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Opening comments:  More at the end.

Toronto Star May 13 2000, - by Rob Ferguson, Business Reporter

Another day, another scandal at Ontario Realty
As much as $11 million may have gone astray

As scandals go, it doesn't have the lurid appeal of Monica Lewinsky's blue dress.

But it does have something everyone can relate to - money. How much have Ontario's taxpayers been ripped off in the sale of government-owned land and awarding of suspicious contracts by the Ontario Realty Corporation?

That's the key question now plaguing the provincial government's real estate arm, formed in 1993 to manage the government's many properties. The potential tally is in the millions of dollars amid what government critics have called ``sweetheart'' deals like these:

In 1998, Ontario Realty sold a chunk of industrial land in Brampton for $1.27 million. Six days later, the purchaser sold it for $4 million.

The agency sold a Mississauga lot for $1.9 million in March 1999 to a firm called P. Gabriele & Sons Ltd. - which has purchased several Ontario Realty properties since 1994, and which then sold the land for $4.4 million 8 months later without major improvements.

The math is simple. In those two sales alone, critics maintain taxpayers waved goodbye to $5 million in foregone profits. Opposition politicians have charged that at least $11 million has gone astray.

It's a potential minefield for the Conservative government of Premier Mike Harris.

``The danger of this issue to the Tories is that it erodes one of their main planks, which is credibility in handling public finances,'' says Robert MacDermid, a politicial science professor at York University.

``This is the government we elected because everyone else were wastrels and corrupt.''

A `pattern of questionable activities' is being investigated by the Ontario Provincial Police

As Harris himself told 3,000 supporters last week at the annual premier's fund-raising dinner: ``We are the people elected to fix government.''

The premier and one of his top cabinet ministers - Management Board Chairman Chris Hodgson, who is responsible for Ontario Realty - have been grilled on Ontario Realty's deals almost daily in the legislature.

There are signs the issue is getting to Harris, who has lost his temper twice recently under questioning from the Opposition.

``The only thing that stinks here is you,'' he snapped at Liberal Leader Dalton McGuinty a couple of weeks ago.

``That just shows the issue's getting to him, that they're not in full control of it,'' MacDermid says of the premier.

Hodgson, a realtor from Lindsay, is widely seen as the premier's protegé. New revelations about suspicious deals are making headlines regularly, five years after the Conservatives came to power promising to sell surplus government land with ``rigid guidelines'' to protect the public.

Ontario Realty manages more than $6 billion-worth of provincially owned real estate, including 7,000 buildings and 26,000 hectares of land.

The scandal first sprouted roots more than a year ago and has been followed by a spate of allegations that Ontario Realty was selling land at firesale prices only to see the new owners resell it for huge profits.

Under increasing pressure in the fall, Ontario Realty boss Tony Miele - a real estate specialist who has worked for the Conservatives both federally and provincially - ordered an independent audit of several land flips. In the words of Ontario Realty spokesman Dave Moran, that audit uncovered ``a pattern of questionable activities.''

They prompted the Crown agency to call in the Ontario Provincial Police anti-rackets squad this March along with a forensic auditing firm to follow the money trail.

``There's no estimate of a time frame to complete this investigation,'' says Rick Kotwa, superintendent of corporate communications at the OPP's Orillia headquarters.

``It's a large investigation. We're contributing significant resources.'' In April, Ontario Realty filed a lawsuit in Ontario's Superior Court of Justice alleging the widening internal probe has uncovered evidence of bid rigging, fraudulent invoicing, and that two former employees received tens of thousands of dollars in kickbacks on contracts let by the agency. The lawsuit names 23 businesses including Gabriele, several family companies, plus the two former Ontario Realty employees.

The case has not gone to trial and none of the allegations have been proven.

There have also been police raids at the offices of some businesses that have bid for contracts at Ontario Realty.

Where does the scandal go from here?

That depends on several factors, such as:

Whether the OPP finds evidence of criminal wrongdoing and lays charges - a potential lightning rod for public attention, says MacDermid.

Whether new examples of questionable deals continue coming to light as the legislature continues until its summer break, which starts June 22.

``The longer these things accumulate, the more that threatens that important basis of people's perception of the government - its handling of public finances,'' MacDermid adds.


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