Metrolinx and Infrastructure Ontario award additional $255M contract to sanctioned Russian oligarch

Without any fanfare, and with little to no media coverage, Infrastructure Ontario and Metrolinx announced this week a new $255M contract to Strabag Inc. for work on the years delayed Eglinton Crosstown West Extension.

This is the second large Ontario transit construction contract awarded to Strabag, despite there being sanctions on the Russian oligarch, Oleg Deripaska, who holds a controlling interest in the company. In 2021, Strabag was awarded a $757M contract to design, build and finance the tunnel for the Scarborough Subway Extension.

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The announcement comes at the same time as news out of Russia about the death of Alexei Navalny, a Russian opposition leader and political prisoner who was jailed for advocating for reforms against corruption in Vladimir Putin’s government. Back in 2018, Navalny published an investigation alleging that Russian cabinet members and senior bureaucrats had received lavish gifts and hospitality from Deripaska. In 2022, Deripaska sued Navalny to stop him sharing the results of his investigations, and to have photos removed from the internet of Deripaska and Russian Foreign Minister, Sergei Lavrov, together in Japan.

In 2022, the US Senate Intelligence Committee released its report on Russian interference in the 2016 US election, which outlined Russia’s connections to members of the Trump campaign, and how the Kremlin was able to access sensitive information. The report found that former Trump campaign chairman, convicted felon Paul Manafort, had been working on influence operations for Deripaska and others as far back as 2004, having hired a Russian intelligence officer, Konstantin Kilimnik, to serve as a liaison between himself and Deripaska.

The committee wrote that “Manafort’s high level access and willingness to share information with individuals closely affiliated with Russian intelligence services, particularly, Kilimnik and associates of Oleg Deripaska, represented a grave counterintelligence threat.” A company owned by Manafort and his wife had received a $10M loan from Deripaska in 2010, and there is evidence the oligarch had been backing Manafort’s “consulting work” in Ukraine since 2005. NBC News reported at least $60M being exchanged between Deripaska and Manafort’s company, citing financial documents filed in Cyprus and the Cayman Islands.

The plan to put a subway in Scarborough, which would eventually direct $757M towards the Russian oligarch, goes back to Rob Ford, infamous crack-smoking mayor of Toronto and late brother of current Premier of Ontario, Doug Ford. In September of 2014, just a month before he faced a campaign for re-election, Rob Ford announced a subway-heavy transit plan that was light on detail about how it would be funded.

Indeed, “subways, subways, subways” became a catchphrase for Mayor Rob Ford, later echoed by big brother, Doug, when he took over brother Rob’s seat on council, and continued into Doug’s campaign for Mayor of Toronto and Premier of Ontario. After the death of Rob Ford, his replacement in the seat of Toronto Mayor, John Tory, was also stumping for subways, despite ballooning estimates that pegged the one-stop Scarborough subway at $3.2B to build. A 2016 Toronto Star article by Jennifer Pagliaro outlined how a misleading briefing note produced by the TTC on costs related to the originally planned LRT was used to convince council to vote for a subway option instead.

The provincial Liberal government had also, since 2013, thrown its support behind a subway instead of an LRT for Scarborough, promising to fund its construction during tight byelections in Scarborough. This was despite having evidence that the subway was not a sound plan. In 2013 Metrolinx had delivered a detailed 16-page report concluding that the additional cost to build a subway was “not a worthwhile use of money”, but the report was never published by Metrolinx. A draft copy was only made available through a freedom of information request from the Toronto Star.

For the last two decades, transit planning and construction in the Greater Toronto Area has been shambolic. At the end of 2023, Metrolinx CEO, Phil Verster, refused to speak about a possible opening date for Eglinton Crosstown LRT. Construction on the project began in the summer of 2011 and was supposed to be open in 2020. When that date was missed, Metrolinx promised that the project would be “substantially complete” in 2022, but the consortium building the line missed that deadline as well.

Currently the Eglinton Crosstown is more than $4B over budget with no end in sight. In December of 2022, confidential documents from Metrolinx indicated there was “no credible plan” from the consortium, Crosslinx Transit Solutions (ACS-Dragados, Aecon, EllisDon and SNC-Lavalin) to complete the project. At the end of 2023, Metrolinx (an agency of the government of Ontario) ran ads mocking residents who dare to complain about the never-ending project which has been causing traffic chaos for over twelve years, inspiring a parody campaign which was hardly more hostile than the originals.

Parties involved in transit construction (including Infrastructure Ontario, Metrolinx, the Ontario Ministry of Transportation and the consortium) have faced years of criticism for lacking transparency about billions in cost overruns and the never-ending construction. This could perhaps be expected from Metrolinx CEO, Phil Vester, hired to lead Metrolinx to replace departing CEO, Bruce McCuaig, in 2017.

Announcing the hire of Verster, Rob Prichard, then chair of the Metrolinx Board of Directors, called Verster an “experienced rail operator” from the UK, and someone with deep experience delivering infrastructure.

According to Rob Prichard, Chairman of the Metrolinx Board, the Board itself was looking for someone with deep expertise in the field and significant executive experience delivering infrastructure.

“What stood out to us the most is what [Verster] has done successfully is exactly what we need to do, which is to operate, expand, and build services and infrastructure, and to do that while maintaining existing services at the same time,” Prichard said.

What was not mentioned during Verster’s welcome announcement was his failing performance at Scottish Rail. Before taking the Metrolinx job, Verster had resigned from the ScotRail franchise over the company’s poor performance, having faced allegations from a whistleblower that he took bribes from suppliers and contractors.

For residents growing weary with the lack of progress on GTA transit, despite billions and billions in cost overruns, the cast of characters involved is not likely to increase confidence. In Scarborough, specifically, commuters face even more chaotic and time-consuming commutes since the derailment of the TTC’s rickety Scarborough LRT in the summer of 2023, affecting tens of thousands of riders who used the LRT daily. An already crowded replacement bus service faced service cuts last summer, meaning many Scarborough residents now spend up to two hours on a trip that used to take 30 minutes. A far cry from the improvements promised by Mayor Rob Ford and Prime Minister Stephen Harper back in 2013.

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