Oct 31, 2008 - 12:00 PM

Tony Van Alphen, Torstar news services

An employee of the Ontario government's real estate arm owned property with landscape contractor Frank Gabriele while working on the bidding process for a multimillion-dollar piece of public property that the businessman's company won, a court has heard.

Mr. Gabriele, the main defendant in the civil trial into corruption allegations involving the province's Ontario Realty Corp., acknowledged yesterday he was "a good friend" of agency employee Joseph Clasadonte.

The employee handled the sale of 88 acres (35 hectares) of land in Bowmanville in 1996.

Government lawyer Ronald Carr revealed that Mr. Clasadonte and Mr. Gabriele are owners of 787774 Ontario Ltd., which holds property in Orangeville.

"And we continue to hold it to this day," Mr. Gabriele said proudly.

Mr. Carr told the court that Rosebury Holdings, in which Mr. Gabriele owns a stake, won the Bowmanville property with an offer of $1.725 million after Mr. Clasadonte allowed the firm to make a second proposal because the first one was too low in view of other bids.

Regarding any discussions with Mr. Clasadonte on improving Rosebury's initial bid of $1.5 million, Mr. Gabriele said he didn't remember any specific talks.

"There was that kind of discussion," Mr. Gabriele told Mr. Justice Frank Newbould of the Ontario Superior Court of Justice.

"It was 12 years ago so I really have no recollection whatsoever."

The Ontario Ministry of the Attorney General and ORC sued about 50 individuals and companies, including several Gabriele-related firms, eight years ago for fraud, conspiracy, bid rigging and kickbacks involving land sales and environmental clean-up contracts during the late 1990s.

The trial finally started this month.

Although Mr. Gabriele didn't remember talks with Mr. Clasadonte, he recalled a dispute over service problems that threatened the Bowmanville sale and generated more than $500,000 in reductions on the final price for Rosebury and another company linked to the landscape contractor.

The cuts came despite provisions in the deal that prohibited price adjustments, Mr. Carr said.

Mr. Carr also disclosed John Perdue, another ORC official who recommended some of the price cuts to Mr. Clasadonte for approval, worked for Rosebury and the Gabriele family to help get subdivision approval from Durham region.

Mr. Gabriele acknowledged Mr. Perdue, a land development co-ordinator at ORC, was "moonlighting" for his firm but noted the government agency gave their employee permission.

Mr. Carr also said a third ORC employee, John Falcioni, eventually worked as a sales agent for a Gabriele-connected home company at the Bowmanville site.

The court heard Mr. Falcioni became involved in the sale of a 29-acre parcel of land in Mississauga where P. Gabriele & Sons offered $2.22 million in 1998 while another developer proposed $2.25 million.

But Mr. Carr submitted records of handwritten changes to the Gabriele offer after the bid deadline.

Mr. Falcioni was the ORC official who took the bids and made the changes, according to pre-trial proceedings. Under questioning from Mr. Carr, Mr. Gabriele acknowledged talking to someone at ORC but denied he witnessed the changes.

Although the Gabriele offer was lower, Mr. Falcioni recommended the sale to the company.

ORC records show Mr. Gabriele also received price concessions on the Mississauga property totalling about $300,000 for bad soil and further savings on a vendor takeback mortgage.

Mr. Gabriele sold the land with little improvement for $4.39 million to the same firm that lost the bidding eight months later. The transaction left Gabriele with a profit of $2.4 million.

"You make it sound like profit is a dirty word," Mr. Gabriele replied after Mr. Carr noted the big gain.

In its claim, the government is seeking to disgorge profits from the Bowmanville and Mississauga transactions and other property deals involving Gabriele related firms.

-- Tony Van Alphen is a business reporter with the Toronto Star