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To the main Judicial Inquiry page - to the Hazel McCallion page.Comments by others to this web-page - 4 - to this web-page at time of posting.
Mississauga News - Aug. 19, 2010 - By Louie Rosella - email@example.com
Mayor's role in hotel deal slammed
The vice-president of the company that was selling prime City Centre land to a development firm founded by Mayor Hazel McCallion's son admitted today he didn't like her involvement and the constant pressure she put on executives to get the deal done.
Michael Kitt, executive vice-president of Oxford Properties, a subsidiary of the Ontario Municipal Employees Retirement System (OMERS), said he had no clue what Peter McCallion's role was in the transaction and admitted the deal concerned him from the get-go.
He said McCallion was "very involved" in the 2008 negotiations between her son's company, World Class Developments (WCD), and Oxford in which WCD was trying to acquire 8.5 acres of land for an eventual hotel and conference centre.
"Her role wasn't necessary in negotiations," Kitt told the Mississauga judicial inquiry, adding it made him "uncomfortable."
Kitt said he was well aware of the mayor's "passion" for a first-class hotel in the downtown core. He admitted it was difficult to tell the mayor to "butt out" of negotiations because her son was the buyer.
Kitt believed Tony DeCicco, one of WCD's principals and investors, was using the mayor in the process.
"Tony and WCD were using the mayor as a negotiating tool, an effective communication tool to advance negotiations," he testified. "I could feel the pressure increasing from the mayor's side. She was becoming more and more involved."
McCallion was calling OMERS head Michael Nobrega throughout 2008 asking for extensions on WCD's behalf, Kitt said. They were granted. She also arranged a meeting between her son and Kitt and was being updated regularly on negotiations.
"She said WCD needed more time...to satisfy the conditions of the purchase and sale agreement," Kitt said.
In an e-mail from Kitt to another executive during negotiations, he comments: "Hazel called me...interesting to note the developer didn't call."
When the mayor got word that OMERS' investment partner, Alberta Investment Management (AIM), was unhappy with the hotel deal for a number of reasons, including her son's involvement, Kitt said she wanted to speak to AIM's key players directly.
Oxford had concerns about the mayor's "divide-and-conquer" philosophy, Kitt said.
While Kitt said the mayor undoubtedly knew her son was involved, nobody knew exactly what Peter McCallion's role was in WCD.
"I didn't understand completely, definitively, what his role was. No one could say exactly," Kitt said. "I came to understand quite quickly there was some fuzziness associated with this file...everything was curious. I was uncomfortable with the overall dynamic of the negotiation."
Kitt said Peter McCallion attended two meetings in 2008, one of which he was late for — he showed up "halfway through" — while Kitt was meeting with the mayor on the hotel deal.
Peter McCallion arranged another meeting in the fall of 2008 asking OMERS and OXFORD to drop the conditions that there be a hotel on the land and simply sell it as a "straight-sale," a request that was later rejected.
"Peter McCallion wasn't dictating or negotiating," Kitt testified. "He wasn't a person of influence."
However, that Peter McCallion was "financially connected" to the transaction was "enough to be concerned" there was a "serious conflict," Kitt told the inquiry.
"I inherited the situation," he said. "I assumed all the appropriate measures (regarding conflict of interest) had been taken."
While questioning DeCicco on Wednesday, Commissioner Douglas Cunningham referred to the younger McCallion's role as someone who, "sits there like a bump on a log."
A series of events, including the lack of evidence that WCD could follow through in getting a hotel, led Kitt to "lose faith in the buyer."
The mayor, in late 2008, assured the sellers that her son was "off the file," but the deal was already crumbling and near-dead, Kitt said.
The deal eventualy collapsed and OMERS sold the land to the City of Mississauga last summer for close to $15 million. The City, in turn, leased it to Sheridan College for a business school, to open next year.
Meanwhile, DeCicco maintained on Wednesday that the mayor's involvement did not benefit the development.
Instead, it was quite the contrary, the Vaughan-based businessman told the inquiry.
“Peter’s involvement was the main reason they terminated the deal,” DeCicco said during testimony, referring to OMERS.
The inquiry heard earlier that neither OMERS nor WCD liked "the optics" of the situation, with respect to the involvement of both McCallions.
DeCicco was pressed on whether he used Peter McCallion to gain access to his mother.
“With hindsight, the mayor didn’t help you?” asked Commission counsel William McDowell.
“Not at all,” replied DeCicco, who told the inquiry he had known Hazel McCallion since the early 1980s and considered her “a good friend.”
Also, despite acknowledging that toward the end of 2008 he left 17 messages at McCallion’s office begging her to help salvage the deal, DeCicco maintained he sought her intercession only because she had long wanted the hotel built, not because she was his WCD partner’s mother.
Her help was sought only to get extensions from OMERS when the deal was faltering, he said. And that wasn’t too difficult to obtain, given the then global financial meltdown.
Even during normal times, “it was very standard to get these kinds of extensions,” he noted.
DeCicco, who hammered out the $4-million payout to WCD from OMERS following the collapse of the deal, also confirmed Peter McCallion did not receive a share of the money.
Kitt said things became testy with DeCicco as the deal was falling apart and during settlement talks.
"Some of the things (DeCicco) said (in one meeting) need not be repeated here," said Kitt, adding he was "happy to hear the end of WCD" after learning a settlement had been reached.
The inquiry is probing the failed land deal, including conflict of interest allegations against the mayor and her behind-the-scenes involvement.
Comments by others - 4 - to this web-page at time of posting;
Aug 19, 2010 8:41 PM
Kudos to Kitt for Acknowledging
That Mayor McCallion was "very involved" And that "'Her role wasn't necessary in negotiations,' adding it made him 'uncomfortable.'" Also "He admitted it was difficult to tell the mayor to 'butt out' of negotiations because her son was the buyer." And WCD "'was using the mayor in the process. Tony and WCD were using the mayor as a negotiating tool, an effective communication tool to advance negotiations,' he testified. 'I could feel the pressure increasing from the mayor's side. She was becoming more and more invloved.'"
Aug 19, 2010 8:40 PM
$4M payout from pensioners' pockets
Don't forget OMERS is a pension plan. They paid out $4M that they didn't have to using pensioners' money.
* Agree 1
The Mississauga Muse
Aug 19, 2010 4:46 PM
Dead-on accurate right to the punctuation. Clifford Lax said it best. Way out in Edmonton Hazel McCallion's son's involvement signaled "BAD OPTICS" and he observed, that "the situation is clearer the further you are away from it". I admit I'm real close to the situation but then again I've read the Municipal Conflict of Interest Act! As of today can confidently add it to the provincial legislation that The City has violated. And I wonder if Rogers TV caught me on camera laughing when Michael Kitt (OMERS) revealed he didn't know about that Act...
* Agree 2
Aug 19, 2010 2:32 PM
I cannot help thinking what would have happened in another city? I believe this to be a criminal matter now...at the very least it stinks to all hell. The OPP should be investigating. It is obvious that almost every witness is minimizing while everything seems to still revolve around Hazel. She can no longer say that she didn’t know this or that, that her son was a principle and would benefit enormously. It is so bizarre that in the end, nothing will change, Hazel will get another term like nothing ever happened,
* Agree 3
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