‘Rules get broken’: What we learned in Week 1 of a $300-million Toronto construction fraud trial

Prosecutors allege the pair communicated in secret and failed to disclose the extent of their personal and business relationship during the St. Mike’s project procurement process between 2013 and 2015.

Superior Court Justice Peter Bawden, who is hearing the case without a jury, spent the first week of trial listening to witnesses describe the rules and processes that are supposed to be followed during the bidding process for such large-scale contracts; prosecution evidence on how Aquino and Georgiou allegedly flouted them; and suggestions by defence lawyers that even if rules got broken, the St. Mike’s procurement process was fair — in essence that Bondfield won, not due to cheating, but because it had the best and most competitive bid.

The St. Mike’s project — which was largely publicly funded — involves the construction of a new wing and tower, including state-of-the-art surgical facilities and the expansion of the emergency department.

Construction was supposed to be completed by 2019. Instead, Bondfield collapsed in one of the biggest construction company bankruptcies in Canadian history and the work continues today.

What we learned in Week 1 of the trial:

St. Mike’s started exploring the idea of expanding its aging downtown facility in the early 2000s; by 2012, the Ontario government approved a plan that included building a new 17-storey tower at the corner of Queen and Victoria Streets.

To help oversee the project, St. Mike’s hired Vas Georgiou, a former senior executive at Infrastructure Ontario, the Crown corporation that manages major infrastructure projects.

Georgiou worked at Infrastructure Ontario from 2006 to 2012. (The reason for his termination hasn’t been raised so far at trial. The Globe and Mail has reported he was terminated after being implicated in a false invoice scheme at York University.)

While at Infrastructure Ontario, Georgiou’s resume states that he established the procurement policy “to ensure a fair, open and transparent process.”

Among other things, that policy explains to any private sector companies bidding on government contracts that they should only communicate with Infrastructure Ontario’s official contact person.

Five companies were in the running for the St. Mike’s contract: PCL Construction, EllisDon, Turner Construction, Brookfield Corp., and Bondfield, at the time a mid-sized, family-run construction company that was vying to become a bigger player in public infrastructure.

EllisDon has taken over the project since Bondfield’s bankruptcy.

The Crown alleges that Aquino and Georgiou communicated in secret during the competition and that Georgiou used a Bondfield-supplied Blackberry phone and an @bondfield.com email address under the username BCCLDevelopment.

Last week, prosecutors called Jillian Newsome to testify. She acted as a “fairness monitor” — an outside consultant hired by Infrastructure Ontario — to keep tabs on the St. Mike’s procurement process.

Crown attorney Ellen Weis presented Newsome with a record of calls and emails between the two men.

In one email, sent May 18, 2014, days before the deadline for companies to submit their bids, Georgiou advised Aquino to keep the Bondfield bid low by leaving out certain items — something another competitor might not do.

“This may be a chance to bid as low as you can and fight later in negotiations when we are No. 1,” Georgiou wrote.

Weis asked Newsome: “At any time during the procurement process were you made aware of this communication?” 

“Is it the kind of correspondence you’d expect to be included on?”

“If it’s related to this project and (requests for proposal), then yes.”

Prosecutor Rachel Young asked another witness, David Ho, a lawyer who spent years at Infrastructure Ontario, about the agency’s best practices when companies are bidding for infrastructure contracts.

He explained that proponents are “encouraged” to use an official Infrastructure Ontario contact person.

“Was communication allowed outside those channels?” Young asked.

Defence lawyer Peter Brauti, who represents Georgiou, sprinkled his cross-examinations with references to other apparent rule-bending by others involved in the St. Mike’s procurement process.

On Friday, he asked Newsome if she was “surprised,” to hear that some of the applicants had participated in golf tournaments with Infrastructure Ontario employees during the period when bids were still open, including “riding in carts together.” (“I don’t know if it surprises me but I wasn’t aware of it,” Newsome responded.)

Earlier in the week, Brauti asked Ho about the fact a member of the evaluation team knew how much one company had bid, despite the fact those figures were supposed to remain in sealed envelopes. 

“Rules get broken,” Brauti stated, adding: “But just because a rule gets broken, doesn’t mean fairness has been affected, correct?”

Ho pushed back — “Not quite,” he said.

Following that bid revelation, the team enlisted a third-party consultant to review the process, and determined it wasn’t tainted.

At the end of the day, someone broke a rule, but it “didn’t mean that fairness was affected,” Brauti asked again.

Aquino’s lawyer, Alan Gold, asserted during his cross-examination of Ho that Bondfield won the contract without “any help, savoury or unsavoury.” He also noted Bondfield’s $299 million bid was closest to the hospital’s $300 million target.

During the Crown’s opening address Tuesday, Young appeared to anticipate that would be one of the defence arguments.

The Crown’s case will not focus on whether Bondfield would have won the competition, regardless of Georgiou’s involvement, she said. “The issues, as presented by the Crown, will focus on what they did and did not do when it was not yet known who would win and why they did it.”

Near the end of court Friday, the judge summarized what appeared to him to be the two “lines of defence.”

One Bawden described as “the Queen Mary defence” — that is, “whatever they did, it’s like tossing a pebble off the side of the Queen Mary, it makes no difference.”

The other, the judge continued, can be summed up as “everybody knows” that rules get broken.

“Maybe there’s rules, maybe there are really strict rules, maybe there’s a fairness monitor who’s there to try to make sure everybody tries to play by the rules, but, in the end, everybody knows.”

By the end of the week, Bawden also commented on earlier findings, by other bodies, about whether the St. Mike’s procurement process had been compromised.

For instance, in 2016, a special committee of the Infrastructure Ontario board of directors determined that Georgiou had failed to disclose all of his potential conflicts of interest and that if he made the required disclosures, the “conflict review team” would likely have prohibited him from participating in the St. Mike’s procurement evaluation.

Nevertheless, “no evidence was found that Vas Georgiou had attempted to inappropriately influence evaluation decisions during the St. Michael’s Hospital procurement,” according to a summary of key findings.

That report, however, was written years before the emails between the two men surfaced during Bondfield’s bankruptcy proceedings in 2020. The prosecutors have said they will present evidence showing that Aquino directed that all emails connecting him to Georgiou be deleted from the company server.

On Friday, the judge reiterated his thoughts on what others have found.

“It doesn’t matter to me what anybody else says is fair. I have to decide what is fair in the context of this criminal trial,” Bawden said. “I am steadfast in my intent to decide myself what’s fair.”

The trial resumes Monday and is expected to end just before Christmas.