no benefit in -- in that 9 regard? 10 A: No, because there would be another issue, 11 and another issue is all -- a different set of factors. 12 Q: And so the profile of the company and the 13 way you position them and the pitch and all of that, just 14 throw it out the window after the file's over? 15 A: What I do is when I have a big client and 16 I'm working on a number of matters, I have separate files and 17 then I prune them occasionally because we're finished with 18 that particular issue and we -- and we keep the file, the 19 general file, but we throw out the specific files. 20 There are different colours in our office, and 21 one (1) I'm thinking about as I'm talking to you is yellow, 22 and it's a different number of projects, and as soon as I'm 23 finished the project and it's dealt with, we just get rid of 24 the file, we don't need -- we don't need the -- well, first 25 we're always fighting for space, which is an issue, as I

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1 think any law firm knows, and we happen to be a sub-tenant of 2 a law firm. 3 I know Mr. Manes is writing that down, but we 4 just are a sub-tenant, and we have -- anyway, the -- so 5 that's what we do anyway. 6 Q: Help me with the colour coding, what's the 7 yellow file? 8 A: Well, that I do for the specific client, 9 I'm not sure I do it for any other. The yellow is each 10 issue. 11 Q: Sorry, yellow is for one (1) client in 12 particular, of all your clients? 13 A: Well, this particular client has a number 14 of issues, and it's been ongoing for a few years, so I get 15 rid of the file when I'm finished using it on that issue. 16 Q: But you're talking about one (1) 17 particular client that you have a particular colour coding 18 practice for? 19 A: For that -- for that one (1) I do, yeah. 20 Q: Right. But your point, Mr. Lyons, if I 21 hear you correctly is, is that the vast majority of the 22 information that you amass in a lobbying client's file is of 23 no value to you or the client after your retainer is over? 24 A: Yes. 25 Q: And you have a practice, therefore, of

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1 destroying your consulting or lobbying files, after your 2 active engagement is over? 3 A: Yes. 4 Q: Mr. Lyons, am I right that that's not your 5 practice when you're acting as a lawyer, that you maintain 6 your files even after the matter has ended, that that is 7 something that you do when you're acting as a lawyer? 8 A: Because you have an obligation as to legal 9 documents, I think you're supposed to keep it, so I follow 10 the procedures, whatever the law firm has at that time. But 11 I'm operating as my own group now, and I just -- that's my 12 procedure. 13 Q: And you also agree that not only do you 14 have an obligation as a lawyer to maintain files for a long 15 number of years, but you also have a duty as a taxpayer, if 16 nothing else, to maintain financial records, for tax 17 purposes, don't you? 18 A: Well, we keep the financial records. 19 Q: Right. So, who would have the financial 20 records with respect to DFS and Dell? 21 A: Well -- 22 Q: Your accountant? 23 A: -- no. No -- 24 Q: Who? 25 A: It would have been Morrison Brown.

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1 Q: So Morrison Brown, would have the 2 financial records with respect to Dell and DFS? 3 A: I would imagine so. 4 Q: That would show all your accounts and -- 5 A: Well -- 6 Q: -- and all the monies received, that sort 7 of thing? 8 A: I would assume so, I don't know if they 9 have them still, but we keep them separate in our own office. 10 Q: Mr. Lyons, as a lawyer, who has been 11 practicing for some thirty eight (38) years, and as someone 12 who you've said has an obligation to keep lawyer client 13 files, you surely know that it is absolutely common practice 14 in this City, in this Province, when you don't have enough 15 space in your law office, to simply send them to off-site 16 storage? 17 A: We don't have any legal files. 18 Q: I'm saying, Mr. Lyons, that you surely 19 developed a practice as a lawyer, over all the years that you 20 practiced of sending closed files to off-site storage? 21 A: Yes, when I was a lawyer, but I don't 22 practice law. 23 Q: It was cheap and easy wasn't it? 24 A: What to send them to storage? 25 Q: Hmm hmm?

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1 A: Not if I'm paying. It's all right when 2 you're a big law firm -- if I have to be storing my own 3 documents, I'm not going to be doing it when I don't need 4 them. They're not legal documents, so why would I do it? 5 Q: Mr. Lyons, I'm suggesting to you that it's 6 a relatively insignificant expense? 7 A: Whatever you want to say, that's fine. 8 Q: Do you agree -- 9 MR. TODD WHITE: Well, I'll take issue with 10 that. Is My Friend going to call evidence on how many 11 thousands of dollars it costs to store documents? 12 THE WITNESS: Yes? 13 14 CONTINUED BY MS. LINDA ROTHSTEIN: 15 Q: Mr. Lyons -- I'm suggesting, Commissioner, 16 that Mr. Lyons surely knows, after his thirty eight (38) 17 years of practice, that the cost of off-site storage, is a 18 relatively small expense. 19 Do you agree with that, sir? 20 A: No. 21 Q: So, it's just too costly in your role as a 22 lobbyist? 23 A: I don't know, Ms. Rothstein, what it costs 24 to store documents, but it's not inexpensive in the City as 25 you would say. Maybe if you worked for the City of Toronto,

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1 you don't have to pay. 2 Q: You're saying that success fees don't 3 cover the cost of off-site storage, sir? 4 MR. TODD WHITE: Your Honour, my guess is that 5 was sarcasm. 6 MADAM COMMISSIONER: I -- 7 MS. LINDA ROTHSTEIN: Mr. Lyons responded to 8 my question with a question, as if he couldn't afford it. 9 And I think Commissioner, I'm entitled to say to him, based 10 on the evidence he's given thus far, that he surely could. 11 He surely could. 12 MADAM COMMISSIONER: I think it's a fair 13 question in cross-examination. 14 15 CONTINUED BY MS. LINDA ROTHSTEIN: 16 Q: You're surely not telling the Commissioner 17 you couldn't afford it, Mr. Lyons, are you? 18 A: Is this sarcastically put? 19 Q: I'm just asking a question. 20 A: Do you want me to sarcastically answer the 21 comment? I will do that. What was your question again? 22 Q: I'm simply saying, Mr. Lyons, that it 23 can't be that it was too expensive to send the files to 24 off-site storage? 25 A: I'm going to suggest to you, without

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1 sarcasm, that it is too expensive. And that's my answer. 2 Q: Did you use e-mail in 1999 or 2000? 3 A: I never use e-mail other than a 4 Blackberry. And I only started that about a year and a half 5 ago. 6 Q: MFP, Mr. Lyons -- 7 A: Hmm hmm. 8 Q: -- there's something that I really don't 9 understand. 10 A: Well, tell me your problem. 11 Q: In April and early May of 1999, you say 12 that MFP did not even know that you were working for DFS on 13 the computer leasing RFQ. Did I hear your evidence 14 correctly, sir? 15 A: Do you want to repeat that? I'm sorry I 16 didn't get that. 17 Q: Are you telling us that MFP never knew 18 that you were working for DFS on the computer leasing RFQ? 19 You never told them that? Never had a discussion? 20 A: Yes, I did. 21 Q: Okay. 22 A: I said I'm doing work for Dell Financial. 23 Q: You said you were working for Dell 24 Financial -- 25 A: Right.

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1 Q: -- but did you tell them that you were 2 working on the computer leasing RFQ for Dell Financial? 3 A: I can't recall that, specifically. I 4 don't think I did. 5 Q: So, that's what I thought. I thought that 6 you told Mr. Manes that you never told MFP that you were 7 working for DFS on the computer leasing RFQ, am I right? 8 A: I've told you my best recollection. 9 Q: And your evidence is that you didn't 10 realize that MFP was bidding on the computer leasing -- 11 A: That's absolutely true. 12 Q: -- RFQ? 13 A: That's absolutely true, I didn't know 14 that. 15 Q: You didn't know that Dash Domi was 16 spending 50 percent of his time on winning that RFQ? 17 MR. DAVID MOORE: Well, in fairness, the RFQ 18 was issued on May 31st so -- I -- I -- we're talking about a 19 period of time, I presume My Friend's questions have extended 20 back prior to the actual RFQ even being in existence. 21 MS. LINDA ROTHSTEIN: That's fair, 22 Commissioner. That's what I intended by the question. I'm 23 quite comfortable with that being the way I rephrase it for 24 Mr. Lyons. 25 Are you saying --

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1 MADAM COMMISSIONER: When Mr. Domi was here, 2 he said that about 50 percent of the time that he spent 3 working for MFP was based on City of Toronto business, which 4 was trying to -- primarily trying to get this RFQ -- the 5 leasing RFQ that we're talking about. Does that help? 6 And what Ms. Rothstein is asking is that you 7 did -- didn't you know that Mr. Domi was spending 50 percent 8 of his time on winning the RFQ or I gather what she's really 9 asking you is didn't you see him around a whole lot at the 10 City working on this RFQ for MFP? 11 THE WITNESS: I don't know what -- much I had 12 to do with him. I was doing some work for them for that 13 month and a half or something. 14 Did I see him around City Hall? I -- first of 15 all, I don't go to City Hall as frequently as people think I 16 do but secondly of all, I don't think I had much of a 17 relationship with him during this period of time. 18 He might have -- I might have seen that he was 19 doing something but I -- I -- it wasn't something that I 20 recollect with a lot of -- I just don't recollect it. It's 21 possible. 22 23 CONTINUED BY MS. LINDA ROTHSTEIN: 24 Q: Let me see if I can assist your 25 recollection. MFP never asked you for strategic advice

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1 related to the computer leasing RFQ? 2 A: Absolutely not. 3 Q: You never discussed it in general terms 4 with Irene Payne? 5 A: Absolutely not. 6 Q: Not with Dash Domi, even in general terms, 7 Mr. Lyons? 8 A: No. 9 Q: Or Mike Flanagan? 10 A: Not Mike Flanagan. Not to my knowledge. 11 Q: Or Rob Wilkinson? 12 A: Never heard of him. 13 Q: Or anyone else at MFP? 14 A: Nobody else at MFP. 15 Q: Dash Domi says that he did see you at City 16 Hall. Do you want me to take you to his evidence, sir? 17 A: No, y -- you can. 18 MADAM COMMISSIONER: I just get the impression 19 that Mr. Lyons is saying that he never saw Dash Domi. 20 MS. LINDA ROTHSTEIN: Right. I understand. 21 22 CONTINUED BY MS. LINDA ROTHSTEIN: 23 Q: So you may well have seen Dash? 24 A: Right. 25 Q: And he would have made it known to you

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1 that he was spending a lot of time at City Hall for a reason? 2 A: He might have. I'm not disagreeing. I 3 mean, I wasn't -- I don't know what -- what my recollection 4 is. I might have seen him around. It wouldn't be something 5 I would remember but it's possible. 6 Q: Don't you remember that Dash Domi was 7 spending a lot of time at City Hall -- 8 A: No. 9 Q: -- working on this very RFQ process? 10 A: My answer -- I'm sorry, I should have 11 waited -- is no. 12 Q: So Dash Domi -- 13 MADAM COMMISSIONER: City Hall or was it Metro 14 Hall that he was working at? 15 MS. LINDA ROTHSTEIN: The question that Mr. 16 Manes asked him on January the 27th said City Hall -- 17 MADAM COMMISSIONER: Okay. 18 MS. LINDA ROTHSTEIN: -- but I don't know if 19 he meant it actually, Commissioner, in the generic or the 20 more specific Metro Hall. I think you're right that when Mr. 21 Domi testified, he talked about some early work at Metro Hall 22 but I think Mr. Manes' questions on the point described it in 23 the more generic or colloquial City Hall. 24 MADAM COMMISSIONER: All right. 25 MS. LINDA ROTHSTEIN: All right.

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1 2 CONTINUED BY MS. LINDA ROTHSTEIN: 3 Q: Just on that point, Mr. Lyons, do you 4 remember whether you personally in the spring of '99, would 5 have spent time at Metro Hall as distinguished from City 6 Hall? 7 A: Talking -- I can't even remember wh -- 8 what -- that -- whatever was going on at the time, if it was 9 Council was meeting at Metro Hall -- 10 Q: You were there? 11 A: I was there but it -- some of the staff 12 could be at City Hall. Anyway, it's very confusing. It 13 still is. 14 Q: It still is. But if I understand your 15 evidence, sir, if the Council was meeting at Metro Hall then 16 yeah, you were surely there sometime in the spring of '99, is 17 that right? 18 A: Yeah. You know what, I don't ever 19 remember seeing him at Metro Hall. Like, I don't have a 20 picture in my mind but he could have been. 21 Q: And do you remember seeing him at City 22 Hall? 23 A: I've seen him at City Hall. 24 Q: And you're telling us, Mr. Lyons, that you 25 never discussed with him what the hell he was doing there?

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1 MADAM COMMISSIONER: Well, Ms. Rothstein. 2 MS. LINDA ROTHSTEIN: Well, did you discuss 3 that with him? 4 MADAM COMMISSIONER: I -- I must -- 5 THE WITNESS: I'm just not sure I did. I 6 mean, I'm not denying I might have. I'm just not sure. 7 I mean, I don't remember much of a 8 relationship in those days and he -- I probably bumped into 9 him. He might have -- he might have said something to me. I 10 can't recollect. 11 12 CONTINUED BY MS. LINDA ROTHSTEIN: 13 Q: Your contact with Dash Domi and MFP 14 following Ms. Payne's letter terminating your retainer, can 15 you take a look at Exhibit 15 which are Mr. Domi's cell phone 16 records at Tab 54. 17 A: These are mine -- my records -- I mean, my 18 -- 19 MADAM COMMISSIONER: The Clerk will assist 20 you. It probably says Dash Domi on it, I would think. 21 THE WITNESS: Oh, Dash Domi, okay. I never 22 had Dash Domi, is Dash Domi here? I don't have it. Oh, 23 yeah, here it is. 24 25 (BRIEF PAUSE)

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1 2 THE WITNESS: Fifty-five (55), okay. 3 MS. LINDA ROTHSTEIN: Tab 54. 4 THE WITNESS: Okay. 5 6 (BRIEF PAUSE) 7 8 CONTINUED BY MS. LINDA ROTHSTEIN: 9 Q: Have you got that, Mr. Lyons? 10 A: Yeah. 11 Q: That's a chart which is a summary of Dash 12 Domi's cell phone calls to your telephone numbers, and you'll 13 see that it follows sequentially by date? 14 A: Yes. 15 Q: And you'll see, Mr. Lyons, that there are 16 calls on -- two (2) on the 28th of May, following the 17 termination of your retainer on the 26th of May. There 18 are -- 19 MADAM COMMISSIONER: Can you tell me what 20 number they are on the left? 21 MS. LINDA ROTHSTEIN: That's 2 and 3 on rows 2 22 and 3 of that document, Commissioner. You'll see that's 23 followed by rows 4, 5, 6, 7 and 8, all calls in June, the 24 1st, the 2nd, and three (3) on the 8th of June of 1999. And 25 a call on the 9th, or row number 9 is a call on August the

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1 13th of 1999, all before the rehiring of you by MFP, Mr. 2 Lyons. 3 THE WITNESS: Right. 4 5 CONTINUED BY MS. LINDA ROTHSTEIN: 6 Q: And you'll see that it would appear from 7 looking at this, that there were no calls made to you prior 8 to February '99 by Mr. Domi? 9 A: Yes. 10 Q: That he only called your number once on 11 February 9th, 1999, that is during the period of your actual 12 engagement by MFP? 13 A: Yes. 14 Q: And so the -- there's a number of calls, a 15 total of seven (7) calls that he made after Irene Payne had 16 terminated your retainer? 17 A: Yes. 18 Q: But that's when it would appear he starts 19 to call you more frequently? 20 A: Yes. 21 Q: Can you assist us with that, sir? 22 A: Yes, I can. He -- when Irene terminated 23 this relationship he started phoning me and feeling very 24 badly that this relationship had ended. And I was thinking, 25 what a nice guy, he's feeling -- because I felt that I was

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1 ill done by, because she misunderstood my letter. 2 And he phoned me three (3) or four (4) times 3 around that time, just I think the 28th was the first one (1) 4 he called me about in May, that's when he really expressed 5 his concern or left -- he could have left a message and I 6 could have phoned him back, because it's very short. I'm 7 just looking at that. 8 But anyway, and some of these could be to my 9 secretary, so I'm not sure, because they're just -- they're 10 very short periods. But I do remember one (1) or two (2) 11 phone calls where he was upset that the relationship ended, 12 and he said, I'm going to work one (1) day to get the two (2) 13 of you back together. And I said -- 14 Q: So -- 15 A: -- that I appreciated that. 16 Q: -- okay. So, what he was doing was trying 17 to rebuild your relationship with MFP, do I hear you 18 correctly, sir? 19 A: Yes, yes. 20 Q: And did that culminate in a lunch with him 21 at Il Posto on June the 18th of 1999? 22 A: No. No, I'm sorry, I didn't -- I wasn't 23 there. 24 Q: And you say that with some conviction, 25 sir. Can you assist me as to why you're so certain that that

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1 didn't happen? 2 A: Because I had another family event to 3 attend that day, and it was -- didn't happen. 4 Q: Just how do you know that -- 5 A: Because -- 6 Q: -- have you looked at a calendar to tell 7 you that? 8 A: Yes, I've -- I've done -- not a calendar, 9 I've spoken to my wife and my family, because I recall it was 10 a graduation for one (1) of my children. 11 Q: Do you still have a calendar from that 12 year? 13 A: No, no. It's just a recollection. 14 Q: And so, you knew prior to coming to 15 testify, that there was this document in your document brief 16 that you recorded at least on the surface, a lunch between 17 you and Dash Domi at Il Posto, and you spoke to your wife and 18 she said, well that's impossible, one (1) of our kids was 19 graduating, is that what you're telling us, sir? 20 A: Well, one (1) of them did graduate; right. 21 Q: Okay, one (1) of your -- one (1) of your 22 children graduated on that day? 23 A: Had her graduation ceremony. 24 Q: Right. 25 MS. LINDA ROTHSTEIN: Commissioner, I'm going

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1 to move on to another area, and so this -- oh, no, it's 2 really early, okay. I didn't want to break it up. 3 4 CONTINUED BY MS. LINDA ROTHSTEIN: 5 Q: Mr. Lyons, your role as a lobbyist? 6 A: Right. 7 Q: On May the 8th, that's last Thursday, you 8 told Mr. Manes that you do essentially four (4) things. You 9 provide strategic advice; right? 10 A: Yes. 11 Q: You solve problems? 12 A: Yes. 13 Q: You gather information? 14 A: Yes. 15 Q: And you arrange meetings? 16 A: Yes. 17 Q: Is there any other category of service 18 that you provide to your lobbying clients, that you can think 19 of, that doesn't fit within those four (4) very broad 20 categories? 21 A: Strategy -- just give it back to me. 22 Q: Strategic advice? 23 A: Right. 24 Q: Problem solving. 25 A: Hmm hmm.

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1 Q: Information or intelligence gathering. 2 A: Hmm hmm. 3 Q: Setting up meetings. 4 A: No, that would be it. I mean, I -- my own 5 view of this whole business of lobbying is that it's your 6 experience of knowing these people, but also know how the 7 system works. 8 Because I have been involved in so many 9 different thing in my life in public and in politics. 10 Q: Let's just talk about what some of those 11 things actually involve and see if you and I are, in fact, in 12 agreement. Because I don't actually think we're that far 13 apart, Mr. Lyons. 14 Strategic advice, because I think that's the 15 biggest part of this, if I may say, that involves as your 16 website would say, reading the political landscape? 17 A: Yes. 18 Q: And bringing to bear the experience that 19 you've just described -- 20 A: Right -- 21 Q: -- and knowing people and how things get 22 done? 23 A: Right. 24 Q: It involves advising your clients on how 25 to be visible around City Hall?

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1 A: That might be part of it sometimes. 2 Q: I'm talking generically. This is not DFS 3 related, Mr. Lyons, okay? 4 A: Okay. 5 Q: Really not, just -- 6 A: Okay -- 7 Q: -- just at 30,000 feet, it could involve 8 your clients on how to be visible around City Hall, if that's 9 appropriate, right? 10 A: Right. 11 Q: It could involve telling them how to make 12 meaningful contact with Councillors? 13 A: Yes. 14 Q: You advise your clients how to build good 15 will with Councillors? 16 A: Yes. 17 Q: Talked about that, sometimes it may be 18 suggesting to them that a political donation here and there 19 won't hurt? 20 A: Could have said that, yes. 21 Q: Right. Same with the Mayor, that sort of 22 thing, how you get a goodwill relationship with the Mayor, if 23 that's possible? 24 A: If that's possible. 25 Q: Take it that the Mayor, actually -- I

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  1  didn't mean it that way.
  2                 I take it that the Mayor -- let me ask this
  3  question, doesn't have a lot of time himself, to meet with
  4  private clients, is that fair?  Has that been your
  5  experience?
  6                 A:  The Mayor --
  7                 Q:  The Mayor doesn't himself have a lot of
  8  time to meet with private clients who are interested in doing
  9  business at the City, is that fair?
 10                 A:  That's right. 
 11                 Q:  More often than not, any meetings that you
 12  get are with the Mayor's advisors?
 13                 A:  Right.
 14                 Q:  All right.  Also, part of your strategic
 15  advice is giving clients a sense, your view, your opinion, on
 16  whether it would be, for example, a good idea to attend or
 17  sponsor the Marilyn Lastman Arts Ball.
 18                 Have you been asked that sort of thing, sir?
 19                 A:  Would -- yes, I've helped on that.  That
 20  first year, I think.
 21                 Q:  And so can I take it, Mr. Lyons, that you
 22  have, in fact, encouraged some of your clients to attend that
 23  function?
 24                 A:  Well -- probably did but it wouldn't be a
 25  significant one.

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1 Q: You might be asked about, whether or not a 2 client should attend or sponsor the Mayor's golf tournament? 3 A: Yes, been asked that. 4 Q: And have you said that that was a good 5 idea? 6 A: Well, I don't think I actually recommended 7 them doing it, if you want my honest opinion. 8 Q: Why was that? 9 A: Because it wouldn't matter to this Mayor. 10 And so, what are you -- if you want profile in the City, 11 that's a lot of money to be spending. I'm just talking about 12 PR as opposed to -- 13 Q: So you haven't encouraged your clients to 14 do that? 15 A: No, I mean some of them have done it 16 anyway. But -- 17 Q: Have you ever been asked about whether 18 someone should purchase a moose from the City? 19 A: Oh, I purchased one (1). I supported the 20 cause. 21 Q: And you thought that was a good idea, sir? 22 A: Yeah, I had one (1) at my golf tournament. 23 Q: And so did you encourage some of your 24 clients to do that, as well? 25 A: Yeah, I thought it was a great thing for

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1 the City. I don't know if some of them did, but I thought 2 that was one (1) of the great things they did. 3 Q: And what about attending or sponsoring the 4 annual I&T golf tournament that used to take place, did you 5 ever get consulted about whether that was something your 6 clients should support, in some way? 7 A: I&T? 8 Q: Yes, the IT departments golf tournament. 9 A: I never had anything to do with that. 10 Q: Okay. 11 A: Maybe -- 12 Q: You were never asked to come or -- 13 A: No, no. 14 Q: Okay. 15 A: I mean -- no, I don't recollect that. 16 Q: Your clients may seek your advise with 17 respect to whether they should invite a Councillor or a staff 18 member out to dinner, or to attend a sporting event or to a 19 hockey game, or that sort of thing? 20 A: My staff do sometimes, but it's generally 21 with staff or Council -- 22 Q: No, not your staff, sorry, Mr. Lyons. I'm 23 asking whether or not your clients, sorry to interrupt, but I 24 want to make sure you and I understand each other. Whether 25 your clients ask for your advice on whether they should be

146
  1  inviting a Councillor or a staff member out to dinner, or to
  2  attend a hockey game, or the client's golf tournament?
  3                 A:  I don't really get that question.  I think
  4  they've done it before I've ever heard about it, or they just
  5  tell me.
  6                 Q:  Okay.  And if you were in fact asked by a
  7  client about whether that was a good idea or not, what would
  8  you say?
  9                 A:  I'd probably say it was a good idea.
 10                 Q:  Okay.  And would you put any kind of limit
 11  on what kind of dinner, what kind of sporting event, what
 12  kind of fundraisers they should feel free to invite staff and
 13  Councillors to?
 14                 A:  Well, I mean it has to be tastefully done,
 15  and it's not going to be some extravaganza.  I mean it's just
 16  -- it's what you have in any -- any industry, sorry, in any
 17  industry, whether it's Government or private sector, you
 18  know, take them out for dinner, take them golfing.  And -- 
 19                 Q:  So -- 
 20                 A:  -- you know.
 21                 Q:  -- if a client had asked you whether or
 22  not they should fly a City Councillor to Philadelphia on a
 23  private jet to watch a playoff hockey game, what would you
 24  have said, Mr. Lyons?
 25                 A:  I wish I'd have been invited, that's what

147
  1  I would have said.  If you want my honest answer.  Now, what
  2  do I think about it?
  3                 Q:  If a client had asked you whether they
  4  should invite a City Councillor to fly to Philadelphia on a
  5  private jet to watch a playoff hockey game, what would you
  6  have said?
  7                 A:  Well, that's not my style, I just can tell
  8  you that's not what I do.
  9                 Q:  Would you have told them that it was an
 10  appropriate invitation?
 11                 A:  If it's an appropriate invitation?  I
 12  would probably caution them.
 13                 Q:  Was it over the top?
 14                 A:  I don't -- it -- it happens in private
 15  business, I don't know whether in the public sector, it -- it
 16  would be a good idea, that's all.  I would caution them.
 17                 Q:  Mr. Wolfraim testified that if he'd been
 18  asked, he would never have approved of such an expense,
 19  because it was pushing the envelope.  Is it any less clear to
 20  you, sir?
 21                 A:  He was probably right in what he said.
 22                 Q:  It's not a grey zone is it?
 23                 A:  Hmm?
 24                 Q:  It's not a grey zone is it?
 25                 A:  Well, I mean I've heard these things

148
  1  happen in business, but to do this within the public sector
  2  is -- puts it in another perspective.
  3                 Q:  To do this with a public official is not a
  4  grey zone is it, Mr. Lyons?
  5                 A:  Well, it's -- it's probably not a grey
  6  zone.
  7                 Q:  It's black and white isn't it?
  8                 A:  It could be black and white.
  9                 MS. LINDA ROTHSTEIN:  Commissioner, I am going
 10  to break at this stage, thank you.
 11  
 12                       (BRIEF PAUSE)
 13  
 14  CONTINUED BY MS. LINDA ROTHSTEIN:
 15                 Q:  Actually I have one (1) other question,
 16  Mr. Lyons. 
 17                 A:  Go ahead, I'd be happy to keep on going.
 18                 Q:  Did you know that Dash Domi had invited
 19  Tom Jakobek to fly to Philadelphia on a private jet?
 20                 A:  Listen, I knew nothing about these trips.
 21  I heard about one (1), and all I regretted was I wasn't
 22  invited.  I'm just telling you what my opinion is.
 23                 Q:  So you don't know whether or not Mr.
 24  Jakobek went?
 25                 A:  No.

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1 MS. LINDA ROTHSTEIN: It's a good time to 2 break, Commissioner. 3 4 (BRIEF PAUSE) 5 6 MADAM COMMISSIONER: All right, we'll come 7 back at 2:30. 8 THE REGISTRAR: Order. The Inquiry is 9 adjourned until 2:30. 10 11 --- Upon recessing at 12:55 p.m. 12 13 --- Upon resuming at 2:30 p.m. 14 15 REGISTRAR: The Inquiry will resume. Please 16 be seated. 17 18 (BRIEF PAUSE) 19 20 MS. LINDA ROTHSTEIN: Thank you, Commissioner. 21 22 CONTINUED BY MS. LINDA ROTHSTEIN: 23 Q: Mr. Lyons, we were talking before lunch, 24 at thirty thousand (30,000) feet, about the four (4) 25 categories of services that you provide to clients in your

150

1 capacity as a consultant lobbyist, do you remember that, sir? 2 A: Right. 3 Q: And we'd gone through the -- to some 4 degree some consideration of the category that you've 5 described as strategic advice. 6 I want to turn if we can to the category of 7 gathering intelligence. I think you, just in jest, referred 8 to it as snooping around. Do you remember that, Mr. Lyons? 9 A: Yes. 10 Q: And I didn't take you seriously on that, 11 so you don't have to fuss about that. 12 But if you were to cast your mind back, to the 13 year 1999, from whom would you have obtained intelligence in 14 the IT department at the City of Toronto? 15 A: On the IT department? 16 Q: Hmm hmm? 17 A: From the department itself? 18 Q: Yes? 19 A: Probably three (3) or four (4) people that 20 I knew there. 21 Q: And those were, Jim Andrew -- 22 A: Jim Andrew, Lana Viinamae -- 23 Q: Yes -- 24 A: -- Mike Franey -- 25 Q: Yes --

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1 A: -- and a fellow named Wong. 2 Q: Okay. 3 A: I can't remember his first name. 4 Q: Steve Wong? 5 A: Steve Wong. 6 Q: What about Kathryn Bulko? 7 A: Kathryn Bulko? 8 Q: Ring a bell? 9 A: Yeah, it does, actually. 10 Q: But not much of one (1) -- I'm looking at 11 your face and I don't see -- 12 A: Well, is that the lady that's involved 13 with this other lady? 14 Q: Well there have been recent press reports 15 about Ms. Bulko, that's true. 16 A: So that's why I'm confusing, whether I 17 just heard it about that or I remembered her name from IT. 18 Now, you said she was in IT, it's possible. 19 Q: Okay. 20 A: But the name isn't familiar to me. It's 21 possible. 22 Q: Okay. And so can we assume from that, Mr. 23 Lyons, that she isn't someone from whom you sourced 24 intelligence back in '99, at least not frequently? 25 A: Not frequently.

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1 Q: And if we were actually to focus your 2 attention more specifically on the computer leasing RFQ, Mr. 3 Lyons, from whom did you obtain any intelligence in the IT 4 department? 5 You told us that with respect to, Jim Andrew, 6 to this day you don't know what his view is on leasing, 7 that's what you told us yesterday? 8 A: Yes. 9 Q: So, am I right in concluding that you got 10 very little information from him? 11 A: On the -- on this -- 12 Q: On this RFQ? 13 A: -- RFQ? 14 Q: Yes? 15 A: Yes, I don't remember getting much. 16 Q: And do you remember getting much, if 17 anything, from Lana Viinamae? 18 A: No. I don't remember. 19 Q: Certainly, if we look at the documents, I 20 can tell you, Mr. Lyons, she doesn't seem to have had a whole 21 lot of involvement in the process of the preparation of the 22 RFQ. 23 She seems to have become much more involved 24 after the bid was submitted -- the bids were submitted. 25 A: I didn't know she had any role, so that's

153

1 my recollection. 2 Q: Okay. She certainly wasn't at any 3 meetings that you attended, is that fair? 4 A: Yes. 5 Q: And you're not even sure that Jim Andrew 6 was ever at any meetings, but if he was it was just that 7 April 23rd, is that right? 8 A: Yes. 9 Q: Okay. And Mike Franey, did you get any 10 intelligence on the City of Toronto computer leasing RFQ from 11 him? 12 A: No, part of my problem is, I would act for 13 a number of clients in that field, so I would be talking to 14 these people, but I don't remember talking to him about this 15 one (1), but that's just my recollection. 16 Q: Okay. And Steve Wong, any information 17 from him about this leasing RFQ and if it assists you, sir, 18 his name doesn't seem to appear in any of the documents, or 19 not many of the documents on the leasing RFQ at least during 20 this time period. 21 A: No, I don't think I talked to him about 22 it. 23 Q: Okay. So, in all likelihood, you didn't 24 get a lot of -- if any, intelligence from the IT department 25 in February, March, April, and May of '99, is that fair?

154

1 A: Probably fair. 2 Q: Now -- and you certainly can't remember a 3 single piece of intelligence that you obtained from anyone in 4 the IT Department in the period March or February through the 5 end of May '99. Is that fair? 6 A: That could be fair. 7 Q: Now -- and then if I understood your 8 evidence correctly, sir, after the bids are submitted and 9 whenever that date is, I don't expect you to remember it -- 10 but after the bids are actually in, you don't then call 11 anybody. You're a lobbyist and you considered yourself to be 12 governed by the same rules as your clients -- 13 A: Which is -- 14 Q: -- in respect of no contact with staff? 15 A: -- for the blackout period? Yes. 16 Q: Yes. Okay. I just wanted to be sure that 17 we were clear about that and I wa -- help me with this 18 because I've asked a number of witnesses this, Mr. Lyons. Do 19 you remember referring to it at the time or hearing it 20 referred to as a blackout period? 21 A: No. 22 Q: That might not have been the actual 23 terminology? 24 A: You know, like, it's something I just 25 follow at the province, too. It's just a -- I call it a

155

1 blackout period. 2 Q: Okay. 3 A: And that's just my terminology. 4 Q: Okay. So that's the terminology that you 5 would have used in your own head or perhaps in conversations 6 but you're telling us that you're not at all certain that you 7 would have heard that from, for example, City employees? 8 That terminology. 9 A: I'm not sure I did. 10 Q: Okay. You certainly understood the 11 concept of a procurement sensitive period in which there 12 should be no communication with staff, right? 13 A: Right about that -- 14 Q: About -- about that particular -- 15 A: I mean, you could end up talking to them 16 and it could be totally unrelated but I didn't -- I thought 17 that was fair. 18 Q: You and I have no debate about that, sir. 19 A: Okay. 20 Q: No debate about that and -- but the point 21 of it is and I take it that you understood this, was that it 22 ensures that there is, in fact, a level playing field for the 23 bidders? 24 A: Right. 25 Q: Right. And it ensures or it helps to

156

1 ensure, at least -- go some distance in ensuring that the 2 evaluation that is done by staff is as objective as possible. 3 A: Right. 4 Q: All right. And I suppose it also ensures 5 that Councillors don't get too, you know, politicized by the 6 tender process and they are receiving staff advice and 7 accepting it as objectively provided. It has that effect, as 8 well, does it not, Mr. Lyons? 9 A: Well, I mean -- I don't know. I don't 10 know if they communicate with the Councillors or not during 11 the process. I think they sometimes do, they sometimes 12 don't. 13 Q: You're talking about the staff? 14 A: Right. 15 Q: But there'd be nothing wrong with that -- 16 A: No. 17 Q: -- surely? 18 A: I mean, no, they might be just updating 19 them or whatever. 20 Q: Well -- well, su -- let's just make sure 21 there's no debate between you and I about this. I don't 22 think there is, Mr. Lyons. I really don't. 23 A: No, I don't think there is either. 24 Q: But I take it you agree with me that it 25 would be perfectly proper for staff involved in evaluating

157

1 the RFQ to provide information to Councillors who are sitting 2 on the committee that is first going to look at the staff 3 recommendation? 4 A: Right. 5 Q: Couldn't be anything wrong with that. If 6 anything, it might be encouraged? 7 A: Well, I -- I don't know if they talk to 8 everybody in the committee but certainly, the chair of that 9 committee because they're talk -- they're working together, 10 would be talking to each other and I'm sure there's an RFP 11 out there or what's the one, an RFQ or whatever. They would 12 probably chat about it. 13 Q: All right. 14 A: That's just, sort of, my sense of it. 15 Q: And certainly any Councillor who was 16 actually on the P&F Committee would be entitled to get 17 whatever information they needed to assess the staff 18 recommendation from the staff members who prepared that 19 recommendation? 20 A: That could be, yeah. 21 Q: You can't see anything wrong with that? 22 A: No, I don't see anything wrong with it. 23 Q: All right but what isn't okay is for the 24 Councillors to be actively lobbied during that period by your 25 clients or you?

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1 A: Well, I mean, if -- if it's the blackout 2 period, I don't think there would be any lobbying but that's 3 my view of it. 4 Q: All right and the blackout period would 5 continue until a decision had been made. Is that your 6 understanding, sir? 7 A: Yes, until there was a report to the 8 committee. 9 Q: Okay. 10 A: And now, if it's in-camera, obviously, you 11 wouldn't know. 12 Q: Right. 13 A: So -- some are public, some aren't. 14 Q: Right. 15 A: I assume that this one wasn't public at 16 some point or whatever. 17 Q: This one was in-camera -- 18 MADAM COMMISSIONER: You said it -- 19 MS. LINDA ROTHSTEIN: -- sir. 20 MADAM COMMISSIONER: A report to the 21 committee? Is that what you're saying that -- 22 THE WITNESS: Yeah. Well, not all comm -- 23 like, you can have an RFP and it might be released, you know, 24 with the recommendation. 25 MS. LINDA ROTHSTEIN: But you're --

159

1 THE WITNESS: Or -- anyway, it doesn't matter. 2 I'm just -- 3 4 CONTINUED BY MS. LINDA ROTHSTEIN: 5 Q: Your understanding, Mr. Lyons, is if that 6 the RFP recommendation is contained in a confidential report, 7 then there's no room for lobbying of those who are 8 considering that confidential report? 9 A: Certainly not from -- from me or my 10 clients because we wouldn't know. 11 Q: And do you have any views on the propriety 12 of contact with staff after Council has voted on a 13 recommendation that a particular bidder enter into 14 negotiations with the City to arrive at a contract? 15 A: And that's public or in-camera? 16 Q: Yeah, it's public, it's -- 17 A: Oh, no, then you would hear -- 18 Q: -- announced at the -- 19 A: -- you would hear about it after. 20 Q: You'd hear about it, but do you think 21 there's anything wrong with the staff then having -- you know 22 what, Mr. Lyons, I don't need your views on that, I'm going 23 to -- I'm going to leave that. 24 A: Okay. 25 Q: We'll ask some other questions. If we

160

1 look at the Department of Finance in 1999, and talk about 2 again, the intelligence gathering function that you 3 performed, if we look at that time period in particular, 4 Wanda Liczyk would have been someone whom you obtained 5 intelligence from, from time to time? 6 A: Yes. 7 Q: All right. But if we talk specifically 8 about this leasing RFQ, am I right in understanding that the 9 only intelligence that you obtained from her was on the basis 10 of what she actually communicated during the meeting of April 11 23, 1999? 12 A: Well, you don't know whether -- what I 13 don't know is whether I spoke to her earlier to ask her her 14 view on leasing. 15 You know, that could have been over at City 16 Hall or by a phone call, I'm sure there wasn't a meeting. 17 Q: Okay. You're sure there wasn't a meeting, 18 you may have had a brief either conversation with her in the 19 hallway, so to speak; yes? 20 A: Yes. Or you know what, with her I tried 21 to catch her at Council, you could never find her any other 22 time. 23 Q: All right, so you might have talked to her 24 outside the Council Chamber? 25 A: Right.

161

1 Q: Yeah. Or you might have given her a quick 2 call? 3 A: Yes. 4 Q: You wouldn't have spent a lot of time 5 talking to her -- 6 A: No. 7 Q: -- is that fair? 8 A: No, because we -- we weren't -- we didn't 9 -- she was not one (1) person you could really call and get a 10 lot of -- you know, she just wasn't quick on returning phone 11 calls. So, my way with her was usually to go over to City 12 Hall and look for her. 13 Q: Okay. So if you had any contact with 14 Wanda Liczyk, apart from during the meeting of April 23, 15 1999, do I understand you to say, Mr. Lyons, it was probably 16 at Council, a brief conversation -- 17 A: Probably. 18 Q: -- about this topic? 19 A: Probably. 20 Q: That's the most it would have been? 21 A: Right. 22 Q: Okay. And the intelligence that you 23 obtained from her, either through that process of meeting 24 with her outside Council, or during the April 23rd meeting, 25 was that she was initially at least, kind of lukewarm on this

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1 leasing idea. Did I hear you correctly about that? 2 A: Yes. 3 Q: And -- 4 A: That's when I sort of realized that 5 they've got to get past that issue first before there's even 6 a bid. 7 Q: All right, okay. 8 A: Sorry. 9 Q: And there's just one (1) other interesting 10 thing that nobody has asked you about, and I'd be grateful if 11 you could assist me with, and it's in your volume of 12 documents at Volume 1, Tab 6, Mr. Lyons. 13 A: Okay. 14 15 (BRIEF PAUSE) 16 17 A: Volume 1? 18 Q: Yes, Tab 6. It's your memo to file in the 19 MFP matter dated April 22, 1999. 20 MS. LINDA ROTHSTEIN: Begdoc 40453, 21 Commissioner. 22 THE WITNESS: Hmm hmm. 23 24 CONTINUED BY MS. LINDA ROTHSTEIN: 25 Q: It's really about a meeting that you've

163

1 had at the Toronto District School Board, and it's your memo 2 to file about your discussions with Ms. Payne and Mr. Shaw 3 about that. And you can -- you can just read it through to 4 get the context, Mr. Lyons, by all means. 5 But the only note that I'm interested in at 6 the moment is the last sentence of that memo, it reads, "She 7 --" and that's referring to Ms. Payne: 8 "-- also wants to say that the Ministry of 9 Education is doing leasing for all their 10 equipment as well as the story I should 11 tell about the Commissioner of Finance for 12 the City." 13 A: Yes. 14 Q: Does that trigger a recollection, Mr. 15 Lyons? 16 A: No, I -- let me see what that means. 17 Q: I can tell you, sir, I haven't got the 18 foggiest idea. 19 A: Neither do I. 20 "Wants to say the Ministry of Education is 21 doing leasing for all their equipment." 22 23 (BRIEF PAUSE) 24 25 A: I have no idea either. I don't know.

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1 Q: If you think of something you'll let me 2 know. I mean it could be completely insignificant, Mr. 3 Lyons, I just -- 4 A: No, I -- 5 Q: -- it's something you actually dictated to 6 your own file, and -- 7 A: -- and it must have triggered something, 8 but -- I'm trying to think if there was some relationship 9 between Marguerite Jackson and the Commissioner of Finance. 10 There is something in my memory about that. 11 But that's all I can remember. 12 Q: Okay. 13 A: I just sort of vaguely thought there was 14 something between her and the CAO and the City Commissioner, 15 anyway, that's all I can recollect. 16 Q: But it's very unlikely to have anything to 17 do with the computer leasing RFQ, is that right, sir? 18 A: No, this was strictly the School Board. 19 Q: Okay. So, back to the intelligence that 20 you were in a position to obtain from the Department of 21 Finance, in 1999, other than Ms. Liczyk, what were your other 22 sources of information in that department? 23 A: I don't know on this issue of leasing 24 whether I could have spoken to Len Brittain, sometimes I'd 25 phone him. If, I guess, in that area or was it the other

165

1 person was what, Giuliana Carbone or something that works 2 there in Revenue. 3 There would be other people I would talk to in 4 that department. 5 Q: All right. You certainly didn't call Ms. 6 Carbone about the leasing RFQ, did you? 7 A: No, because she's revenue, I think, right? 8 Q: Well, actually, I don't remember -- I 9 think she is in revenue, yes. 10 A: Yes. No I wouldn't -- 11 Q: Or she was at the time. 12 A: No, I'm just saying other people I talked 13 to in that department. 14 Q: Right. So, in terms of the leasing RFQ, 15 the only person other than Ms. Liczyk from whom you may have 16 obtained some intelligence, was Len Brittain? 17 A: Could have been. 18 Q: Could have been, don't remember anything 19 in particular, right? 20 A: Right. 21 Q: And if it was something, it was a brief 22 telephone call, correct? 23 A: Right. I might have spoken to somebody in 24 the Mayor's office, but I don't think so, on this issue. 25 Sometimes I would, just to get more information.

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1 Q: If you -- 2 A: But I wouldn't know who I talked to, I 3 mean -- 4 Q: Okay -- 5 A: -- there's a number of them there, some of 6 them aren't even there anymore. 7 Q: So, if we deal with probabilities, it's 8 most unlikely that you made a call to the Mayor's office 9 about the leasing RFQ, is that what you're telling us? 10 A: No, because I really found out my answer, 11 I think through one (1) of these people, that it's not 12 something they're really thinking about doing. They're still 13 thinking about it. 14 Q: Right. They're certainly not certainly 15 leasing, that's your point? 16 A: Right. 17 Q: Okay. So, is there any other person who 18 you had a relationship with in 1999, from whom you were in a 19 position to obtain intelligence on the leasing RFQ? 20 A: I don't think so. 21 Q: Thank you. 22 23 (BRIEF PAUSE) 24 25 Q: Mr. Lyons, out of curiosity, has your

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1 access to staff at the City of Toronto or the level of 2 interaction that you have, particularly with the staff in the 3 IT department, or Finance department changed since '99? 4 A: Well, when they changed the staff, I mean, 5 it's not just mine, everybody's. 6 Q: It's declined? 7 A: It's declined. 8 Q: Yes, not as many calls? 9 A: No. 10 Q: Right. No lunches? 11 A: None of that's going on. 12 Q: None of that is going on? 13 A: I mean it's to the point where nothing is 14 happening. I mean -- 15 Q: That's your concern? 16 A: That's my perspective. 17 Q: All right. Now -- 18 MADAM COMMISSIONER: Just to clarify, Mr. 19 Lyons, on that, when Ms. Rothstein asked you if there has 20 been any change to your access since 1999, is your answer 21 referring to the change in the lobbying bylaw, is that what 22 you're referring to? 23 THE WITNESS: No, that has nothing to do with 24 it. 25 MADAM COMMISSIONER: Okay, it's just the

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1 change in the staff? 2 THE WITNESS: I mean, there's just very little 3 going on. 4 MADAM COMMISSIONER: Okay. Thank you. 5 THE WITNESS: And that's what I'm told and -- 6 MS. LINDA ROTHSTEIN: Thank you, Commissioner. 7 8 CONTINUED BY MS. LINDA ROTHSTEIN: 9 Q: I want to make sure -- I think Mr. Lyons, 10 you and I understood each other -- 11 A: Right -- 12 Q: -- but, just to make sure, what you were 13 telling me was that your actual ability to phone up staff and 14 have these kind of casual conversations appears to have 15 lessened somewhat? 16 A: Yes. But I'm also attributing the fact 17 that there's very little going on. I mean there's just not - 18 - 19 Q: There's no big tenders that you're 20 involved in? 21 A: There's no tenders, there's really -- 22 you'll have to ask the industry they're more expert at this 23 than I am, but they're telling me that there's not much 24 happening. 25 And they're basically said that they're not --

169
  1  they're taking a pass on the City for awhile.  I mean that's
  2  what they say.
  3                 They just don't want to --
  4                 Q:  The industry is saying that?
  5                 A:  Yes.  They're saying it's a bit
  6  dysfunctional.  And I've heard that comment many times.
  7                 Q:  And I suppose it might also be the
  8  industry's reaction to the holding of this Public Inquiry?
  9                 A:  Yes, this Public Inquiry has caused
 10  business to step back.
 11                 Q:  Yes.  It's given some businesses concerns
 12  about having their private affairs aired in public, would
 13  that be fair, Mr. Lyons?
 14                 A:  Yes, and that they think -- well, I don't
 15  know if I give you all my opinions about the Inquiry or
 16  whatever, because I don't think it's for me to say that.
 17                 Q:  But what you're saying Mr. Lyons --
 18                 A:  They have a negative view of doing
 19  business at the City.  It's not a positive view.
 20                 Q:  All right.
 21                 A:  That's all I can say.
 22                 Q:  An -- and -- but in particular, what
 23  you're saying is that there certainly would be some business
 24  people who don't relish the prospect of having their private
 25  business with the City of Toronto aired in public as we are

170

1 doing at this moment? 2 A: Oh, I'm sure that would be one 3 consideration. I agree with you. 4 Q: I understand that point. All right. You 5 told us you arranged meetings. I think that, sort of, speaks 6 for itself. I don't think there's a whole lot I need to ask 7 you about that. 8 Problem solving. In terms -- I can understand 9 the whole concept of what that would involve, Mr. Lyons, I'm 10 interested to know, though, how your problem solving skills 11 were brought to bear in assisting DFS in its bid on the 12 computer leasing RFQ? Can you help me with that? 13 A: Well, the -- the problem solving is that 14 their problem to be solved was two (2) things. One was to 15 get the City on side for leasing. The other part was to get 16 their profile up that if anybody was considering a tender for 17 quotes, I guess it turned out to be, that they would be 18 considered as an equal to the other contenders and you know, 19 I mentioned, I think, was it yesterday? About GE Capital 20 would be a big competitor. 21 I mean, you always wonder how -- I mean, they 22 would be the -- the one that you would think would win. 23 They're like the IBM of the leasing industry. 24 MADAM COMMISSIONER: Were they a client of 25 yours?

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1 THE WITNESS: No, no. They were just big. 2 Very big. The world's biggest, probably. I don't know. 3 Yeah, that -- 4 5 CONTINUED BY MS. LINDA ROTHSTEIN: 6 Q: The other thing that you made mention of 7 as you were going through your evidence yesterday and on 8 Thursday, I believe, Mr. Lyons, is that you had a number of 9 other more pressing matters on during this same time period 10 with the IT Department and I'm really not asking you to 11 reveal client names, Mr. Lyons. 12 I do understand that the sensitivity of that, 13 whether it's a breach of privilege or not but can you assist 14 us at all as to, in general terms, what those other matters 15 were and if they were public at the time. Can you help us 16 with that? 17 A: You know, I just remember that -- I had 18 more clients in that period of time, some were small software 19 companies trying to sell certain products and -- than I did 20 at other periods of time. Was there a significant issue? 21 22 (BRIEF PAUSE) 23 24 Q: Were there any other tenders you were 25 involved in assisting clients to win?

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1 A: I just can't remember. 2 Q: Sir -- 3 A: I just remember that I was very busy with 4 a number of software clients. That's about all I can 5 remember around that time. Who, sort of, came to the scene 6 and left. You know, they didn't -- we worked on a few 7 things. 8 I remember one client was trying to do some 9 work for the City and they were always on my case around that 10 period of time. They wanted to get some work from the IT 11 Department selling some services, I just remember. 12 Q: Anything else that you remember that 13 caused you to say to Mr. Manes that there were some pressing 14 matters that -- 15 A: Well, I remember this one particular 16 client was pressing me and it wasn't a bit. He would -- I 17 was on a short retainer with him and he wanted results and I 18 knew if I didn't get some results for this guy, my re -- or 19 for this company, you know, my retainer probably wouldn't 20 continue. 21 Q: Right. 22 A: And I was feeling pressed a lot and I just 23 wasn't getting anywhere and I didn't, in the end, get 24 anywhere but I tried. 25 Q: So did you lose that retainer?

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1 A: Yes. Just didn't continue it, yeah. You 2 know, it was a happy termination -- if you call it happy. 3 Q: So the problem solving services that you 4 brought to bear on the DFS bid to win the computer leasing 5 RFQ were, firstly, as I understand it, to get the City on 6 side for leasing and secondly, to get up -- to get the 7 profile of DFS raised -- 8 A: Right. 9 Q: -- at the City of Toronto? Anything else? 10 A: And obviously, they had questions that 11 they had to ask or put forward, as you saw from that 12 interview, that a number of a people have gone over the notes 13 but that was making sure they just got to the right meeting 14 and making sure they were meet -- met the right people, which 15 is what you're offering to them. 16 Q: Yeah. 17 A: That's part of problem solving to me -- 18 Q: Okay. 19 A: -- is, you know, where do they go? They 20 need the road map. 21 Q: Right. Well, it doesn't matter whether 22 you and I call it problem solving or strategic advice and I 23 certainly don't -- 24 A: It's probably the same in some cases -- 25 Q: Yeah.

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1 A: -- but -- 2 Q: But the key thing that you did, according 3 to Mr. Marentette, is you identified the key decision makers 4 at the City of Toronto? 5 A: Absolutely. 6 Q: And you told him and he told the 7 Commissioner, that there were three (3), there was Wanda 8 Liczyk, who was the CFO and the Head of Finance, there was 9 Jim Andrew, who was the Executive Director of IT, and there 10 was Tom Jakobek? 11 A: Yeah, I -- I guess Jim Andrew would be 12 part of it; right. 13 Q: That's what Mr. Marentette remembers you 14 telling him? 15 A: Well, that's fine if he said that, I don't 16 think I'm going to quarrel with it. 17 Q: So that was the strategic advice or 18 problem solving or experience or expertise that you brought 19 to the piece, you identified those three (3)? 20 A: Right. 21 Q: Okay. Now, in terms of your fees, Mr. 22 Lyons, what you charge. I think I understood your evidence, 23 I read it yesterday quite carefully, that if it's not a one 24 (1) off, then you obtain a monthly retainer, as you did in 25 the case of Dell or MFP?

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1 A: Right. 2 Q: And it's as much as seventy-five hundred 3 dollars ($7500) a month? 4 A: Yes. 5 Q: And that covers strategic advice, problem 6 solving, arranging meetings, obtaining intelligence -- 7 A: Yes. 8 Q: -- the whole thing? 9 A: Yes. 10 Q: Okay. And that sometimes in the case of a 11 one (1) off, I think you said yesterday, you charge a fee 12 over and above a monthly retainer that you described as 13 either a success fee or a bonus? 14 A: Right. 15 Q: And I think you said in those situations, 16 I normally negotiate a success fee? 17 A: Yes. 18 Q: Right. So, Mr. Lyons, in what situations 19 prior to May '99, did you negotiate a success fee over above 20 -- over and above a monthly retainer at the City of Toronto? 21 A: Well, without revealing the client, 22 because I don't think that's -- 23 Q: Don't -- don't -- 24 A: -- appropriate. 25 Q: -- do that for the moment. Tell me the

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1 situation? 2 A: It was a situation over a fight over a 3 contract at the City, a major contract that the -- the 4 opposition was other similar businesses. And I worked -- 5 Q: Sorry, I lost that part, help me with 6 that, that the opposition was other businesses, competitors? 7 A: Sim -- similar businesses, competitors, 8 right, sorry. 9 Q: Right, okay. 10 A: And I had a succ -- a success fee on that. 11 Q: Okay. 12 A: And then I had another one (1) -- 13 Q: When was that, can you give me a year? 14 A: Now I'm wondering if it was after or 15 before, as I'm saying this to you, it was around the same 16 time, but it could have been a year later or a year -- or 17 that year. 18 Q: Okay, okay, but I still -- 19 A: I just can't remember. 20 Q: -- sorry, Mr. Lyons. 21 A: It might have been 2000. 22 MADAM COMMISSIONER: Okay, just let him 23 finish, Ms. Rothstein. 24 THE WITNESS: It might have been 2000, Ms. 25 Rothstein, I'm just not sure.

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1 2 CONTINUED BY MS. LINDA ROTHSTEIN: 3 Q: Okay, but my problem is more fundamental 4 than the year at the moment, Mr. Lyons. I'm not really sure 5 I understand the facts. I don't want you to reveal client 6 confidences at the moment, I don't think it's necessary. But 7 it was a fight over a major contract. Was it a tender; is 8 that what you're telling us? 9 A: No, it was -- see, I don't want to get too 10 much into it, because it identifies the client and it's been 11 what -- the stories well known, so I'm trying to be very 12 vague, it just -- I'm quite prepared to tell the Judge in -- 13 to her -- to her, but I just don't want this -- 14 Q: Okay. 15 A: -- I just don't think it's fair to the 16 client. 17 Q: You don't want it in the newspaper -- 18 A: Right. 19 Q: -- I understand that. 20 A: And this happened some time maybe a year 21 later, I'm thinking now, it wasn't at that time, and it was a 22 major fight that went on for a number of months, through a 23 number of committees, and our client was successful, but I 24 was paid a success fee. 25 Q: Right. And in that case, given what you

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1 told Mr. Manes yesterday, you negotiated that success fee up 2 front? 3 A: Yes. 4 Q: Right. And how much was it? 5 A: Substantial. 6 Q: A hundred thousand (100,000)? 7 A: Can I say that? 8 Q: Tell me how much it was? 9 A: I don't know if I want to say that, 10 because that -- I think -- 11 Q: Was it as much as a hundred thousand 12 (100,000), Mr. Lyons? 13 A: Let me just say it was more than I 14 negotiated on this one (1). 15 Q: It was more than you negotiated -- 16 A: Tried to negotiate on this one (1). 17 Q: -- it was more than two hundred thousand 18 (200,000)? 19 A: Well, I'm not saying it was more than two 20 (2), I'll just leave it at that, I just -- I really feel I 21 don't want this -- 22 Q: Right. 23 A: -- to -- 24 Q: Well, leave it for now, Mr. Lyons, I -- I 25 hear your concern, we'll see -- we'll see if we can work with

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1 it, okay. 2 A: Yeah. 3 Q: I -- I hear you. Any other example in 4 which you negotiated a success fee over and above a monthly 5 retainer at the City of Toronto, prior to May '99? 6 A: Yes, there was another one (1), I can't 7 remember if it was -- now, I just can't remember these times. 8 There was another one (1) where I actually was in it, and it 9 got -- we were mostly through it, but it got very nasty I 10 remember and I negotiated a success fee, a further success 11 fee after -- almost when we got towards the end. 12 Q: And when was that? 13 A: I'm just trying to remember. This was 14 '99, so -- I think it was before -- I think it was around 15 that time. I think it might have been the fall of that year. 16 Q: Fall of '99? 17 A: Yes. 18 Q: Can you think of a single example that 19 happened before May of '99? 20 A: Well, that to me is a very similar period 21 of -- 22 Q: I understand. 23 A: -- I don't think anything before that, I 24 can recall. 25 Q: Okay.

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1 A: Well -- 2 Q: Take a minute -- 3 A: Success fees, yeah, I remember -- I 4 remember, one (1) where I did something in the movie 5 industry, I can say that one (1). And I got a success fee, I 6 remember that one (1). 7 Q: And that was before '99 you're saying? 8 A: Yes. 9 Q: And how big was that success fee? 10 A: It was not as big as the one (1) I 11 proposed, but it was good. 12 Q: Twenty thousand (20,000)? 13 A: Could have been in that or more. 14 Q: Twenty thousand (20,000), max of fifty 15 (50)? 16 A: It wasn't -- 17 Q: It wasn't fifty (50)? 18 A: It wasn't fifty (50). 19 Q: Twenty (20) or thirty (30)? 20 A: Could have been. 21 Q: Okay. And that was again negotiated up 22 front? 23 A: Yes. 24 Q: So, you've got two (2) examples, one (1) 25 in which you say it was more than two hundred thousand

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1 dollars ($200,000), the second one (1) in the fall of '99, it 2 was a further success fee, I don't think you told me the 3 context of that one, in the fall of '99? 4 A: No, because again, all these issues end up 5 getting very public and I'm just sorry -- I'm happy to tell 6 the Judge in confidence, but I just don't feel comfortable, 7 for the sake of my clients. 8 Q: Well, can we do this, Mr. Lyons? Would 9 you be happy to give some information about that to 10 Commission Counsel on the understanding that we would work 11 with Commission Counsel to do what we could to ensure that 12 the privacy of those clients was maintained and that the 13 names didn't, if at all possible, become public? 14 MR. TODD WHITE: Your Honour, I don't think 15 any of this is really relevant, the names or anything like 16 that. 17 And I think if My Friend wants to ask him 18 about success fees he's had with the City is fine. He 19 doesn't have to give our any name or any information to 20 Commission Counsel. 21 MS. LINDA ROTHSTEIN: Well, Commissioner, in 22 my respectful submission, it is relevant to a number of 23 credibility questions. 24 I don't really want to give a lot of details 25 to that with the witness in the room. But it certainly is

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1 relevant to the credibility issues. 2 But, frankly, Commissioner, beyond that, as 3 Counsel for the City, I can tell you that in my view, it's 4 relevant to the recommendations that you may wish to consider 5 at the conclusion of the Inquiry. 6 Assuming that Mr. Lyons is correct and that 7 success fees of some significant magnitude are common place 8 for lobbyists acting for clients in RFQ at the City of 9 Toronto, that may indeed have some impact on the sorts of 10 recommendations that you make and the propriety of a 11 provincial intervention into this area. 12 13 (BRIEF PAUSE) 14 15 MADAM COMMISSIONER: Mr. White, I'm not sure 16 how far I want to go on this, to be quite frank with you. 17 But if Mr. Lyons is prepared to tell me, 18 what's your view as to what the difference is between telling 19 me confidentially and telling Commission Counsel? 20 MR. TODD WHITE: I would have to have some 21 discussions with My Friend, as to what the point of telling 22 Commission Counsel is. 23 What? So Ron Manes can form a view and decide 24 what to do with it from there or -- I don't even understand 25 it.

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1 I mean I couldn't ask and I thought everyone 2 was always very protective of, you know, what type of work 3 have you done for contracts? None of your business, and 4 that's the end of it. 5 I don't see a need for any more information -- 6 the City of Toronto -- again, I mean I think we have the 7 answers that would be helpful to the Commissioner. 8 I don't think we need to go into any more 9 detail. I don't see how it's anyone's business. I don't 10 even understand what My Friend is proposing. 11 I mean I don't even understand the concept of, 12 you know, telling Your Honour or telling Commission Counsel, 13 for what purpose? 14 MS. LINDA ROTHSTEIN: At the minimum, 15 Commissioner, I'm suggesting that Mr. Lyons be allowed the 16 opportunity to review whatever documents he needs so that we 17 can understand when these success fees were negotiated, how 18 much they were for, and what the context was, and at the very 19 least that we'd be entitled to that information for the 20 various reasons that I've given, not including the point that 21 I think it is relevant to your assessment of credibility on 22 at least two (2) counts. 23 MR. TODD WHITE: Well, with the greatest of 24 respect, I mean, I -- I asked Mr. Carnevale about that. He 25 testified, I was objected to and shut down 100 percent. I

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  1  wasn't even allowed to get into the areas of his clients or
  2  what work he's done, let alone what specific clients, despite
  3  the fact that those particular clients that I first talked
  4  about were on a website and I don't see how this is helpful
  5  whatsoever.  
  6                 We're talking about the City of Toronto
  7  contracts.  We haven't got into any other private contracts
  8  or province contracts that Mr. Lyons has negotiated a success
  9  fee and I understand the limited -- but I don't see how it's
 10  relevant.  I don't see how it's helpful.
 11                 Surely, no one is taking the position that
 12  success fees with respect to these type of contracts are
 13  novel or not generally accepted in -- in what lobbyists do
 14  and what lawyers do.
 15                 MS. LINDA ROTHSTEIN:  Actually, Commissioner,
 16  I can tell you that at the City of Toronto a lot of this is
 17  news to us.  So, Commissioner, I can elaborate further, just
 18  so you know, but I wouldn't be happy to do that in the
 19  presence of Mr. Lyons.
 20                 MADAM COMMISSIONER:  Well, why don't I hear
 21  from Mr. Manes.  Mr. Manes, do you have any comments at all?
 22                 MR. RONALD MANES:  Commissioner, I think that
 23  the -- the question is relevant.   I think it's the manner in
 24  which the answer is communicated that the -- that Mr. Lyons
 25  is understandably concerned about.  I'll give you just

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1 briefly why I think it's relevant. 2 Firstly, the province itself in its -- in its 3 -- under the Lobbyist Registration Act requires disclosure in 4 any lobbying agreement as to whether there's a contingent fee 5 or a success fee. 6 So the issue of disclosure required by the 7 province -- one of the issues that we're going to be 8 considering in terms of lobbying is should there be a similar 9 requirement in -- in City lobbying context. 10 Secondly, there is issue as to whether success 11 fees are standard. Mr. Carnevale, for example, who's the 12 only other lobbyist we've had, said that he does not charge a 13 success fee. I'm not suggesting that that establishes a 14 standard but there's, obviously, one lobbyist who charges 15 success fees, one char -- one who doesn't charge success 16 fees. We haven't heard from Mr. Lyons yet who all the other 17 City lobbyists are who do charge success fees. 18 But secondly, in terms of the success fee 19 in -- in this particular case, the question has re -- arisen 20 as to whether this case is exceptional in terms of the way in 21 which Mr. Lyons went about achieving a sec -- success fee as 22 opposed to whether this is the standard way that he does it. 23 That is, is it done at the be -- at the beginning for Mr. 24 Lyons or is done right at the end or what. 25 So the specific ex -- examples from Mr. Lyons

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1 as to other success fees would certainly be helpful to us in 2 understanding and filling in that -- 3 MADAM COMMISSIONER: And does it make -- 4 MR. RONALD MANES: -- area. 5 MADAM COMMISSIONER: -- does it matter for my 6 purposes whether they were made before 1999 or after? Mr. -- 7 Mr. Lyons has only talked about one (1) that he thinks was 8 before and for my purposes in the Public Inquiry, does it 9 matter to me what he's done after? 10 MR. RONALD MANES: It -- 11 MS. LINDA ROTHSTEIN: Commissioner? 12 MADAM COMMISSIONER: I'll hear from you. 13 MS. LINDA ROTHSTEIN: Okay. 14 MADAM COMMISSIONER: Don't worry and Mr. 15 White, as well. 16 MR. RONALD MANES: In terms of Mr. Lyons' 17 modus operandi in -- in providing for success fees, I can see 18 that it would make no difference whether it was before or 19 after. Unless for some reason after there was a lobbyist 20 disclosure requirement on his clients at the City after year 21 2000, if there was any difference in approach but if the 22 approach was basically the same, then we should hear about 23 any success fees before or after 1999. 24 MADAM COMMISSIONER: Ms. Rothstein...? 25 MS. LINDA ROTHSTEIN: Commissioner, I think

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1 they're -- both questions are probably relevant. 2 For the purpose of assessing Mr. Lyons' 3 evidence on the specific facts, probably only what happened 4 before May '99 is of relevance. But in terms of your broader 5 mandate, and what the prevalence is of those fees even since 6 then, and the recommendations that you might make, I would 7 have thought that you're not going to take a snapshot in 8 1999, and only consider that. I would have thought that you 9 would be prepared to consider what's happened since May of 10 '99. 11 MADAM COMMISSIONER: But I guess my question 12 is, what -- in terms of how much information I need to have, 13 is it enough to know, for the purposes of what I need to do, 14 in terms of recommendations afterwards. Is it enough simply 15 to know that there were -- it has happened a couple of times 16 after 1999? 17 MS. LINDA ROTHSTEIN: Look, I'm not asking him 18 to reveal every time that it happened, if that's the 19 question. That's certainly not what I think you need to 20 know. 21 What I do think you need to know is more about 22 the actual context in which these were negotiated and the 23 sums. And I'm frankly content, Commissioner, that we simply 24 get the details on the three (3) that have been identified by 25 Mr. Lyons, the one (1) that he thinks may have been before

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1 May of '99, and the two (2) that were after, if I understand 2 his evidence correctly. 3 MADAM COMMISSIONER: Mr. White...? 4 MR. TODD WHITE: I'd like an opportunity to 5 speak to Mr. Lyons about this and to speak to Mr. Greenspan 6 about this. 7 MADAM COMMISSIONER: All right. 8 MR. TODD WHITE: I have no idea where this is 9 going. 10 MADAM COMMISSIONER: Well, do you want to have 11 a break now, do you want to do that now -- 12 MS. LINDA ROTHSTEIN: Well -- 13 MADAM COMMISSIONER: -- or do you want to 14 continue until 3:30 and then move on? 15 MS. LINDA ROTHSTEIN: I'm happy to take a 16 break now, Commissioner. I'm not entirely sure that the 17 process of speaking to Mr. Lyons and getting his views, other 18 than what he's already expressed, is the way we should go 19 about resolving the issue, I'll just say that, in light of 20 the credibility impact. 21 THE WITNESS: Can I just say something? 22 MADAM COMMISSIONER: Yes, of course, Mr. 23 Lyons. 24 THE WITNESS: I just realized, I can't give 25 this information without talking to my clients, that's very

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1 confidential information. And I don't know why, I've given 2 the story, why do I have to give the name. 3 I mean, I'm sorry I said that comment, but I 4 wouldn't do anything without talking to my clients. I feel 5 very strongly about that, and that's just wrong. 6 So, I couldn't -- 7 MADAM COMMISSIONER: I guess one (1) of the 8 things that is relevant, that I'm going to have to look at, 9 is this whole notion of success fees in terms of lobbying, 10 one (1) of the recommendations, or in terms of my 11 recommendations I'm going to have to look at, to a certain 12 extent, the issue of lobbying, to a certain extent the issue 13 of success fees or bonuses. 14 And obviously to the extent that credibility 15 is an issue here, it's useful for me to know from Mr. Lyons 16 whether or not he is -- what the context is of having success 17 fees, but I don't think I really need to know at this point 18 what the details of those are with respect to the clients. 19 At least not off the top of my head. 20 But if you want to have a break to think about 21 this some more, I'm prepared to take the early afternoon 22 break now -- 23 MS. LINDA ROTHSTEIN: Well, Commissioner, I 24 don't think I can be of any further assistance to you in 25 terms of submissions, unless you want more precise

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1 submissions on credibility, and I think you understand that 2 point. 3 So, I don't need a break, I'm happy to 4 continue but if you think it makes sense, of course I'm very 5 content to have a break as well. 6 MADAM COMMISSIONER: Mr. Lyons, on one (1) of 7 the ones that you referred to as a success fee, you said that 8 you negotiated a further success fee, and I couldn't tell 9 from that whether you meant that you had already negotiated 10 one (1) success fee with them, and then as you got closer to 11 the end you had another discussion, or you meant a further 12 success fee, meaning just another one (1)? 13 THE WITNESS: I think I had a fee worked out, 14 that's my recollection, and it got more involved and so they 15 -- we negotiated an increase in the success fee. 16 MADAM COMMISSIONER: Okay. Now, with respect 17 to -- I wouldn't mind hearing a bit more about the one (1) 18 before 1999. 19 THE WITNESS: There wasn't one (1). 20 MADAM COMMISSIONER: There wasn't one (1) 21 before 1999? 22 THE WITNESS: No. Actually this one (1) even 23 I'm talking about now, was I think in the fall of '99, that's 24 what my evidence was. 25 MADAM COMMISSIONER: Okay. So, in terms of

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1 success fees before the Dell Financial one (1), that there 2 had been no success fees before -- 3 THE WITNESS: Well -- 4 MADAM COMMISSIONER: -- the Dell Financial -- 5 THE WITNESS: -- no, I mentioned something in 6 the movie industry where I represented -- 7 MADAM COMMISSIONER: Right. 8 THE WITNESS: -- some problem there, and the 9 fee was somewhere, twenty (20) or thirty thousand dollars 10 ($30,000) is my recollection, success fee. 11 MADAM COMMISSIONER: Okay, and that was before 12 1999? 13 THE WITNESS: That's my recollection, or 14 around that time. I'm just -- 15 MADAM COMMISSIONER: Maybe if you could help 16 me, Mr. Lyons, if you think it was before your involvement 17 with DFS or after? 18 THE WITNESS: I just can't -- and I don't even 19 have that file. I don't have -- a couple of those files. 20 I just -- I think it was around that time and 21 like I'm trying to think, the election was '97, I go by 22 elections. '98, '99, so I think it might have been before. 23 MADAM COMMISSIONER: So, it might have been 24 before, but it might not have been before? Is that where we 25 are?

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1 THE WITNESS: No, I think it was before. It 2 was sort of early on, that's all I remember. 3 MADAM COMMISSIONER: Okay. All right. 4 5 CONTINUED BY MS. LINDA ROTHSTEIN: 6 Q: But the DFS success fee would have been at 7 most the second you'd ever attempted to negotiate? 8 MR. TODD WHITE: For the City of Toronto. 9 10 CONTINUED BY MS. LINDA ROTHSTEIN: 11 Q: For the City of Toronto, thank you Mr. 12 White. For the City of Toronto? 13 A: Could have been the second, or yeah, could 14 have been. 15 Q: At most the second for the City of 16 Toronto? 17 A: Could be. I just don't want to say with 18 certainty, because I just can't remember if there was another 19 one (1). But I think it was after that one (1). 20 MS. LINDA ROTHSTEIN: Commissioner, did you 21 still want to take a break, or should we continue? 22 MADAM COMMISSIONER: I'm prepared to continue. 23 MS. LINDA ROTHSTEIN: Okay. 24 25 (BRIEF PAUSE)

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1 MS. LINDA ROTHSTEIN: Thank you, Mr. Lyons. I 2 take it that issue is on hold. Should I treat it that way, 3 Commissioner? 4 THE WITNESS: No, you can ask. 5 MS. LINDA ROTHSTEIN: I'm fine with that. I'm 6 absolutely fine with that. 7 MADAM COMMISSIONER: All right. With what? 8 MS. LINDA ROTHSTEIN: With the idea that I've 9 made a request and it hasn't yet been -- 10 MADAM COMMISSIONER: I see -- 11 MS. LINDA ROTHSTEIN: -- fully -- 12 MADAM COMMISSIONER: -- if I need, if I want 13 further argument -- at this point, I'm not going to ask Mr. 14 Lyons to produce any of that information to us. 15 If we need -- if I want to hear further 16 argument from all of you or any of you, I'll ask for it. 17 Okay? 18 MS. LINDA ROTHSTEIN: Thank you. 19 MADAM COMMISSIONER: All right. 20 21 CONTINUED BY MS. LINDA ROTHSTEIN: 22 Q: All right. I want to talk to you, Mr. 23 Lyons, if I can, about what was involved in attempting to win 24 the computer leasing contract and what DFS had to do 25 specifically.

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1 And you've already identified a number of 2 things, I have taken notes. 3 You said firstly, that DFS had to persuade the 4 City that leasing was better than purchasing computer 5 hardware and software. And that was really, you know, the 6 sort of, first point of persuasion for a company like DFS. 7 Do I have that fairly? 8 A: Yes. 9 Q: And do I understand you to be recalling 10 that it was really you who provided that insight to DFS, as 11 opposed to DFS already having understood that that was the 12 lay of the land? 13 A: No, I think they didn't know. 14 Q: Because when Mr. Marentette testified, he 15 said that he actually had been in meetings with people like 16 Mr. Franey and Mr. Bulko (sic), prior to attending any 17 meetings with you or being involved with you and that that 18 was obvious at those meetings. 19 It was obvious that the IT department and the 20 rest of the City, was going to have to be persuaded about the 21 benefits of leasing? 22 A: Could have -- 23 Q: Was he wrong about that? 24 A: He could be right. 25 Q: Okay. He probably has a better

195

1 recollection of that than you do, sir? 2 A: Well, I do remember inquiring about it, 3 but he might have done his own inquiries. I don't remember 4 that he did, but I'm not going to disagree with it. 5 Q: And you would have had access to 6 information, for example, from sources other than you, 7 leaving aside City employees who he might have met without 8 your introduction, I take it that you agree, that the folks 9 at Dell, who were doing some business at the City of Toronto, 10 would have also been in a position to provide someone like 11 Mr. Marentette with some intelligence? 12 A: Yes. 13 Q: And that it's really quite likely that the 14 sales people at Dell would have also been on the ground 15 closely enough to tell Mr. Marentette, you know what, the 16 whole issue of leasing is still very undecided. 17 They would have been in a position to pass 18 that information to Marentette? 19 A: Yes. 20 Q: And am I right, Mr. Lyons, that in 21 addition to persuading the City that leasing was better -- 22 well, in order rather, to persuade the City that leasing was 23 better than purchasing, one (1) had to know quite a lot about 24 the economics of leasing versus purchasing, isn't that true? 25 A: You mean the client would have to know?

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1 Q: Yes? 2 A: I hope they did. 3 Q: Yeah, because certainly, am I right, Mr. 4 Lyons, you learned very little about that subject? 5 A: You're right. I just understood the 6 parameters. 7 Q: Right. From your perspective and again, I 8 don't quarrel with this for a moment. I do the same thing, 9 of course, in my job. There was no point in reinventing the 10 wheel. There was no point in -- 11 A: Right. 12 Q: -- you getting up to speed 110 percent on 13 the economics of leasing versus purchasing? That was your 14 client's expertise? 15 A: Well, that's what you're selling. 16 Q: That's what you're selling. And if they 17 didn't know it and know it well and couldn't communicate it 18 well, there wasn't much chance they were going to get off to 19 first base, was there? 20 A: No way. I agree. 21 Q: They had to know about residual pricing, 22 right? 23 A: All those things that Mr. Anderson raised 24 this morning that I didn't totally understand. 25 Q: End of lease costs?

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1 A: Yes. 2 Q: The economics of leasing software as 3 opposed to hardware? There's -- 4 A: Yes. 5 Q: -- a whole topic about that. 6 A: Right. 7 Q: They had to know about lea -- the cost of 8 leasing new technology versus the cost of refurbishing old 9 technology? 10 A: Yes. 11 Q: They had to know about the asset life of 12 technology? 13 A: Yes. 14 Q: The refresh strategies? 15 A: Yes. 16 Q: That could be used by the City? How they 17 might upgrade their technology? 18 A: These are all buzz words or words that I 19 remember through the process, yes. 20 Q: But the list could go on and on about 21 those, kind of, what you've described, technical areas. 22 Correct -- 23 A: Right. 24 Q: -- Mr. Lyons? 25 A: Right.

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1 Q: And without wanting to embarrass you, 2 because it's not my point, isn't it fair to say that your 3 knowledge of those things is very superficial? 4 A: Yes, that's not what my skill set was. 5 Q: All right. Scott Marentette, on the other 6 hand, from everything you could see had considerable 7 knowledge about all those things? 8 A: Yeah. He had that -- he had knowledge of 9 that. 10 Q: And indeed, when you and I had that debate 11 before lunch about your views about leasing versus 12 purchasing, am I right, Mr. Lyons, that what you were really 13 saying to me was you took your client, Mr. Marentette, Mr. 14 Simone's, Mr. Barrett's opinion on the preferred economics of 15 leasing for the City versus purchasing, in good faith? 16 A: Yes. I had that, sort of, seminar, as I 17 called it. 18 Q: Right but you didn't do your own homework 19 on it? 20 A: Not that I recollect. Did I ask other 21 questions from people? Maybe. 22 Q: You might have asked the odd question of 23 others that you happened to be in contact with in the 24 industry, generally, but you didn't sit down and do your own 25 independent assessment of whether or not it was, in fact, in

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1 the best interest of the City of Toronto to lease computer 2 equipment instead of buying it? 3 A: No, I mean, what we would do is before 4 those meetings, like that meeting before Wanda, we would have 5 coffee downstairs. It's always, sort of, a ritual I have to 6 make sure everybody's ready and what they're talking about 7 and that might have been for a half an hour or so and we -- 8 if it was ten o'clock, we'd meet at 9:30 or something like 9 that. 10 Q: So you had a prep meeting with Mr. 11 Marentette -- 12 A: And we would go through the advantages. I 13 -- I mean, I heard enough of that mantra about leasing over 14 purchasing that I became convinced myself -- 15 Q: Right. 16 A: -- that with the zero (0) taxes that the 17 City should really want this if they wanted to keep that 18 mantra going. 19 Q: Right. But you didn't -- just to make the 20 point, sir, you didn't do an independent assessment of your 21 client's advocacy of that position, correct? 22 A: No, I would sort of listen to their -- and 23 then of course, I s -- afterwards, I listened to what Wanda 24 said at that meeting so I was starting to get a pretty good 25 view of things.

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1 Q: All right. But it is true, isn't it, Mr. 2 Lyons, that City staff, public servants like Ms. Liczyk, they 3 weren't entitled to the luxury of simply accepting your 4 client's advocacy on that issue as they sell it? 5 A: No and I didn't expect her to. I expect 6 -- you know, I don't expect them just to agree with it. 7 We're just putting forward a point of view, but to me, I felt 8 good about putting that point of view forward. I guess 9 that's what I kept saying before. 10 Q: Yeah. There's no doubt that Ms. Liczyk 11 and or her staff are, in fact, obliged to do an independent 12 assessment? 13 A: Absolutely. I would be surprised if they 14 didn't. 15 Q: But from what you observed, Mr. Lyons, Mr. 16 Marentette had considerable expertise in all those issues, 17 yes? 18 A: Well, yeah, he was good on the technical. 19 I didn't think he had great s -- selling experience. He was 20 -- he was young. I mean, I know people might say he's 21 thirty-one (31) or something now, but he was younger when I 22 met him. That's just a few years ago. That was his 23 weakness, I thought, was his selling. 24 Q: Okay. 25 A: I mean I thought the people at Dell

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1 Computer were much better sales people than DFS. But that 2 was just my view. 3 Q: So, his bedside manner wasn't -- 4 A: He's staring at me, I didn't know why -- 5 Q: Mr. Manes is staring at you? 6 A: Yeah, and I was just wondering what was 7 bothering him. Sorry, go ahead. 8 Q: That's okay. I missed the joke. 9 A: No, it wasn't a joke, he was -- 10 Q: Okay. 11 MR. RONALD MANES: I'm just watching you give 12 evidence, Mr. Lyons, don't take anything by that. 13 THE WITNESS: Okay. 14 MR. RONALD MANES: I take notes every once in 15 a while. 16 THE WITNESS: Okay. 17 18 CONTINUED BY MS. LINDA ROTHSTEIN: 19 Q: But you don't quarrel with the fact that 20 he'd already met with Ms. Bulko and Mr. Franey without your 21 involvement? 22 MR. TODD WHITE: Well to be fair, Your Honour, 23 once again, that was not exactly Scott Marentette's evidence, 24 he couldn't recall who set it up or whether he'd met them 25 before, was my understanding.

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1 MS. LINDA ROTHSTEIN: No, I -- I've got the 2 evidence right here, Commissioner, and so I'm quite happy to 3 put it to the witness if necessary, because I did walk him 4 through that. But I will do that at the break, if -- if 5 there's any doubt about that. 6 7 CONTINUED BY MS. LINDA ROTHSTEIN: 8 Q: You don't have a recollection of actually 9 setting up a meeting -- 10 A: No. 11 Q: -- for -- 12 A: No. 13 Q: No. And you presumably would have a 14 recollection of that, would you not, Mr. Lyons? 15 A: I would think so, I mean it's quite 16 possible. When was that -- when did he say he met with them? 17 Q: He said he met with them before the April 18 23rd, meeting. 19 A: And then I was working for them since 20 about the middle of February, and then I had a meeting with 21 Barrett, I don't know. It's -- 22 Q: It's more likely than not that he arranged 23 that meeting -- 24 A: Right. 25 Q: -- without your involvement --

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1 A: That -- 2 Q: -- isn't it, Mr. Lyons? 3 A: -- that would probably be my best guess. 4 Q: Thank you, sir. And when two (2) members 5 of the Finance Department, Mr. Altman and Nadir Rabadi got 6 involved in this piece, and asked Mr. Marentette for some 7 economic modelling, some models that could be done that would 8 help to demonstrate the economic impact of leasing as opposed 9 to purchasing, he did all of that without your involvement; 10 am I right, sir? 11 A: Yes, because those two (2) names aren't 12 familiar to me. 13 Q: Okay. And so presumably he had contacts 14 with members of the Finance Department, again, without your 15 facilitation? 16 A: If it -- I didn't arrange a meeting with 17 those two (2), at least I don't remember. 18 Q: And you certainly didn't get involved in 19 helping prepare the modelling that was done for those two (2) 20 persons? 21 A: If they did a financial model, no, I 22 wouldn't have prepared that. 23 Q: And am I right, Mr. Lyons, that in fact 24 you didn't actually walk through with Mr. Marentette, the -- 25 the sort of presentation that he was going to provide to the

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1 City of Toronto, other than in that one (1) half hour prep 2 meeting that you just described. You didn't see his Power 3 Point demonstration and tell him how to fix it and edit it 4 and change it and do this and do that? 5 A: Well, first of all I had that seminar 6 where they sort of walked me through it. Secondly of all I 7 would have had some other conversations between that meeting 8 and the time we met with Wanda, because Wanda was like -- and 9 her staff, whoever else was there, about the 23rd of April. 10 So, there was a period of about six (6) weeks that I'm sure 11 that I was having meetings and discussions. They were pretty 12 involved, Mr. Marentette in particular. 13 Q: But Mr. Lyons, you couldn't have assisted 14 him with respect to the substance of his presentations? 15 A: No. I'm just telling you what I learned 16 from it, that's all. 17 Q: All right, you learned something from the 18 seminar, the education, that the people at DFS provided to 19 you -- 20 A: Yes. 21 Q: -- so you could help facilitate matters? 22 A: Yes. 23 Q: You had to know something? 24 A: Yes. 25 Q: You didn't have to know very much?

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1 A: Yes. 2 Q: You couldn't review or edit the 3 presentations that Mr. Marentette was preparing? 4 A: No. 5 Q: He was on his own on those issues? 6 A: Well, he might ask my opinion, he probably 7 did during that period, should I see this person, whatever, 8 but I -- 9 Q: We're talking about the presentations, Mr. 10 Lyons? 11 A: I mean about my -- he might have spoken to 12 me, I mean we had a number of phone calls. I don't have his 13 call log, as we do with some of these people. But I am 14 convinced he phoned me many times through this whole process 15 until Susan sort of became -- got involved at the end, or 16 during the process. 17 Q: Susan, as in Susan Cross? 18 A: Right. 19 Q: She got involved -- 20 A: Well -- 21 Q: -- at least as of April 23rd, we know 22 that? 23 A: Oh, yeah, she was involved before. Yeah, 24 and I mean he would have called her too. I mean I'm just 25 saying, we got a lot of calls.

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1 Q: Okay. But in terms of the contents, 2 sir -- 3 A: No, I agree with you there, that -- 4 Q: You agree. 5 A: -- that would be his -- 6 Q: That was his -- 7 A: His presentation. 8 Q: -- and his expertise? 9 A: Absolutely. 10 Q: And when the City wanted assistance from 11 DFS in designing what the RFP or the RFQ should look like, 12 there's reference to that in Ms. Cross' notes, do you 13 remember that? 14 A: Yes. 15 Q: You understand that the City was actually 16 looking for whatever assistance a bidder or a prospective 17 bidder like DFS could offer in terms of the template that 18 would be used for the RFQ? 19 A: Yes. 20 Q: You couldn't possibly assist in the design 21 of such a template, could you, Mr. Lyons? 22 A: No, I couldn't. 23 Q: And yet you admit, do you not, or you 24 certainly acknowledged, that this is how Mr. Simone and 25 Marentette put it, if you can get involved in actually

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1 designing the template for the tender document itself, it 2 gives you a little bit of a leg up, in terms of the ultimate 3 evaluation, can you see that? 4 A: Yes. 5 Q: Because the design of the template may, to 6 some extent, to some extent, wittingly or unwittingly, put 7 some bidders in a better position to meet the requirements 8 than others? 9 A: Yes, but, you know, if you do that, you 10 hire another consultant to do that, I know where I've been 11 involved where companies have used a former employee of the 12 City to prepare their response. 13 Q: Right. 14 A: And that's what I would have recommended. 15 I wasn't asked that question though. 16 Q: But I'm not talking about the actual 17 response, just so we understand each other -- 18 A: Right -- 19 Q: -- Mr. Lyons. I'm actually talking about, 20 during the April 23 meeting, Ms. Liczyk's office, there's 21 actually a suggestion that Mr. Marentette could be of some 22 assistance in designing the template that the City's going to 23 use -- 24 A: Oh, I see -- 25 Q: -- for its RFQ --

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1 A: -- that's possible, that's possible. 2 Q: -- right. 3 A: Sorry. 4 Q: Okay. And you couldn't have been of any 5 assistance in that, right? 6 A: Right. 7 Q: And you agree with me, that to the extent 8 that Mr. Marentette involved himself in that process, it 9 might give him a little bit of an edge? 10 A: Yes. 11 Q: Yes. 12 A: Sure. 13 Q: All for the good? 14 A: Yes. 15 Q: But all something he's going to have to do 16 on his own account, sir? 17 A: I couldn't help him with that. 18 Q: You couldn't help him with that. 19 MADAM COMMISSIONER: Is it time for a break, 20 or are you still -- 21 MS. LINDA ROTHSTEIN: No, that's fine, 22 Commissioner. Thank you. 23 MADAM COMMISSIONER: Break until quarter to. 24 REGISTRAR: The Inquiry is recessed until 25 3:45.

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1 --- Upon recessing at 3:30 p.m. 2 3 --- Upon resuming at 3:45 p.m. 4 5 THE REGISTRAR: The Inquiry will resume, 6 please be seated. 7 MADAM COMMISSIONER: Ms. Rothstein...? 8 MS. LINDA ROTHSTEIN: Thank you, Commissioner. 9 10 CONTINUED BY MS. LINDA ROTHSTEIN: 11 Q: I've sort of lost my place, Mr. Lyons, 12 just give me a moment. 13 A: Sure. 14 MADAM COMMISSIONER: You were asking him about 15 Scott Marentette. 16 MS. LINDA ROTHSTEIN: I realize that, but 17 actually I'm going to just -- I'm going to just go back to 18 that success fee issue, without asking you to reveal any 19 names, Mr. Lyons, okay. But I do want to just follow up on 20 that point, having given it a little bit of thought over the 21 break. 22 THE WITNESS: Okay. 23 24 CONTINUED BY MS. LINDA ROTHSTEIN: 25 Q: Am I right, sir, that from what you've

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1 told us about the twenty (20) to thirty thousand dollar 2 ($30,000) success fee that you negotiated prior to the DFS 3 attempt, that that was not in respect to an RFQ? The movie 4 thing? 5 A: No, that was -- at the City of Toronto it 6 was an issue involving something to do with a problem 7 affecting the industry that we had to get a -- a dispensation 8 from Council. 9 Q: Hmm hmm. 10 A: And that was the success fee. And -- and 11 remember that the Commissioner asked about success fees, I 12 had other ones that I put in writing like that, and but not 13 all of them were paid. That one (1) was paid. 14 Q: All right. 15 A: I had -- 16 Q: You mean you'd negotiated some before, but 17 never received them, is that what you're saying? 18 A: Well, when you were asking the question I 19 was talking about ones that I was paid. 20 Q: Right. 21 A: And there was others that I would 22 negotiate, but nothing happened, so I never got the success 23 fee. 24 Q: I see. 25 A: I did the work, and but that was something

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1 I would do. Most one (1) off situations I had success fees. 2 Q: If I understand what you're saying is that 3 you're saying that when you answered the Commissioner's 4 question before about there only being one (1) success fee 5 that you had negotiated prior to 1999, that what you're now 6 saying -- 7 A: Which was paid. 8 Q: -- just a sec -- 9 A: Sorry. 10 Q: -- what you're now saying is there's only 11 one (1) in which you were actually paid? 12 A: Right. 13 Q: That's the movie one (1)? 14 A: Right. 15 Q: In which you required a dispensation from 16 Council? 17 A: Right. 18 Q: And it was not an RFQ? 19 A: No. 20 Q: And what you were paid was a maximum of 21 thirty thousand dollars ($30,000)? 22 A: That's my recollection. 23 Q: All right. You're telling us that there 24 were other retainers that you had written with clients prior 25 to 1999 at the City of Toronto, which contemplated the

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1 prospect of a success fee -- 2 A: Right. 3 Q: -- but since you were not successful in 4 getting what the client wanted, you never got paid it; is 5 that your evidence, sir? 6 A: Yes, and to be specific, because I know 7 you're looking for examples. You or Mr. Manes, and it might 8 have -- no, it couldn't have been you, it might have been Mr. 9 Anderson, mentioned something about SAP won a bid over a 10 client of mine. 11 Q: Right. 12 A: My client I recall was from New Jersey, 13 and I remember I had a success fee in there, but I didn't get 14 it. 15 Q: Okay. And so that was in the context of 16 an RFQ? 17 A: It was an RFP, I think. 18 Q: An RFP, a tender? 19 A: I think so, yes. Yes, it was. 20 Q: Okay. And what was the method by which 21 the success fee was calculated in that case? 22 A: I basically doubled my time, so that if my 23 time was something like twenty thousand (20,000), I think my 24 success was about twenty thousand (20,000). 25 Q: Okay. That would be typical for the kind

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1 of success fee that you had negotiated -- 2 A: Usually -- 3 Q: -- in the past, but not actually been 4 paid, sir? 5 A: Yes. 6 Q: Thank you. And just at the Province, you 7 know that you actually do at the Province, post-1999, have to 8 not only register, but disclose whether or not your retainer 9 contemplates a success fee or the language they use there, 10 and I think Mr. Manes took you to this is contingency fee; 11 correct? 12 A: Yeah, I think you just say, yes. I'm not 13 sure that you actually specify it, but I think you're not -- 14 Q: I think you're right about that. 15 A: Yes. 16 Q: But you actual -- you certainly have to 17 disclose the fact that you've negotiated a contingency fee of 18 some kind? 19 A: Right. 20 Q: Right? And am I right, Mr. Lyons, that 21 you have not identified the fact of a possible contingency 22 fee in any retainer at the Province that existed prior to 23 1999? 24 A: Well, first of all -- 25 Q: Is that right, sir?

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1 A: -- well, let me answer the question. 2 Q: Okay. 3 A: The -- the Act didn't come in until 4 January of '99. 5 Q: I understand that. But I thought that if 6 you still have an active retainer, you have to disclose the 7 fact of a success fee for anything that actually predates 8 '99; am I right about that? 9 A: Yes -- 10 Q: All right. 11 A: -- but all my clients were on long term 12 retainers, if I recall, at the Province, such as Dell. 13 Q: Right. So, the point being though, you do 14 have some long term clients at the Province; right? 15 A: Right. 16 Q: You do have some clients that pre-date 17 '99? 18 A: At that time, yes. 19 Q: You would therefore have to disclose a 20 contingency fee if you'd in fact negotiated one (1) with 21 those clients? 22 A: Right. 23 Q: You haven't made any such disclosure? 24 A: That's my recollection. 25 Q: Thank you. Back to the other topic. Mr.

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1 Marentette's role, your role in the leasing RFQ. 2 We talked about the possibility that Mr. 3 Marentette was involved in actually preparing a template for 4 the City's RFQ. You've already made some reference to this 5 already, but in terms of the actual review of the City's 6 actual RFQ, and the preparation of the response, you simply 7 didn't assist? 8 A: Sorry, Mr. Marentette's response? 9 Q: Yeah, the DFS response? 10 A: No, but you have to understand that 11 through this process -- well let me start, DFS, my 12 recollection, did not have any experience at the City. Dell 13 Computer did, and I agree with you. 14 And what they did through this whole process, 15 they would just pick my brain, they'd be phoning all the 16 time, myself, sometimes Susan to get -- to ask question and 17 sometimes they appeared to be very naive questions, but if 18 you didn't have experience with the City, it would be not 19 unusual. 20 Q: Well, give me -- give me an example? What 21 sort of naive questions did Mr. Marentette, or anyone else at 22 DFS have for you? 23 A: Well, they wouldn't know any of the 24 procedures at the City, didn't know the process -- 25 Q: Which procedures are we talking about?

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1 A: Well how it went -- what committees it 2 went to -- 3 Q: Yes -- 4 A: -- who were the big poobahs at the City -- 5 Q: Yes -- 6 A: -- the people we talked about. 7 Q: So, let's just make sure I understand what 8 you're saying. They didn't know that the committee that was 9 ultimately going to review the staff recommendation was 10 called the P&F committee, they didn't know that? 11 A: They didn't know that. 12 Q: And they didn't know who was on that 13 committee? 14 A: For sure, they wouldn't have known that. 15 Q: And you had to tell them that. 16 A: Had to tell them more than that. 17 Q: All right. What else did you have to tell 18 them about the committees? 19 A: You had to tell them about, you know, who 20 the players were at the City, the experience -- I had the 21 feeling with this particular group of people, if they weren't 22 talking to me, they'd literally stumble in on Jim Andrew one 23 (1) day or Wanda Liczyk and say, where's the order? 24 I mean they just were not sophisticated about 25 --

217
  1                 Q:  Okay --
  2                 A:  -- they were private sector experienced,
  3  but they didn't have public sector experience.
  4                 Q:  But I think we need to understand exactly
  5  what that means and how it's different.  So, forgive me Mr.
  6  Lyons.  
  7                 A:  Yes --
  8                 Q:  Who the players were?  Wanda Liczyk, Jim
  9  Andrew, Tom Jakobek.  What else did you tell them?
 10                 A:  What else did I tell them?
 11                 Q:  Yes?
 12                 A:  I mean it -- what -- there could be a lot
 13  of questions about what -- you know -- why does the City have
 14  to look at this thing as leasing as opposed to purchasing?
 15                 How do you actually do this preparation for a
 16  meeting?  I mean you really had to go through everything with
 17  them.
 18                 They really had -- they didn't know anything
 19  about the politics, they knew little about the staff.  And
 20  part of your experience, when you're sort of problem solving,
 21  is saying, look at, this is -- your competition is going to
 22  be some big corporation, probably GE Capital.
 23                 They're going to be very sharp.  You've got to
 24  have your notes down.  I mean you'd be going through all
 25  this.  And you know the other problem would be that -- I had

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1 a thought but -- sorry -- go on. 2 Q: Let me tell you what Mr. Marentette said 3 about competition. 4 A: Hmm hmm. 5 Q: He said first of all, that this is a big 6 tender and everybody was focussed on it. That was well known 7 in the marketplace from the outset. Disagree with that? 8 A: I would think the leasing companies were 9 well focussed. 10 Q: He said he knew that from his large circle 11 of contacts, wasn't in any way exclusive to you? 12 A: I didn't think he had a large circle of 13 contacts, so I disagree with that. 14 Q: All right. Are you telling us, Mr. Lyons, 15 that you told him from the outset that this was a big tender? 16 I thought you told, Mr. Manes -- 17 A: No I didn't -- 18 Q: -- you didn't really realize that? 19 A: -- no I didn't, I agree with you. I -- 20 Q: So, his circle of contacts, big or small, 21 must have been more informative on that issue, than you were? 22 A: What that -- he was more informed than I 23 was as to -- 24 Q: As to the size of the tender -- 25 A: Well, I hope he did because he was

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1 preparing his financial models for it. 2 Q: Right. So I'm right about that. 3 A: Yes, I would think you're right. 4 Q: And he said that he knew that the City had 5 very limited leasing experience. Did you know that? 6 A: The City had limited leasing experience? 7 Q: Yes? 8 A: Yes, they probably -- well, as we are 9 finding out, they probably needed some expertise. 10 Q: But he knew what the limits of that 11 leasing experience were; did you? 12 A: The limits of the leasing experience? 13 Q: In the IT area? 14 A: That the staff didn't have leasing 15 experience? 16 Q: Yes? 17 A: I don't know if he knew more about that 18 than I did. I mean everybody wants to tell you how great 19 they do their job. I'm just telling you what I knew -- 20 Q: And I'm -- 21 A: -- I mean, you know, if they want to come 22 here and embellish the role they played, I can't dispute 23 that. 24 Q: No, but Mr. Lyons -- 25 A: Right --

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1 Q: -- to be fair, Mr. Marentette testified 2 and I don't think he was embellishing anything. He testified 3 that he came to understand that the City had a limited 4 previous experience with respect to leasing its IT technology 5 and that he learned that they had leased computers from MFP 6 for the Councillors. 7 A: Well, how do you know we didn't give him 8 that information? 9 Q: Because, Mr. Lyons, you don't seem to know 10 anything about that? 11 A: But, listen, Counsel, with all due 12 respect, this is going back four (4) years. I just don't 13 remember all these things. I had a number of files. This 14 is one (1) of many. I may have had twenty (20) or thirty 15 (30) active files at the time. 16 I can't remember all these conversations. I 17 mean I just don't have the notes. You gave me Susan Cross' 18 notes. I can't even remember her notes. 19 So, I just can't help you any more than that. 20 Q: Are you suggesting, Mr. Lyons, that you 21 told Scott Marentette or DFS that or are you just guessing? 22 A: I told you my recollection is not good and 23 I'm just telling you what I remember. All I can tell you is, 24 my perception was that they did not have any experience at 25 the City.

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1 They seemed to have had previous experience 2 elsewhere. I, sort of, felt at times I was like their sales 3 manager. The only person that seemed to be involved was Mr. 4 Marentette, considering this was such a big bid. I never 5 heard from the president. Mr. Simone appeared a couple of 6 times and all it was was one (1) young guy who was trying -- 7 he was trying but he was inexperienced at the City. 8 Q: He said that he was concerned from the 9 outset that MFP was the number 1 competitor for DFS. You 10 deny that? 11 A: I think -- I still say to this day that GE 12 Capital would have been the major competitor. 13 Q: He says that he knew that MFP effectively 14 had a head start because it was leasing the Councillor's 15 computer and had a master lease agreement. 16 A: I didn't know that. 17 Q: You didn't know that? 18 A: I didn't know that. 19 Q: So I'm suggesting to you, Mr. Lyons, that 20 that, in fact, was intelligence that Mr. Marentette must 21 surely have obtained without your assistance? 22 A: If -- if he had that intelligence early, 23 then it wasn't from me. 24 Q: And he said that he knew that Irene Payne 25 -- he knew, from the marketplace, that Irene Payne was a very

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1 important figure in public sector tenders for IT Technology. 2 A: Well, she was a very impressive person, I 3 can tell you that and he was no match for her. She's just 4 that good. 5 Q: And he knew she was a very significant 6 competitor? 7 A: He was right on that. 8 Q: Right. But I take it that isn't 9 information that you ever passed on because that would have 10 been passing on information about MFP? 11 A: I wouldn't have got into describing MFP. 12 Q: No, you wouldn't have done that -- 13 A: I don't -- 14 Q: -- because -- 15 A: -- and I don't think I was ever into that 16 conversation. 17 Q: All right. So, again, that was 18 intelligence, which turns out to be right by the way, doesn't 19 it, that Mr. Simone was able -- or Mr. Marentette was able to 20 source without your assistance? 21 A: Well, I don't remember these conversations 22 at the time, and you know, some -- with all due respect, 23 sometimes people's memories are, sort of, after the fact and 24 after the fact -- he never mentioned Irene Payne, I can 25 specifically tell you that because I would remember because I

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1 knew Irene Payne. 2 She was the only person I dealt with during 3 that short period of time and I was very impressed with her 4 and we never had a conversation about Irene Payne. So I -- 5 I'm telling you, my own view is that sometimes people's 6 stories coming here -- so after newspaper stories, after 7 reading about this, after the event that happens, I'm just 8 telling you what I remember and I can't help you with Mr. 9 Marentette's evidence more than that. 10 Q: But back to the drafting of the RFQ, Mr. 11 Lyons. You didn't assist in drafting the response to the 12 RFQ? 13 A: No, I don't do that. 14 Q: And at most, you would have reviewed the 15 cover letter? 16 A: As I said, yes. 17 Q: Your knowledge was insufficient to assist 18 them in preparing that response? 19 A: My knowledge was insufficient to prepare 20 the response. I wouldn't be the person doing that. You're 21 -- yeah, you're right. 22 Q: And when it came to the critical issue -- 23 the absolutely critical issue of pricing the deal -- do you 24 agree with me that that's a critical issue for an RFQ? 25 A: Absolutely.

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1 Q: Is it the critical issue, Mr. Lyons? 2 A: Well, no, because if -- my own opinion was 3 if I was the City and I had GE Capital on one side and Dell 4 Financial from the get-go -- I'm just talking from the get- 5 go, I wouldn't be looking at Dell Financial. 6 They -- you know what, the City wants a 7 responsible party at the table that they can u -- go back to 8 if there's liability. You know, I'm sure you've heard that 9 before. They want deep pockets, as they always say. That's 10 why IBM gets so much business from the City is because 11 they're a big corporate citizen who will be around to pay. 12 One of the reasons I lost the SAP tender was 13 because my client, they were worried wouldn't be around. So 14 in the case of GE Capital, you would be assured that you got 15 a winning bet. 16 So with Dell Financial, it was very important 17 to let them know that Dell Financial was part of this big 18 Dell Corporation, Michael Dell, et cetera, one of the world's 19 big companies and that they're -- like -- I still think -- 20 Q: And that they're 100 percent owned by 21 Newcourt? 22 A: Well, that's not the in -- I agree with 23 Ms. Dyer, but -- 24 Q: Hmm hmm. 25 A: -- you saw Susan Cross' notes --

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1 Q: Yeah. 2 A: -- on that. 3 Q: Yeah. 4 A: So I'm not sure what the answer is. 5 Q: Just on that point, then, what I hear you 6 saying, Mr. Lyons, and what I think I understood from your 7 evidence this morning is you weren't privy to the precise 8 legal relationship between Dell Commuter -- Dell Computer and 9 Dell Financial Services. Is that -- 10 A: Yes. 11 Q: -- fair? 12 A: But -- 13 Q: But what you did understand -- 14 MADAM COMMISSIONER: Just let him answer. 15 THE WITNESS: No, but -- 16 17 CONTINUED BY MS. LINDA ROTHSTEIN: 18 Q: I thought you said yes, yeah. 19 A: No, no but what I wanted to say was I 20 agree with Ms. Dyer and I do recognize that, but later when 21 somebody else asked me a question, Susan Cross' own notes 22 from the meeting at Wanda Liczyk's office has something where 23 Dell is 70 percent and -- 24 Q: Yeah. 25 A: -- Newcourt's 30. Now, to be honest, I

226

1 always thought that was the case but I'm not going to 2 disagree with Mr. Barrett who was the president of the 3 company. 4 Q: Yeah. 5 A: So I -- maybe it changed at some point. 6 Q: Your understanding, whether it happened to 7 be right or wrong, was that there was a good relationship and 8 some sort of sister or partner -- 9 A: Right. 10 Q: -- or co-venture relationship? 11 A: Right. 12 Q: Right. And as far as you understood, that 13 was a selling point for DFS? 14 A: Right, because they had this big company 15 behind them. 16 Q: Right, but I take it, Mr. Lyons, it 17 wouldn't have taken a rocket scientist -- rocket scientist to 18 figure out that, that that was a selling point for DFS? 19 A: Yes, but the only problem is they weren't 20 very good at putting that forward, that was my sense. 21 Q: Okay, your sense was when they'd actually 22 show up at a meeting and try and describe that, they didn't 23 do as good a job as they did do because of your involvement? 24 A: And also they needed these meetings, they 25 were on a -- on a time is the essence sort of calendar

227

1 agenda. They needed to get these meetings done quickly, 2 because as you recall, I got retained in February, March, 3 April, May, and then they had to respond. 4 So, they only had three (3) months to do this, 5 and to get these meetings with somebody like Wanda, that's 6 part of what you provide, is the ability to cut through it 7 and get it done. The same with Jakobek, who's a really busy 8 guy, and probably wouldn't even have met with him until it 9 was too late, I guess. 10 Q: Well, that -- that's a really interesting 11 point you make. Just on the point about meeting with Wanda, 12 Mr. Marentette testified, and you may say this is just after 13 the fact evidence, an example of it. He was certainly asked, 14 in hypothetical terms, but he was asked whether or not if you 15 hadn't been involved, he would have been able to get a 16 meeting with Ms. Liczyk. It's your evidence that he would 17 not have been able to get that meeting without your 18 assistance, Mr. Lyons? 19 A: Well, why did they hire me then? 20 Q: I don't think that answers the question, 21 sir? 22 A: I -- I just don't agree, but you know, I'm 23 not going to -- that's my opinion. 24 Q: Based on your years of experience as a 25 lobbyist at City Hall, a small company like DFS can't get a

228

1 meeting with the CFO to pitch their goods or services unless 2 Jeffrey Lyons is hired? Is that really your evidence? 3 A: No, that's not really my evidence. I said 4 time was of the essence, I did premise that earlier. And I 5 said they had to get these meetings within three (3) months, 6 March, April, May, and that was an important meeting, because 7 if Wanda Liczyk, it could have been with her staff, hadn't 8 had that meeting, they would never really understand who 9 these people were. 10 Q: And I don't quarrel with you about that 11 for a moment, and I agree with you that that was the right 12 strategic view of the case? 13 A: Right. 14 Q: They had to meet with the CFO. 15 A: Right. 16 Q: Everything we've heard seems to 17 corroborate that view. 18 A: Right. 19 Q: But my question stands, sir. Are you 20 really saying that Mr. Marentette or Mr. Simone or Mr. 21 Barrett acting alone, would not have been able to obtain a 22 fair hearing with Wanda Liczyk in that three (3) month period 23 without your assistance? 24 A: I can't answer that, that's just what I 25 did.

229

1 Q: But that surely can't be right, Mr. Lyons, 2 she's a public official? 3 A: Absolutely, I don't -- I'm just saying to 4 you, it was a timely issue. Now, you may argue that they 5 would have ultimately got an appointment, and I would agree 6 with you. I just don't know whether they would have got it 7 in three (3) months. 8 Q: Now, you started to say that you weren't 9 so sure that they'd ever have gotten a meeting in time with 10 Mr. Jakobek, do you hold with that view, sir? 11 A: Well, I got my meeting in only about a 12 week to go, if I recall, wasn't it? Something the end of 13 May. 14 Q: Because Mr. Marentette did say, that he 15 wasn't sure that that would have been something that he would 16 have been able to arrange without your assistance, was he 17 right about that? 18 A: I don't think he even knew who Mr. Jakobek 19 was until I told him. 20 Q: And Mr. Jakobek surely wouldn't have known 21 who he was? 22 A: That's for sure. 23 Q: And from what you told Mr. Manes last 24 Thursday, Mr. Jakobek wasn't always prepared to meet with 25 just anybody, isn't that true?

230

1 A: Well, I can't speak for him, I mean I'm 2 just telling you that I know Mr. Marentette didn't know him 3 and I arranged the meeting. 4 Q: Well you walked through an example in some 5 detail, and I'll take you to the evidence, Mr. Lyons, where 6 in the past the -- 7 A: No, that was -- 8 Q: -- the refusal of Mr. Jakobek to give a 9 meeting, to give a fair hearing to your client. That had 10 been an experience that you had in fact -- 11 A: That wasn't that -- that specific -- 12 Q: -- at Council? 13 A: -- situation, yes. 14 Q: Right. 15 A: In that case he didn't want to meet with 16 this person. But he had -- he might have had some reasons 17 for that particular issue. 18 Q: So, same question with respect to Mr. 19 Jakobek. In the three (3) month period that was available to 20 DFS, would they have been able to arrange a fair hearing with 21 Mr. Jakobek without your participation? 22 A: As I indicated, time was of the essence, 23 and I got the meeting, whether it would have happened, I'm 24 not sure, I don't think it would have, because Mr. Marentette 25 didn't even know who he was.

231

1 And I suppose if he did find out, your 2 question is, would he have got that meeting in three (3) 3 months? I -- I don't think so, but that's just an opinion. 4 Q: And -- and can you explain to us then, Mr. 5 Lyons, how it is that Irene Payne and Dash Domi say they had 6 no trouble getting a meeting with Mr. Jakobek? 7 A: Well you have to -- 8 Q: Does that make sense? 9 MR. DAVID MOORE: I'm not sure that's exactly 10 right. 11 THE WITNESS: I can't answer that. 12 MS. LINDA ROTHSTEIN: Well, Mr. Domi, 13 testified just to respond to Mr. Moore's comment, 14 Commissioner, that he didn't need the assistance of Mr. 15 Lyons, that he was able to get a meeting with Mr. Jakobek, 16 and anybody else who was a key decision maker at the City of 17 Toronto without your assistance? 18 MADAM COMMISSIONER: Or without a lobbyist. 19 MS. LINDA ROTHSTEIN: Or without a lobbyist. 20 MR. DAVID MOORE: That's right. I mean that's 21 a somewhat different question. 22 MADAM COMMISSIONER: Yes. 23 MS. LINDA ROTHSTEIN: All right. Fair enough. 24 25

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1 CONTINUED BY MS. LINDA ROTHSTEIN: 2 Q: So, does that change your view, Mr. Lyons? 3 A: No. 4 Q: No. In the case of DFS, they wouldn't 5 have been in the same position to get a meeting with Mr. 6 Jakobek as MFP, is that your evidence? 7 A: I can't answer for MFP. I don't know 8 anything about their meetings with Mr. Jakobek. I mean 9 you're throwing evidence at me. I'm hearing other comments, 10 so I'm not saying -- I don't know. 11 Q: In any event, DFS would not have been able 12 to get a meeting with Mr. Jakobek without your assistance? 13 A: In that timeframe. I didn't say that the 14 would never meet them and I can't answer for Mr. Jakobek. 15 Q: But your point is right, Mr. Lyons, there 16 is no point in meeting them -- 17 A: Right -- 18 Q: -- after the tender has been -- 19 A: That's right. 20 Q: -- has hit the street, in fact, you can't 21 meet them then? 22 A: Right. 23 Q: And there's no point in meeting them after 24 it's all over to tell them he's sorry that they didn't win 25 the first bid, and better luck next time?

233

1 A: Right. 2 Q: Right. So, the only reason to meet with 3 Mr. Jakobek, is prior to the RFQ hitting the street? 4 A: Right. 5 Q: Right. And that couldn't have been 6 achieved without your facilitation? 7 A: I'd like to think that I did that for 8 them. 9 Q: Okay. Based on all your years of knowing 10 Mr. Jakobek, that is your considered view? 11 A: My considered view of what? That I was 12 able to get the appointment? 13 Q: Yes? 14 A: Yes, I was able to get the appointment. 15 Q: And they wouldn't have been? 16 A: I can't answer that, sorry. 17 Q: So, we've talked about setting up 18 meetings. We've talked about the response to the RFQ, 19 pricing the deal, you've said, and this is how we got down 20 that road, I actually remember, Mr. Lyons, I don't know if 21 you do. 22 That in an RFQ, it is more than price, that 23 there are situations where the lowest price will not prevail? 24 That's what we started down? You started to say, no, no, Ms. 25 Rothstein, if it was GE Capital versus DFS --

234

1 A: Right -- 2 Q: -- I wouldn't necessarily pick DFS? 3 A: Well, I remember Mr. Simone's evidence, 4 which I don't recall as much, I told him to bid low, right? 5 Q: Right. 6 A: So, I guess they listened to me. 7 Q: So, you agree with his evidence on that 8 point? 9 A: That I told him to bid low? 10 Q: Yes? 11 A: Absolutely. 12 Q: All right. 13 A: Because the best -- they had two (2) 14 things -- the only way you're going to win this is the sense 15 that they could handle it. That was the DFS story, right, 16 they were owned by Dell. I don't think Newcourt was probably 17 known somewhat at that time. 18 And b) that we have the right price. And of 19 course, it would be more than price. I think it was the -- 20 the what do you call it. The -- when it's -- when the lease 21 is expired and the -- 22 Q: The end of term lease cost? 23 A: End of term lease cost, right. 24 MR. RONALD MANES: Residual. 25

235

1 CONTINUED BY MS. LINDA ROTHSTEIN: 2 Q: Residual? 3 A: Thank you. Residual. 4 Q: The residual value? 5 A: The residual value. 6 Q: But on the issue of price, just to stay 7 with it for a moment, surely you agree that there are very 8 few occasions when City Council doesn't pick the tender 9 that's got the lowest bid? 10 A: Oh, I've seen them where they sometime 11 will question whether this company has the ability to do the 12 job. 13 Q: Okay. 14 A: And they sometimes award it to the next 15 one (1). 16 Q: Okay. 17 A: Now, you would say to me, maybe all these 18 big companies, why would they do that? But they didn't have 19 a proper sense -- well, didn't we just go through this 20 recently here, this story in the newspaper? 21 Q: I don't know what you mean? 22 A: Where you know, part of that whole issue 23 about Union Station, isn't that a part of the fact, that they 24 didn't think one (1) party had the financial wherewithal, as 25 opposed to the other.

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1 Q: Yes, but, I don't think that's an RFQ -- 2 A: Well -- 3 Q: -- is it? It's not a -- 4 A: No, but, I'm just saying, you know, these 5 are how decisions are made, you know. 6 Q: So, you view, just to be fair to you, is 7 that it's more complicated than just price dictating the 8 results. 9 A: Right. 10 Q: And it's considerably more complicated 11 than that. But it particularly involves the sense of the 12 ability of the successful party to truly manage the contract? 13 A: Right. 14 Q: Do I have that fairly? 15 A: Yes, they have to be able to manage the 16 contract. 17 Q: But price is, however you cut it, 18 critically important to the response, right? 19 A: Yes. 20 Q: Unless you're awfully close to the lowest 21 bid, you ain't going to have a chance? 22 A: I would say so. 23 Q: And that's surely the advice that you gave 24 to Mr. Simone and Mr. Marentette? 25 A: Well -- well, as he says, I said bid low.

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1 Q: Yeah. 2 A: And they had to have the pricing. 3 Q: And I take it, Mr. Lyons, that the pricing 4 -- that issue, a tough issue for a leasing company, wasn't 5 something that you could help them problem solve about, 6 right? 7 A: No, I couldn't solve his pricing. 8 Q: No. You didn't -- 9 A: I could -- you know, I could do the rest. 10 Get them positioned to do well on this, get the credibility 11 factor out, give them a good sense of what I saw on the scene 12 but the pricing would be their -- their financial model of 13 the pricing would be their responsibility. 14 Q: Because you don't really know much, if 15 anything, about lease rate factors, do you? 16 A: Not much. 17 Q: And you cer -- surely don't know much 18 about how much equity or what the residual value should be 19 for a leasing company? 20 A: I just knew it was a factor. 21 Q: Yeah. But, you know, you knew that what 22 these leasing companies do is they actually take an economic 23 risk on these bids? 24 A: They take an economic risk on these bids? 25 Q: They invest.

238

1 A: They what? 2 Q: They put their money in these bids, right? 3 A: Yeah. 4 Q: Yeah. 5 A: They didn't have to buy it. 6 Q: There's an economic risk -- 7 A: So they're factoring in their purchase 8 with whatever they borrow the money at and then they factor 9 in the lease. 10 Q: But they're not just borrowing all the 11 money, right? 12 A: No. 13 Q: They're putting in some of their own? 14 A: Yes. I've heard -- 15 Q: You knew that? 16 A: Yes. 17 Q: Or did you? 18 A: No, I did remember that. 19 Q: All right. So you couldn't help them 20 assess their risk? 21 A: No. 22 Q: You couldn't help them figure out how 23 aggressively they had to bid and still not assume too much 24 risk? You couldn't help them with that? 25 A: No.

239

1 Q: Those were critical strategic decisions 2 that you couldn't provide advice about? 3 A: That's part of -- that's what they have to 4 do. My job wasn't that. 5 Q: Those were very tough problems that you 6 couldn't help solve? 7 A: Well, if you say so. I'm just saying that 8 that's part of it. Yes, it was a very important part but the 9 missing -- 10 Q: Is there any doubt about -- 11 A: -- the missing piece may be what I 12 provide. You know, it's like in everything in life, just 13 because you've got a great product and you've got the -- it's 14 time tested. Sometimes it's the person who actually gets in 15 there and makes the pitch and sells it that it happens for. 16 Q: Well did you actually make the pitch and 17 sell at the April 23rd meeting? I thought you agreed with 18 Commission Counsel earlier that all you did was facilitate? 19 A: Yes, but I w -- 20 Q: And introduce? 21 A: But that wasn't the only conversations I 22 had. I mean, they were in my conversations. I mean, I would 23 be talking to people. That's the onl -- I said I spoke to 24 Wanda before, I could have spoken with her subsequently. 25 Not, obviously, after the blackout period. I mean, I --

240
  1  these --
  2                 Q:  And who else -- who else did you talk them
  3  up to, Mr. Lyons?
  4                 A:  I could have been talking to a number of
  5  people.  I would just talk it up, that's my nature.
  6                 Q:  I understand that but I really --
  7                 A:  Part of the sales --
  8                 Q:  -- don't want --
  9                 A:  -- look it, you're buying -- when I'm
 10  representing people, you get me.  I'm a package and my
 11  package is to win for my clients and what I try to do is to
 12  get the best position out there for them to help them win. 
 13  So how did I do it?  I do it in many different ways and I
 14  don't have a quick answer for each of these questions you ask
 15  me.  
 16                 All I know is I was focussed on it.  I was
 17  getting the job done but I can't remember everything and I
 18  was doing twenty (20) other things but I am a person, seven
 19  (7), twenty-four (24).  If I have to get it done, it's done
 20  and if I have to do it that day, it's done that day.  That's
 21  just my style and that's what I expect from my staff. 
 22                 So that's me.  That's all I can tell you.
 23                 Q:  Apart from that general description of
 24  your general practice --
 25                 A:  Hmm hmm.

241

1 Q: -- you can't assist us with a single 2 specific recollection of who you talked up DFS to at the City 3 of Toronto other than Wanda Liczyk and Tom Jakobek, correct? 4 A: Well, I spoke to others but I don't have 5 -- 6 Q: Can you give us -- 7 A: No, I -- 8 Q: -- a single recollection, Mr. Lyons? 9 A: Well, it depended who was involved. I -- 10 there might have been others at the time that had the lay the 11 land but I just don't remember. I mean -- 12 Q: I mean, when you reviewed it all with Mr. 13 Lyons yesterday you said -- 14 MADAM COMMISSIONER: Mr. -- 15 THE WITNESS: Mr. Lyons? 16 MS. LINDA ROTHSTEIN: Sorry. Excuse me, 17 Commissioner. I guess it's getting a bit late. Sorry, Mr. 18 Lyons. 19 THE WITNESS: No, it's okay. 20 21 CONTINUED BY MS. LINDA ROTHSTEIN: 22 Q: When you reviewed it all with Mr. Manes 23 yesterday, here's what you said: You said you had five (5) 24 meetings with Mr. Marentette, not ten (10). Is that right? 25 A: I had about five (5) meetings with him.

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1 Q: And that they were about a half an hour 2 each. 3 A: About -- 4 Q: Are you changing that today? 5 A: No. 6 Q: Okay. You said you had one (1) meeting 7 with Wanda Liczyk, the one we've talked about on April 23rd. 8 It lasted about an hour. 9 A: Well, I might have gone over to City Hall, 10 as I indicated -- 11 Q: Okay. 12 A: -- to speak to her earlier. 13 Q: Okay, okay. So, that's what, another half 14 hour at most? 15 A: No, I -- well, whatever. 16 Q: That's being generous isn't it? 17 A: Well, I have to go over there, I might 18 have had other things to talk -- 19 Q: Am I being generous in giving you -- 20 A: Well, I'm not going to argue -- 21 Q: -- a half an hour? 22 A: -- with the time. 23 Q: Okay. 24 A: It's what I get done. 25 Q: You had one (1) meeting with Mr. Jakobek

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1 and Mr. Marentette, half an hour you said yesterday? 2 A: Right. 3 Q: Any -- any trouble with that today? 4 A: No. 5 Q: You said that your office was responsible 6 for setting up the meetings? 7 A: Yes. 8 Q: Right? That would be the normal work of 9 your staff? 10 A: Right. 11 Q: Who were your staff at the time, Mr. 12 Lyons, we know it was Ms. Cross, so -- 13 A: And the secretary, I'm not sure I had 14 anybody else at that time. 15 Q: Your secretary was Gail -- 16 A: Miltonberg. 17 Q: -- Miltonberg. Would it be Ms. Miltonberg 18 who would have set up those meetings? 19 A: Possibly. 20 Q: All right. So, your only staff at the 21 time was Ms. Miltonberg and Ms. Cross? 22 A: That's what I recollect. 23 Q: Okay. You had a number of phone calls 24 with Mr. Marentette; right? 25 A: Yes.

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1 Q: We'll get to the numbers in a moment. 2 None with Mr. Barrett, you're sure about that? 3 A: Pretty sure. 4 Q: And none with Mr. Simone? 5 A: Not that I can recollect, it was always 6 Mr. Marentette. 7 Q: He was the key contact; right? 8 A: Right. 9 Q: He was the guy who was really driving this 10 piece -- 11 A: Right. 12 Q: -- from DFS? 13 A: He was the enthusiastic one (1). 14 Q: He was the sales rep? 15 A: He was the sales rep. 16 Q: Mr. Simone was in a kind of management 17 position wasn't he? 18 A: Well, he's just a young guy, I mean he -- 19 Q: But -- but -- 20 A: -- you would have thought he was more 21 involved, that's my opinion. 22 Q: Maybe he should have been, whatever, he 23 wasn't very, right? 24 A: Right, he wasn't -- like Mr. Barrett was a 25 senior guy, Mr. Simone was just a young guy in his twenties

245

1 himself, and maybe you know -- anyway. 2 Q: I think -- I think they were a bit older, 3 but that's okay, Mr. Lyons, I'm not good -- I'm not good at 4 age either. 5 Your -- your telephone calls with Mr. 6 Marentette, seven (7) or eight (8) short conversations you 7 told Mr. Manes yesterday? 8 A: Conversations with Marentette? 9 Q: With Scott Marentette? 10 A: How many conversations? 11 Q: You said seven (7) or eight (8) short 12 conversations? 13 A: You know what, it might have been more, 14 but I said it yesterday -- am I bound by that -- I'm bound by 15 it? 16 Q: No, no, should we -- should we raise it to 17 twenty (20)? 18 A: It was prob -- well -- 19 Q: Should we -- 20 A: -- to my -- no, I mean, to my office it 21 probably was twenty (20), including Susan. 22 Q: Okay. 23 A: It wasn't to -- all to me, I might have 24 been ten (10) or twelve (12) or eight (8), like -- 25 Q: That's fair, no, Mr. Lyons --

246

1 A: I don't know, I mean it was more -- 2 Q: -- Mr. Lyons -- 3 A: -- than seven (7). 4 Q: -- Mr. Lyons, that's fair. Let's get your 5 best recollection right now, okay? You said seven (7) or 6 eight (8) yesterday, I'm prepared to give you some room. 7 With Mr. Marentette, you personally, what's the maximum? 8 A: Well, I -- thinking back now that you're 9 going through this, I mean he called me frequently, so over a 10 period of how many months was it, three/four (3/4) months or 11 something, assuming a call a week or a couple of calls a 12 week, I mean it was like sixteen (16), it might have been 13 twenty (20). 14 Q: It might have been twenty (20) calls? 15 A: Yeah, I mean I just -- 16 Q: It might have been twenty (20) calls? 17 A: No, I'm just saying -- I'm trying to be -- 18 Q: Yeah, I get that. 19 A: -- okay, I'm trying to be honest that's 20 all. 21 MADAM COMMISSIONER: Ms. Rothstein, just let 22 Mr. Lyons finish. 23 MS. LINDA ROTHSTEIN: Okay. 24 THE WITNESS: I'm trying to be honest, I mean 25 I'm trying to remember these phone calls, you know, I'm more

247

1 focussed now, and I'm thinking there was a lot more. 2 MS. LINDA ROTHSTEIN: Okay. 3 THE WITNESS: Okay. 4 5 CONTINUED BY MS. LINDA ROTHSTEIN: 6 Q: Okay. I think twenty (20) calls is fine, 7 I can live with twenty (20) calls. Many of them, as you told 8 Mr. Manes, would only have been a couple of minutes? 9 A: Could have been, I mean he was just asking 10 questions. I mean he was picking my brain. 11 Q: All right. 12 A: That's -- anyway, who knows, I mean what 13 happens in two (2) minutes, but a lot of conversations 14 sometimes happens in two (2) minutes. 15 Q: Yeah. 16 A: I just don't remember. They weren't long 17 -- it could have been long ones. I remember phoning him at 18 home a few times, that's why I know it was more than seven 19 (7), because I remember once he was painting his apartment, 20 and he was going on about this, and so I remember I had three 21 (3) or four (4) conversations with him at least at home. 22 I just remember this -- I remembered some 23 personal stories he told me. So, anyway, that's in my 24 recollection. 25 Q: So, maximum two (2) hours spent on the

248

1 phone with Mr. Marentette? 2 A: Whatever you want to put to that. 3 Q: It's not up to me, Mr. Lyons, really. I 4 mean, I'm -- I'm going with what you're telling me and I'm 5 giving you some grace and generosity. You said a couple 6 minutes, I'm assuming that's understated, five (5) minutes 7 each, ten (10) minutes each -- 8 A: Whatever. 9 Q: -- does it get much past two (2) hours, 10 sir? 11 A: Let's leave it at two (2) hours. If you 12 say two (2) hours, I'll say two (2) hours. 13 Q: And then there would have been, and we've 14 seen this in Ms. Cross' notes, all kinds of attempts to reach 15 you or to reach her that Mr. Marentette made; right? 16 A: Say this again? 17 Q: There would have been times when Mr. 18 Marentette spoke to Ms. Cross, correct? 19 A: Right. 20 Q: Or times when he left the message and you 21 weren't there and that message was forward to you? 22 A: Right. That's right. 23 Q: So, a bit more time involved in that. 24 A: Yes. 25 Q: Okay. But what other time did you spend,

249
  1  Mr. Lyons?  Where is that list deficient?
  2                 A:  Well, where it's deficient is, Ms. Cross,
  3  whose my employee --
  4                 Q:  No, you sir --
  5                 A:  Well, you don't --
  6                 Q:  Before you get to her --
  7                 MADAM COMMISSIONER:  Just let him answer.
  8                 MS. LINDA ROTHSTEIN:  No, but, I --
  9                 THE WITNESS:  I --
 10                 MADAM COMMISSIONER:  Just let him answer the
 11  question.
 12  
 13  CONTINUED BY MS. LINDA ROTHSTEIN:  
 14                 Q:  Go ahead, Mr. Lyons.
 15                 A:  I mean, Ms. Cross, attended a couple of
 16  committee meetings, Council, went to a lot of -- she was
 17  dogging this issue for him, and I -- she is still part of my
 18  overhead, and I still had her skill set and if I gave you a
 19  number of hours before, I was including her in my hours, I
 20  wasn't including myself.
 21                 Q:  Okay.  I understand.
 22                 A:  And I would -- you know, she had a
 23  probably more hours in it than I did, because she would sit
 24  there all day at these committee meetings, to wait to see
 25  what happens.  And that's what I expect her to do, and she'd

250

1 do the same thing at Council. And so that's -- my evidence. 2 Q: Sorry, Mr. Lyons, if I interrupted you, 3 unduly. 4 A: No, that's okay. 5 Q: I wanted you to focus not on Ms. Cross 6 because I understood your point about that, and I want to 7 come back to it in a minute. 8 But just focussing on you, as you say, just 9 sort of thinking back carefully, Other than the list we've 10 just gone through, the time that you, sir, spent quite apart 11 from other members of your staff, is there anything not on 12 the list? 13 14 (BRIEF PAUSE) 15 16 A: Yes, I mean a number of discussions I 17 would have had with people. But I can't recollect -- I mean 18 I just can't tell you -- 19 Q: Would have added up to -- if we just look 20 at hours, just to get that one (1) measure, it's not the only 21 measure, Mr. Lyons, but that one (1) measure. Couple of 22 hours spent talking to people? 23 MR. TODD WHITE: Well, Your Honour, I think 24 he's been crystal clear that he doesn't remember. If he 25 doesn't remember, he doesn't remember. You know, it's a six

251

1 (6) month contract and he's given his best evidence. I think 2 we've flogged this to death. 3 MS. LINDA ROTHSTEIN: Commissioner, as you 4 know, Mr. Lyons said something before lunch that was rather 5 different than he said yesterday. I think I'm entitled to 6 probe this area. 7 MADAM COMMISSIONER: About seventy five (75) 8 hours? 9 MS. LINDA ROTHSTEIN: He did indeed. 10 THE WITNESS: But that's a guesstimate. 11 12 CONTINUED BY MS. LINDA ROTHSTEIN: 13 Q: Well, that's my point, Mr. Lyons. I just 14 want to understand how it ever comes close to seventy five 15 (75) hours, if we discount -- just a moment -- if we discount 16 the time spent by your staff. It doesn't come close. 17 A: Well, I -- to me, I spent a number of 18 hours on it. Was it twenty (20) hours? I don't know. But 19 it was sort of in -- look it -- I didn't do hard figuring 20 last night -- I just started thinking of all the phone calls, 21 I had and some meetings I had and it started looking in my 22 mind, looking like I spent a lot more hours on it. 23 And you know, I just don't give myself enough 24 credit for doing it because my memory is so bad. I mean look 25 it, it's four (4) years later. I just don't remember.

252

1 And I had a number of other things going on. 2 If I had a record in front of me, I could do it. The only 3 records that have been available is Susan Cross' notes, which 4 I don't even understand. 5 So -- 6 Q: Mr. Lyons, is twenty (20) hours a fair -- 7 your absolute best assessment of the time that you personally 8 spent on this matter? 9 A: Twenty (20) or twenty five (25) hours, I 10 would say, that was my opinion. 11 Q: Thank you, Mr. Lyons. 12 13 (BRIEF PAUSE) 14 15 MADAM COMMISSIONER: Ms. Rothstein, just in 16 terms of the timing. We're minutes away from 4:30. How long 17 do you think you might be? 18 MS. LINDA ROTHSTEIN: I think I can complete 19 my examination in ten (10) minutes. And I'd be happy to do 20 that and I see a nod from our witness. 21 THE WITNESS: I'm ready. 22 MADAM COMMISSIONER: Just before we do that, 23 Mr. White, although I'm not sure if Mr. Moore will have any 24 questions yet, I may have some questions, Mr. Moore, that 25 might affect you having questions.

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1 MR. DAVID MOORE: Yes, Commissioner? 2 MADAM COMMISSIONER: I'm prepared to go on, 3 but, I think we might -- Mr. White, do you know how long you 4 might be? 5 MR. TODD WHITE: I don't expect to be too 6 long. 7 MADAM COMMISSIONER: I'm just -- that's not 8 too helpful right now, because I have to think about staff, 9 in terms of how much longer -- 10 MR. TODD WHITE: I'll be a half an hour or so. 11 MADAM COMMISSIONER: Half an hour, okay. So, 12 if you're ten (10) minutes and you're half an hour, we might 13 make you have to come back tomorrow morning. 14 I was trying to avoid doing that. 15 THE WITNESS: We can't do it? 16 MADAM COMMISSIONER: Well, in my experience, 17 Mr. Lyons, I could be completely wrong on this, but I haven't 18 had a lawyer yet, in the x number of months that I've been 19 here, who has said they were going to take exactly the amount 20 of time that they say they're going to take, and Mr. White, 21 is notorious. Now, having said that, in fairness to him, I 22 suspect -- 23 THE WITNESS: He talks fast, though. 24 MADAM COMMISSIONER: -- I suspect he wouldn't 25 take as long with you as he has with others. But I'm just

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1 concerned that -- can people stay for another hour, because I 2 think we're really talking about an hour? Mr. White...? 3 MR. TODD WHITE: I'd rather not. 4 MADAM COMMISSIONER: Did you say no? 5 MR. TODD WHITE: No, I'd rather not, if we're 6 going to be another hour, we might as well just do it 7 tomorrow. 8 MADAM COMMISSIONER: Well, I'm just thinking 9 if you're half an hour and Ms. Rothstein is ten (10) minutes, 10 that's forty (40), and if I have some questions, if Mr. Moore 11 has some questions and if I ask Mr. Lyons for his views of 12 how he can help me, and if Mr. Manes has anything, then we're 13 really talking probably about an hour. 14 I suspect, Mr. Lyons, if we do it tomorrow, 15 it'll be all over in five (5) minutes, but just -- 16 THE WITNESS: You're right. 17 MADAM COMMISSIONER: -- I don't know. 18 MR. DAVID MOORE: I wonder whether it might 19 make sense for Ms. Rothstein to complete her questioning, if 20 it's only going to be ten (10) minutes, and that would give 21 myself at least, full opportunity to consider whether in fact 22 I do have any questions, as opposed to having to wonder 23 whether there's anything more that might -- for MFP, and 24 similarly might make it more efficient for Mr. White, if the 25 witness does come back tomorrow.

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1 MADAM COMMISSIONER: Ms. Rothstein, if we have 2 to come back tomorrow, do you want to finish now then, or do 3 you want to -- to -- 4 MS. LINDA ROTHSTEIN: I just want to see if I 5 have one (1) other -- 6 MADAM COMMISSIONER: Okay. 7 8 (BRIEF PAUSE) 9 10 MS. LINDA ROTHSTEIN: I can't really 11 understand his writing. 12 13 (BRIEF PAUSE) 14 15 MS. LINDA ROTHSTEIN: I'm quite content to 16 finish -- 17 MADAM COMMISSIONER: Okay. 18 MS. LINDA ROTHSTEIN: -- with my examination 19 of this witness. 20 21 CONTINUED BY MS. LINDA ROTHSTEIN: 22 Q: And, Mr. Lyons, I think that's your 23 preference isn't it? 24 A: Yeah. 25 Q: Yeah, okay. Let me just find my place

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1 then, sir, just a moment. 2 A: Okay. 3 4 (BRIEF PAUSE) 5 6 MS. LINDA ROTHSTEIN: And if I'm more than ten 7 (10), I take it, Commissioner, that's okay, if I'm a little 8 bit more? 9 THE WITNESS: That's fine with me. But I 10 can't speak for -- 11 MADAM COMMISSIONER: Go ahead. 12 13 CONTINUED BY MS. LINDA ROTHSTEIN: 14 Q: In terms of the importance of the meetings 15 with Mr. Jakobek, I just want to deal with that for a moment. 16 You told me, Mr. Lyons, that your assessment of Ms. Liczyk 17 was that she was not originally in favour of leasing; 18 correct? 19 A: Yes. 20 Q: But she seemed to be turning around, I 21 think those were your words? 22 A: Yes. 23 Q: Based on your review of the notes of April 24 23 made by Ms. Cross, and your recollection of the events, 25 it's pretty clear that what Ms. Liczyk communicated to your

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1 client, DFS, is that she still had to persuade her political 2 masters? 3 A: Yes. 4 Q: About leasing? 5 A: Yes. 6 Q: And I take it, Mr. Lyons, that Ms. Liczyk 7 was someone who you believed was good at reading the 8 political landscape? 9 A: I thought she had a good sense. 10 Q: And her view was as expressed in the 11 meeting, that she would have to persuade Mr. Jakobek that 12 leasing made sense for the City? 13 A: Yes. 14 Q: Or someone would have to persuade him of 15 that, if not her? 16 A: Well, I mean he was a pretty independent 17 thinker, but if -- if she was the Treasurer, and I think they 18 had a good relationship, so I think they could have worked 19 that together. 20 Q: Right. And her view was, and I take it 21 you share it, that without Mr. Jakobek's support for the 22 concept of leasing, it was unlikely to fly at the City of 23 Toronto? 24 A: Well -- yes. 25 Q: And indeed, Ms. Liczyk, based on your

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1 experience, would not have released the RFQ without Tom 2 Jakobek's buy in on leasing? 3 A: I would think so. 4 Q: That wouldn't have happened unless Mr. 5 Jakobek agreed that that was a sound financial vehicle for 6 the City's acquisition of computers? 7 A: Yes. 8 Q: Am I right, sir, that based on your 9 experience at the City, and your knowledge of the 10 relationships, that not only did Mr. Jakobek have a good 11 relationship with Ms. Liczyk, he also had a good and close 12 relationship with Jim Andrew? 13 A: I don't know whether he was -- he was 14 closer, my sense, with Wanda than Jim Andrew. 15 Q: I wasn't doing it comparatively, per se. 16 A: Yeah, no, I'm just saying they had a good 17 working relationship I think, but I -- he worked more with 18 Wanda, so I guess that's my impression anyway. 19 Q: Did you ever have any doubt, sir, that Mr. 20 Jakobek viewed Jim Andrew very favourably? 21 A: Well, I think he thought well of him. 22 Q: Did -- 23 A: I never heard otherwise. 24 Q: All right and that Mr. Jakobek was more 25 than happy to meet with Mr. Andrew whenever necessary?

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1 A: I don't know that but I mean, it wouldn't 2 surprise me. I mean -- 3 Q: Does it surprise you, sir, when you review 4 the Sue Cross notes that it would appear that Mr. Jakobek's 5 assistant, Lil Yang (phonetic) is often the person who was 6 arranging meetings between you and Mr. Jakobek for purposes 7 unrelated to this leasing RFQ? 8 A: You meant, Lil Yang was Jim Andrew's 9 assistant. 10 Q: Yeah. 11 A: She was arranging meetings? 12 Q: Meetings that you had with Mr. Jakobek on 13 unrelated matters. Because that's what it looks like. 14 THE WITNESS: Oh, no. I -- that didn't 15 happen. 16 17 CONTINUED BY MS. LINDA ROTHSTEIN: 18 Q: No? 19 A: No. 20 Q: I've rea -- I've read those notes 21 incorrectly? 22 A: Yes. 23 Q: Okay. Commissioner, did you understand my 24 point? 25 MADAM COMMISSIONER: Yes.

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1 MS. LINDA ROTHSTEIN: All right. 2 3 (BRIEF PAUSE) 4 5 CONTINUED BY MS. LINDA ROTHSTEIN: 6 Q: Your request for a success fee, Mr. Lyons, 7 of one hundred and fifty thousand dollars ($150,000). 8 A: Yes. 9 Q: I want to just explore with you for a 10 moment what you and I have agreed about your contribution to 11 DFS' bid. If we measure it by time, sir, in terms of your 12 own personal time spent on that matter, we get to about 13 twenty (20) hours, true? 14 A: Twenty (20) or twenty-five (25), as I 15 said, right. 16 Q: Right. Right, you're quite so. If we 17 measure it by the effort that you made, I hear you that you 18 always give it your full effort and I am not doubting that, 19 sir. 20 A: And that was confirmed, actually, by the 21 client that the -- his -- her discoveries -- not discoveries, 22 I mean -- 23 Q: Yeah. 24 A: -- evidence here. 25 Q: I'm not doubting that for a moment but in

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1 -- in fairness, Mr. Lyons, this was nothing new. This was 2 hardly a new kind of process for you? An RFQ. 3 A: No, I mean the leasing was a new concept. 4 Q: But the process you were walking the 5 client through was hardly new and hardly difficult given your 6 years of experience. 7 A: Well, that's what they're coming to me 8 for. 9 Q: Right. Well, my point being, Mr. Lyons, 10 that there was no special extra difficulty presented by this 11 particular matter for you, Jeffrey Lyons? 12 A: The only problem would be that this was an 13 unknown company and that was the big problem, was trying to 14 sell DFS, who nobody had ever heard of. 15 Q: And if we then measure it not so much by 16 your effort but by the value you provided to your client, 17 you've told us that you believe you were instrumental in 18 setting up a fifteen (15) minute meeting with Mr. Jakobek and 19 it would appear that DFS concurs with you about that. 20 A: Well, that was part of it, yes. 21 Q: Were they right that it didn't actually go 22 very well? 23 A: I think it went fine. He heard it. He 24 didn't say -- pat them on the back and said, I'm giving you 25 the deal. You know, what did they expect?

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1 Q: The -- 2 A: They -- they -- he heard what they said. 3 Q: The problem solving that you did for this 4 client consisted of telling them which persons to meet with, 5 right? 6 A: Right. 7 Q: And consisted of telling them how to best 8 pitch their particular company? 9 A: Right and how to put their best foot 10 forward -- 11 Q: Right. 12 A: -- which was an ongoing process. 13 Q: But that amounted to trying to leverage as 14 best they could off Dell Computer's reputation, right? It's 15 really what your advice was? Leverage off Dell. 16 A: That was, yes, a lot to do with it. 17 Q: Right. I mean, whatever Ms. Dyer says 18 about the legal realities, your point was leverage off your 19 relationship -- 20 A: Right. 21 Q: -- with Dell Computer. 22 A: But part of it is, you have to understand, 23 when you speak to these people, these decision makers, and 24 you've got it down to two (2) but there might have been more, 25 that, you know, you're saying it as opposed to somebody else

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1 saying it. Why -- why does it make a difference? Because 2 they're listening. 3 Sometimes they just don't even listen and I 4 think that's what Mar -- Mr. Marentette thought that Mr. 5 Jakobek didn't really get it but I know Mr. Jakobek well 6 enough that he got who they were and what they were trying to 7 do. 8 Q: Right. So the value you provided was 9 being able to tell Mr. Marentette, because you were there, 10 you know what, we did get the message through. 11 A: Right and I think he was satisfied. I've 12 said that before, anyway. 13 Q: It's certainly true that you gave, that we 14 can think of, no particular intelligence to this client that 15 was not readily available in the marketplace? 16 A: It -- intelligence as to the technical, 17 sure they could get that. 18 Q: No, intelligence as to what was happening 19 at the City, that they were maybe interested in leasing, 20 maybe not. 21 MR. TODD WHITE: Well, Your Honour, that's not 22 fair. 23 24 CONTINUED BY MS. LINDA ROTHSTEIN: 25 Q: Mr. Lyons, you tell me. What --

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1 MADAM COMMISSIONER: No. Well, hang on. 2 There's an objection. 3 MS. LINDA ROTHSTEIN: Okay. I'm trying to get 4 through this here. 5 THE WITNESS: Yeah. 6 MADAM COMMISSIONER: I understand. Your 7 question was you gave no particular intelligence that wasn't 8 available in the marketplace, now what's the concern, Mr. 9 White? 10 MR. TODD WHITE: That's not in Mr. Lyons' 11 testimony. 12 MADAM COMMISSIONER: Well, I think what Ms. 13 Rothstein is saying is that -- that Scott Marentette had 14 already said that. 15 MS. LINDA ROTHSTEIN: Hmm hmm. 16 MADAM COMMISSIONER: Am I wrong on that? 17 MS. LINDA ROTHSTEIN: Yes, my point with Mr. 18 Lyons, and I think he'll be able to answer it or not, is that 19 I don't understand yet what the intelligence was that he 20 provided to the client they didn't get elsewhere, couldn't 21 get elsewhere. Just -- just explain it to me one (1) more 22 time, Mr. Lyons, can I ask him that, Commissioner? 23 MADAM COMMISSIONER: Well, I don't have a 24 particular problem with the question actually. 25 THE WITNESS: Well, she's looking for the

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1 magic formula. It's -- listen, what they're -- I'd have to 2 repeat myself again. What they're buying when they come to 3 me is forty (40) years of experience. 4 I've been through this process either as -- as 5 in politics or serving in different capacities, and I have a 6 sixth sense other people don't have, and what -- I assisted 7 them. 8 These people were well intentioned, but they 9 had no previous experience at the City. They were private 10 sector oriented, they never had done this bid. And what I 11 did was walk them through it. 12 No, I didn't do the technical expertise, which 13 I've said. But what I did was have them always putting their 14 best foot forward. 15 16 CONTINUED BY MS. LINDA ROTHSTEIN: 17 Q: And I understand that point. 18 A: And what's that value? That value is -- 19 is immeasurable. It might have made the difference, they 20 didn't win, so it didn't make the difference, but it could 21 have made the difference. 22 Is it worth a $150,000? Yes. Did everybody 23 else get success fees? Yes. Mr. Domi got his commission, 24 I'm sure Mr. Simone and Mr. Marentette would have got a 25 commission, so I hope I've answered all your questions

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1 anyway. 2 Q: I think you were attempting to try and 3 anticipate them all and answer them all so you could get it 4 over with? 5 A: Right. 6 Q: And actually, Mr. Lyons, I'm not going to 7 finish, given what you just said, so we'll see you tomorrow 8 morning, sir. 9 MS. LINDA ROTHSTEIN: If that's okay with you, 10 Commissioner? 11 MADAM COMMISSIONER: How long do you think 12 you're going to be? 13 MS. LINDA ROTHSTEIN: Well, I might be another 14 ten (10) or fifteen (15) minutes now? 15 THE WITNESS: Why can't we just finish? 16 MADAM COMMISSIONER: I told you, I told you, 17 Mr. Lyons? 18 THE WITNESS: Well we can finish it. 19 MS. LINDA ROTHSTEIN: Well, I got an awfully 20 long answer to a lot of questions I hadn't yet asked, 21 Commissioner. 22 MADAM COMMISSIONER: Yes. Mr. Lyons is quite 23 eager to finish today, is that what I'm hearing from you, Mr. 24 Lyons? 25 THE WITNESS: Yes, yes.

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1 MS. LINDA ROTHSTEIN: Well, then I would be 2 obliged if he would wait for a question, before he provides 3 us with a lot of -- 4 THE WITNESS: Okay, I'm sorry that I -- so, 5 let me just -- 6 MADAM COMMISSIONER: No, no, no, that's 7 okay -- 8 THE WITNESS: -- withdraw it. No, I want to 9 withdraw the answer. 10 MADAM COMMISSIONER: Mr. Lyons, I don't -- I 11 think a lot of us would like to do that. I don't want you to 12 have to stay here if you don't want to stay here. 13 THE WITNESS: No, I'm happy to stay here. And 14 I obviously anticipated the questions, so I withdraw my 15 comments, and I'll wait for the questions. 16 MADAM COMMISSIONER: Okay. 17 MS. LINDA ROTHSTEIN: Thank you, Commissioner. 18 19 CONTINUED BY MS. LINDA ROTHSTEIN: 20 Q: Mr. Lyons, I'm suggesting to you that you 21 passed on no significant intelligence to your client about 22 this deal? 23 A: Well, I don't agree about that. 24 Q: Your client knew more about it than you 25 did?

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1 A: I don't agree with that. 2 Q: Your client's knowledge of the technical 3 issues, that exceeded anything that you had? 4 A: That I agree. 5 Q: You were really not in a position to 6 provide any special skill or service other than arranging 7 meetings and identifying the key decision makers; isn't that 8 true? 9 A: And put their best foot forward, as I 10 said. 11 Q: And put their best foot forward. And if 12 we measure it by the risk that you were assuming in this 13 transaction, you were assuming no risk whatsoever? 14 A: My risk? 15 Q: Yes? You were getting paid three thousand 16 dollars ($3,000) a month for six (6) months. You weren't at 17 risk if they didn't win the deal? 18 A: Well, I would have -- if I was successful 19 getting a success fee, I would have done a lot better, but I 20 didn't get it. You're right, so I got paid the three 21 thousand dollars ($3,000) a month. 22 Q: You weren't assuming any risk in this 23 transaction, Mr. Lyons? 24 A: No, I -- I don't. 25 Q: And if we look at your client, they were

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1 taking some risk, you've told me that? 2 A: You've said that, yes. 3 Q: And you agreed? 4 A: I -- I -- I understand that that's what 5 they do. 6 Q: You're surely not suggesting that 7 introducing your client to public officials is worth a 8 hundred fifty thousand dollars ($150,000); are you, Mr. 9 Lyons? 10 A: No, I never said that. 11 Q: You're not suggesting they will only grant 12 an audience if you show up? 13 A: Grant an audience if I show up? No, I 14 didn't suggest that. 15 Q: You're not suggesting they will only grant 16 a fair hearing if it has been purchased through you? 17 A: Purchased through me? You mean they paid 18 me? 19 Q: By paying you to arrange it for them? 20 A: No, I never said that. 21 Q: A hundred and fifty (150) to two hundred 22 thousand dollars ($200,000) was what you had in your mind? 23 You asked for one hundred and fifty (150). I'm suggesting to 24 you, Mr. Lyons, that it bore no relationship to your 25 contribution by any measure of value.

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1 A: Can I answer that now -- 2 Q: Yes, you do. 3 A: -- as I did before? 4 Q: You answer. 5 A: Okay. I'll start over again. I have been 6 in this business for forty (40) years. I have forty (40) 7 years of experience. I've been involved in politics my whole 8 life, I happen to love it and that was part of the reason I 9 got into the business. 10 I -- I've experienced sitting on a number of 11 public boards. I have -- and I have a sixth sense, as I said 12 to you before, what they have to do, clients, to be 13 successful. 14 This client was well-intentioned. They had -- 15 but they had never done business with the City of Toronto. 16 They were, to some extent, naive about the whole process. 17 I made sure, through every step of the way as 18 they picked my brain, that we put our best foot forward. Is 19 that worth one hundred and fifty thousand (150,000) on a $100 20 or $150 million contract if they were successful? 21 I certainly think so. 22 Q: Your sixth sense, Mr. Lyons. Your sixth 23 sense. 24 A: That's -- 25 Q: Your sixth sense was --

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1 A: This -- 2 Q: -- that they had to meet Tom Jakobek or 3 they didn't have a chance of being successful? Is that your 4 evidence? 5 A: No. 6 Q: Your sixth sense is that a client in this 7 situation, at this stage of the game, would pay one hundred 8 and fifty thousand dollars ($150,000) for what you'd done for 9 it? 10 A: That they would have? 11 Q: That they would? 12 A: Everybody else was getting a success fee. 13 Q: We're not talking about everything else. 14 A: Well, I mean, in that industry they do pay 15 commissions. 16 Q: Mr. Lyons, based on your experience at the 17 City of Toronto, you'd asked for one before and it was no 18 more than thirty thousand dollars ($30,000). Now, you tell 19 the Commissioner -- 20 A: It wasn't $100 or $150 million contract. 21 Q: I don't care, Mr. Lyons. You tell 22 Commissioner Bellamy what client in their right mind would 23 pay you one hundred and fifty thousand dollars ($150,000) at 24 crunch time for what you did? 25 MR. TODD WHITE: Your Honour, I'm going to

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1 object. I think that question is just argumentative and 2 sarcastic. 3 MS. LINDA ROTHSTEIN: It's not -- 4 MADAM COMMISSIONER: I don't -- 5 MS. LINDA ROTHSTEIN: -- Commissioner. 6 MADAM COMMISSIONER: -- have a problem with 7 the question. Go ahead. 8 9 CONTINUED BY MS. LINDA ROTHSTEIN: 10 Q: You tell me, Mr. Lyons, what client did 11 you expect to do that? What client in their right mind would 12 do that? 13 A: What client in their right mind would do 14 that? A client that was hopeful of winning. 15 Q: You're not a stupid man, Mr. Lyons, right? 16 You weren't asking for -- 17 A: Well, that's not -- 18 Q: -- a gift. 19 A: -- for me to judge. 20 Q: You're not a -- you weren't asking for a 21 gift, sir? 22 A: I wasn't asking for a gift. 23 Q: You weren't asking for them to act out of 24 sympathy, right? 25 A: No, I'm not asking for sympathy.

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1 Q: You already had a contract with them? 2 A: Right. 3 Q: You weren't asking to amend the contract 4 with the person that you'd negotiated it with the first time? 5 A: Well, that was -- that was an error. 6 Q: And that's because you didn't think he'd 7 ever agree to amend that contract, right? 8 A: You know, I told you that I should have 9 negotiated this at the beginning and once you're in the 10 process, it's very difficult to change it unless you have an 11 understanding with the client and I agree, that wasn't the 12 person to talk to and he didn't even recognize that you're 13 able to do that. So I thought -- I was dealing with that and 14 I just didn't pursue it any further. 15 Q: Mr. Lyons, isn't it true that there was no 16 chance that Scott Marentette and Rob Simone would buy into a 17 success fee for you at crunch time, unless there was some 18 other purpose for the money? 19 A: Some other purpose for the money? 20 Q: Yes. 21 A: Say that again? 22 Q: Didn't you imply that you had connections, 23 that you could pull some strings, that there was some other 24 purpose for that money? 25 A: Oh, that's ridiculous. What do you think

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1 I'm going to do, go and talk to these young guys and tell 2 them that? This is crazy. 3 Q: Didn't you throw Tom -- 4 A: I mean, you know better than to even ask 5 me that question. 6 Q: Didn't you throw Tom's name around -- 7 A: No. 8 Q: -- to demonstrate that you could pull 9 strings -- 10 A: No. 11 Q: -- Mr. Lyons? 12 A: Ms. Rothstein, you know -- this is not for 13 scoring points here. I am trying to deal with a serious 14 issue here and you're trying to bring in this -- you know 15 that I wouldn't be asking these two (2) people. You know a 16 person of my standing, in forty (40) years in the community 17 suggesting something like that. I've got to be absolutely a 18 lunatic. 19 Q: Mr. Lyons -- 20 A: I don't even know why you keep pursuing 21 this. 22 Q: Didn't you tell them that other companies 23 thought it was worth the money? 24 A: No. 25 Q: Isn't that what your --

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1 A: No. 2 Q: -- Counsel -- 3 A: No. 4 Q: -- suggested to Mr. Simone? 5 A: No. Great dramatic flair but I'm sorry, I 6 can't agree with anything you're saying. 7 Q: Thank you, Commissioner. 8 MADAM COMMISSIONER: Can you just repeat that 9 last part, Ms. -- 10 MS. LINDA ROTHSTEIN: Isn't that what Counsel 11 suggested ro Mr. Simone you would say? 12 THE WITNESS: Say that again? 13 14 CONTINUED BY MS. LINDA ROTHSTEIN: 15 Q: Mr. Manes yesterday took you through the 16 questions that were asked by Mr. White of Mr. Simone. And 17 one (1) -- 18 A: Yes. 19 Q: -- of them contained the suggestion that 20 you would say that some people thought it was worth 150,000. 21 You never said that, sir? 22 A: Never said that. I -- I was valuing, as I 23 told you, the success fee between a 100,000 to 200,000, so I 24 don't know where -- the hundred and fifty (150) was my own 25 suggestion.

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1 Q: And a hundred and fifty thousand dollars 2 ($150,000) was a hundred and twenty thousand (120,000) more 3 than you'd ever received before for City of Toronto work? 4 A: I'm sorry, I don't agree with you on that. 5 Q: As a success fee, isn't that what you told 6 the Commissioner? Never received anything more than thirty 7 thousand dollars ($30,000)? 8 A: At that point in time? 9 Q: Yes. 10 A: Yes. But nothing was worth a $100 to $150 11 million. 12 Q: Are you telling the Commissioner it was 13 just greed? 14 A: It was just what? 15 Q: Just greed? 16 A: Discreet? 17 Q: Just greed? 18 A: Oh, greed? No, that's -- I mean if you're 19 working on something of that major proportion, you should be 20 talking about a success fee, I should have talked about it at 21 the beginning, I'm just repeating myself. 22 Q: You are and so am I. 23 MS. LINDA ROTHSTEIN: And that completes my 24 questions, Commissioner. 25 MADAM COMMISSIONER: Okay, thank you.

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1 THE WITNESS: Thank you. 2 MADAM COMMISSIONER: Now, Mr. Lyons, you're 3 eager -- do you want to keep going, because Mr. White is 4 going to be -- 5 THE WITNESS: I think Mr. White -- 6 MADAM COMMISSIONER: -- about half an hour. 7 THE WITNESS: What's Mr. White -- 8 MADAM COMMISSIONER: Mr. White...? 9 THE WITNESS: -- want to do? 10 MR. TODD WHITE: Well, I'd rather start 11 tomorrow myself. 12 MADAM COMMISSIONER: Well, okay. Let me ask 13 you just a few questions now -- 14 THE WITNESS: Sure. 15 MADAM COMMISSIONER: -- so that Mr. Moore can 16 make a determination of whether or not he wants to ask you 17 any questions tomorrow. 18 Did you ever talk to Tom Jakobek about a 19 success fee, or the word success fee, did you ever have that 20 kind of -- 21 THE WITNESS: To him? 22 MADAM COMMISSIONER: -- with Tom Jakobek? 23 THE WITNESS: No. 24 MADAM COMMISSIONER: Okay. Did you know Dave 25 Robson?

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1 THE WITNESS: Who? 2 MADAM COMMISSIONER: Dave Robson? 3 THE WITNESS: I've heard the name, but 4 probably just following this Inquiry, does he work -- did he 5 work for -- 6 MADAM COMMISSIONER: At MFP. 7 THE WITNESS: -- MFP. 8 MADAM COMMISSIONER: He's not been a witness 9 here. 10 THE WITNESS: I've never met him. 11 MADAM COMMISSIONER: Okay. And Peter 12 Wolfraim, when he testified, said that he had -- that you had 13 assisted in I think with Mr. Godfrey after there was some 14 talk about possibly having this matter either -- before it 15 became an Inquiry, but when things seemed to start to fall 16 apart, he called Mr. Godfrey and I think I thought he said 17 that you had been involved? 18 THE WITNESS: Well, I was acting for the 19 company and when these things started happening, he called me 20 from time to time to get my advice. And so we had a number 21 of chats, and that's my recollection. So, we talked about 22 Kitchener, I think, and Windsor. 23 MADAM COMMISSIONER: Okay. 24 THE WITNESS: And -- 25 MADAM COMMISSIONER: All right, so that's it.

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1 THE WITNESS: Yeah. That's your question? 2 Okay. 3 MADAM COMMISSIONER: I mean, as far as I know. 4 I just want to make sure that Mr. Moore has them so he could 5 think about whether or not this was something he needed to go 6 into tomorrow. 7 MR. DAVID MOORE: Thank you. 8 MADAM COMMISSIONER: All right, so we're going 9 to end today, and then either Mr. Moore from MFP will have a 10 few questions or he won't, I'm not sure. And then it would 11 be Mr. White, who says he's going to be about half an hour, 12 maybe a bit longer, Mr. White? 13 MR. TODD WHITE: About half an hour, I think. 14 MADAM COMMISSIONER: About half an hour? 15 MR. TODD WHITE: Yes. 16 MADAM COMMISSIONER: And then possibly some 17 re-examination from Mr. Manes. 18 THE WITNESS: Yes. 19 MADAM COMMISSIONER: If we start at 10:00, we 20 should be done fairly early on I'd say. 21 MR. RONALD MANES: Commissioner...? 22 MADAM COMMISSIONER: Yes. 23 MR. RONALD MANES: Before you rise, Mr. 24 Jakobek and his counsel, Mr. Gold and Mr. Honickman, are 25 standing by --

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1 MADAM COMMISSIONER: Hmm hmm. 2 MR. RONALD MANES: -- as to tomorrow. I think 3 I should tell them that we'll -- in all fairness, we'll be 4 the morning? 5 MADAM COMMISSIONER: No, I don't think we -- 6 MR. RONALD MANES: Or until 11:30 break? 7 MADAM COMMISSIONER: -- no, no, no. No, no, I 8 wouldn't even go that far. 9 MR. RONALD MANES: All right. 10 MADAM COMMISSIONER: I think if Mr. White is 11 only half an hour, and if you're just a short time after 12 that, if Mr. Moore has no questions. 13 MR. DAVID MOORE: If I have any questions, and 14 I haven't decided yet, but if I do, I'll be very brief. 15 MADAM COMMISSIONER: Okay. So, we might very 16 well be finished with -- or Mr. Lyons' evidence might very 17 well be finished by 10:30, quarter to 11:00. If Mr. White is 18 shorter, so I'd rather that we don't waste anymore time, that 19 we have Mr. Jakobek ready to go, all right? 20 MR. RONALD MANES: I understand he is, yes. 21 MADAM COMMISSIONER: Okay, good. Let me just 22 get out of here and all right, Mr. Lyons, the rest of you, 23 we'll see you tomorrow morning -- 24 THE WITNESS: Okay. 25

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1 (WITNESS RETIRES) 2 3 MADAM COMMISSIONER: -- at ten o'clock. 4 THE REGISTRAR: Order. The Inquiry is 5 adjourned until ten o'clock tomorrow. 6 7 --- Upon adjourning at 4:55 p.m. 8 9 Certified Correct 10 11 12 13 14 15 ______________________ 16 Carol Geehan 17 Court Reporter 18 19 20 21 22 23 24 25