Exterior of St. Michael's Hospital which is currently under construction in Toronto.Kevin Van Paassen/The Globe and Mail
The former CEO of Infrastructure Ontario says that after he learned the agency's chief administrative officer was implicated in a scheme to defraud a Toronto university, he personally fired the executive and informed the chair of the board – a statement that contrasts with the current regime's version of events.
David Livingston, the agency's one-time head who later became premier Dalton McGuinty's chief of staff and is now embroiled in the gas plant scandal, which is under criminal investigation, said he is "quite positive" he briefed board chair Anthony Ross and an executive in the human resources department.
In a statement, Infrastructure Ontario said Mr. Ross had "no recollection" of any such discussion. These duelling explanations are the latest sign of confusion at the crown agency after The Globe and Mail revealed that its former chief administrative officer, Vas Georgiou, now the number-two executive at St. Michael's Hospital, was involved in a false invoice scheme at York University.
Infrastructure Ontario and St. Mike's have now launched parallel investigations into the matter. And on Tuesday, a second Toronto hospital initiated a review into its business dealings with Mr. Georgiou.
Last week, Infrastructure Ontario officials, including the current CEO and the vice-chair of the board, told The Globe Mr. Georgiou resigned and that they had not been informed about the York fraud.
On Friday, the officials said they had now learned that York had in fact briefed a (since-retired) senior executive. Then on Tuesday, the officials said they recently discovered that Mr. Georgiou's employment was actually terminated.
The Globe has reported that, during his time at Infrastructure Ontario, Mr. Georgiou issued false invoices that were used in a kickback scheme at York. Mr. Georgiou left the agency in February, 2012, and within a year, got the job at St. Michael's, in which he has presided over construction of a $300-million patient tower. Hospital officials said they were not aware of Mr. Georgiou's involvement in the York case when they hired him.
Mr. Georgiou is now on indefinite leave from St. Michael's.
On Tuesday, after inquiries from The Globe, St. Joseph's Health Centre said it is looking into maintenance contracts it awarded to a company involved in the York fraud that was owned by Mr. Georgiou's family.
Hospital president Elizabeth Buller confirmed Toronto Engineering Company did work for the hospital in 2007 – the year Mr. Georgiou created one of the false York invoices.
St. Joseph's is trying to determine who ordered the work, what was done, whether procedures were followed and whether there were any conflict-of-interest issues, as Mr. Georgiou was the hospital's chief operating officer before he joined Infrastructure Ontario in 2006. In a statement to The Globe through his lawyer, Mr. Georgiou said all of the TECO work was done "well after" he left the hospital. Lawyer Gavin Tighe said The Globe's reporting on this issue was "remarkably unbalanced and unfair."
Mr. Georgiou did not address questions about the nature of the work TECO performed.
In 2011, York University concluded it had been the victim of a $1.2-million fraud. An investigation revealed that the university had paid eight companies for repair work that was never completed. Mr. Georgiou was found to be connected to two of those companies, Arsenal Facilities Consultants Inc., which he owned, and Toronto Engineering Company, which was registered in the names of his wife and in-laws. He admitted to the school's investigators that – between the two companies – he created three invoices totalling $64,800 for door lock and water main work that was never performed.
After cashing the university's cheques, Mr. Georgiou passed on $40,000 of that money to an intermediary. (He says he withheld the $25,000 for income tax purposes.) Mr. Georgiou told investigators he was doing a favour for a friend who asked him to draw up the invoices. He said he did not ask why.
Mr. Georgiou signed a settlement agreement with the school in April, 2012, and was never charged criminally.
The next month, Mr. Livingston moved to the premier's office.
Reached by phone on Tuesday, Mr. Livingston said he first learned about Mr. Georgiou's involvement in the fraud in 2012 from Bill Ralph, the agency's then chief risk officer. Mr. Ralph had been contacted by York University's general counsel, Harriet Lewis. After confirming the information himself, Mr. Livingston says he called Mr. Georgiou into a meeting.
"I would have said in that meeting, 'Like Vas, you got to go. I realize this is an investigation. You got to do what you got to do, but we've got Infrastructure Ontario's reputation here and you can't be defending yourself in a procurement scheme from your perch as an executive at Infrastructure Ontario,' " Mr. Livingston said. " 'And so we're going to let you go.' And so I would have told him then that he's being terminated."
About two weeks later, Mr. Livingston sent out a memo reporting that Mr. Georgiou was resigning for personal reasons.
"It is with mixed emotions that I announce Vas Georgiou is leaving Infrastructure Ontario after almost 6 years of dedicated service. As many of you know, he has a new baby and various personal and family matters to manage and we agreed he could focus on them most effectively by dropping the very time consuming job he has with us," Mr. Livingston wrote at the time.
"I know it was a tough decision for him, but I admire him for making it."
Mr. Livingston says he does not regret the wording of his e-mail. Mr. Georgiou was released "out of an abundance of caution" and that he was only under investigation. "We didn't know at that point, was Vas guilty or not guilty."
When Mr. Georgiou took the number-two job at St. Michael's Hospital, Mr. Livingston said he was no longer with the agency and he assumed the York matter had been cleared up. He also assumed the hospital would have been made aware of the situation.
In one of its initial statements about this affair, Infrastructure Ontario said Mr. Georgiou resigned on Feb. 8, 2012, two weeks after the agency's chief risk officer was briefed about Mr. Georgiou's involvement in the York fraud.
Mr. Ralph, who is now retired from Infrastructure Ontario, confirmed Mr. Livingston's version, saying the two met with the agency's chair about the fraud.
At Queen's Park on Tuesday, Infrastructure Minister Brad Duguid said he is retaining an adviser to act as his "eyes and ears" as both St. Michael's and Infrastructure Ontario conduct their own probes.
"This is troubling to say the least," Mr. Duguid told reporters. "I think there's some real unanswered questions."
With a report from Adrian Morrow
rdoolittle@globeandmail.com, khowlett@globeandmail.com, gmcarthur@globeandmail.com
Robyn Doolittle
Karen Howlett
Greg McArthur