Quebec Corruption Scandal: Construction Companies Have Deep Federal Ties

CP  |  By Posted: 05/09/2012 1:14 pm Updated: 05/09/2012 8:27 pm

Quebec Corruption Scandal Construction
The federal Conservative party received donations from dozens of employees at three engineering firms now implicated in high-profile police investigations into Quebec's construction industry. (Alamy/CP)

MONTREAL - The federal Conservative party received donations from dozens of employees at three engineering firms now implicated in high-profile police investigations into Quebec's construction industry.

Such donations to Canada's governing party, and to a lesser extent the opposition Liberals, illustrate that federal politics is no stranger to the corporate ties now being scrutinized by police and an upcoming provincial inquiry in Quebec.

As Ottawa unveiled billions in economic stimulus spending in 2009, Conservative coffers in one Montreal riding were flooded with contributions from individuals affiliated with firms that have since become mired in collusion scandals.

A special Quebec task force has been investigating the role of engineering-consulting firms in wider scandals over collusion, kickbacks, Mafia ties, illegal political financing and money-laundering that have raged at the provincial and local level.

Little has been written about the industry's ties to federal politics.

An analysis by The Canadian Press of federal data indicates that donations from certain firms, now under scrutiny, helped transform one Tory association in a no-hope Montreal riding into an improbable financial juggernaut in early 2009.

In Laurier-Sainte-Marie, a left-leaning fortress home to some of the most progressive politics in the country, the Tory riding association pulled in $288,823.37 in donations that year — despite the party placing fifth there in the previous election, behind the Green party.

In 2009, that riding association managed to rake in more than five times as many funds for the Conservative Party of Canada as Calgary Southwest — the one held by Prime Minister Stephen Harper, which raised $57,103.75.

The prime minister's appearance at a May 20 fundraiser, attended by dozens of engineering executives, is partly responsible for the fundraising windfall in Laurier-Sainte-Marie.

Donations in the riding came from employees associated with BPR; Roche Ltd.; and Leroux, Beaudoin, Hurens & Associes, which are among the largest engineering-consulting firms in Quebec.

All three have had employees arrested in the last year as part of an ongoing investigation into Quebec's construction industry. In the case of BPR, the firm itself is also facing fraud and conspiracy charges.

Law enforcement officals claim to have uncovered a system in which municipal politicians received kickbacks in exchange for lucrative contracts to upgrade local water installations.

Jean Leroux, who heads Leroux, Beaudoin, Hurens and Associates, was among 15 people arrested earlier this month on charges related to the alleged collusion scheme in the town of Mascouche, just off the island of Montreal.

Leroux donated $666.66 to the Laurier-Sainte-Marie association in 2009. He is expected to make a court appearance on June 19.

On the same day Leroux made his donation, France Michaud gave $400 to the Tory association in Laurier-Sainte-Marie.

A vice-president at Roche, Michaud was arrested in 2011 for allegedly taking part in a similar scheme in Boisbriand, another off-island municipality. She has denied any wrongdoing and pleaded not guilty to the charges she faces, and continues to work at Roche.

Their donations coincide with the elaborate Tory fundraiser held in Montreal on May 20. Sources told The Canadian Press at the time that Conservative Sen. Leo Housakos was one of the key organizers of the event — though he denied playing a role.

Michaud and three executives from BPR were invited to an exclusive gathering held before the main event. It was hosted by Christian Paradis, who was then the minister of public works and the senior minister responsible for Quebec.

At the time, the Conservative government was looking to spend $4 billion on construction-ready infrastructure projects as part of its $47-billion economic stimulus program.

This money was largely transferred to the provinces, who in turn made it available to municipalities. In other words, Ottawa was not the one cutting cheques for the companies perfoming much of the infrastructure work — that was done at the municipal or provincial level.

A spokesperson for Paradis, now in charge of the industry portfolio, said the minister doesn't even recognize Michaud's name.

Housakos, however, would have been familiar with at least some executives at BPR. He was hired by BPR in 2008 to run a wholly owned subsidiary, Terreau, specializing in environmental waste management.

As part of his contract, he was to be offered a number of BPR shares annually depending on his performance. Despite being named to the Senate only days after formalizing his relationship with BPR, Housakos continued working for the company for nearly a year, until the fall of 2009.

During Housakos' time with BPR, the firm was part of a consortium that won a $1.4 million government contract to study the future of Montreal's Champlain Bridge.

Housakos told The Canadian Press that while he was paid a salary by BPR, he never received shares in exchange for his performance.

An investigation by the Senate ethics commissioner cleared Housakos of any suggestion that he abused his position of influence.

In the spring of 2009, BPR employees were among the more generous donors to the Tories' Laurier-Sainte-Marie riding association.

By cross-referencing Elections Canada donor lists with other publicly available information, The Canadian Press was able to identify at least 19 different employees who made a donation on April 17, 2009. That netted nearly $12,000 in donations for the party.

None of the April 17 donors contacted by The Canadian Press responded to interview requests.

Asked if employees were ever encouraged to donate to a particular political party, a BPR spokesperson replied that political donations "are considered personal and voluntary actions."

"The actions of employees are governed by law and the Company's code of ethics," Kathia Brien added in an emailed response.

Housakos said he only ever solicited funds from one BPR employee — the firm's president and CEO, Pierre Lavallee.

"He made a contribution of approximately 600 bucks back in 2009 and it was in regards to the cocktail of 2009 — May 20," said the senator. Lavallee's contribution of $666.66, recorded on April 17, represented the "equivalent of six tickets to that event," Housakos said, referring again to the May 20 fundraiser.

Two BPR employees — Rosaire Fontaine and Claude Briere — were arrested in 2011 as part of the investigation into Boisbriand's awarding of municipal contracts. Fontaine, who was charged again in last month's police roundup, has the same name as someone who donated $500 to the Tories in 2009, and $950 in 2007. Briere donated $800 in 2007.

Another BPR employee, Andre De Maisonneuve, was charged this month with fraud and conspiracy in connection with his handling of municipal contracts in Mascouche.

BPR said that Briere has since left the company, while Fontaine and De Maisonneuve have been placed on administrative leave pending an internal investigation. All three have yet to enter a plea in their cases. Fontaine and Briere are next due in court on May 11.

The Conservatives were not alone in tapping the lucrative engineering industry in 2009.

Four members of BPR's board also donated to the Liberal riding association of Chambly-Borduas, which itself pulled in $470,755.41 in total contributions in 2009 — $182,000 more than the Tories managed in Lauier-Sainte-Marie.

The Liberals attribute the spike in contributions in Chambly-Borduas to a large regional fundraiser held June 4, 2009, which the riding coordinated and was attended by then Liberal leader Michael Ignatieff. It then transferred much of the money raised to other Liberal riding associations in the province.

Around the time of the Liberal fundraiser, the party received an influx of donations from leading Montreal law firms.

On June 11, Chambly-Borduas registered contributions from at least 26 individuals whose names correspond with lawyers at Fasken Martineau, including $438.69 from a Jacques Audette. A Fasken Martineau lawyer with the same name was among those arrested on fraud and conspiracy charges last month for their alleged role in the Mascouche collusion scheme.

Among the other Grit donors that spring was Guy Charbonneau, a board member at the engineering firm S.M. Group.

The firm's president, Bernard Poulin, was at the centre of a high-profile political controversy last year.

During the 2011 election, an audio recording surfaced that purported to be a discussion between Poulin and construction magnate Tony Accurso about influencing the appointment process to the Montreal Port Authority's board of directors.

The voice that is allegedly Poulin's is heard telling Accurso that he will talk to Housakos. Their plan was to enlist the help of Dimitri Soudas, then one of the most powerful employees in the Prime Minister's Office.

Harper responded to the controversy during the election, by pointing out that the candidate Soudas preferred, Robert Abdallah, was not appointed to the board in the end. He was later hired by one of Accurso's firms.

Poulin's name, along with Housakos', appears on the guestlist of a more exclusive event held just before the main fundraiser, on May 20. That event was a reception with Prime Minister Harper.

Over the course of the spring, individuals associated with a range of other Montreal engineering firms were making donations to the Conservatives.

The Laurier-Sainte-Marie Tory association received nearly $10,000 from more than a dozen employees of CIMA, one of Quebec's largest engineering-consulting firms and a member of the consortium that won the contract to study the Champlain Bridge.

Sizable contributions were also received that spring from employees with other engineering firms, including CIMA, with no ties to criminal allegations.

For Housakos, the donations from engineering firms shouldn't be viewed in a negative light. He pointed to the transparency of the donation process in Canada and stressed the right of industry players to get involved in politics.

"It's pretty clear the people that make contributions," Housakos said.

"If you look at various reports you'll know who they are. Their names speak for themselves. Those are my friends, that is my network, and I have a democratic right to solicit people."

But whistleblowers have suggested that some engineering firms have been the link between corruption in the construction industry and the illegal financing of provincial political parties.

Lino Zambito, a construction boss who recently pleaded guilty to trying to fix the 2009 municipal election in Boisbriand, told Radio-Canada last month that engineering firms are "the ones closest to power." He said they ask construction companies for a "helping hand" in order to secure certain contracts.

In 2010, the engineering firm Axor and several affiliated companies pleaded guilty to 40 counts of breaking Quebec's election laws.

The province's elections watchdog discovered the firm had circumvented laws preventing corporate donations by funneling money through employees.

That forced the governing Quebec Liberals to return more than $113,000 in donations collected between 2006 and 2008. Opposition parties, the Parti Quebecois and the now defunct Action democratique du Quebec, returned smaller amounts.

Federal fundraising laws also forbid corporate donations, while limiting individual ones to $1,100 annually, indexed to inflation.

Like their Liberal counterparts in Chambly-Borduas, the Tories in Laurier-Sainte-Marie transferred much of their funds to other Conservative ridings.

The biggest recipient was the Conservative association in Megantic-L'Erable — the riding held by Paradis — which received $30,000 in the fall of 2009.

His office said he didn't recognize any of the names of BPR employees who were arrested.

Arguably the key figure in last month's arrests was the construction entrepeneur Accurso, whose name figured in the first news reports several years ago about close ties between municipal politicians and the construction industry.

Those initial reports opened the floodgates to myriad allegations, police investigations and, now, a public inquiry about to begin. Accurso now faces six charges: fraud, conspiracy, influence-peddling, breach of trust and two counts of defrauding the government.

More recently, a Radio-Canada investigation attempted to shed new light on how corporate interests might seek to gain political influence.

An undercover reporter posing as an investor recorded Pierre Coulombe suggesting that decision-makers in the Quebec government could be accessed, for a fee. Coulombe is an influential provincial Liberal organizer, and was recently a prominent Tory organizer.

He was overheard suggesting to clients that instead of paying off political insiders, they should simply promise future jobs.

He suggested some working conditions: the job might pay politicians, upon retirement, about $25,000 a year for multiple years and require them to attend only one meeting annually — while sending them on the occasional business trip to Europe, he said.

After the broadcast, Coulombe explained that he had actually been exaggerating on the video and had overstated his level of access to government contacts.

Coulombe was the chief organizer for the Harper Conservatives in Quebec from 2006 to 2008.

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Filed by Michael Bolen  |