Ex-Bondfield CEO got tips on hospital bid, court filings allege

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The former chief executive officer of Bondfield Construction Company Ltd. received tips from an insider close to St. Michael’s Hospital, through a secret e-mail account, in advance of the company winning a $300-million contract to redevelop the downtown Toronto hospital, court records allege.

John Aquino, who headed up the company until he was fired in 2018, received the messages from a St. Michael’s insider who had been given a “concealed” Bondfield.com e-mail account, investigators with Ernst & Young Inc. allege in the court filings. The court filings contain evidence that the sender of those messages was Vas Georgiou – who was the second-highest-ranking executive at St. Michael’s at the time the e-mails were written.

Ernst & Young, which has been the court-appointed monitor for Bondfield since the construction company sought creditor protection in 2019 and has been probing the company’s operations, says it discovered the e-mails a little more than a month ago. Ernst & Young says it has recovered four e-mail chains in total, including a chain from May, 2014, when someone writing from the account BCCLDevelopment@bondfield.com advised Mr. Aquino on a bidding strategy to win the St. Michael’s contract. The author of those e-mails does not refer to himself by name.

But in other messages from and to that e-mail account, which were written in 2016 and 2018, respectively, the person behind the account is identified as “Vas.”

The secret Bondfield files: Records outline alleged kickbacks between former executives over St. Michael’s Hospital bid

Mr. Georgiou, the former chief administrative officer of St. Michael’s, was fired from the hospital in 2015 after a Globe and Mail investigation showed he was involved in two business ventures with Mr. Aquino at the same time he was evaluating potential bidders on the construction project.

Both Mr. Georgiou and Bondfield sued The Globe following the publication of the articles, with the latter claiming $125-million in damages and complaining that the articles falsely implied the contract was obtained through corruption and collusion. The BCCLDevelopment@bondfield.com e-mails were not disclosed by Bondfield in that litigation. The case has not proceeded since Bondfield was put under bankruptcy protection.

None of the allegations in the monitor’s court filing have been proven in court.

Neither Mr. Aquino nor Mr. Georgiou responded to requests for comment sent to their lawyers. In response to questions for previous Globe articles, both men have denied any wrongdoing with the respect to the St. Michael’s project.

The collapse of Bondfield has been felt far and wide across Ontario. It has left two hospitals without much-needed renovations at a time when health care systems are scrambling to prepare for an expected surge of COVID-19 infections.

The completion of the project at Cambridge Memorial Hospital in southwestern Ontario, which Bondfield was contracted to build in 2014, has been delayed by more than three years. St. Michael’s is more than two years behind schedule – although the 128-year-old hospital announced last week that, with accelerated work by a replacement contractor, it has managed to open two floors of its still unfinished patient care tower. Both floors have been dedicated to COVID-19 critical care.

When Bondfield sought creditor protection in 2019, the company faced more than 200 lawsuits from unpaid subcontractors and vendors. Zurich Insurance Company Ltd., which issued surety bonds guaranteeing the completion of Bondfield’s many stalled projects, has had to pay out more than $200-million in claims, the largest surety loss in Canadian history.

The disclosure of the e-mail account is potentially damaging to several government agencies, including the procurement arm of the Ontario government, Infrastructure Ontario, which was responsible for awarding the St. Michael’s project. After The Globe’s reports in 2015, Infrastructure Ontario launched a $1.8-million investigation into Mr. Georgiou’s connections to Mr. Aquino, but concluded that the hospital “procurement was not compromised.”

The May 2014 e-mails discovered by the monitor show that Mr. Aquino sought input from the person behind BCCLDevelopment@bondfield.com about what he should include in the St. Michael’s bid, the court documents show. In those exchanges, Mr. Aquino never refers to the person behind the e-mail account by name, but makes reference to the person being involved in the hospital’s operations. In one e-mail, Mr. Aquino asks: “who does your security cameras at the hospital now?” In another, he writes about the dollar amount a certain company wants to charge to “disconnect your existing nursecall system.”

The person behind BCCLDevelopment@bondfield.com recommends that Mr. Aquino keep his “base bid as low as possible.” He also advises Mr. Aquino that once Bondfield is selected as the best candidate, they can fight “later in negotiations when we are No. 1.”

The e-mails were written about eight months before the hospital announced that Bondfield was the winning bidder.

The monitor also uncovered two other BCCLDevelopment@bondfield.com e-mails – one from 2016 and one from 2018 – which show that, at that time, Mr. Georgiou was the user of that e-mail address. In the 2016 e-mail, the author suggests that he and Mr. Aquino “grab lunch or dinner” and signs off as “Vas.” In the 2018 e-mail, written by Mr. Aquino’s executive assistant, she addresses him: “Good afternoon Vas. Here are the details for the call this afternoon.”

Another e-mail recovered by the monitor shows that a Bondfield IT manager told Mr. Aquino in 2013 that he set up the BCCLDevelopment e-mail account so that its existence was hidden from an internal company list, "so no one can see him.”

The 2014 e-mails were discovered last month as Bondfield employees were packing up and moving out of their Vaughan, Ont. headquarters, which the company was forced to sell as part of its insolvency, the court filings show. The e-mails were found as paper copies, not digital.

Steven Aquino – John Aquino’s younger brother who replaced his brother as Bondfield’s CEO after his 2018 departure – said in an e-mailed statement that when the existence of the e-mails was brought to his attention, he immediately provided them to Ernst & Young.

When investigators went looking for the original, digital versions of the 2014 e-mails on Bondfield’s server, however, none were found, the court records show. Forensic analysts later concluded that they were likely wiped from Bondfield’s computer system shortly after The Globe published the first article in a series of stories about Mr. Georgiou in 2015.

Zurich Insurance, which is still liable for the completion of many of Bondfield’s stalled projects, enlisted forensic computer experts to examine an archiving device Bondfield uses to retain e-mails, including those that have been deleted by individual users, the court records state.

The analysts discovered that on Sept. 15, 2015, someone accessed the archiving device and searched for a number of key words, including: “Vas Georgiou,” “vas.georgiou” and “BCCLDevelopment,” the court records state. That was the same day The Globe published its first piece about Mr. Georgiou.

It appears that whoever accessed the archiving device deleted about 5,370 “potentially relevant messages” that included those search terms, the forensic experts concluded.

The monitor entered the e-mails as evidence in court when it sought, and obtained, a sweeping order from Justice Glenn Hainey. The order requires a number of people – including Bondfield employees, both current and past, as well as Mr. Georgiou – to preserve any records concerning the concealed e-mail account. The order also requires anyone with any information about the destruction of the e-mails to “advise the monitor immediately of those steps.”

Alan Merskey, the lawyer for the monitor, said in an e-mailed statement that there is no evidence that Steven Aquino, or any other members of the “current executive management of Bondfield" were involved in the creation of the concealed e-mail account or the destruction of records. Mr. Merskey also confirmed in his e-mail that Steven Aquino assisted Ernst & Young.

Infrastructure Ontario, which oversaw the awarding of the St. Michael’s contract, said it was unaware of the existence of the e-mails. In a statement, the agency’s chief executive officer Ehren Cory, highlighted the conclusions of a 2016 report that Infrastructure Ontario commissioned in response to The Globe’s reporting about the undisclosed commercial ties between Mr. Georgiou and Mr. Aquino.

The report, which cost about $1.8-million in legal fees to produce, was prepared by a special committee of the agency’s board of directors. The committee found that Mr. Georgiou and Mr. Aquino had conflicts of interest that ought to have been disclosed, but concluded that the bidding process was not compromised.

Mr. Cory said the committee found that, even if there had been leaks about the project, such information would not have been considered a “significant advantage given the emphasis in the evaluation on price (in which there was a significant difference between bids) and the public nature of the procurement information.”

Speaking directly about the e-mails uncovered by the monitor, Mr. Cory said: “Even the most rigorous procurement standards could not protect against the type of behaviour alleged.”

A spokesperson for Unity Health, a network of Toronto hospitals that includes St. Michael’s, said it was unable to comment on the e-mails because they are the subject of a legal proceeding. “Our focus is moving on from this unfortunate situation and continuing to provide excellent care to all those in need,” said Sabrina Divell, Unity’s chief communications officer.

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