Federal government comes up for first time in Quebec corruption inquiry
Witness did not explicitly state whether collusion was practiced on federally-funded contracts
MONTREAL—The federal government’s historic multi-billion dollar infrastructure program has been lucrative for a few Quebec construction companies involved in illegal collusion, a witness testified at the province’s corruption inquiry.
That testimony produced a rare mention of the federal government at the probe—where politics outside Quebec has been declared off-limits and beyond the mandate of an inquiry that has severely rattled governments within the province.
The potential implications of the testimony were clear: that Canadian taxpayers, from coast to coast, may have seen some of their money gobbled up in collusion schemes.
The claim came on the first day of the inquiry’s return from its summer break, during an appearance on the witness stand by an engineering executive.
Patrice Mathieu, a former vice-president for eastern Quebec at Aecom Technology Corp., said collusion in the Quebec City area began when companies there worked out a system in 2004 to rig a bid for work on retention basins at the St-Charles River.
They hit a snag when the Quebec City municipal government cancelled the bid, suspecting collusion, and started a new process—but the companies colluded again.
They agreed not to lower their prices and to keep the same rates for engineers.
And the Quebec City system was born.
“It took a long time to install (the system)—but we got there,” said Mathieu, who had worked for Quebec-based Tecsult which was bought by American giant Aecom in 2008.
The inquiry has already heard of other, more longstanding schemes, some dating back decades, in Montreal and elsewhere in the province.
The testimony has also destroyed several careers—including that of Montreal’s ex-mayor Gerald Tremblay.
But one thing the inquiry hadn’t done until Mathieu’s testimony was drag in the federal government and its multi-billion dollar infrastructure spending blitz of the last decade.
Mathieu said the companies involved in the collusion system really saw their profits take off after 2006—as the federal government embarked on one infrastructure refurbishment plan, and then another as part of the post-2008 meltdown Economic Action Plan.
The feds have dedicated $53-billion since 2007 to the Building Canada Plan, billed as the most expensive infrastructure program in Canadian history.
Quebec City saw its own infrastructure spending suddenly jump from $70-million to $150- to 160-million, Mathieu said.
“The manna, the abundance of projects, was there,” Mathieu said.
He made the claim in end-of-day testimony.
He did not explicitly state whether collusion was practiced on the contracts that received federal funding, nor did he state that collusion resulted in driving up the price tag.
He will be back on the witness stand Sept. 4.
The federal government, for its part, may have created the ongoing fund but it is not actually responsible for handing out the contracts or picking the companies that win them.
Over the last two years, when asked about the Quebec scandals, the Harper government has taken great care to distance itself by repeatedly pointing out that its role was that of project-funder—not of project-manager.
“The projects that our government funds are priorities established by the provincial government,” Michele-Jamali Paquette, a spokesperson for the minister of infrastructure, said in an email. “The province of Quebec is responsible for overseeing the tendering process and awarding contracts on these projects.”
Meanwhile, Quebec has been rocked by testimony of illegal activity by political parties at the provincial and municipal level, and by construction companies and municipal bureaucrats and their links to the Mafia.
Only a fraction of the testimony has touched on provincial politics, so far, with most of the witnesses to date stemming from the Montreal-area municipal realm.
Federal politics, meanwhile, has been declared entirely off-limits under the rules of the probe.
The closest the inquiry has come so far to scorching federal politicians has been in brief and peripheral references—such as when engineering executive Rosaire Sauriol replied, “Yes,” when asked whether he performed the same illegal fundraising activities for federal parties as he had provincially.
As she opened the autumn session, commission counsel Sonia LeBel said that unions hold “a key position in the industry.”
She said she wants to examine the possible infiltration of unions, links to organized crime, ties between businesses and unions, and intimidation and extortion on construction sites.
LeBel said the commission will delve deeper into the construction industry’s vulnerability to criminal infiltration.
The commission, which has focused heavily on municipal politics around Montreal, will spend more time examining other parts of the province.
The first witness of the session was from an engineering firm for the Outaouais region, near Ottawa and the Ontario border.
Commission lawyers said the scams there differed from those described in Montreal and Laval.
Marc-Andre Gelinas, director-general for the Outaouais region for Aecom, said four companies split up the contracts for sewer, sidewalk and aqueduct work.
He said politicians and civil servants there weren’t aware of the collusion—which is different from earlier testimony about Montreal and its surrounding municipalities.
The former Tecsult employee said the purchase by an American company caused him problems.
When Aecom stepped in, it created a code of conduct with a slew of new rules.
Under the new rules, he said, he couldn’t even buy civil servants lunch.
“It was the first code of ethics I’d ever seen in a company, which said clearly what were the acceptable behaviours, what weren’t, and the consequences and implications,” he said.
“I was shaken up and a bit uncomfortable when I learned about that code.”
The collusion continued anyway, he said.
He said he didn’t know whether such collusion existed across the river in Ontario because another company office was responsible for Ottawa.
So far the Quebec probe has heard from 80 witnesses, including mayors, city bureaucrats and engineering executives.
During the fall session, the commission is also expected to delve into construction contracts involving Quebec’s transportation ministry.
Chair France Charbonneau has been given extra time to complete her work.
The corruption inquiry got an 18-month extension from the provincial government.
The inquiry will be required to submit a progress report by Jan. 31, 2014. Charbonneau must deliver her final report by April 2015.