Canada Revenue Agency Cleared To Examine Quebec Municipal Contracts

First Posted: 07/18/11 12:24 PM ET Updated: 09/17/11 06:12 AM ET

Old Quebec Night Walk

THE CANADIAN PRESS — MONTREAL - The Canada Revenue Agency will be able to inspect the books of about 150 Quebec municipalities as it conducts a sweeping probe looking for possible cases of tax evasion.

A Federal Court judge approved a request by government lawyers during a brief hearing in Montreal on Monday, giving the revenue agency the green light to demand the financial records from the cities and towns.

The court had already signed off on an initial batch of records last month — involving 88 cities and towns east of Montreal — and gave its approval for the balance of towns and cities on Monday.

The agency wants detailed information about companies and people who received money from these municipalities.

"The objective of this step is to verify if the people that received money conformed to the law and declared these amounts in their tax returns," said lawyer Dominique Castagne, a Justice Canada lawyer representing the revenue agency in court.

The move comes as Quebec municipalities are increasingly under the microscope over their spending practices and some prominent mayors have been subject to probes by the province's municipal affairs department.

And the province remains ensnared in corruption allegations involving the construction industry, politically well-connected businessmen, and crime groups like the Mafia.

The revenue agency wants to scrutinize hundreds of contracts handed out by municipalities between 2007 and 2010 — looking at everything from snow removal and garbage pickup to individuals who may have done consultant work.

The revenue agency said it isn't the first time municipalities have been asked to provide information.

In February, the provincial government launched an anti-corruption squad dubbed the first of its kind in Canada, modelled after New York City's Department of Investigations aimed at probing municipal corruption.

All the while, Quebec Premier Jean Charest's Liberal party has brushed off demands for a public inquiry into the allegations.

Most of Quebec's largest communities are targeted by the revenue agency, including Quebec City, Laval, Saguenay, Sherbrooke and Longueuil. Montreal was subject to a similar request for information last year.

Some tinier villages are also listed like Kingsbury, Que. — population 90 — or Saint-Benoit-du-Lac — population 48 — in the Eastern Townships.

The agency has requested a detailed list of people or companies that received money other than salary for those years.

Once they receive the formal requests, municipalities will have about six weeks to provide a CD containing the four years' worth of records the agency is seeking.

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Filed by Brodie Fenlon  |