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National Post - Aug. 19, 2010 - By Megan O'Toole - email@example.com
World Class called on Mayor for help, inquiry told
While conceding Mississauga's Mayor pulled high-level strings for her son's firm in a controversial land deal, developer Tony DeCicco yesterday denied suggestions that Peter McCallion's primary value to the company was his direct connection to the city's top official.
A judicial inquiry is probing conflict-of-interest allegations against Mayor Hazel McCallion, stemming from her involvement in her son's failed bid to build a hotel complex in the city centre -- a project from which Peter McCallion stood to make millions.
Mr. DeCicco, a partner with the younger McCallion in World Class Developments, said the company enlisted the Mayor to make strategic interventions with land vendor OMERS to help keep the deal afloat.
After dodging a number of questions on the extent of the Mayor's involvement, Mr. DeCicco acknowledged that as payments on the project became due, World Class asked the Mayor to press OMERS for an extension. The very next day, Michael Nobrega, the pension fund's chief executive, was taking steps to make that happen, the inquiry heard.
"You make a call and you have this very powerful figure in Canadian finance prepared to intervene," commission counsel William McDowell told Mr. DeCicco. "[You're] making that call in the hope and expectation that [the Mayor] is going to intervene for you."
"Yes," Mr. DeCicco agreed.
The inquiry has heard evidence that contact between the Mayor and Mr. DeCicco ramped up in late 2008, as the project faced imminent collapse.
"You spoke to her 18 times in the month of November," Mr. McDowell said.
"It was 17," Mr. DeCicco responded, noting his primary goal was to keep the Mayor informed on the status of the hotel project.
Mr. McDowell pointed out that Peter McCallion, who today continues to own a 16% stake in World Class, attended many meetings on the hotel deal, but appeared never to speak or handle any assignments that arose from the meetings.
What he brought to the deal, Mr. McDowell suggested, "was his close relationship with his mother."
"I'm not sure whether that's an asset or a liability," Mr. DeCicco responded. The younger McCallion's involvement made some of the vendors nervous, he said, because of the perception of conflict, which he believes was "the main reason they terminated the deal."
Asked whether World Class was more comfortable making requests of the Mayor because the company was "carrying" her son, Mr. DeCicco was unequivocal: "Not at all."
In a bizarre string of testimony, Mr. DeCicco said he thought Peter McCallion's stake in the company actually ended in the fall of 2008, though there are no documents to support the claim, and Mr. McCallion continued to be involved with the firm's day-to-day business through to the end, when the deal collapsed and OMERS settled with World Class for $4-million in late 2009.
City lawyer Clifford Lax suggested this testimony was a way to explain why Mr. McCallion received none of the $4-million settlement, with a majority going to companies affiliated with Mr. DeCicco. By failing to pay anything out to Mr. McCallion, Mr. Lax suggested, World Class effectively hid his role in the company.
Peter McCallion, however, has testified he did not know until recently he was entitled to any settlement as he did not know he owned part of the company, believing himself to be a simple real-estate agent. Mr. DeCicco understood the true ownership structure, but says he never spoke with the Mayor about her son's role.
The inquiry resumes today, then breaks until Sept. 13.
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