A former hospital executive and the ex-president of a major Ontario construction company have been found guilty of fraud for skewing the bidding process for the $300-million expansion of a downtown Toronto hospital, in a ruling that has echoes for all public contracts.
Vas Georgiou, former chief administrative officer at St. Michael’s Hospital, and John Aquino, ex-president of Bondfield Construction, received guilty verdicts on two counts each of fraud over $5,000 in a Toronto courtroom Tuesday morning.
“The evidence that the defendants acted dishonestly over the course of the procurement process is overwhelming,” Superior Court Justice Peter Bawden said in his decision.
The judge said insider information that Georgiou provided to Aquino via secret emails was “confidential, highly material and obviously intended to assist Bondfield to win the procurement. That conduct would be recognized as objectively dishonest in any circumstances, but when seen in the context of a strictly regulated public procurement, it is unmistakable.”
Bawden said the entire process of tendering contracts for public works was put at risk.
“Public confidence in the responsible use of public funds for infrastructure projects depends on a procurement process that is genuinely competitive…. The defendants’ dishonest conduct compromised this objective,” his 136-page judgment reads.
“Their actions demonstrate that even a well-regulated process may be susceptible to corruption at senior levels. This undermines trust in public procurement and may discourage qualified bidders from participating in future projects, thereby weakening competition and damaging the integrity of the market.”
Asked if he had any comment after the verdict was read, Aquino told CBC News: “Are you f–king kidding?”
His lawyer Alan Gold was more measured. “We will read the judge’s reasons very carefully but on their face they appear problematic as a matter of law,” he said, declining to comment on whether that means his client will appeal.
Georgiou’s lawyer Peter Brauti did not want to comment while the matter is still before Justice Bawden for sentencing.
Family company once a major player in Ontario
Prosecutors had alleged the two men worked behind the scenes between 2013 and 2015 to tilt the procurement process in favour of the Aquino family’s company, Bondfield, once a major player in large-scale public construction projects in Ontario.
The Crown’s case rested on evidence of a pre-existing commercial relationship between Georgiou and Aquino — among other things; Georgiou had done work for a real estate business partly owned by Aquino, and both men had shares in the same bottled-water company.
In his ruling Tuesday, Justice Bawden found these relationships represented a conflict of interest that Georgiou, as a high-ranking public-sector executive sitting on the very committee that was evaluating the contract bids, was required to disclose but didn’t.
Prosecutors Ellen Weis and Rachel Young also presented evidence that the men communicated confidential information about the bidding process on the side, with Georgiou having access to a bondfield.com email address and a BlackBerry phone that Aquino supplied.
Bawden’s judgment says these illicit communications deprived the hospital and the Ontario government of a contracting process done “in the most transparent manner possible so there could be no question of the fairness of the outcome.”
“Bondfield’s bid should never have been before the executive committee for consideration. If the [hospital and government] had known about the messages exchanged between Mr. Georgiou and Mr. Aquino … the Bondfield submission would have been rejected,” the judge wrote.
The defence contended that while rules for the contract process might have been broken, it didn’t render it unfair or inflate the cost of the hospital expansion.
The trial began last November and lasted more than a month, with testimony from hospital and construction executives. Georgiou took the stand in his own defence and affirmed he always put the hospital’s interests first and only provided already public information to Aquino.
Bawden said: “I do not believe any of that testimony and find that none of it could reasonably be true.”
Aquino dismissed in 2018
Aquino hasn’t been at the helm of Bondfield since 2018, when he was dismissed as president and replaced by his brother, Steven Aquino. The company’s finances and those of related corporations were unravelling, and Bondfield finally filed for protection from creditors in April 2019 in what was described as one of the biggest failures ever in the Canadian construction industry.
A number of major public construction projects, including a hospital expansion in Cambridge, Ont., were thrown into disarray by Bondfield’s insolvency.
Subsequent money tracing by auditors revealed that John Aquino and a number of others had participated in a scheme to funnel more than $33 million out of Bondfield and a related family company in the five years before the companies’ insolvency. Aquino and his associates were ordered to repay the money and appealed to the Supreme Court of Canada, where they lost a case last fall that was unrelated to this criminal trial.
Having been sued dozens of times by Bondfield’s suppliers and by insurance companies, Aquino was forced into bankruptcy this past June, owing at least $37 million to creditors and potentially tens of millions more to an insurer, according to the bankruptcy judgment.
The construction work at St. Mike’s was supposed to finish in 2019, but has dragged on and is now slated to be completed next year. The project includes a new 17-storey patient tower, more operating rooms and an expanded emergency department.
Georgiou hasn’t been with the hospital since November 2015, when he was dismissed as the No. 2 executive following reports by the Globe and Mail on his undisclosed ties to Aquino during the bidding process for the hospital’s construction project, among other issues.
In an emailed statement after Tuesday’s verdict, Sabrina Divell, vice-president of stakeholder relations for Unity Health, into which St. Michael’s Hospital merged in 2017, said that the hospital “fully co-operated” with the police investigation that led to the criminal charges and that “criminal wrongdoing was isolated to” Georgiou.
“We are confident in the hospital’s procurement processes and policies, and recently audited the controls within our redevelopment projects to validate that we have a rigorous system in place.”
