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Ford brothers helped business client lobby city for tax break

From left to right, Richard Wachsberg, Mayor Rob Ford, Charles Wachsberg and Councillor Doug Ford in June, 2012.

Toronto Mayor Rob Ford and his councillor brother Doug Ford helped one of the customers of their family business to lobby the city's highest ranking bureaucrat for a special property tax break and repeatedly intervened with city staff without disclosing the company had a commercial relationship with the Ford family, a Globe and Mail investigation has found.

In the months after the mayor and Councillor Ford took office in 2010 they intervened for Apollo Health and Beauty Care, a soap and shampoo company that unsuccessfully urged City Manager Joe Pennachetti to hand it a generous property tax grant. Apollo's proposal failed when Mr. Pennachetti refused to make an exception for the company, but a cache of e-mails, letters and memorandums obtained by The Globe under the Freedom of Information Act show a pattern of intervention by the Fords on Apollo's behalf that extend to a variety of municipal issues, from stop-sign designations to building permits.

The Ford family's business, Deco Labels and Tags Inc., has manufactured labels for Apollo, off and on, for about a dozen years, but this was not disclosed to six senior civil servants who detailed, in interviews, how the mayor and Councillor Ford inserted themselves into Apollo-related discussions.

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"In terms of the mayor requesting I meet with a resident or a business, this is the case where I spent the most time of any," said Mr. Pennachetti, referring to his meetings concerning Apollo's efforts to secure a tax grant, and the Fords' role in arranging those discussions.

The city manager met with representatives from Apollo at least three times in the spring of 2011, the records show. Mr. Pennachetti also was told by the mayor, but declined, to attend a meeting at Apollo's factory when city inspectors were investigating Apollo's alleged role in a sewage spill in the summer of 2012.

Asked if he was ever told Apollo was a client of the Ford family company, Mr. Pennachetti said: "I had no idea."

Mr. Pennachetti said he never felt pressured by the Fords to break from city policy. But he said that had he known about Apollo's relationship with Deco he may not have attended the meetings, and that the Fords should have provided that information. "If they were a client, I think they should have declared it," he said.

Councillor Ford called it "absolutely ridiculous" to suggest Apollo got special treatment. Deco does business with "thousands" of companies, he said in an interview, arguing its business ties with Apollo had nothing to do with the brothers' efforts to help the firm. "That doesn't make two hoots of a difference," he said.

The councillor refused to answer questions about Deco's business with Apollo and the mayor did not respond to questions given to his chief of staff before he recently went on leave.

Richard Wachsberg, the co-owner and chairman of Apollo, said his company never received special treatment or access because of the Fords. "Nobody asked them to be involved and it has never been contributive or positive in my opinion," he said.

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The Apollo chairman said he does not know how the Fords came to involve themselves in issues concerning his firm, and that the issue of disclosure of the relationship between his company and Deco is one for politicians to address, not him.

Though Apollo is not a household name, its soaps and shampoos can be found around the world on the shelves of department stores and drug stores as private-label or in-store brands. Its vast product lineup requires many types of labels – business that Apollo has typically dispersed among a handful of label suppliers in Ontario.

But after the Fords came to power, Deco's business with Apollo grew, The Globe and Mail has learned. In late 2011, other label manufacturers that Apollo had been using were informed that a portion of that work was being shifted to Deco, three label industry sources said in interviews. Estimates on how much that business was worth varied but the sources agreed that, at a minimum, it amounted to about $1-million a year for Deco.

In an interview, Mr. Wachsberg said that the Fords' advocacy on behalf of his company played no role in Apollo's choice of label manufacturer. He declined to detail how much business his company has given Deco since the Fords came to power, except to say "Deco has won business and lost business in the past two years."

"I can tell you unequivocally and in no uncertain terms, the only – the only – reason business moves from supplier to supplier is price or quality," he said. "And unequivocally – put it in the press in big bold letters on the front page – it's the only reason."

He declined to say whether he had ever had any discussions with the Fords about Apollo's label needs while Councillor Ford and the mayor were engaged with him in city business.

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"Ours is a private business. I believe theirs is as well. I don't want [that] to be a matter of public record for private businesses. And it's just not a reasonable ask, so I'm not going to answer that," Mr. Wachsberg said.

The Fords' interventions on behalf of Apollo began in the spring of 2011 when construction of Apollo's manufacturing facility was well under way.

Mr. Pennachetti was called to an impromptu meeting in the mayor's office by Councillor Ford, Mr. Pennachetti said in an interview. It was here that the city manager was pitched by Mr. Wachsberg on giving Apollo a special tax holiday.

Apollo was preparing to take part in a program, known as the Tax Increment Equivalency Grant, that provides a sort of rebate for companies that develop new buildings in the city. After a new development is assessed by the Municipal Property Assessment Corp., city staff use a formula to calculate a grant, based on the difference between the higher tax on a new building and the older, lower tax on the undeveloped property. The city then pays back 60 per cent of 10 years' worth of that difference.

But for Mr. Wachsberg, Apollo's rebate wasn't good enough. Handwritten notes taken by the city treasurer, Giuliana Carbone, show that Mr. Wachsberg wanted to receive a grant covering 20 years. He also wanted a "different percentage" than the standard 60 per cent, the notes show.

At no point in the meeting did Councillor Ford disclose that his family's business had a relationship with Apollo, both Mr. Pennachetti and Mr. Wachsberg said. Mr. Wachsberg's factory is not in Councillor Ford's ward, a fact that Mr. Pennachetti said he was unaware of until it was pointed out to him by The Globe.

On April 20, Mr. Pennachetti responded to Mr. Wachsberg with a letter, explaining the city couldn't make an exception for him because it had 15 similar agreements being arranged. The first two people cc'd on the letter were Councillor Ford and the mayor's then chief of staff.

This was not the answer Mr. Wachsberg expected and he let the mayor and Councillor Ford know it in an e-mail the next day.

"Dear Rob and Doug," he wrote. "This response is very unexpected given our conversations and we are quite disappointed in the result." Given the 450 jobs that Apollo expected to bring to Toronto from its previous headquarters in Vaughan, and the environmental certifications the building was expected to receive, Apollo should be considered special, he wrote.

"Please assist us to progress this matter."

Councillor Ford e-mailed one of his aides and instructed him: "Remind me to talk to Joe about this."

Mr. Pennachetti could not recall what, if anything, Councillor Ford or Mayor Ford said to him about his rejection letter, but less than a month later, Apollo had another audience with Toronto's chief executive.

On May 18, the company again urged Mr. Pennachetti to amend the draft grant agreement – this time the issue was how Apollo's land was classified for tax purposes. Although Apollo does not own the land on which its manufacturing facility is housed, city records show that it applied as a tenant along with the owner – a company called Fifty-Five Developments Inc. – to participate in the city's tax-rebate program.

Fifty-Five Developments, a company unrelated to Apollo, had around that same time negotiated an agreement with MPAC that classified the predeveloped land as farmland, which would significantly increase Apollo's grant. Apollo wanted this agreement acknowledged by the city, and its consultant Bob Langlois was given access to Mr. Pennachetti to impart that, the records show.

Six days later, Mr. Pennachetti found himself meeting with Mr. Wachsberg, Mayor Ford, Councillor Ford and Mr. Langlois, according to an e-mail. In addition to land classification, Apollo wanted to discuss "some traffic issues" with the city's top bureaucrat, an e-mail states.

Around the same time, city planners also were becoming familiar with how important Apollo was to the mayor. Planners had concerns Apollo was deviating from the construction site plan, making a private driveway look like a public road. Planning manager Neil Cresswell said he was called to the site in the spring of 2011 and arrived to be greeted by Mr. Wachsberg and the mayor. Mr. Cresswell said the mayor's attendance sent a clear message to staff that he wanted "this building to proceed."

"He basically said he would like to get this figured out and staff said yes," said Mr. Cresswell, adding that he was not told that Mr. Ford's family business had a relationship with Apollo.

Finally, on June 14, Mr. Pennachetti wrote Mr. Wachsberg about how much his company would receive in grant money and said that in keeping with MPAC's decision, it would recognize the predeveloped land as farmland. This resulted in a larger grant – an estimated $2.5-million – for Apollo. The city's top bureaucrat, an official in charge of the tens of thousands of city staff, also assured Mr. Wachsberg that he had personally inquired about his request for an all-way stop intersection at his building and that field studies were under way, the letter states.

There were 10 officials cc'd on the letter. The first two were the mayor and his brother.

Several months later in October, Councillor Ford involved himself in another Apollo-related meeting, this time over a building permit, said Mike Williams, head of the city's Economic Development department. Mr. Williams said neither he nor staff involved in that meeting were told of the commercial ties between Apollo and Deco.

On June 15, 2012, the mayor and Councillor Ford stood on the front steps of Apollo, adorned with balloons and ribbons, and presented Richard Wachsberg and his brother Charles with an official city scroll commemorating the grand opening of the factory.

But on the evening of Aug. 14, aides for Councillor Ford and the mayor started contacting the city's top officials – including Mr. Pennachetti and deputy manager John Livey – with an urgent request: Be at Apollo headquarters for a meeting the next day to answer questions about a sewage-spill investigation.

The next day, Mr. Livey and Lou Di Gironimo, the head of Toronto Water, arrived at Apollo's factory for a meeting with Mr. Wachsberg, the mayor and Councillor Ford. The mayor and Mr. Wachsberg questioned why city inspectors suspected Apollo was responsible for a spill that had taken place five kilometres away. City staff explained that inspectors traced the spill – a mass of foam that spewed out of a manhole in a public park – back up the sewer line to Apollo's factory. Again, no one disclosed the relationship between Deco and Apollo, Mr. Livey and Mr. Di Gironimo said.

Eventually, the city entered into an agreement with Apollo to treat its excess discharge, for a fee, at a city treatment plant. Mr. Wachsberg said that agreement has cost his company $800,000 a year, and he complained that no one from the bureaucracy warned him about the city's water standards before he moved his company to Toronto.

Mr. Wachsberg said he didn't know how the Fords came to involve themselves in so many municipal issues concerning his company.

Mr. Wachsberg said he could not address questions about why the relationship between his company and Deco was never disclosed. "Your issue, if you have an issue, is with conduct of politicians in their own realm and has nothing to do with the private sector. It has nothing to do with us," he said.

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National reporter

Greg has been a reporter with The Globe since 2005. He has probed a wide variety of topics, including police malfeasance, corruption and international corporate bribery. He was written extensively about the Airbus affair, offshore tax evasion and, most recently, Toronto Mayor Rob Ford and his criminal ties. More

Toronto City Hall bureau chief

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