St. Michael's Hospital has fired the senior executive overseeing its ambitious redevelopment after a Globe and Mail investigation found that he had previously been implicated in a fraud at a Toronto university and had ties to the president of the construction firm awarded the $300-million contract for the facility.
The 123-year-old hospital, which is in the early stages of having a 17-storey patient-care tower built, announced on Thursday it has terminated the employment of Vas Georgiou, the hospital's chief administrative officer, as part of an ongoing review by a team of lawyers and forensic auditors. Mr. Georgiou will receive no compensation under the terms of his departure, the hospital said. St. Michael's continues to review Mr. Georgiou's role in the bidding process – one that numerous sources have told The Globe was fraught with irregularities.
Although the hospital will not disclose precisely what prompted Mr. Georgiou's dismissal, its president, Bob Howard, said in a note to staff that the termination came about as a result of an internal probe based on "allegations raised by The Globe and Mail."
The Globe found that when Mr. Georgiou was hired in 2013 to steer the hospital through its ambitious revitalization, St. Michael's was unaware he had been dismissed less than a year earlier by his previous employer, Infrastructure Ontario, because of his involvement in a false invoice scheme at York University.
The Globe's investigation also found that during the period Mr. Georgiou was evaluating potential bidders for the St. Michael's contract in 2013, he was also working for two commercial real estate companies controlled by John Aquino, the president of Bondfield Construction, the firm eventually selected for the St. Michael's job. As an evaluator of potential bidders for the project, Mr. Georgiou was required to sign a declaration that requires him to disclose any "situation that may be reasonably construed as constituting an actual or potential conflict of interest."
Neither Mr. Georgiou nor his lawyer, Gavin Tighe, responded to requests for comment late Thursday afternoon. In previous statements, Mr. Georgiou has played down his role in the false invoice scheme at York, saying he did not personally profit from it, and that he co-operated with investigators. As for his commercial links to Mr. Aquino, he acknowledged he worked for companies Mr. Aquino presides over, but said any work he performed for them after starting his job at St. Michael's was to tie up "minor loose ends." Mr. Georgiou said he told a staffer at Infrastructure Ontario about his work for those companies and was advised it was not a conflict of interest.
Mr. Aquino has said the awarding of the St. Michael's contract to Bondfield has nothing to do with the work Mr. Georgiou performed for the real estate companies he controls. He has also said that the use of a third-party consultant in the awarding of the St. Michael's contract helped make his company's bid the "most vigorously vetted" in the history of Infrastructure Ontario, the Crown agency that oversees the construction contracts for major public sector projects.
The two-year bidding process for the St. Michael's contract was plagued by problems, numerous sources have said in interviews.
Several months into the request-for-proposals phase of the project, St. Michael's announced to bidders that it was capping the budget at $301-million, a price many considered difficult to meet given the complexities of the job: construction of the tower and extensive renovations to the existing site – all of which are to be done without disrupting patients.
Bondfield's larger rivals, PCL and EllisDon, said it was not possible to perform the work for this price, and submitted bids at least $100-million more than the cap, according to numerous sources. Bondfield's bid was slightly less than $300-million, The Globe has learned.
Bondfield has defended its low price. In an interview in September, Bondfield vice-president Steven Aquino said: "Bottom line is, we submitted a proposal and we're very comfortable with the proposal that we submitted. … We're very comfortable with our ability to complete the project on time and on budget."
But some officials at St. Michael's had concerns about Bondfield's vision for the space. The vast spread between Bondfield's proposed price and bids of its competitors also raised questions about how Bondfield could price the job so differently.
All of this led to an impasse within the group of four senior evaluators: A senior Infrastructure Ontario official argued that Bondfield's bid was not compliant, while Mr. Georgiou pushed for Bondfield, sources close to the process said. In a statement, Mr. Georgiou said his position was to support "any bidder who was compliant with the design and technical specifications and phasing requirements, while also being the lowest price."
This forced the chief executive of Infrastructure Ontario, Bert Clark, and his counterpart at St. Michael's, Dr. Howard, to get involved – a move that Mr. Clark acknowledged in an interview "wouldn't be the norm" but was allowed.
As a matter of due diligence, a third-party engineering firm was enlisted to assess Bondfield's bid and the proposal moved forward.
In September, Mr. Georgiou was placed on a leave of absence after The Globe inquired about what the hospital knew of his involvement in the fraud at York University. In 2011, Mr. Georgiou admitted to forensic auditors for York that he submitted three false invoices, worth a total of $65,000, on behalf of two construction companies owned by his family, for work that those companies had never performed. The hospital and Infrastructure Ontario launched separate probes into why former officials at the Crown agency never disclosed to St. Michael's that the false invoices were the reason for Mr. Georgiou's 2012 termination.
Last month, Markham Stouffville Hospital terminated the employment of Suman Bahl, the senior executive who oversaw its redevelopment. The hospital launched a probe after receiving an anonymous complaint from a whistle-blower following The Globe's story.
Before joining Markham Stouffville in 2007, Ms. Bahl worked at St. Joseph's Health Centre. St. Joseph's has also launched a probe into maintenance contracts the hospital awarded to a company registered in the names of Mr. Georgiou's wife and in-laws and involved in the York invoice scheme.
The reporters of this story can be reached at gmcarthur@globeandmail.com; rdoolittle@globeandmail.com; khowlett@globeandmail.com.
Editor's Note: An earlier version of this story incorrectly said a third-party engineering firm was enlisted to assess Bondfield's bid and it concluded that, with some modifications, it was compliant. In fact, the initial bid by Bondfield Construction was deemed compliant by evaluators. As a matter of due diligence, a third-party engineering firm was enlisted to assess Bondfield's bid and the proposal moved forward. This online version has been corrected.
Greg McArthur
Robyn Doolittle
Karen Howlett