Dan Brambilla, the head of Toronto's Sony Centre for the Performing Arts, was the subject of an internal probe into his use of public funds in a failed bid to take over the city-owned theatre, but the results of that investigation – even its existence – have never been made public, The Globe and Mail has learned.

The investigation, done for the board more than a year ago by an outside party, examined whether Mr. Brambilla and other senior managers used the theatre's resources to prepare a plan to buy the theatre in 2012, sources with a connection to the Sony Centre say.

The proposed management takeover was part of an effort in the early years of Mayor Rob Ford's administration to gauge buyer interest in the sale of Toronto's three public theatres.

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Mr. Brambilla, who is set to retire as CEO at the end of this month, has confirmed an outside firm did a confidential review.

"I was found not to have done anything improper," he said in an e-mailed response to questions about the probe.

"You should also know that city staff reviewed the bid the executive team of the Sony Centre made and found there was no issue of fairness or conflict," wrote Mr. Brambilla, a theatre industry veteran and former Livent executive.

However, The Globe and Mail has learned that the investigation centred on Mr. Brambilla's use of the theatre's law firm to prepare his takeover plan in 2012.

The law firm later reimbursed the theatre for Mr. Brambilla's legal fees, and the CEO paid for the work, sources said.

"There was an investigation into his use of Sony Centre funds," said one source familiar with events. The person would not discuss the findings of that investigation. Another individual, who did not wish to be quoted, confirmed the probe.

These latest revelations come as Mr. Brambilla and the theatre's board of directors are being scrutinized over a scathing audit report that uncovered a long list of alleged accounting irregularities in connection with a multimillion-dollar renovation, including allegations of sole-source contracts and missing documents. The audit has raised questions about oversight of the Toronto landmark, built half a century ago by business magnate E.P. Taylor.

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The city's auditor-general, Jeff Griffiths, is scheduled to appear before the Sony Centre board on Monday to detail other findings of his staff. Toronto city council also next week will vote on whether to disband the theatre's board – comprising eight citizens and four councillors. The city's audit committee is recommending an interim board be installed. The move would put the theatre under tighter city control until after the civic election and while a replacement for Mr. Brambilla is selected.

Ronald Forbes, chair of the theatre's board, denies there was an investigation of the proposed management buyout. He is leading a fight by the citizen directors against the interim board plan, arguing that the period the auditor examined – between 2008 and 2011 – predates the appointment of the current directors.

The management takeover proposal was the topic of a fiery confrontation in November, 2012, between Mr. Brambilla and several members of the city's executive committee, who raised the potential of a conflict – whether Mr. Brambilla had access to insider information in preparing it because of his position as CEO, and whether he used city resources and work time.

"We didn't investigate. The bid was thrown out," Mr. Forbes told The Globe and Mail, adding Mr. Brambilla and the theatre's CFO "categorically denied" using public resources on their bid.

"They did all this in their spare time. There was no evidence that they used the financial resources of the organization. We couldn't just make accusations," Mr. Forbes said.

Councillor Paula Fletcher, who recently gave up her seat on the Sony Centre board to area Councillor Pam McConnell, said she was very concerned about the potential conflict of the management bid. "We took a pretty good look at that, but I can't tell you any more," she said.

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The bid, submitted by Mr. Brambilla's personal company, Stage-by-Stage Holdings, would have set up a new non-profit, Toronto Theatre Trust, run by senior Sony managers. Under the proposal – sketched out for members of the city's executive by Mr. Brambilla at that 2012 meeting – the trust would take over operating the Sony Centre and responsibility for capital expenses. The management team also offered to take over the city's two other theatres, The St. Lawrence Centre for the Arts, and The Toronto Centre for the Arts in North York, Mr. Brambilla revealed during questions.

Mr. Brambilla told councillors he had found a "philanthropic investment group" willing to donate $10-million to the theatre – money needed to make his plan work. If the city wanted to keep ownership, he said it could step in and invest the $10-million instead.

Councillor Michael Thompson, one of several committee members who raised the potential of a conflict at the executive meeting, questioned why the theatre managers did not involve the board – their employer – in a joint bid.

In fact, board chair Mr. Forbes and the vice-chair also addressed the 2012 committee meeting, asking councillors for extra time to prepare a response to the idea of selling the theatre.

Mr. Thompson said he began to see red flags over the operation of the Sony Centre several months before that executive committee meeting, when he was invited to tour the renovated facility. What he got, he said, was "an inquisition" from the CEO about the future of the city's three theatres and the possible sale. "I was offended by that, quite frankly," he said in a recent interview. "I was really, really upset."

The councillor became more dismayed, he remembered, listening to Mr. Brambilla outline his plan to the executive committee. "He comes with a straight face and says, 'Give me $10-million,' like he has somehow found a vessel of stupidity."

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After a lengthy closed-door session, the executive supported a motion by Councillor Mike Del Grande to ask the auditor-general to add the Sony Centre to his schedule for 2013.

Mr. Forbes said he and the chair of the board's finance committee met with Mr. Griffiths and asked him to focus on the building project when he said he was too busy to do a full audit. Mr. Forbes also said the theatre's board was made aware of the management bid at its meeting in July, 2012, months before it was discussed by the executive committee.