A New York Times investigation has found that Austrian-based luxury spa company Therme “misrepresented” itself and misled the province of Ontario in order to secure a lucrative, nearly century-long deal in Toronto.
Therme Canada secured a 95-year lease as part of the province’s plan to redevelop Ontario Place — a plan that has already ballooned in cost and drawn criticism from both the public and Auditor General, Shelley Spence.
Spence’s report last December found that the Ford government’s contracting process was “not fair, transparent or accountable to all participants,” with some developers, including Therme, having direct access to an Infrastructure Ontario executive.
“We found a Vice President at Infrastructure Ontario, responsible for conducting the financial assessments, communicated directly with Therme Canada and other participants during the call for development open period,” the auditor’s report found. “The VP exchanged nine emails and held one call with Therme’s legal counsel about media interest regarding Therme’s involvement in the call for development process.”
Now the New York Times is adding another layer of controversy to the plan, reporting that Therme “misrepresented itself, misleading the Ontario government and exaggerating its experience in its bid to secure the Toronto deal.”
In its probe, the New York Times interviewed dozens of people involved in the company’s operations and bidding process and also dug into corporate filings to conclude that Therme “falsely presented itself as an industry player that operated as many as half a dozen spas in Europe.”
In reality, the Times said, Therme had at the time built and run just one spa, on the outskirts of Bucharest, Romania.
“So how could this company — headquartered in Austria and running one facility in Romania — persuade the Ontario government that its business portfolio was far larger than it actually was?” the Times questioned in its piece. “A hint lies in the company’s insignia, a riff on Botticelli’s Venus. It bears a striking similarity to the logo of another European spa complex, one built and operated by an entirely different company — with the same name.”
So was Premier Doug Ford and his government duped into believing the company he was dealing with was larger than it was?
Ford faced that question on Wednesday and vowed to get to the bottom of it.
“When I heard this allegation I went directly to the Minister and the Deputy and said ‘here, look into this,’ ” he said.
“They are going to look into this allegation and find out…”
The Times also reported that the Therme company that secured the Toronto lease bought the spa near Munich that shared its name last December. “Therme had finally purchased a spa it had claimed to run,” the Times story noted.
Ford touched on that, but said he still wanted to look into the dealings with Therme. He stopped short of calling for an investigation though.
“Now what I understand is they are all one company, so one bought the other company, so I guess they’re a larger, stronger company,” he said.
“I want to double and triple check the contract and make sure that anything that was said in the story from The Times, we’ll look into it and make sure everything passes the smell test.”
The Times investigation also found a shaky financial base at Therme when it pitched for the Toronto spa deal.
“Auditors found it was losing money and had less than 1 million euro (about US$1.1 million) in equity.”
By securing the Toronto deal, the Times said Therme was able to attract more investments and secure new projects.
CityNews has reached out to Therme Canada about the New York Times probe, and is awaiting a response.
‘What they found is stunning’: Fraser
The investigation was a hot topic during the morning session at Queen’s Park on Wednesday, with Liberal MPP John Fraser and Minister of Infrastructure Kinga Surma clashing over the paper’s findings.
“What they found is stunning,” Fraser began. “A company with one small spa, only a million dollars in equity …. yet somehow they convinced the premier that they had a global track record?”
“It didn’t just stretch the truth, it led the Premier down the garden path and Infrastructure Ontario signed right off on it,” he said.
“So why did the Premier green light a 95-year deal with a company that inflated its portfolio and couldn’t pass a basic financial sniff test?”
Surma took on the question, defending Infrastructure Ontario as a “world-renowned arms-length agency,” and noting the massive job creation behind the Ontario Place redevelopment, with 4,700 new jobs created during the construction phase, and 2,000 new permanent jobs once the plan is complete.
“Not only are we creating jobs, but we are also creating a wonderful place for families to visit,” she said.
Fraser wasn’t sold.
“Therme didn’t win a contract, they won a prize,” he argued. “And the deck was stacked behind closed doors.”
Fraser then asked if Ford would “do the right thing” and cancel the Therme contract.
“No, we will not,” Surma shot back. “We will do everything possible to support and create jobs here for the hardworking people of Ontario.”
When faced with the sudden controversy on Wednesday, Premier Ford downplayed the significance of the Therme spa, calling it “one small part” of the overall Ontario Place redevelopment.
“This is going to be something spectacular at the end of the day,” Ford vowed.
‘Cancel the deal’: Stiles
Leader of the Official Opposition of Ontario, Marit Stiles, weighed on the report Wednesday, urging Premier Ford to reconsider moving forward with the spa.
“I think it’s better to get this over with now and cancel the deal,” she said. “And we’ve been saying that since day one. Look, Ontarians never asked for this.”
“We’re not saying there (shouldn’t be) more investment in Ontario Place. But this deal, this deal has to be canceled.”
“Honestly … we questioned from the beginning why the government would go into this deal in the first place when it meant a massive subsidization by government for something that frankly, very few people in Ontario will be able to make use of.”
