The restaurateur family caught in the middle of a divisive election issue says they are being exploited for political gain and have initiated legal action against frontrunner Rob Ford.

George Foulidis, owner of Tuggs Inc., has accused Ford of insinuating he bribed a local politician to help his family secure a 20-year exclusive vending rights contract in the Eastern Beaches.

Often using the Tuggs deal as exhibit A, Ford has propelled his campaign into the lead with promises to end the wasteful spending and backroom deals at city hall.

In the Toronto Sun, the crusading conservative said the Tuggs contract “smacks of civic corruption” and “stinks to high heaven.” Ford is quoted to have said: “it’s confidential and I wish you guys knew what happened behind closed doors.”

The remarks drew a sharp rebuke from Mayor David Miller, who called the statements “irresponsible,” and Ford’s rivals. Rocco Rossi said the comments were “reckless.” Smitherman likened them to “drive-by smears.” But Foulidis is the first to legally challenge Ford’s accusations that city hall is rife with corruption.

Ford is scheduled to be served with a notice of libel on Thursday, the Star has learned. Foulidis has demanded the Etobicoke councillor apologize and admit that his allegations are not based on any evidence. Should he refuse, Tuggs will sue for financial damages.

“Everything Ford has said about us is lies. He will say anything to get elected. And in an attempt to become mayor he has publicly accused my family of corruption — and he professes to stand for the small businessman,” Foulidis said.

Foulidis said picking a fight with a wealthy mayoral candidate is not something he wants to do, but his family has no choice.

“We stayed quiet initially, but this has become one of the main issues in the mayor’s race,” said Foulidis. “Rob Ford is going out of his way to say we are no good and corrupt. If we don’t come to our own defence, than reasonable people might believe it.”

At Councillor Sandra Bussin’s urging in 2006, city council controversially voted to award the contract to Tuggs without putting it to tender, against the advice of city staff.

The issue simmered for three years while the city and Tuggs negotiated the terms of the agreement. It re-entered the spotlight earlier this year in the lead-up to council voting on the final contract.

Ford once again attacked the agreement, framing it as a sweetheart deal that isn’t good for taxpayers. Councillor Frances Nunziata put forward a motion to re-examine the decision. And the Sun ran several front-page stories accusing the restaurant of being dirty and serving overpriced, bad food.

The paper cited a report from a private investigator that found the Foulidis family, friends of Foulidis and employees of the business have contributed more than $8,000 to Bussin’s campaign over the years.

Foulidis says he and his family have openly contributed several thousand to Bussin’s campaign, but that he has never heard of several of the people on that list.

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Controversy aside, council approved the agreement. And a new protocol has been put in place to ensure that in future these types of agreements are put up for open bidding.

Foulidis will hold a news conference outside his restaurant, the Boardwalk Pub, Thursday morning. He has challenged Ford to show up with evidence.