Repairing Elliot Lake mall was futile, owner testifies

The owner of the crumbling Algo Centre Mall admitted Thursday he actually had the cash to fix the leaking roof but chose not to because it would have meant pouring money down the drain.

Robert Nazarian says Algo Mall 'was a black hole … that mall was doomed'

The owner of the Algo Centre Mall says he had the cash to fix the leaking roof but described the mall as a black hole he didn't want to put money into repairing 2:35

The owner of the crumbling Algo Centre Mall admitted Thursday he actually had the cash to fix the leaking roof but chose not to because it would have meant pouring money down the drain.

Testifying for a third day at the inquiry into the mall's deadly collapse, Robert Nazarian said he sold a property he owned in 2009 — four years after he purchased the mall — then spent $2.6 million to buy another.

Why, commission counsel Peter Doody asked, didn't he instead put that money into fixing the roof?

"Because," Nazarian said.

Doody: "Because why?"

"The Algo Mall was a black hole," Nazarian responded. "No matter how much money you put in … that mall was doomed. Simply, I would not put my life in it. I worked 42 years to gather some funds for my family. I'm not going to put everything in this building."

The stunning admission came after days of testimony about how Nazarian had been desperate to finance repairs to the perennially leaking roof, which caved in last summer killing two women.

John Pomerleau, a funeral director in the town, called Nazarian's comments unreal.

"Wow. I guess lives are a waste of money, so we don't want to do that," Pomerleau said.

"If he had the money, I don't see why this wasn't fixed and then dump it, if you want to dump it. Do it in good conscience and things would have been good all round."

'A mistake'

Nazarian also testified about entering into a series of dubious multimillion-dollar contracts and cash transactions to obtain a grant or loan to repair the building.

"It's a mistake, I shouldn't have got involved," he said. "Out of desperation, I got involved."

The scheme, hatched around the middle of 2008, involved a "dear friend" of the Nazarians, Alex Sennett, who set up a general contracting company called Empire Roofing and Restoration.

Sennett, who had never done any contracting, then signed six-figure contracts with Nazarian's company, Eastwood Mall, to do roofing restoration work.

Sennett used those documents to try to get a grant, which he would have used to hire a real contractor. He never did raise any cash.

Nazarian also used the contracts to ward off the Royal Bank, which was threatening to call his mortgage over the mall's state of disrepair, and was demanding immediate corrective action at a cost of about $3 million.

To make Empire appear an active company, another contractor who had done roof work returned $80,000 Nazarian had paid him.

Nazarian then gave the money to Empire, which it paid back to the contractor, Glen Day.

"You took part in this series of financial transactions in order to make it look like Mr. Day was doing work for Empire," said commission counsel Peter Doody.

"Why was it necessary to go through this bit of a song and dance?"

"There was no song and dance," Nazarian said. "Completely legitimate. We were giving a chance to our friend to find a grant for us. We were struggling to survive. We were knocking every door possible to get help."

"It was a false way," Doody said.

"How could we get a grant if we don't have another company?" Nazarian responded. "Eastwood was paralyzed."

Any money raised by Sennett, whom Nazarian called an educated businessman, would have been used to finance roof repairs, the owner insisted.

"There's no hanky-panky or any other reason beside this," Nazarian said. "We did not cheat anyone."

The plan looked sketchy, Nazarian said, so he went to his lawyer, who told him to give up on it.

Nazarian, who said the plan was Sennett's idea, followed the lawyer's advice, eventually.

"How could a company borrow money and pay himself as a contractor to do the job," Nazarian said. "It doesn't make sense."

Nazarian is expected to face a fourth day of questioning Friday.

Nazarian bought mall 'as is'

Earlier Thursday, the company from which Nazarian bought the ill-fated mall released a statement to "clarify the facts regarding the sale of the Algo Centre Mall" in August of 2005.

"We provided Mr. Nazarian with all the information he requested prior to the sale, as any responsible vendor would do," Richard Kennealy, general manager of Elliot Lake Retirement Living, wrote in a letter given to the media.

"Mr. Nazarian was made aware by us and others, including tenants at the mall, that the parking deck leaked at times during the year. With this knowledge, he negotiated two price reductions of $1 million each to allow him to address the issue.

"The letter requesting the first discount gave the reason that 'the purchaser intends to improve the condition of the property and parking lot in due time.'"

His request for the second reduction was to allow him to have sufficient cash in reserve to effect repairs. In addition, both parties — Mr. Nazarian and Elliot Lake Retirement Living — agreed that the property would be sold ‘as is’."

The statement contradicts testimony given by Nazarian in which he said he did what he could to keep the leaking building in good shape. Nazarian claimed the previous owners gave him no inkling of the poor state of repair the building was in when he bought it in 2005 — and that it would cost millions to fix the leaking roof.

Nazarian said he wanted to sue the previous owners but his lawyer advised him against it.

Painstaking questioning

Since Nazarian began testifying on Tuesday, the inquiry has heard confusing accounts about measures he took to repair the building.

Under sometimes painstaking questioning, Nazarian has had difficulty explaining deals he made to repair the leaking mall.

On several occasions, the commissioner and commission counsel have scolded him for rambling, off-topic answers as lawyers struggled get straightforward answers.

"I'm going to ask the question, sir, until I get an answer," commission lawyer Peter Doody said.

To which Nazarian replied: "You can ask a hundred times if you like."

 Nazarian's response caught the attention of Commissioner Paul Belanger.

"You go on, and you engage in a lot of embroidery which is making this very long," he said.

While the commission has set aside a week to hear from Nazarian, it is possible his testimony could continue into next week.

"I ask you to simply concentrate on the question of Mr. Doody or any other lawyer asking you —  to respond to that question — not to go on with other stuff, because it's going to make this eternally long," Belanger said.

During testimony Wednesday, Nazarian said in 2008 a company jack-hammered holes in the mall's already leaking roof-top garage, creating an even worse problem.

The public inquiry was established in July 2012 by the Ontario government and has been underway in Elliot Lake since March.

It was created to report on events surrounding the mall roof's collapse on June 23, 2012, the deaths of Lucie Aylwin and Doloris Perizzolo, the injuries to others, and the emergency management and response.

With files from The Canadian Press