Six arrests in kickback probe

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Dale Brazao – December 21, 2006

The former campaign chair for two Toronto mayors faces fraud and bribery charges in connection with the misappropriation of federal government grants.

John Danson, 60, a long-time Liberal party activist and campaign manager for mayors Mel Lastman and June Rowlands, is one of six people arrested in the past week in an ongoing police investigation of grants obtained from the former Human Resources Development Canada.

Danson was also a fundraiser for Tony Clement's failed bid for the leadership of the provincial Progressive Conservatives and donated almost $10,000. Clement, who is now federal health minister, was Ontario's health minister at the time.

Danson, a self-described training expert and communications consultant, is the son of Barney Danson, a former defence minister in Pierre Trudeau's cabinet. The younger Danson managed June Rowlands' campaign in 1994 and did the same for Mel Lastman three years later.

The arrests announced by the Peel Region police fraud squad yesterday bring to 27 the number of people charged in the three-year investigation. Several of those charged have been convicted or pleaded guilty.

Police allege that HRDC was defrauded of more than $3 million between 1999 and 2004 using false invoices, overbilling and bribes to obtain approval for projects.

The Peel police investigation has centered mainly on an HRDC centre in Mississauga.

Money that was earmarked for training programs and skills development was allegedly diverted through a variety of schemes and payoffs, police say.

The charges against Danson relate to his time as director of the Quality and Continuous Improvement Centre, a not-for-profit training arm of the Peel District School Board.

The investigation was started in the wake of the so-called "Billion-Dollar Boondoggle," after the auditor general's report in 2000 found the federal department had handed out almost $1 billion in grants with little or no accountability.

The ensuing outcry eventually cost then human resources minister Jane Stewart her job. The federal department also got a new name and is now known as Human Resources and Social Development Canada.

The HRDC was a mammoth $60-billion-a-year operation that was responsible for about half of all federal spending. It managed a wide range of social-assistance programs, such as employment insurance claims, and applications for Canada Pension Plan and Old Age Security benefits.

"We really can't get into details because the investigation is ongoing and we anticipate there will be more arrests in the near future," Det. Bob Lundy said yesterday.

"We've been at it for three years and we're still full steam ahead."

The courts have already dealt with many of those arrested earlier in the probe.

In August, Joan Rowe, a former project manager of an HRDC office in Mississauga, was sentenced to 28 months in prison after pleading guilty to defrauding the federal government and accepting secret commissions.

Rowe, 44, was also ordered to make restitution of almost $500,000.

The court heard how Rowe and other employees who worked for her diverted thousands of dollars in HRDC grants to herself, her family and others, by submitting invoices for work and services that were not provided.

Her husband, Vinton Clarke, was recently convicted for his part in the multi-million-dollar fraud ring, and is in custody awaiting sentencing next month.

Mississauga residents Jason Kulra, 32, and Rula Norman, 31, who worked for Rowe, also pleaded guilty to fraud and were each given 18-month conditional sentences at the August hearings and ordered to pay $50,000 in restitution.

Antonella Klausmann, 33, another HRDC employee, pleaded guilty to breach of trust and received a suspended sentence.

In September, the Peel police task force arrested Beach resident Dennis Metcalfe, a former Toronto-based HRDC project officer, and charged him with accepting a secret commission. Metcalfe's case is before the courts.

Three years ago, a $1.2 million contract that John Danson was awarded by then health minister Clement for an anti-smoking campaign was severely criticized in the Ontario Legislature.

Danson, who at the time headed a company called Unauthorized Solutions Inc., worked on Clement's failed leadership campaign and contributed almost $10,000 to the minister's campaign coffers.

A number of those previously charged in the investigation, dubbed "Project School Board," worked directly for HRDC or the Dufferin-Peel Catholic District School Board.

Also charged with fraud yesterday are Harbhinder Bajwa and Harvinder Rakhra, both of Oakville, and Laura Mikos of Mississauga. Peter Rethazy and Phillip Goodman of Toronto are charged with conspiracy to commit fraud.

Original article on Toronto Star website