Printer Friendly

CLEARLINK Reports On The Toronto Computer Leasing Inquiry Report.


The Toronto Computer Leasing Inquiry issued its long awaited report at 12:00 p.m. September 12, 2005. The Inquiry under Commissioner Bellamy examined, among other things, computer and software lease transactions between the City of Toronto and MFP Financial Services Ltd. (MFP) (now, CLEARLINK Capital Corporation) entered into in 1999 through 2001 at a total cost of equipment of approximately $83 million.

MFP welcomes the major findings made by the Commissioner as follows:

(1) The Commissioner rejected the serious and highly publicized notion advanced by the City that MFP perpetrated a "bait and switch" on the City;

(2) In this part of the Report, Commissioner Bellamy noted that "MFP was entitled to look out for its own best interests" and that "...the City and MFP negotiated at arms length" with their own negotiators and professional advice. In reviewing eight separate points which reject the "bait and switch" allegation, Commissioner Bellamy also stated that "the bait and switch theory all too conveniently recasts as helpless victims the City Staff, who, in reality, failed to do their jobs".

(3) Although concluding that the City's decision to change the lease term from three to five year was fundamentally flawed, in her review of this issue (Report, pg. 307) Justice Bellamy makes it clear that these errors were made by City Staff, and that "....the City was a victim of its own failings". These failings, which had nothing to do with MFP, are detailed on pages 307-308 of the Report.

(4) Commissioner Bellamy also made findings that the change to a five year lease term was beneficial to MFP. However, consistent with her rejection of the City's bait and switch allegations, Commissioner Bellamy also noted (pg. 348) that "MFP was likely to make significant the three year lease transaction". Her Honour also made reference (Report, pg. 308) to the evidence of the Inquiry's own leasing expert who said, "MFP gave the City reasonable five year rates" despite the absence of any proper analysis of same by City Staff.

(5) In relation to the issues raised about the Oracle transaction and the City's decision to lease these assets, Commissioner Bellamy concluded as follows:

"Did MFP encourage or suggest it? Not at all. It (MFP) had nothing to do with the City's decision to place the Oracle acquisition on lease.

That MFP had nothing to do with the decision to put Oracle software on lease - a view that ironically gives rise to the City's decision to hold this $19 million Inquiry in the first place. MFP simply received a request from the City to place the Oracle software on lease after the City had already made its arrangements with Oracle".

(6) MFP also notes that while the Commissioner is highly critical of the contents of the Leasing RFQ, the Staff Report to City Council, and the operation of the Leasing Contract Management Office, the Commissioner's evaluation makes it clear that shortcomings in these areas were by a large number of senior City Staff widely scattered through different Departments, not MFP.

(7) Commissioner Bellamy made many negative findings about Mr. Domi and Mr. Jakobek, including certain alleged financial dealings between the two individuals. MFP did not actively participate in the evidentiary position of the Inquiry which dealt with this issue as it had no involvement or knowledge of or participation in any such alleged dealings. MFP is gratified by the Commissions conclusions in relation to the theory that Dash Domi gave Tom Jakobek a payoff: "there is no evidence that Tom Jakobek had any connection with anyone at MFP apart from Dash Domi, so this theory does not include the company or any other of its officers or employees." The context was that none of the many City decision makers who testified ever suggested that they had been influenced or pressured by Mr. Jakobek in any of their decisions or dealings in relation to MFP.

(8) MFP also recognizes that the Commissioner has been critical of MFP. In particular, the Commissioner was highly critical of the entertainment and expense account practices. As the Report indicates, this is an area where MFP acknowledged mistakes and deficiencies during the Inquiry. Reading the Commissioner's Report as a whole, her conclusions make it clear that MFP's entertainment of the City was not dissimilar to that of many other vendors. Under the heading "The Attitude At The Top Trickles Down", Justice Bellamy observed that:

"Vendors regularly took City staff to lunch, encouraged by senior managers. Lunches were supplemented with hockey, basketball, or concert tickets. The newly amalgamated City had big IT needs, and suppliers were competing to shower IT staff with treats."

"...IT staff had become addicted to a rich variety of corporate largesse." (Report, pgs. 163-164)

(9) Commissioner Bellamy was also critical of MFP's conduct in relation to the lease rewrites which extended the average life of the existing five year lease by approximately 3 1/2 months. Her Honour concluded that MFP should have specifically disclosed the $2.5 million additional cost of their extension to the City at the time, but that the City was also responsible because of an unacceptable lack of oversight. This disclosure is a matter which MFP, through its former CEO, Peter Wolfraim, conceded would have been appropriate during the recall phase of the Inquiry. When this issue came to light in July, 2001, MFP offered to revert to the prior lease terms, long before this Inquiry was called. This offer was kept open indefinitely but the City chose to live by the extended term before exercising it's purchase option.

CLEARLINK CEO Fraser R. Berrill stated that in addition to a strong measure of vindication, the Report's conclusions serve to bolster the company's position in the upcoming litigation with the City over the wrongfully withheld lease payments. "We are confident that the City's theory of liability on the part of MFP is largely debunked by the evidence and the Commissioner's characterization of events and the relationship of the parties. We look forward to further confirmation of this at trial the fall in the event that the City does not wish to settle."

CLEARLINK Capital Corporation is a provider of innovative financial solutions in technology and equipment leasing, and equipment trading. Based in Mississauga, Ontario, CLEARLINK operates throughout North America and Europe.

CLEARLINK(TM) is a trademark of CLEARLINK Capital Corporation.
COPYRIGHT 2005 Business Wire
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2005, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

Article Details
Printer friendly Cite/link Email Feedback
Publication:Business Wire
Geographic Code:1CANA
Date:Sep 12, 2005
Previous Article:Pleasant Holidays Scores with 2006 Pro Bowl Vacations in Hawaii.
Next Article:Integration Associates and Oki Electric Enables ZigBee(TM) One-Stop-Solution; Oki Receives the ZigBee Compliant Platform Certificate.

Related Articles
Local Law 38: Management's biggest challenge in new millennium.
Ontario appoints judge to conduct SARS inquiry. (Health).
MessagePro terminates TeleChaos, triples leasing results.
Figuratively speaking.
A tarnished image.
Can your leasing staff do it all? Between administrative tasks and sales duties, managers must find the delicate balance or responsibilities to get...

Terms of use | Privacy policy | Copyright © 2019 Farlex, Inc. | Feedback | For webmasters