The corruption investigation into Bondfield Construction Co. Ltd., once one of the largest builders of public sector projects in Ontario, has widened to include its contracts with a second Toronto hospital, Sunnybrook Health Sciences Centre.
A police investigation, which is being led by a provincial law enforcement initiative known as the Serious Fraud Office, is targeting Sam Marafioti, a Sunnybrook executive who oversaw construction and planning until his recent resignation from the hospital.
Mr. Marafioti has not been charged with any criminal offences. In an e-mailed statement to The Globe and Mail he said he could not provide a detailed comment while the matter was under investigation. “I do know, however, that my conduct in relation to Sunnybrook and its best interests was appropriate throughout,” he said in the e-mail.
As The Globe has reported previously, the SFO is also investigating alleged corruption at Toronto’s St. Michael’s Hospital, which, in partnership with Infrastructure Ontario, selected Bondfield in 2014 to lead its $300-million redevelopment.
The multifaceted police probe, which is now scrutinizing multiple hospital construction contracts as well as an alleged scheme to siphon $80-million out of Bondfield through the use of false invoices, is entering its third year. It is the first major test of the capabilities of the SFO, which was created in 2018 in response to criticism that law enforcement has struggled to properly investigate and prosecute complex white-collar crime.
The sprawling nature of the Bondfield probe also speaks to the company’s significant role in Ontario’s public sector, as well as the deep impact its 2019 insolvency left on the construction industry. The Surety Association of Canada has called it the largest construction collapse in the country’s history.
On Dec. 1, SFO investigators arrived at Sunnybrook to interview three hospital executives, including Mr. Marafioti, about its procurement policies. Seven days later, Mr. Marafioti resigned, ending a three-decade career at Sunnybrook, which is home to Canada’s largest trauma centre. In an e-mail, a spokesperson for the hospital said it is co-operating fully with the investigation and has retained a law firm to investigate.
“This is a deeply troubling situation and we are taking this seriously,” said Craig DuHamel, the hospital’s vice-president of communications.
Mr. Marafioti was first hired at Sunnybrook in 1989. Since that time, he has served in multiple roles, including overseeing construction and working as the hospital’s chief information officer.
Over the years, Bondfield has been awarded a number of contracts at Sunnybrook, which the hospital estimates were worth a total of $129-million. The bulk of that work was awarded during the hospital’s redevelopment in the mid-2000s, when Bondfield expanded the emergency department and worked on several research labs.
Mr. Marafioti led the hospital’s capital redevelopment program, but in its statement to The Globe, Sunnybrook said Mr. Marafioti was not part of the team that evaluated bidders.
More recently, Bondfield was working on several smaller Sunnybrook projects, including renovations to the dialysis unit, before the company’s 2019 collapse. The company also recently redeveloped the offices of the Sunnybrook Foundation, which is not taxpayer funded.
John Aquino, Bondfield’s former president, is a target of the SFO probe as well. He has not been charged with a criminal offence, and he did not respond to a request for comment.
Mr. Aquino was fired from Bondfield in 2018 by his younger brother Steven Aquino, who supplanted him as president. Since then, John Aquino has emerged as a central figure in the fallout from Bondfield’s collapse.
Ernst & Young LLP, which was selected as the company’s court-appointed monitor when Bondfield sought creditor protection, determined that while John Aquino was company president, he participated in a false invoice scheme that saw nearly $80-million flow out of Bondfield.
An Ontario Superior Court judge found that those funds were “illegitimately” transferred to subcontractors for services that were never delivered. In March, Justice Bernadette Dietrich ruled that many of those payments, but not all, were “transfers under value” – which means they were made for the purpose of defrauding or evading creditors. Justice Dietrich ruled that $22-million must be paid back to the monitor for Bondfield.
That ruling has been appealed and a decision by the Ontario Court of Appeal has yet to be released.
John Aquino is also being investigated by the SFO for his role in alleged corruption at St. Michael’s.
More than $1-billion worth of Bondfield’s projects were guaranteed by Zurich Insurance Co. Ltd., including the St. Michael’s project, through construction surety bonds.
After Bondfield’s collapse, Zurich launched an investigation and discovered that John Aquino had issued a BlackBerry to Vas Georgiou, the then-chief administrative officer of St. Michael’s. Mr. Georgiou also was supplied with his own bondfield.com e-mail address. Zurich determined that the two men communicated secretly throughout the hospital bidding process.
In 2015, when The Globe was preparing a story about the close ties between the two men, John Aquino ordered an IT official at Bondfield to permanently delete 5,000 e-mails and records about Mr. Georgiou from the company’s servers.
Zurich is suing Mr. Aquino and Mr. Georgiou, as well as Unity Health Toronto, the hospital network that includes St. Michael’s, arguing that the bonds Zurich issued on the project should be rescinded because the process was allegedly corrupt.
Mr. Georgiou’s lawyer has said her client denies any wrongdoing.
As part of that proceeding, lawyers for Zurich examined Steven Aquino, under oath, in 2020. They asked him if John Aquino had ever told him about any payments he had made to anyone involved in projects Bondfield was bidding on or had secured. Steven Aquino replied that, yes, his brother told him he had paid Mr. Marafioti in connection with Bondfield’s work at Sunnybrook.
He added: “We’ve done a lot of projects there. I have no idea when or why or how much. Again, like I said, I don’t even necessarily believe that it was true.”
Mr. Marafioti was not a party to that litigation and was not offered an opportunity to respond to Steven Aquino’s testimony. The Globe quoted Steven Aquino’s testimony in a letter to Mr. Marafioti, but he did not address it in his response.
In his statement to The Globe, Mr. DuHamel of Sunnybrook said no one had informed the hospital about the testimony. “It is obviously something we are deeply concerned about and the hospital will be conducting an investigation of the situation and will be engaging external counsel to assist with the review.”
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