People relax at Therme Spa in Bucharest, Romania, on Feb. 21.ANDREEA CAMPEANU/The New York Times News Service
Ontario Premier Doug Ford wouldn’t say whether he knew that Austrian spa operator Therme Group only owned one facility in Romania, and not a total of six similar spas, when he okayed the signing of a 95-year lease with the company for part of the government’s Ontario Place site on Toronto’s waterfront.
The Premier came under fire on Thursday after a New York Times story elaborated on findings from the province’s Auditor-General’s report on Ontario Place issued last December, which concluded that taxpayers were on the hook for $2.2-billion in costs for the redevelopment.
The audit also said that Therme, which plans to build a spa and waterpark on the site, had pointed to six facilities as proof of the success of its concept in its 2019 application for Ontario Place, but in fact it only directly operated one, in Bucharest. The Auditor-General said Infrastructure Ontario, the agency overseeing the process, “did not conduct due diligence to ensure that spas cited by Therme in its submission were in fact owned and operated by Therme Group.”
In a statement, Therme denied that it had misrepresented itself and called the New York Times story “inaccurate.” It said the other five facilities were operated by another company with “a long-standing and formalized relationship” with Therme and that they shared key staff and the overall concept for the attractions. Therme has since bought one of these sites, in Erding, near the German city of Munich, in a deal announced in December.
Asked whether he thought the company owned six spas or just one when it was awarded the bid for Ontario Place, Mr. Ford said he left the details to others but had confidence in Infrastructure Ontario.
“I don’t get involved in the bids directly,” Mr. Ford told reporters on Thursday. “That’s not my area.”
Mr. Ford, who a day earlier had said he would “double and triple check” when first asked about the New York Times story, said the plan was going ahead.
Reading a prepared answer from a Teleprompter at an unrelated event, Mr. Ford said Therme and its related companies have the “capability to deliver on big projects like this.” He said all of the competing submissions for Ontario Place “underwent a thorough evaluation,” including a financial review by the Ernst & Young accounting firm. And he said an analysis of audited financial statements showed that Therme had the financial net worth required to be awarded the lease.
“We have no reason to believe there’s been any wrongdoing,” Mr. Ford said. “We’re moving forward with the project. It’s going to be world class.”
Ontario NDP Leader Marit Stiles, who has long opposed the Ontario Place deal, told the legislature on Thursday that “Therme hit the jackpot and Ontarians got ripped off” and charged that “Therme lied about its qualifications.”
In her 121-page report last December, Auditor-General Shelley Spence concluded that the process the province used to award the lease to Therme was not “fair, transparent or accountable to all participants,” did not follow “best practices for large-scale, modern land-use development projects” and broke the province’s own rules. Ms. Spence made 19 wide-ranging recommendations for changes to the way bidders for similar projects should be chosen, but did not call for scrapping the Ontario Place plan.
As reported in The Globe and Mail at the time, Ms. Spence also said Therme’s 2019 submission for the project had stated that it “has proven the success of its concept with six globally placed facilities under operation.” However, her auditors “reviewed the six spas and found five instances where the spa cited in the submission was not owned or operated by the Therme Group.”
Plus, the audit says, Therme cited the Erding spa, as one of its own, “in order to showcase the team’s ability to deliver.” The audit says the company responded by acknowledging that Therme Erding was then owned by the family of architect Joseph Wund, who came up with the Therme spa concept and created several similar facilities in Germany.
The audit says Therme said its chief executive officer, Robert Hanea, had a “close professional relationship” with Mr. Wund. But the audit concludes that the “ownership/operating experience in the submission was not accurate.”
The government told auditors that it did not review Therme Group’s operating structure, as the lease was being executed with Therme’s Canadian arm “a newly formed company with fewer than 10 employees.” The government said the company’s Austrian parent was a backstop for all of the company’s obligations, the report says.
In a statement this week, Therme Canada said it had signed a formal partnership agreement with Mr. Wund’s Wund Fundation – he died in 2017 – in 2019, which it said was retroactive to 2018. The two organizations have shared “architectural, engineering and operations teams,” with staff joining Therme after Mr. Wund’s death, the statement says.