Audit put brakes on kickbacks at Honda 0
All it took was a random audit by Canada Revenue Agency to put an end to a kickback operation that was being conducted out of the Honda plant in Alliston for several years, a court heard on Monday.
The operation started when Darwin Whitton, of Stayner, a technical co-ordinator of calibration at Honda, devised a plan to overbill the company by rigging the bidding process for contract work from 2003 until 2008.
Court heard Whitton benefitted from the operation to the tune of more than $600,000 in kickbacks and secret commissions.
However, Whitton's partner in the operation, Barry Thompson, a 68-year-old Bellwood electrician, only benefitted enough to keep himself employed by doing the contract work for Honda.
Court heard how Whitton would tip Thompson off on the highest bid that he could quote for jobs, then Whitton used his influence at Honda to ensure Thompson was the successful bidder and got the contracts.
In exchange for getting the contracts from Honda, Whitton then instructed the electrician to provide him with $1,000 a month in cash, along with hundreds and thousands of dollars worth of other items, including two snowmobiles, tractors, a swimming pool, landscaping, kitchen renovations, a travel trailer and two all-terrain vehicles.
"The list goes on and on," said Crown attorney Sarah Tsar, who produced a long list for the court.
"Mr. Whitton was motivated by greed, pure and simple," said the Crown, while admitting Thompson was "taken advantage of " by Whitton, although Thompson knew he was participating in illegal activity.
"Clearly, Mr. Whitton was the one enjoying the benefits of this arrangement-- Mr. Thompson was not living a lavish lifestyle as Mr. Whitton had been."
The Crown noted Thompson only provided the goods and cash to Whitton to ensure he would receive the continued electrical contract work at Honda.
While Whitton never reported the kickbacks on his income tax statement, the electrician did report all of the goods he delivered to Whitton as legal expenses on his own income tax returns.
It was that reporting of expenditures that brought the lucrative five-year scheme to an end, when in a random audit of the electrician's business, Canada Revenue noticed the numerous expenditures, like the swimming pool and tractors, were not typical of an electrical contracting business.
In the end, the electrician admitted to the operation and was willing to testify against Whitton.
But Whitton unexpectedly pleaded guilty to tax evasion and two counts of receiving secret commissions. He was sentenced to six months in jail and 17 months of house arrest. He also lost his job of 18 years at Honda.
Thompson pleaded guilty to corruptly giving Whitton a total of $622,000 in goods and cash in exchange for obtaining the bids.
Thompson was sentenced to a two-year conditional sentence and a $60,000 restitution fee, which he quietly handed over to a Honda representative in court.
His lawyer noted Thompson had to borrow the money to make the payment.
Thompson is also barred from ever doing work for Honda.