STAGE 3: IMPLICATIONS OF CRIMINAL FRAUD

I was not happy with Management whitewashing the Internal Audit investigation, to put it mildly. INTERNAL "MISMANAGEMENT, FRAUD AND CORRUPTION"

After six months, I asked my lawyer (Mr. Richard Darrah) for an upscale private investigator to look for fraud, or rather, implications of criminal fraud. Ontario Hydro was in a major financial mess, so I decided that a full legal case with charges (on the V-P. now, as well as Jim Brown) would do serious damage. Also, Maurice Strong had been nominally Director of Research during the IA investigation, and Larry Leonoff had been implicated. So I wanted a "heavy smell" case, based on extensive circumstantial evidence. (My spouse and lawyer did not support my views.) CASE STRATEGY, AT THE START, LEGAL CONSIDERATIONS, 

Private Investigators International (PII) understood the message perfectly, and finished their investigation in a few weeks from scratch. PII focused on CARIAD at first, and found that they had sold their house to their children just after my memo went in, had $250k in their bank account, and looked about to flee the country (they did). In a "perimeter search" or garbage pick-up, PII found a most unusual fax, which freely talked of laundering money from Indonesia. It was hard to believe that people would actually talk of laundering money in a fax; obviously CARIAD were amateur crooks. PII obtained all their information from legal sources, credit checks and garbage pick-ups. THE FULL LEGAL CASE

Coupled with the Research information, at this stage all we could say that we knew for certain about CARIAD was that they indulged in criminal fraud: CARIAD certainly didn’t do electron microscopy, and acted rather unusually for a business.

PII also checked out Jim Brown and Don Mills, the Director. Apparently Don was clean, but Jim showed the typical profile of a manager in decline. Jim had major financial problems - credit card refusal, short term cash flow problems, delinquent phone and hydro bills. There were also suspicious payments into Jim’s accounts (whatever that means: I interpreted it as a polite way of saying that PII had tracked the source, legally). Jim had major alcohol problems, known for many years, and there were rumors of social problems with the TEM technician. From Research, we knew that Jim had no background in TEM, yet Jim had railroaded through the CARIAD contracts.

All the circumstantial evidence pointed to criminal fraud, yet there was no criminal case because the money loop between Jim Brown and CARIAD was not complete. The case was "one step short of the line". To put the case in perspective: if the CARIAD fax had talked about laundering money to Jim Brown, we would have had to take the case to the Fraud Squad (not the master plan at this stage). CASE STRATEGY

STAGE 4: ARTHUR ANDERSON (AA)