On Sept. 29, Toronto City Council voted 42 to 1 to ask Toronto police to forward their inquiry efforts and findings to another force for a more independent inquiry. That same day, lawyers for the city advised that Toronto should pay out $9.65 million to settle a lawsuit with MFP Financial Services Ltd.
Enormous public resources were spent on MFP, the inquiry and on a lawsuit against the former private financial services company. To add to the costs is MFP’s counterclaim stating the city still owes it money under the leasing agreement for computer equipment.
Here is a recap of the MFP scandal of inflated billing and unaccountability:
- The initial $40 million computer leasing contract ballooned to just over $100 million.
- Dash Domi, former salesman for MFP, secured a bonus of $1.2 million for getting the contract.
- Justice Denise Bellamy, who oversaw the two judicial inquiries looking into computer leasing and other contracts, found “credible evidence” that Domi gave then councillor and budget chief Tom Jakobek a $25,000 payoff.
- Jeff Lyons, a lobbyist who was involved in the MFP scandal, was under investigation by the Ontario Provincial Police for allegedly accepting a $150,000 bribe from two Dell Financial Services salesmen. The OPP also investigated Lyons over whether he ordered an aide to deposit $15,000 into her own account and use the money to write personal cheques to 29 candidates for municipal council. No charges were laid against Lyons by the OPP.
- The inquiry itself cost the city $19.2 million and lasted nearly three years.
MFP, now known as Clearlink Capital Corp., is familiar with the halls of justice. Several cities in Ontario have had similar issues as those in Toronto.
In August, Clearlink settled a lawsuit with the City of Windsor and Essex County for an undisclosed sum. Windsor filed a $305 million lawsuit in 2002. The city claimed irregularities dating back to 1995 with leasing arrangements on communication devices, firefighting equipment and a host of other supplies for the city.
MFP financed RIM Park, a 500-acre park and recreation facility in Waterloo. The cost of the park more than doubled to $227 million without city council approval. A settlement brought the cost down to $145 million.
In July 2005, Clearlink decided to mothball its main operation of equipment leasing. Clearlink now cites its main activity as the equipment trading business. Municipalities beware.
Clearlink, a company with shares on the Toronto Stock Exchange, issued a statement in July that addressed its situation: “The substantial amount of time and focus on litigation matters with resulting negative publicity, together with worsening economics in its technology leasing area, has resulted in a substantial erosion of the corporation’s prospects in its traditional core business.”
Public financing and leasing arrangements would have saved Toronto, Windsor and Waterloo millions of dollars, lots of headaches and the public trust.