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“Everything is rigged”

Will exposing corruption in Montreal clean up politics –or scare honest people away?

An introduction by Bob Chodos

10_corruption_illustrationA major mission of Inroads since its inception has been explaining Quebec to people outside the province. The evolution of cities has been another important theme of this journal. With these mandates in mind, we could not ignore the revelations of the Charbonneau Commission into the Awarding and Management of Public Contracts in the Construction Industry, revelations that continue to make headlines in Quebec. Casting a net that includes Montreal, other Quebec municipalities and the provincial parties, the commission has brought to light unsavoury aspects of politicians’ and public officials’ relationship with construction and related service companies going back at least two decades. Just before Inroads’ press time, Quebec’s anti-corruption squad arrested 37 people, including Gilles Vaillancourt, powerful ex-mayor of Laval, Quebec’s third largest city.

Of course, corruption in Montreal is nothing new. In 1928, a dubious financial transaction preceding the municipalization of a water utility came to light. The ensuing scandal helped bring about the defeat of longtime mayor Médéric Martin at the hands of his younger rival, Camillien Houde. Twenty-six years later Houde was so entrenched in the mayor’s office that he was known as “Monsieur Montréal.” But incriminating revelations at an inquiry into underworld influence ended his long tenure, and one of the lawyers for the inquiry, Jean Drapeau, was elected to succeed him on a reform platform. Drapeau was to dominate Montreal politics for the next three decades, but his election simply moved the action to the suburban municipalities surrounding the city. In rapidly growing Ville Jacques-Cartier on the South Shore, the mayor in the early 1960s was a convicted criminal and his chief aide was an ex-boxer and bank robber.

And yet, nothing in this history prepared Montrealers for the swirl of revelations, reports, accusations, resignations and denials that began in October 2012. By early November, the mayors of both Montreal and neighbouring Laval had been brought down. Some of the more significant revelations, along with the origins of the Charbonneau Commission, are highlighted in the accompanying timeline. The timeline is followed by comments from five informed observers: Inroads co-publisher Henry Milner, Montreal journalists Irwin Block and Eric Hamovitch, political scientist Brian Tanguay of Wilfrid Laurier University and urban politics specialist Robert Whelan of the University of Texas at Dallas.

Each writer focuses on a particular ramification of the revelations. Whelan sees municipal corruption as a North America–wide phenomenon and puts it in historical context. Tanguay asks whether Quebec really is the most corrupt province in Canada and, if so, why. Hamovitch looks at how Montreal’s relationship with the provincial government in Quebec City has contributed to its problems. Block highlights the vast scope of the corruption and sees it as a case of wilful blindness at Montreal city hall. Milner focuses on the role of former Montreal mayor Gérald Tremblay in the affair: is he villain or victim?

Only some of the underlying features of the scandal are unique to Quebec as a province and Montreal as a city. Similar scandals shook the Netherlands ten years ago, and now are affecting Spain – just to name two. The incentives inherent in the relationship between private construction companies and the governments they contract with to undertake large-scale projects and provide important public services inevitably invite under-the-counter side deals and outright corruption:

  • These are typically very large contracts and the rewards to the winner are likely to be handsome provided competition for the contracts is limited; hence the incentive for the contractor to bribe.
  • The contracts are negotiated with anonymous, not especially well-paid officials or local politicians. The contracting firms know far more about their business than their counterparts on the government side, and there are few incentives for the officials and politicians to undertake due diligence. Savings realized do not, at least in principle, accrue to the politicians and officials.
  • Quebec’s strict laws governing political donations have perverse effects. Parties are unable to raise enough money for campaigns from individuals and are prohibited from receiving corporate donations. What they get instead are donations from corporations funnelled through individuals who act as proxies. This is illegal, and hence done in secret, which means that any quid pro quo they receive is hidden.
  • The key actors in the construction and related sectors have sociocultural connections facilitating collusion. In the case of Montreal/Quebec, these links extend to organized crime – the Italian mafia in particular.
  • In the normal course of events, the transactions appear to follow best practices of tendering. The lowest bidder gets the construction contract, and the consortium of engineering companies created seems to be appropriate for a complex project.
  • It takes a public commission to expose the collusion underlying the tendering process. Honest elected and appointed officials working alongside corrupt ones may be totally unaware of these practices or, more likely, are somewhat suspicious but unable to confirm their suspicions.
  • An important feature of the corruption is behind-the-scenes pressure, with implicit threats of violence, that persuades reputable outside firms not to compete for public contracts. This kind of tacit collusion, in which reputable firms quietly withdraw from the market, is different from what we normally think of as political corruption: companies illegally contributing to a political party or candidate in exchange for future considerations.

This is still very much a developing story, as the commission’s hearings are slated to continue through 2014. We present as full a picture as we can as of early May.

The Charbonneau Commission: A timeline

April 2009

An Action Démocratique du Québec member of the National Assembly, Sylvie Roy, calls on the Liberal government of Premier Jean Charest to establish a commission of inquiry into the construction industry to examine alleged links among construction companies, politicians and organized crime.

September 2011

The report of the anticollusion unit of the Ministry of Transport, led by former Montreal police chief Jacques Duchesneau, confirms problems of corruption, collusion and influence peddling among firms doing business with the Transport Ministry. The anticollusion unit will later be incorporated into UPAC, the province’s permanent anticorruption unit.

October 19, 2011

After two years of pressure from all sides, Premier Charest establishes a commission of inquiry with a mandate to bring to light possible collusion and corruption in the construction industry. Quebec Superior Court Justice France Charbonneau, a former prosecutor, is appointed commissioner.

November 9, 2011

In response to criticism about the mandate of the commission, the Charest government grants it full powers of a commission of inquiry.

May 15, 2012

The government introduces Bill 75 to give the commission additional powers. The bill is passed. The commission can now conduct searches and seize documents.

May 8–21, 2012

The commission begins to hear witnesses. Meanwhile, Jacques Duchesneau makes headlines with a second report, on his own account, revealing the secret financing of political parties.

September 4, 2012

In the Quebec election, the Charest government is defeated and Charest loses in his own constituency. He resigns as Liberal leader. The Parti Québécois forms a minority government. Jacques Duchesneau is elected as a Coalition Avenir Québec (CAQ) member of the National Assembly.

September 17, 2012

The commission’s hearings resume. Initial testimony focuses on links between the construction industry and the mafia.

October 2, 2012

Testimony by former contractor Lino Zambito points to collusion between contractors and Montreal municipal officials, including former executive committee chair Frank Zampino.

October 4, 2012

UPAC conducts searches at the home of Laval Mayor Gilles Vaillancourt, at Vaillancourt’s city hall office and at other Laval municipal offices.

October 18, 2012

Former Montreal municipal engineer Gilles Surprenant admits that he took hundreds of thousands of dollars in bribes from contractors between 1991 and 2008.

October 30, 2012

Former party organizer Martin Dumont testifies that Montreal Mayor Gérald Tremblay was aware of secret financing and double bookkeeping in his political party, Union Montreal. Tremblay denies the allegations. Members of the National Assembly from all three parties call for his resignation.

November 5, 2012

Gérald Tremblay resigns as mayor of Montreal, protesting his innocence and denouncing the process as an “intolerable injustice.”

November 9, 2012

With revelations pointing to his central role in corruption and collusion in his city, Gilles Vaillancourt resigns as mayor of Laval.

November 16, 2012

Montreal City Council appoints Executive Committee Chair Michael Applebaum to succeed Tremblay as mayor. Having resigned from Union Montreal, Applebaum sits as an independent and heads a multiparty administration. He promises not to be a candidate in the upcoming (November 2013) election.

November 2012

The Charbonneau Commission hears testimony from a number of witnesses about collusion among construction companies and the payment of kickbacks to municipal officials. According to contractor Michel Leclerc, this system dates back to the 1990s.

January 23, 2013

In his testimony before the commission, the president of the engineering firm Génius, Michel Lalonde, reveals collusion among consulting engineering firms and illegal contributions to provincial and Montreal municipal political parties. Montreal officials deny the allegations.

February 11, 2013

The engineering firm Genivar suspends one of its vice-presidents, François Perreault, named in testimony about collusion among engineering firms.

February 19, 2013

UPAC conducts searches at Montreal city hall, other municipal offices and Union Montreal headquarters. Mayor Applebaum, former mayor Tremblay and former executive committee chair Zampino are reported to be the chief targets of the searches.

February 19, 2013

Nicolo Milioto, nicknamed “Mr. Sidewalk,” denies the existence of collusion in the allocation of sidewalk contracts in Montreal, even though 92 per cent of contracts were awarded to six firms with roots in the same Sicilian village, Cattolica Eraclea. Milioto also denies being an intermediary with the mafia, although he acknowledges being a friend of the late mafia boss Nicolo Rizzuto.

February 20, 2013

A publication ban covering some of Genius president Michel Lalonde’s testimony is lifted. Revelations include a $2,000 cash payment from Lalonde to former Quebec cabinet minister Line Beauchamp. The transaction was carried out through Bernard Trépanier, former chief fundraiser for Union Montreal, nicknamed “Mr. Three Per Cent.”

March 11, 2013

Former City of Montreal director general Claude Léger testifies that two former executive committee chairs, Frank Zampino and Claude Dauphin, interfered to favour the selection of particular firms.

March 12, 2013

Having resigned from Genivar, François Perreault admits that he participated in the engineering cartel and paid 3 per cent kickbacks to Union Montreal.

March 22, 2013

Paolo Catania, Frank Zampino, Bernard Trépanier and others appear in Superior Court to answer charges of fraud, breach of trust and conspiracy in the 2008 Faubourg Contrecœur land deal.

March 25, 2013

Two engineers who testified before the Charbonneau Commission, Rosaire Sauriol of Dessau and Robert Marcil of SMI, resign from their firms.

March 26–28, 2013

Bernard Trépanier testifies before the Charbonneau Commission.

April 17–24, 2013

Frank Zampino testifies before the Charbonneau Commission.

April 25 & 29, 2013

Gérald Tremblay testifies before the Charbonneau Commission.

May 9, 2013

UPAC arrests 37 people, including former Laval mayor Gilles Vaillancourt, former engineering executive Rosaire Sauriol and former construction company owner Tony Accurso.

 

 

 

[Sidebar] The cozy relationship between councillors, civil servants and contractors

As the hard-digging Linda Gyulai reported in the Montreal Gazette, the root cause of the current round of collusion, kickbacks and influence peddling may well be traced to the mid-1990s. Before then, according to one veteran Montreal civil servant, a Montreal city councillor wasn’t allowed to contact any of his former municipal colleagues.

The separation between the civil service and politicians was formalized when the reform-oriented Montreal Citizens’ Movement under Jean Doré was elected in 1986. They created the position of secretary general, responsible for the civil service and a precursor to today’s city manager, and set up a liaison office that handled councillors’ requests for information and meetings with the civil service, she noted. All contact had to be arranged and mediated through the liaison office.

That separation of politicians from civil servants changed in December 1994 when, at the request of newly elected mayor Pierre Bourque, the Quebec government discarded the provision.

The former civil servant, who spoke on condition that his name not be used, said this was the beginning of the illegal payments linked to the new cozy relationship between municipal employees, Montreal politicians and city contractors as described at the Charbonneau hearings.

New rules to prohibit such access to civil servants who make recommendations on budget spending and zoning changes so they can do so in strict neutrality would help curb influence peddling.

 

 



About the Author

Bob Chodos
Bob Chodos is managing editor of Inroads.




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