News

Towards Understanding The $1.2 Million Decision

By Adrian Duyzer
Published May 04, 2012

I've spoken to a lot of people about the City's decision to give Hess Village Real Estate $1.2 million in a loan and grant since writing about it yesterday. The people I spoke with were unanimously disgusted with Vranich's past behaviour, but two of the responses provided a different perspective on the situation, one that revolves around the fact that Hess Village Real Estate is a separate legal entity from Denis Vranich personally.

Raise the Hammer editor Ryan McGreal:

I'm really conflicted on this one. A corporation is by definition a legal mechanism that limits the personal liability of its owners and/or shareholders. When you do business with a corporation, you are doing business with the legal entity of the corporation and not directly with the people who own it. As far as I know, Hess Village Real Estate has not been convicted of any activities that would render it ineligible for the city's financial incentives.

I personally find it galling that a company owned by a convicted sex offender is receiving public money, but I worry about the appropriateness of denying an application that meets its eligibility criteria and follows the proper process. The alternative to a clear, transparent process is an arbitrary, politicized process that would be far more susceptible to cronyism and corruption.

If we decide that the application process should take into consideration the personal conduct of a corporation's owner, it seems to me that the proper course is for council to consider the feasibility of changing the process to reflect that.

I was also privileged to get an opinion from a friend who practises law. He wrote:

The spirit of the upset on this topic clearly comes from a whole hearted place. There may be a number of reasons why the funds should or should not be granted in this scenario. With this said, I may be swimming against the current here by suggesting that the past criminal convictions of the director of a corporation do not appropriately form the criteria when assessing entitlements to public funds. If it were The Charter of Rights and Freedoms would form the basis of some obvious challenges which may very well be prima facie cases of res judicata.

To save you the trouble of looking up "prima facie" and "res judicata", this basically says that the problem with denying Vranich's company a grant and loan on the basis of past criminal behaviour would be, on its face, a situation where Vranich was being retried for a crime that had already been adjudicated.

I understand these perspectives, so where does this leave me? First, it makes me feel better about the City's decision. If they followed their standard process in a fair manner, no one ought to criticize them for it.

Second, it keeps my ire focused on the person on whom it ought to remain: Denis Vranich himself, who has the gall to avail himself of the public purse in spite of his disgraceful conduct. As Undustrial pointed out in a comment:

It's not just the sex crimes.

First there's the numerous derelict buildings left to rot or burn (how many times did this one catch fire?), along with fire code citations. Then there's the bribery allegations. The unpermitted parking lots. It's not like the city hasn't had to demand these loans back from Vrancor before...

Oh, and the Rok Bar is now getting publicly denounced for wage theft from the waitresses.

There is every reason to be outraged here.

Well said.

UPDATE:

I want to be clear that this blog post is not intended to excuse this situation. Rather, it is an attempt to clarify how it may have happened. It is still outrageous, and it should cause us to examine whether or not there are legal ways to prevent this type of situation from happening in the future.

Adrian Duyzer is an entrepreneur, business owner, and Associate Editor of Raise the Hammer. He lives in downtown Hamilton with his family. On Twitter: adriandz

11 Comments

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By Robert D (anonymous) | Posted May 04, 2012 at 08:04:43

I know of several provincial licenses across Canada which require criminal records checks on the directors and officers of a corporation to ensure that a "bad actor" is not perpetuating his past bad acts through the shelter of a new corporation. If these are valid considerations for licensing I don't see why they shouldn't be valid considerations for a grant/loan. If someone bilks the city of thousands of dollars should we look the other way when he incorporates a new company? Surely not. I agree such conditions need to be made part of the published process and criteria - we cannot just take this into consideration when we feel like it.

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By Fair is fair (anonymous) | Posted May 04, 2012 at 08:47:10

1.2 million for Vranich, but Lynwood hall is 1.2 million in need of repairs?

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By Rebar (anonymous) | Posted May 04, 2012 at 09:39:59

While we're working toward greater clarity, we should also acknowledge that Denis Vranich is not Darko Vranich and that, AFAIK, Hess Village Real Estate is not a Vrancor Group holding. Darko is the owner/president/CEO of Vrancor Group/Construction/Hospitality. Denis is Darko's son, it is true. But does Denis work for Vrancor in any official capacity? If so, can someone draw the connections more clearly? Judging someone as guilty based on their own actions is one thing, but judging them guilty based on the actions of another is another. If we're splitting hairs on moral fibre, we'll want to keep these arguments above-board, lest we betray our own frailties in the process.

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By John Neary (registered) | Posted May 04, 2012 at 12:47:59

Hi Adrian,

I agree with your moral outrage over Denis Vranich benefitting from a handout of public money. But for reasons similar to those stated above, I think the city ought not to try to prevent it.

What is more unjust, and deserving of remedy, is what you pointed out in your other article: that the rules are different for Denis Vranich than they would be for a person applying for an entry-level municipal job. Although I think the remedy is on the other side of the equation.

John

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By Undustrial (registered) - website | Posted May 04, 2012 at 13:40:09

This isn't about who owns which end of which business in particular (Darko, Dennis, Diana etc). Development in this town is controlled by a very small number of prominent firms/families/friends and elites (eg: Effort Trust, LIUNA etc). Individual ownership of firms/projects if often in flux, but it isn't hard to follow the names involved. As has been said before, most of these developers have some degree of bad reputation, but none really compare to those of the Vranich family, in more ways than I've got space to name.

My problem is not that someone with a criminal record is being given public funds. My problem is that 98% of this town's population never has a chance at such loans in the first place. These loans institutionalize firms like Vrancor, and if there's a lack of others able to develop buildings and properties downtown, it's because they keep being given large chunks of our money.

BTW: Dennis no longer directly owns the Rok Bar, which I should clarify. That's been a long an sordid saga, including assaults, operating without a licence and allegations of unpaid wages (under both new and old owners). Is this the kind of development we want downtown?

http://www.thespec.com/news/local/articl...

http://peaceofhermind.blogspot.ca/2010/1...

Comment edited by Undustrial on 2012-05-04 13:40:38

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By brodiec (registered) | Posted May 04, 2012 at 21:10:36 in reply to Comment 76482

Also, in my professional opinion, "Rokbar" is totally scuzzy. As a gay dude seeing some young girl's visible lady parts in a thong while she served me beer was really disgusting.

Comment edited by brodiec on 2012-05-04 21:12:19

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By Alpha (anonymous) | Posted May 06, 2012 at 15:52:13 in reply to Comment 76496

insult spam deleted

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By brodiec (registered) | Posted May 04, 2012 at 20:31:04 in reply to Comment 76482

I completely agree with you and often rant about the crooked D* Vranichs, usually while well inebriated. Maybe we can fantasize about a better process?

I usually dislike popular votes. They're terrible for writing law even though some people seem to think that's the solution to government. However in the case of awarding these sorts of grants I think in this age we can put this up for a vote. Suddenly journalism like RTH, The Spec etc. plug into the awarding of these funds. It does introduce an element of popular competition which I think it's as healthy as a civic salad.

Anyhow, just trying not to be too gloomy having watched the Staybridge Suites 2.0 have it's sign sprayed in foam format from a skyjack or whatnot.

Comment edited by brodiec on 2012-05-04 20:33:41

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By Pxtl (registered) - website | Posted May 04, 2012 at 14:31:18 in reply to Comment 76482

Operated without a license for a few months... no biggie! Just make a few changes that you should've made already and everything's right as rain.

Hmm, I wonder if other businesses in Hamilton get that kind of deal.

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By TnT (registered) | Posted May 04, 2012 at 16:13:24

I assure you they do not. They would be given threats of fines and ordered to shut down. However, I am guessing these types of developers have more resources then bylaw and can easily outmaneuver them legally and fiscally.

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By Kevin (registered) | Posted May 04, 2012 at 21:44:34

Undustrial's clear, concise comments quoted in this piece are write on the money.

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