Developing a close relationship with customers should be a good thing, the channel partner at the center of the Toronto Leasing Inquiry said Tuesday.
The inquiry, meant to determine why the city ended up spending more than $80 million for a hardware and software contract originally valued at $43 million, resumed Tuesday morning after a holiday break.
The first order of business was the continued cross-examination of Peter Wolfraim, president of Mississauga-based MFP Financial Services Ltd., which handled the leasing of the equipment to the city. This time he was questioned by counsels for Toronto CFO and treasurer Wanda Liczyk for the city of Toronto.
The relationship MFP sales people had developed with city officials came under scrutiny as Wolfraim had to try and explain why the company used city staff testimonials on its Web site and in print marketing materials.
Far from a sign that its relationship with city staff had become too close for comfort, the testimonials were standard practice, Wolfraim said.
“”We’ve used customer testimonials on our Website an in print for many years. Two thirds of those testimonials were from public sector customers,”” he said.
Wolfraim was also questioned by Liczyk’s lawyer, William Anderson, about what the counselor described as the “”Dear Wanda”” letter from MFP sales representative Dash Domi. The friendly salutation, dismissed later as a common way for MFP business letters to begin, came under fire along with a number of hockey games Liczyk attended courtesy of MFP.
The MFP president argued that the hockey game invitation, suggested by a number of articles and reports to be part of a general “”wining and dining”” of city council by the leasing company, was nothing more than standard business practice.
Wolfraim said that Liczyk was invited to the games by MFP, but points out that nearly everyone in the Air Canada Centre’s corporate boxes are there because of a similar invite. Taking clients to sporting events is nothing new, he said.
Wolfraim also pointed out that the company did not use those invitations to convince city council to sign a contract with the firm, since the first games she attended were either December 15th or 20th.
“”By then we’d done $40 or $50 million worth of business with the city of Toronto.””
Whether or not the company got that business by ethical means was the focus of the first set of questions from counsel for the city of Toronto.
The amount, type and presentation of information on the benefits of leasing hardware and software MFP provided to city staff was the primary focus of the morning questions from city lawyer Linda Rothstein. She questioned whether or not the sales representatives working on the leasing deal had done enough to educate their clients about the potential financial impact of the contracts.
Rothstein pointed to earlier testimony from MFP regional sales manager Rob Ashbourne. While testifying he’d stated that in 1997 the city didn’t have much knowledge about leasing of technology and he had made presentations to them on its benefits because he “”felt that education was needed,”” she said.
If the company was acting in the role of educator then, Rothstein asked, did they have an obligation to point out areas of the contract with potentially negative implications for the city?
As he has maintained to date, Wolfraim argued that the company had acted in good faith. He also asked how far can obligations stretch for a firm, which after all is in business to make a profit.
“”We believe in developing long-term relationships with our customers, so if we need to make presentations and answer questions we’re happy to do so, “” he said. “”Whether or not we’re obligated to is a tough question.
“”We could present options and make suggestions,”” he added, “”but in the end it’s up to the customer to make decisions.””
And while Wolfraim did concede that some of the information passed on to Toronto staff by VP of sales Irene Payne was just “”sales speak,”” he argued that a corporation as huge as the government of Toronto should have had access to resources to help them determine whether they wanted to enter into a leasing contract with MFP or not.
A contract, he pointed out, which has not actually meant a huge windfall for MFP, bringing in gross profits significantly lower than other partnerships. The city got a good deal, he maintained.
“”The city of Toronto had been leasing cars for years. There’s very little difference, leasing is leasing,”” Wolfraim said. “”I mean, we’re not splitting atoms here.””
Wolfraim is to undergo continued cross-examination by the counselors of the city of Toronto on Wednesday as well.
It was also announced Tuesday morning that Dash Domi, the sales representative who earned a $1.2 million commission from the leasing deal, has been granted full standing by the commission. He is yet to appear before the inquiry.
The city of Toronto deal could cost MFP a number of other clients. The Ontario government has removed the company from its vendor of record list, and it is facing four lawsuits by public sector clients.
Illustration by Jarrett Osborne