Angry in the Great White North

There are a lot of facets to this story. Stuff I'm still trying to understand. Bond issues and 500-page contracts and stuff that makes my head spin.

But I'm going to start (and hopefully not end) with a relatively easy story to understand. It is a series of links and events that separate don't seem all the significant but laid out start to tell a story.

Under Dalton McGuinty's Liberal government in Ontario, billions is being spent on PPP projects managed under the Crown corporation Infratructure Ontario. "PPP" stands for Public-Private Partnerships. The idea is to build public buildings like hospitals using private cash, in return for long-term management contracts for the facility.

You might think that sounds rather conservative, but it isn't really. A true conservative would pull the State out of the process altogether, except perhaps as a customer, but certainly not as a partner.

In any case, consider these four PPP facilities:

• Brampton Youth Justice Facility (projected cost: $93 million) [Bird Construction, Manulife, London Life, Fengate/LPF and CIT Group Securities (Canada) ("CIT")]
• Sudbury Regional Hospital (projected cost: $132 million) [Fengate/LPF, Ellis Don and RBC]
• Trillium Health Centre (projected cost: $105 million) [Fengate/LPF, Ellis Don and RBC]
• Sault Area Hospital (projected cost: $988 million) [Hospital Infrastructure Partners/Carillion Canada, Fengate/LPF, Ellis Don and CIT]

The common thread in these is Fengate/LPF.

Fengate/LPF is actually two disconnected entities. Fengate Capital Management is a building management operation run by Lou Serafini Jr. Fengate was a generous supporter of the Ontario Liberal Party in the past (over $4000 in 2005).

On the Fengate website they list the wins. The Sault Area Hospital is listed as a bid in process, but it has actually been awarded to the Fengate group. Also not mentioned is the fact that Fengate/LPF is shortlisted for the new data centre project and the new Woodstock General Hospital.

Now what is happening is that Fengate is advising LPF. LPF is the Labourers' Pension Fund. It is operated by the Labourers' International Union of North America, or LIUNA.

Now LIUNA has an interesting history. In June of 2006, the most powerful construction union in Canada was given over to US control:

It came like a thunderclap on June 12: a so-called "bottom-line decision" by the Ontario Labour Relations Board that rocked the Toronto construction industry by summarily deposing the leadership of the city's largest, most powerful and -- until then -- influential construction union.

The ruling thrust rich and rebellious Local 183 of the Laborers' International Union of North America under the trusteeship of its Washington-based parent, transferring control of $57-million in cash and $1-billion in pension funds to the international union's Hamilton-based subsidiary. And it instantly threw Local 183's Tony Dionisio, the most powerful labour leader in Canada's largest city, out on the street.

But nobody knows why. More than two months after making the summary decision, the labour board has yet to release any reasons to explain why it placed Local 183 under trusteeship. And the truth about one of the key charges levelled during the long and bitter dispute leading up to the June 12 decision -- allegations of organized-crime links within the international union's Hamilton operation -- remains unexplained.

Dionisio, a Portugese-born welder, had problems with the union's Italian leadership:

Mr. Dionisio has long been at odds with the Italian-Canadian leadership of the international union. LIUNA first removed him from office a decade ago, when he was charged with offering a secret commission -- in the form of home repairs -- to a federal official. But once acquitted, he regained control of the Toronto local and built it into a powerful rival to the international parent.

Under Mr. Dionisio, Local 183 gained 30,000 members, making it the largest union in Toronto and dwarfing LIUNA's other Canadian locals. It also set records for political donations: raising $750,000 for Paul Martin's bid for the Liberal leadership and doling out more donations than any other business or individual in the 2000 municipal election. In 2003, Mr. Dionisio and Local 183 were early and generous supporters of John Tory's failed mayoral campaign.

John Tory, of course, is now the leader of Ontario's Progressive Conservatives, and is engaged in an election campaign against Dalton McGuinty and the Liberals.

One of the strange things about this approved takeover of Local 183 by LIUNA is that there are strong suspicions that LIUNA has been infiltrated by organized crime:

[Internal union arbitrator Brian Keller] did remark in his decision that Local 183's suspicions about LIUNA's possible organized-crime links were "fully understandable." The reason: a series of U.S. Justice Department actions in the 1990s that purged the international union of long-established mob links, resulting in a new constitution with a specific provision barring LIUNA officials from "knowingly associating with any member or associate of any organized crime syndicate."

Among the evidence considered by the board was a set of blurry surveillance photographs the Toronto local submitted in an effort to establish that one of LIUNA's Hamilton officials had met with notorious organized-crime figures there.

Local 183 told panel members the pictures showed Cosmo Manella, a LIUNA official, meeting with unsavoury characters -- in violation of the union constitution, which specifically outlaws knowingly associating with any member or associate of any organized-crime syndicate.

The photos introduced to the labour board were potentially the most volatile evidence either side obtained. They were accompanied by affidavits from William Henderson and Richard Grant, two retired Toronto police officers with a combined 40 years experience as specialists in organized crime. The former officers filed affidavits identifying five of the figures purportedly meeting with Mr. Manella as "well known to law enforcement in the Greater Toronto Area."

So what did the Dalton McGuinty do about this powerful construction union local and the concerns that it was being handed over to an organization compromised by the mob?

And so the U.S. takeover of Toronto's richest, most political union proceeds, fully sanctioned by the Ontario government, but for reasons that remain opaque.

So the US-based LIUNA wins in its battle to take over that irritating Ontario Local 183, formerly a supporter of John Tory, with no concerns or roadblocks thrown up by Dalton McGuinty's Liberals despite the evidence of potential mob connections. The pension fund attached to that union is now being advised by Liberal supporters Fengate Capital Managment, and the various consortiums to which it belongs are landing more and more lucrative PPP contracts.

We also know that Ontario labour is pulling no punches to make sure Dalton McGuinty wins the election. The Working Families Coalition is run by an amalgam of labour unions that have enjoyed labour-friendly legislation pushed through by Dalton McGuinty's Liberals. The favour is being repayed by a massive third-party advertising campaign that heavily criticizes John Tory and the Progressive Conservatives.

It just seems odd that one of the most powerful allies for John Tory was crushed with the acquiescence of the McGuinty Liberals, despite serious reservations about just who would be running the union, and that same union's pension fund, under new management, is part of a consortium that is winning infrastructure project after infrastructure project.

What a remarkable series of coincidences.