TDSB paid $200,000 in settlement, documents reveal

The Toronto District School Board paid invoices totalling $200,000 as part of an out-of-court settlement with a food services company over an unrelated matter, documents show.

The invoices dating back three years did not appear in the school board's accounting department, where all billings are vetted and approved, until May, 2013, when the lawsuit over an unsuccessful tender for a cafeteria-services contract was settled, a school board document shows.

Details of the settlement are in a confidential package of documents given to trustees during a private meeting last month and obtained by The Globe and Mail. The documents, consisting of correspondence from food services company Neo City Café, copies of the invoices and internal e-mails, reveal that senior staff agreed to pay the $200,000 for meals for summer camps before verifying the accuracy of the invoices.

As part of the settlement, Neo City was also awarded a commercial lease to operate a catering business on generous terms. The company pays $1,100 a month to rent a kitchen in a school – an amount that does not cover the board's operating costs.

Education director Donna Quan released the documents to trustees in response to stories in The Globe about the board's dealings with Neo City, including the mysterious $200,000 payment.

The Neo City saga highlights a lack of transparency at Canada's largest school board – the documents last month gave trustees their first glimpse of the settlement reached 1 1/2 years earlier. Education Minister Liz Sandals appointed a consultant to probe the board after then-chair Mari Rutka asked her to intervene last month. One of the issues Ms. Rutka raised with Ms. Sandals was lack of disclosure surrounding the Neo City settlement, according to sources close to the school board.

Ms. Quan declined to be interviewed. In response to questions from The Globe, TDSB lawyer Tony Brown said in an e-mail that the board "will not be commenting on a matter that was dealt within an in-camera meeting and which involves confidential legal information."

The documents contain an e-mail dated Nov. 26, 2014, from Ms. Quan to Ms. Rutka, saying the invoices were paid after "extensive verification." But the documents do not say why 17 invoices dating from July 5, 2010, to July 29, 2011, did not appear in the board's accounting department until the settlement. "It should be noted," TDSB comptroller Craig Snider said in an e-mail last month to Ms. Quan, "that the invoices had not been previously received by Accounting."

The invoices were only posted into the school board's central finance and payment system at the "conclusion of legal proceedings," Mr. Snider says in his e-mail.

The sources questioned why senior staff would settle a lawsuit over an unsuccessful tender by paying unrelated invoices. "One has nothing to do with the other," said one who asked not to be named.

The dispute dates back to 2009, when Neo City's owners, George Tsiopoulos and his wife, Stella, sued the school board, accusing it of "arbitrarily" refusing to accept their cafeteria-services tender. The board said in its statement of defence that it rejected the tender because it arrived two minutes after the deadline for bids.

The Tsiopouloses did not respond to a telephone message and written questions from The Globe.

The couple was also unhappy that Neo City's lease was not renewed at a high school that closed in 2001 due to low enrolment, and reopened 10 years later as the John Polanyi Collegiate Institute. Neo City ran a catering business in the school for eight years until July, 2012.

That same month, Ms. Tsiopoulos wrote to Chris Spence, Ms. Quan's predecessor, informing him she was filing a formal harassment complaint over the board's "vindictive decision" to terminate the lease.

In a follow-up letter in May, 2013, to Ms. Quan, Ms. Tsiopoulos accused the board of "continuously" ignoring outstanding invoices totalling more than $200,000. The payment is crucial, Ms. Tsiopoulos wrote, to "avert the loss of our personal property – our home."

The school board agreed to pay the invoices that same month, according to an e-mail dated May 31, 2013, to senior staff from Grant Bowers, general counsel at the time, outlining the terms of the settlement.

On July 3, 2013, Mr. Snider, the comptroller, sent an e-mail to executive superintendent Jim Spyropoulos, asking him to review the invoices. Mr. Spyropoulos responded eight days later, confirming with the help of staff that the invoices for meals for Focus on Youth summer camps, a program he runs, were accurate.

Mr. Bowers says in a second e-mail dated July 2 that the "late payment" of the invoices is part of a "global settlement of all outstanding issues between the parties, including the litigation." Mr. Brown, the TDSB lawyer, told The Globe in an earlier e-mail that the invoices were not paid until mid-July, "after it was verified that the services were actually delivered."

The school board also signed a five-year lease with Neo City, with an option to renew for an additional five years. Under the lease, Neo City pays $5.61 a square foot to rent kitchen space in the Yorkdale Adult Learning Centre. It costs the school board $10.36 a square foot to operate its premises.