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National Post - May 27, 2010 - By Megan O'Toole - firstname.lastname@example.org
Not my place to consult council, lawyer says
Mississauga council should have been made aware of a "deal-breaking" change inserted in the city's Enersource agreement hours before the deal closed, says a lawyer who acted for the city.
But Bill Houston, testifying yesterday at a judicial inquiry into a pair of allegedly suspect business dealings involving the city of Mississauga, said he has no knowledge of whether that ever happened.
"The overriding instructions here were to get the deal done," Mr. Houston said under questioning by commission counsel William McDowell. He referred to then-city manager David O'Brien as the "point person" on the file.
"This was the biggest deal he or Mississauga had ever done," Mr. Houston testified, noting it would have been beyond his own authority as outside counsel to consult the Mayor and councillors about the "last-minute" change. Rather, Mr. Houston said, he dealt with Mr. O'Brien on all matters pertaining to the Enersource agreement, and the city manager in turn reported to council.
The decade-old Enersource agreement -- which gave Borealis, a subsidiary of pension giant OMERS, a stake in the city-owned utility along with veto power on the board -- is one of two subjects the judicial inquiry is examining. The second is a failed multimillion-dollar land deal that has led to conflict-of-interest allegations against Mayor Hazel McCallion, but that will not be addressed until later in the process.
Councillors say the veto clause in the Enersource deal -- which gave Borealis veto power over "special actions," such as determining directors' pay or selling the corporation -- was inserted without their knowledge.
The inquiry has heard that Nov. 29, 2000, was the last date city council reviewed the Enersource agreement before Ms. McCallion signed a week later, on Dec. 6.
An amendment containing the veto clause came through Mr. Houston's office on Dec. 4, documents show. Mr. Houston called this an "important change," noting he discussed the issue with Mr. O'Brien. But whether Mr. O'Brien alerted council to the modified terms of the deal remains unclear.
"There was a substantial risk the deal wold not close" if the amendment did not move forward, Mr. Houston testified.
"If this was a fundamental part of this deal, then surely city council has to be told this is an issue," Mr. McDowell asserted.
Mr. Houston acknowledged the veto was a significant element, but said there would have been no time to call a special council meeting to broach the issue: "That would have jeopardized closing ... [resulting in] disaster and huge economic loss for the city."
Mr. Houston said he would have breached the chain of command and gone to council directly to discuss the amendment had he suspected "something wrong" was going on.
The inquiry is to resume today with Mr. O'Brien's testimony.
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