TORONTO — Mel Lastman was wary of pursuing a public inquiry into computer and software leasing deals until he heard the city had acquired considerably more Oracle database licences than it actually needed, a commission heard Wednesday.
During his third day on the stand at the Toronto Computer Leasing Inquiry, the City of Toronto’s mayor continued to answer questions about the state of the city at the time of Y2K and concerns around conflict of interest. The inquiry’s goal is to determine how the city’s computer hardware and software leasing deal originally thought to be worth $43 million escalated to more than $80 million.
Under cross-examination by counsel for Mississauga-based MFP Financial Services, lawyer David Moore suggested to Lastman that in the fall of 2001 when city council was debating whether to hold a public inquiry, Lastman was in favour of settling a pending legal battle with MFP as opposed to a public inquiry.
“”But the Oracle issue was the straw that broke the camel’s back?”” Moore asked.
“”Yes, it changed my mind but I still wanted to settle and I still wanted an inquiry too,”” said Lastman. In later questioning he said he was concerned a public inquiry would undermine the legal action MFP and the city had begun against each other over the Y2K leasing contracts.
“”The issue of concern was that somehow the city decided to acquire 10,000 Oracle licenses and the current view was that was a gross miscalculation?”” Moore said.
“”Yes,”” said Lastman. “”We were told we definitely did not need 10,000 licences.”” Lastman, added that he tried to ask why that many were purchased, but couldn’t get a clear answer from his staff.
The proposal for Oracle products was for five years and priced at just over $14 million.
According to a city report dated Feb. 1998, Toronto officials believed that by 2001 all staff with access to a computer (about 15,000 ) would require access to an Oracle-based application. The report stated that:
“”Based on known demand for consolidated or new systems, it is estimated that the number of license will increase from the current 504 to over 2,500 in 1998 and increase to almost 6,000 in 1999 and that all city staff with access to a computer will require access to an Oracle-based application by 2001.””
Moore referred to a KPMG report which indicates that the original Oracle analysis was done in December 1997 by IT staff of the former municipalities that now comprise the megacity. KPMG was hired to conduct an investigation into what had happened behind the scenes with respect to the leasing of hardware and software prior to Y2K. That investigation cost the city $400,000.
But while Lastman agreed the Oracle licensing issue was the one that convinced him the inquiry was necessary, city lawyer Linda Rothstein suggested, in later examination, that the reasons were broader than that. Rothstein suggested Lastman also realized an inquiry was, “”the only forum we could ask all the questions that we need to ask about the MFP and other transactions.””
“”Yes, I felt we had to leave no stone unturned,”” he said.
The inquiry also heard that while the complexity and uncertainty of Y2K loomed, senior IT staffers at city hall could often be found on the golf course, including the city’s executive director of IT, Jim Andrew, CFO Wanda Liczyk and Lana Viinamae, the director of the year 2000 project. Through the summer and early fall of 1999, inquiry documents show vendors including Bell Mobility, Cisco Systems, Compugen, Oracle, Dell, Sun Microsystems, Novell, Toshiba, Lexmark, IBM, Compaq and others entertained Andrew and other staffers on golf courses such as Glen Abbey and Lionhead.
During his third day appearing as a witness for the inquiry, Lastman was questioned by MFP counsel David Moore about the practice of city officials being entertained by vendors.
“”Would it be a surprise to you that city officials were being entertained?”” Moore asked.
“”When I saw this, I was shocked. The first thing that came to mind is when are they working? And I can tell you, this will come to an end. A golf game is at least four or five hours and they’re not back at work from morning to night,”” said Lastman, adding he would “”maybe stop this free golf thing once and for all.””
With respect to the question of conflict of interest, Lastman said that while the practice of employees being entertained by vendors may be acceptable in the private sector, “”you don’t deal with cities the same way.””
All total, 19 firms were invited to submit bids for leasing information technology equipment in May of 1999 including servers, desktops, notebooks, software and other devices valued at $43 million for 36 months. Of the 19 invited to bid, quotes were obtained from MFP, Bombardier Capital, Compaq Capital, Dell Financing, IBM, and SHL Financing.
In testimony heard earlier this week, Lastman was questioned about various donations MFP made to his mayoralty campaign as well as charities linked to him. The donations included $6,500 from MFP to sponsor a moose for the mayor’s “”moose in the city campaign”” and $15,000 to the Marilyn Lastman Arts Ball and at least $10,000 each year for the last three for golf tournament sponsorships.
But Lastman insisted anyone who makes donations to charitable events gets nothing in return, even if it buys them a seat at his table.
The inquiry continues tomorrow and is expected to last through the summer of 2003.