Vas Georgiou leaves the Superior Court of Justice courthouse in Toronto on Oct. 7. Mr. Georgiou and John Aquino were convicted of fraud related to the redevelopment of Toronto’s St. Michael’s Hospital.Sammy Kogan/The Globe and Mail
A decade ago, when the Ontario government announced that it would finance a major redevelopment at Toronto’s St. Michael’s Hospital, the renovations were expected to be completed by 2019.
Instead, the project remains over budget and behind schedule, years after allegations first surfaced about irregularities in its procurement process.
Those claims, first reported by The Globe and Mail, reached a denouement on Tuesday with the convictions on fraud charges of Vas Georgiou, the hospital’s former chief administrative officer, and John Aquino, the former president of the company that won the contract for the project, Bondfield Construction Co. Ltd., one of the largest builders of public-sector projects in Ontario at the time.
Dubbed St. Michael’s 3.0 or SMH 3.0, the project includes a new 17-storey patient care tower and an expanded emergency department. Robert Howard, who was St. Michael’s chief executive officer when the project launched, said at the time that it would turn the downtown facility into “the premier critical care hospital in Canada.”
In a 135-page decision, Superior Court Justice Peter Bawden found that Mr. Georgiou covertly and fraudulently shared information with Mr. Aquino and advocated for the company during executive deliberations.
While Bondfield had the lower bid among three finalists, its design received a lower score during the technical evaluation. The judgment said that Mr. Georgiou was “the most persistent and passionate voice” in endorsing Bondfield. “He argued that SMH did not expect a Rolls-Royce design; they were just hoping for a Toyota.”
Bondfield’s proposed $299-million price tag was just under the project’s $301-million budget. Another company, PCL, had a design that earned a higher evaluation score but would cost $538-million. In his ruling, Justice Bawden said that, had the Bondfield bid been excluded, the hospital and PCL would have had a chance to readjust the project and perhaps come to an agreement.
Construction on the project began in March, 2015.
By September, 2018, Bondfield faced major financial difficulties as it struggled to pay subcontractors, leaving a dozen public-sector projects in Ontario behind schedule. In December, 2018, Project Co, the special-purpose subsidiary Bondfield set up for the St. Michael’s project, was placed in receivership.
Three months later, Bondfield applied for court protection from its creditors as the company and its directors faced more than 200 lawsuits.
Zurich Insurance Co. Ltd., the company that issued construction surety bonds to Bondfield on more than $1-billion worth of its projects, became financially responsible for completing the St. Michael’s project.
When it discovered that Mr. Georgiou and Mr. Aquino had been communicating through back channels, Zurich sued the two men and Unity Health, the hospital network that includes St. Michael’s.
Zurich has argued that it would not have issued the bonds if it knew about the improper communications. The Zurich litigation is continuing and a date for a trial has not been set.
Eventually, EllisDon, one of the companies that had lost to Bondfield in the bidding process, took over as general contractor.
While the majority of the patient care tower is now operational, some work remains to be completed, along with continuing renovations for the emergency department expansion and the intensive care unit, according to Sabrina Divell, a spokesperson for Unity Health Toronto.
She has told The Globe that the St. Michael’s project is expected to be completed in 2026, seven years late.
Editor’s note: This article has been updated to correct John Aquino's title with Bondfield.