Canadian Design and Construction Report staff writer
London Health Sciences Centre (LHSC) has launched two explosive lawsuits seeking more than $60 million in damages, alleging a decade-long, multi-million-dollar fraud scheme involving construction and facilities contracts was allowed to continue because former top executives, including the CEO and CFO, knew about the potential wrongdoing and failed to act.
The allegations, which have not been proven in court, are detailed in two separate Statements of Claim filed in the Superior Court of Justice in London.
The first, a $50-million lawsuit filed July 9, alleges a “prolonged, deliberate, and coordinated fraud” was orchestrated by a former facilities executive and several contractors. The second, a $10-million lawsuit filed June 13, claims former CEO Jackie Schleifer Taylor and other senior leaders were given a report detailing the potential fraud in 2022 but “condoned and/or intentionally ignored” the evidence.
None of the allegations in either lawsuit have been tested in court, and statements of defence have not yet been filed.
The alleged $50 million fraud scheme
At the heart of the first lawsuit are allegations against Dipesh Patel, a former LHSC executive for capital redevelopment. The hospital claims Patel conspired with contractor Paresh Soni and two of his own direct reports, Derek Lall and Nilesh Modi, to defraud the hospital.
The unproven allegations state the group manipulated procurement processes to improperly award lucrative contracts to companies controlled by Soni, including BH Contractors and the GBI Group.
The claim alleges the scheme involved falsified documents, inflated invoices for work that was not performed, and the use of a “fictitious alias” to secure contracts.
A key example cited in the lawsuit is the University Hospital Window Replacement Contract, awarded to BH Contractors. The hospital alleges the final cost of nearly $22 million “exceeded BH Contractor’s initial bid by approximately $10 million.” The claim also alleges “multiple significant issues with the quality of the installation and of the windows themselves, resulting in issues with water leaks and insects.”
Another Soni-controlled company, GBI, allegedly invoiced LHSC for more than $300,000 for a reporting system called “FMX” that the lawsuit claims “did not exist.” Between 2013 and 2024, GBI companies were paid over $11.1 million by the hospital.
The alleged $10 million executive failure
The second lawsuit targets former CEO Jackie Schleifer Taylor, former Chief Financial Officer Abhijeet (Abhi) Mukherjee, and former Corporate Hospital Administrative Executive Bradley Campbell.
It alleges that in April 2022, Schleifer Taylor and Campbell were provided with a “confidential management-initiated report” that documented “concerns regarding potentially fraudulent behaviour in facilities procurement and construction contracting practices.”
Despite this, the lawsuit claims the executives failed to notify the hospital’s Board of Directors, its internal audit department, or its external auditors, Ernst & Young.
Instead, the Statement of Claim alleges they “permitted staff implicated in the Allegations to lead an engagement with PricewaterhouseCoopers LLP into the review of rising construction costs, resulting in a 2023 report that failed to address or even acknowledge the existence of the Allegations.”
The lawsuit further alleges that Mukherjee was given the same report in December 2022 and also failed to take appropriate action. Both Schleifer Taylor and Mukherjee are accused of subsequently signing annual representation letters to the hospital’s auditors, confirming they had “disclosed all instances of identified or suspected non-compliance with laws and regulations, including fraud,” in direct contradiction to the knowledge they allegedly possessed.
The hospital is suing these former executives for breach of fiduciary duty, negligence, and wilful misconduct, seeking damages estimated at $10 million.
In a statement to other media, LHSC said it has “taken immediate action to terminate relationships with the employees and vendors named in the claim” and has provided its findings to the London Police Service.
Attempts by other media outlets to reach the various defendants for comment have so far been unsuccessful.
