Go to the Globe and Mail homepage

Jump to main navigationJump to main content

AdChoices
A GP8 Sportwater truck sits in front of a building on Gervais Drive in North Toronto. (Fred Lum/The Globe and Mail)
A GP8 Sportwater truck sits in front of a building on Gervais Drive in North Toronto. (Fred Lum/The Globe and Mail)

investigation

New private business connection emerges in St. Michael’s Hospital contract Add to ...

In 2014, while St. Michael’s Hospital in Toronto was evaluating bids for its $300-million expansion, staff spotted something out of the ordinary in the hospital’s acclaimed international research centre.

Standing on the second floor was a lone, black vending machine that dispensed only one product: a brand of bottled water called GP8 Sportwater.

It caught staff’s attention because the hospital’s then-second-in-command, Vas Georgiou, was a champion of the product. He kept GP8 bottles in his office, doled them out to visitors and told people he had been an investor before joining St. Michael’s the year before.

But what was not mentioned is that Mr. Georgiou had an ongoing stake in GP8 through a family company in his control – and so did the president of Bondfield Construction, the company that won the $300-million expansion contract, court documents allege. Mr. Georgiou was on the selection committee that chose the firm.

This is the second private business connection to emerge between Bondfield’s John Aquino and Mr. Georgiou in an ongoing Globe and Mail investigation.

Last year, The Globe revealed that while Mr. Georgiou was part of a team evaluating potential project bidders, he was providing services to two commercial real estate companies that are headed and partly owned by Mr. Aquino. Mr. Georgiou contends that he was not paid for this work.

Those companies own adjacent buildings on Gervais Drive in north Toronto. GP8 Sportwater is headquartered in one of those buildings.

After the Globe report, Mr. Georgiou was fired with cause in November, 2015. The former executive filed a wrongful dismissal case against the hospital in late December.

That claim says that St. Michael’s fired him, in part, for failing “to disclose a conflict of interest or potential conflict of interest with respect to Aquino.”

Conflict-of-interest rules that govern infrastructure projects are designed to ensure that the public has confidence in the integrity of competitions for work worth hundreds of millions of public dollars. The rules require individuals responsible for overseeing procurement projects to declare real or perceived conflicts, including relationships with individuals named in a bidder’s proposal. Similar rules apply to bidders.

Mr. Georgiou did not declare any conflicts in writing to Infrastructure Ontario, the Crown agency that is overseeing the St. Michael’s project. Mr. Aquino has declined to answer questions about what he disclosed. But after The Globe’s reporting, Infrastructure Ontario asked Mr. Aquino to clarify his relationship with Mr. Georgiou.

Mr. Aquino declined to comment for this story, but in the past, has played down any private connections with Mr. Georgiou.

“Bondfield was awarded the contract for the St. Michael’s hospital project because it had the lowest bid and was approved by an objective third party consultant,” Mr. Aquino said in a statement last November. “Mr. Georgiou’s limited engagement with those [commercial real estate] companies is entirely unrelated to Bondfield’s successful bid on the St. Michael’s [project].”

Meanwhile, Mr. Georgiou alleges in his claim, which has not been proven in court, that St. Michael’s knew about his ties to Mr. Aquino years ago, because the hospital already investigated them.

According to the claim, “rumours” began to circulate in early 2014 that Mr. Georgiou had leaked information to Bondfield about a competitor’s bid, and the hospital hired Bay Street financial consultant Duff & Phelps to investigate. The firm cleared Mr. Georgiou in the leak, but the hospital continued its investigation into Mr. Georgiou’s connections.

St. Michael’s has declined to explain why it continued the probe.

Mr. Georgiou says in his claim that he “discussed” Mr. Aquino’s ownership in the Gervais companies with Duff & Phelps. He further alleges that St. Michael’s obtained an e-mail – the lawsuit provides no specifics about the e-mail’s origins – that disclosed Mr. Aquino’s connection to OTEC Research, the company that manufactures GP8 Sportwater.

According to the lawsuit, Mr. Georgiou faced no repercussions at the end of the St. Michael’s investigation.

The Globe could not verify anything about Mr. Georgiou’s claims. A third-party company hired by Infrastructure Ontario to oversee the bidding process, a role that is referred to as a “fairness monitor,” told The Globe it was not aware of the Duff & Phelps probe.

St. Michael’s and Duff & Phelps refused to answer questions about that investigation.

“As this matter is now before the courts, it is not appropriate to respond to your questions,” St. Michael’s said in an e-mail to The Globe. A spokesperson for Duff & Phelps cited confidentiality issues.

Mr. Georgiou has declined to comment on his dealings with GP8, other than to say, through his lawyer in November, that his “involvement with OTEC Research/GP8” ended before he began working at St. Michael’s and that proceeds from the vending machine went to the hospital’s foundation. But many details are included in Mr. Georgiou’s lawsuit.

In the claim, Mr. Georgiou says that in 2001, he made a “minimal 2.5 per cent” personal investment in OTEC. In November, 2009, and in February, 2010, Mr. Georgiou says he directed “his family company Arsenal Facilities Consultants” to buy more shares.

In late 2011, when Mr. Georgiou was employed as the chief administrative officer at Infrastructure Ontario, he learned that Mr. Aquino had become a shareholder. By this point, Mr. Georgiou claims, his own shares had become diluted to a “book value of $0.”

(Last year, Mr. Aquino confirmed to The Globe that he is a “minority shareholder” in OTEC, but would not comment on the size of his investment or how long he has been involved. He said he understood that “Mr. Georgiou was also at one time an investor, but that he sold his holdings a number of years ago.”)

In early 2012, Mr. Georgiou’s employment at Infrastructure Ontario was terminated after he was implicated in a scheme to defraud York University. Mr. Georgiou admitted writing false invoices using two family companies – one was Arsenal Facilities Consultants – but he maintains he was only doing a favour for a friend and he never profited. Mr. Georgiou was not charged criminally.

That same year, Mr. Georgiou began working with the Gervais properties. He represented the landlord with tenants and co-ordinated renovations, some of which were to be performed by Bondfield Construction, e-mails reviewed by The Globe show. In his lawsuit, Mr. Georgiou said he is friends with two other owners and that Mr. Aquino’s involvement was a coincidence.

By the end of 2012, Mr. Georgiou was hired by St. Michael’s. That same year, Mr. Georgiou’s family company lent OTEC an amount of money that he did not disclose in his lawsuit. Mr. Georgiou began his job at the hospital in January, 2013. Six months into his tenure, GP8’s parent company registered the loan as a promissory note. The loan remains outstanding, although Mr. Georgiou states in his claim that since OTEC is “technically insolvent,” the loan “is effectively worthless.”

St. Michael’s Hospital has not yet filed a statement of defence.

The GP8 vending machine was removed from St. Michael’s Hospital last fall.

rdoolittle@globeandmail.com, gmcarthur@globeandmail.com, khowlett@globeandmail.com

Report Typo/Error

Follow us on Twitter: @robyndoolittle, @McarthurGreg, @kahowlett

Next story

loading

In the know

The Globe Recommends

loading

Most popular videos »

Highlights

More from The Globe and Mail

Most popular