OPP closed hospital project probe after Infrastructure Ontario told them it would investigate, documents reveal

The Ontario Provincial Police opened a file nine years ago into allegations surrounding the redevelopment of Toronto’s St. Michael’s Hospital but say they closed the case after Infrastructure Ontario told investigators the agency would handle the matter on its own.

The revelation is contained in recently unsealed court documents detailing the background of what has become the largest procurement scandal to face Infrastructure Ontario since its inception in 2005. The $300-million redevelopment project at St. Michael’s, overseen by Infrastructure Ontario, is at least seven years behind schedule and has resulted in a barrage of litigation, as well as criminal charges against a former senior hospital official and a major player in the province’s construction sector. A recently established investigative agency of police officers and prosecutors launched a sweeping probe in 2019.

In 2023, Ontario’s Serious Fraud Office charged Vas Georgiou, a former chief administrative officer at St. Michael’s, and John Aquino, the former president of Bondfield Construction Co. Ltd., with fraud. The charges stem from allegations that the two men improperly communicated throughout the 2015 bidding process for the hospital contract, which Bondfield won, and that Mr. Georgiou accepted secret commissions from Mr. Aquino in the form of home renovations. Both men have said they will fight the charges at a trial scheduled for November in Toronto.

The recently unsealed documents allege that as early as 2015, the Ontario Provincial Police were contacted by officials at Infrastructure Ontario with concerns about the procurement. But the matter was closed by police after they were informed by Infrastructure Ontario that it was launching its own probe – one that was led by a special committee of its board and concluded in a 2016 report that the “St. Michael’s Hospital procurement was not compromised.”

In 2015 and 2016, The Globe and Mail published a series of stories about Mr. Georgiou, a long-time senior employee in the Ontario public service who was hired by St. Michael’s in 2013 to oversee its redevelopment. The series revealed that Mr. Georgiou had been quietly terminated from his previous job at Infrastructure Ontario, where he also served as the agency’s chief administrative officer until 2012, after he was implicated in a false-invoice scheme at Toronto’s York University. No one from Infrastructure Ontario shared this information with St. Michael’s when it hired him. The Globe’s series also revealed that Mr. Georgiou was involved in two business ventures with Mr. Aquino while he was evaluating potential bidders for the St. Michael’s project – conflicts of interest that were not disclosed. After The Globe’s revelations, St. Michaels fired Mr. Georgiou.

The court documents provide previously undisclosed details about how senior executives at Infrastructure Ontario responded in September, 2015, to The Globe’s findings. The documents were used by investigators to obtain court orders for various records, including e-mail messages on Mr. Aquino’s hard drive.

On Sept. 9, 2015, a pair of Globe reporters met with three senior officials from Infrastructure Ontario to say they were preparing to report that Mr. Georgiou had been implicated in the false-invoice scheme at York, and that they were investigating Mr. Georgiou’s business ties to Mr. Aquino. The Infrastructure Ontario officials, one of whom was then-general counsel Marni Dicker, said they were unaware of the York matter, or any conflicts of interest between Mr. Georgiou and Mr. Aquino.

The unsealed court documents allege that, shortly after that meeting, officials from Infrastructure Ontario, who are not identified by name, met with the premier’s office. Kathleen Wynne, who was premier at the time, and Andrew Bevan, her chief of staff, each told The Globe they have no recollection of a meeting.

On Sept. 11, 2015, Ms. Dicker contacted the Ontario Provincial Police’s anti-rackets branch about the allegations. But five days later, when a detective followed up with her, she said Infrastructure Ontario would handle the issue on its own, the documents state.

“Dicker clarified that an official complaint has not been made to the OPP and that IO would be dealing with the matter internally,” Baj Sandhu, a detective constable with the Serious Fraud Office, says in an affidavit contained in the documents. Without a formal complaint, “the matter was closed and not investigated any further,” the affidavit states.

In an interview with The Globe this month, Ms. Dicker said she never told police not to investigate Mr. Georgiou and the St. Michael’s procurement.

“We certainly did not call them off,” she said. “We hoped my first call was going to prompt them to delve right into it.”

OPP spokesperson Robert Simpson said in an e-mail response that police closed their file because they did not receive the “necessary information” from the complainant to proceed with a criminal fraud case.

For its part, Infrastructure Ontario set up a special committee of the board, which produced a report in June, 2016, declaring that the procurement for St. Michael’s was not compromised.

While at St. Michael’s, Mr. Georgiou served as an adviser to two commercial property companies controlled by Mr. Aquino, co-ordinating construction work on the buildings in anticipation of new tenants moving in. Both men also had a stake in OTEC Research, a company that manufactures a line of bottled water called GP8 Sportwater. Mr. Aquino was a minority shareholder in OTEC and Mr. Georgiou’s family company had lent it money shortly after he joined St. Michael’s.

Det. Constable Sandhu took issue with the committee’s finding that Mr. Georgiou had failed to disclose his conflicts of interest but that Mr. Aquino might have been unclear that he also had to disclose conflicts in his personal capacity. This is “double-speak,” his affidavit says. “In my opinion, since John was the president of Bondfield during this time, he had a conflict of interest with Georgiou, which means that Bondfield did too.”

The special committee – which was assisted by Toronto law firm Blake, Cassels & Graydon LLP and forensic auditors from Cohen Hamilton Steger & Co. Inc. – found no evidence “of any attempt to inappropriately influence the procurement.”

The court documents also shed new light on Mr. Georgiou’s departure from Infrastructure Ontario in 2012 – including a previously undisclosed severance package he received.

In February, 2012, Mr. Georgiou was terminated from his position at the agency after York University discovered family companies controlled by Mr. Georgiou had issued invoices, totalling $64,800, to the school for work they never performed. The companies were paid nonetheless.

At that time, the chief executive officer of Infrastructure Ontario was David Livingston. Mr. Livingston, the court documents allege, paid Mr. Georgiou a year’s severance and then sent an e-mail to all staff saying he was leaving for personal and family reasons. Mr. Georgiou’s employment file included a letter of termination but no mention of the alleged York fraud, according to the court documents.

Eleven months later, St. Michael’s hired Mr. Georgiou to oversee the hospital’s redevelopment project.

“It is alleged that Livingston dismissed Georgiou to cover-up the invoice scheme,” Det. Constable Sandhu says in the documents. “Georgiou was offered one year of severance pay and arrangements were made to keep this matter a secret.”

Mr. Georgiou was paid a salary of $278,154 in 2011, the last full year he worked at Infrastructure Ontario, according to the province’s public salary disclosure lists.

Mr. Livingston told The Globe in 2015 that he let Mr. Georgiou go because he didn’t think it was appropriate for an executive at the procurement agency to be defending himself in an alleged false-invoice scheme. Mr. Livingston also said he briefed the chair of the board about the reasons for Mr. Georgiou’s departure and another executive confirmed his version. The chair, however, said in a statement he had no recollection of such a discussion – a discrepancy that Det. Constable Sandhu describes as “factual inconsistencies.”

Mr. Livingston’s lawyer, Fredrick Schumann, denied that his client kept the reason for Mr. Georgiou’s departure under wraps. “At all times,” he told The Globe in an e-mail, “Mr. Livingston reported the matter appropriately,” and “kept the chair of IO’s board of directors fully informed.”

Infrastructure Ontario’s special committee findings stand in stark contrast to the conclusion of Ontario’s Serious Fraud Office, which opened its investigation in 2019 into the procurement project, amid new revelations: Bondfield’s multinational insurer, Zurich International Co. Ltd., unearthed evidence alleging that Mr. Georgiou funnelled confidential information to Mr. Aquino to help the construction company win the contract and received kickbacks, including free home renovations.

Since then, the St. Michael’s project has fallen into disarray. The entire project, which includes a new 17-storey patient-care tower, as well as an expanded emergency department and a fully renovated intensive-care unit, was initially set for completion in 2019. The renovations are now “anticipated to be complete in 2026,” said Adam Miller, a spokesperson for Unity Health Toronto, the hospital network that includes St. Michael’s.

Bondfield sought bankruptcy protection in 2019, resulting in the largest financial loss from the collapse of a construction company in Canada. Scores of unpaid contractors submitted claims to Zurich, which had provided more than $1-billion in guarantees – known as construction surety bonds – on Bondfield’s construction projects, including St. Michael’s.

Zurich, along with Bondfield’s court-appointed insolvency monitor, launched its own investigation into the St. Michael’s procurement and says that, during the bidding process, Mr. Aquino had supplied Mr. Georgiou with a secret BlackBerry and a bondfield.com e-mail address.

Mr. Georgiou used the device to leak confidential information about the procurement to Mr. Aquino, Zurich has alleged. The insurer also says it found evidence that Bondfield staff performed hours of free renovations at Mr. Georgiou’s house in north Toronto – including landscaping, a new driveway and interior carpentry work.

“Knowing what we know now, we would have pushed the police,” Ms. Dicker, the former general counsel at Infrastructure Ontario, told The Globe. “But based on the info we had at the time, we didn’t push police.”

Ian McConachie, a spokesperson for the agency’s current leadership regime, said in an e-mail that Infrastructure Ontario assisted police with their investigation, which culminated in charges being laid. The agency, which oversees the awarding of all contracts in Ontario for major public-sector building projects, has also taken steps to complete work on Bondfield’s former projects, including St. Michael’s, he said.