St. Joseph’s hospital contracts went to firms with personal ties to executives: audit

TheGlobeandMail.com
Aug. 17, 2016
By Robyn Doolittle, Karen Howlett and Greg Mcarthur

A Toronto hospital awarded the family business of its former chief executive, Vas Georgiou, $223,000 in renovation contracts after his departure. Almost all of those invoices were approved by St. Joseph’s Health Centre’s then-director of redevelopment, Suman Bahl – whose husband was a subcontractor on a third of those renovation jobs.

These findings – which are detailed in a report from auditing firm Deloitte – are the latest developments in a year-long Globe and Mail investigation into hospital executives and lucrative construction contracts, an investigation that has ensnared three Toronto-area hospitals, and triggered four independent probes as well as the departures of some high-profile executives – Mr. Georgiou and Ms. Bahl among them.

At the centre of the story is Mr. Georgiou, who for decades has moved through senior positions at half a dozen Ontario hospitals, including St. Joseph’s, where he was vice-president and later interim CEO.

After leaving that hospital in July, 2005, Mr. Georgiou took a top position with the province’s procurement agency, Infrastructure Ontario. But outside of his day job, the former executive began working for a private family construction business, Toronto Engineering Company (TECO).

By March, 2006 – and until December, 2007 – TECO was working for St. Joseph’s hospital.

During this period, Mr. Georgiou became involved in a scheme to defraud York University with bogus construction invoices. Mr. Georgiou used two family businesses, including TECO, to invoice the university for $64,800 worth of renovation work he acknowledges his company never performed. (Mr. Georgiou was not charged criminally and reached a settlement with the university.)

When The Globe presented evidence to St. Joseph’s last September that the hospital had also done business with TECO, the health centre hired Deloitte to investigate.

The firm completed its probe this past spring. Deloitte found that over the course of nearly two years, St. Joseph’s Health Centre processed 18 TECO invoices worth about $223,000 for repairs, painting and project management. The report shows Ms. Bahl approved all but five. (The hospital’s then-project manager of redevelopment, Doug Wilson, signed off on the rest.)

Deloitte found no evidence that Mr. Georgiou declared his TECO ties to the hospital, although internal hospital e-mails suggest Ms. Bahl was aware of his connection, the review states.

Through their lawyers, Mr. Georgiou and Ms. Bahl criticized the fairness of the reviews.

The report was not a full-blown audit, and drew no conclusions. Deloitte did not interview Mr. Georgiou, Ms. Bahl or any other former hospital employees or vendors.

In a letter to The Globe, Mr. Georgiou’s lawyer, Gavin Tighe, said TECO’s dealings with St. Joseph’s began after Mr. Georgiou left, so there was no conflict, but that, regardless, his client disclosed those ties.

“TECO competitively bid on work at St. Joseph’s Health Centre,” Mr. Tighe wrote, adding that “TECO did not at any time contract or pay BJ Quality Flooring or Darwin Fisher Flooring to perform work.”

Deloitte also determined that there “may also have been an attempt to conceal” the involvement of Ms. Bahl’s husband in the renovation projects.

Travis Walker, a lawyer representing Ms. Bahl, wrote to The Globe that Ms. Bahl “denies any impropriety” and that “any potential conflict of interest was disclosed to senior management” and “no concerns were ever raised.”

It is not clear exactly what policies Mr. Georgiou and Ms. Bahl may have violated, because St. Joseph’s has refused to comment on the rules it had in 2007.

A hospital spokesperson said “gaps in the procurement process at the time are historical and have since been mitigated” and that Deloitte unearthed “no substantive findings that indicate any further exploration is required.” St. Joseph’s would not answer questions on the report.

When Mr. Georgiou left St. Joseph’s Health Centre, he was one of the most powerful and connected members of the hospital, having served as vice-president for five years and interim CEO for 10 months.

About a month before he began working for Infrastructure Ontario in January, 2006, Mr. Georgiou’s family members registered TECO in Ontario. Mr. Georgiou’s wife, Helen Saoulli, and her parents were listed as directors. Mr. Georgiou acted as a project manager for TECO, according to a statement he made during the York investigation.

Over the next two years, TECO invoiced St. Joseph’s for work that included installing a new security gate for the emergency department, wall patching and painting, and disposal of chemical waste, documents obtained through a Freedom of Information request show.

BJ Quality Flooring, the company owned by Ms. Bahl’s husband, Bojidar Danef, was listed as a subcontractor on seven of the quotes, the Deloitte review found.

The auditing firm noted there may have been an attempt to conceal Mr. Danef’s involvement because, at some point in the process, BJ Quality Flooring was changed to “Darwin and Fisher” [sic] – except that the contact name, telephone number and price stayed the same.

Doug McDonald, owner of Darwin Fisher, a commercial flooring company in Mississauga, says his company has never done business with TECO and he has no idea why TECO invoices would include it. Mr. McDonald noted that during that period, Darwin was doing extensive work for St. Joseph’s, and that on some occasions, he hired Mr. Danef as a subcontractor.

Last November, Mr. Georgiou’s employment as vice-president of St. Michael’s Hospital was terminated after The Globe revealed his involvement in the York fraud, and later the fact that he had private business ties to the president of a construction company that won a $300-million contract with the hospital that Mr. Georgiou had overseen and helped award.

After those stories were published, Markham Stouffville Hospital – where Ms. Bahl was then a senior executive overseeing a redevelopment project – launched an internal probe when a whistle-blower came forward with concerns.

The findings brought a wave of departures, including those of Ms. Bahl and Mr. Wilson, who had left St. Joseph’s and was working with Ms. Bahl in Markham. Mr. Wilson could not be reached for comment.

The Markham Stouffville review, which Deloitte also conducted, found that Ms. Bahl hired five of the hospital’s contractors to renovate her 6,480-square-foot home, received favourable pricing from some and awarded renovation contracts at Markham Stouffville to her husband’s flooring company and her late uncle’s window-covering business.

It appears Ms. Bahl also mixed her professional connections with her personal life when she was at St. Joseph’s hospital.

Deloitte found evidence that one of the hospital’s furniture vendors “assisted Ms. Bahl in procuring office furniture for her home at a 50-per-cent discount from the list price,” the report said.

In another instance, Deloitte noted Ms. Bahl may have tried to circumvent hospital procurement policy by counselling an art supplier to invoice through a company that was already doing work for the hospital, rather than submit a payment request directly.

“This is the only way I can cover the cost,” Ms. Bahl wrote to the art supplier in an e-mail obtained by Deloitte.