03/25/2013 01:15 EDT | Updated 05/25/2013 05:12 EDT

Testimony that sank Montreal mayor was untrue: inquiry witness

MONTREAL - A witness at Quebec's corruption inquiry has suggested that any graft within Montreal's long-ruling municipal party was the fault of rogue individuals — not the organization.

In his testimony Monday, the party's former official agent laid blame at the feet of one man: the former chief fundraiser who, in Quebec, has more recently become known by the unflattering nickname "Mr. Three Per Cent."

Marc Deschamps said that if that man was taking a cut on public contracts, it was going directly into his pockets and not into the coffers of the once-mighty Union Montreal party.

His voice barely above a whisper, Deschamps said "yes" when asked whether he believed the money went directly to Bernard Trepanier.

Deschamps' testimony has set the stage for a trio of high-profile witnesses coming up at the inquiry over the next few days: former Union Montreal party fundraiser Bernard Trepanier; former executive committee head Frank Zampino; and the ex-mayor, Gerald Tremblay.

Deschamps said illicit money never went to Union Montreal, the party of the former mayor which ruled for more than a decade before it started crumbling in late 2012.

He also moved to salvage the reputation of the ex-mayor.

Marc Deschamps said previous testimony that Tremblay knew about illicit financing was untrue. Last fall, former party organizer Martin Dumont claimed he was at a 2004 meeting where Deschamps and Tremblay discussed two sets of financial books.

The claim last fall was politically devastating to the mayor and he resigned soon thereafter — a year before a scheduled election.

But Deschamps insisted he never discussed finances with Dumont.

"That meeting never took place," said Deschamps, an accountant and former official agent for Union Montreal.

This is not the first time that testimony of Martin Dumont has been challenged. Dumont, who made those claims about the mayor, has since admitted that he made up an anecdote during another part of his testimony.

The former mayor is just one of many people to have suffered career damage amid Quebec's ongoing corruption scandals. The latest is engineering executive Rosaire Sauriol, whose resignation was announced Monday from family-run Dessau Inc. after he admitted to organizing illegal political donations.

When asked about his relationship with the man now better known as "Mr. Three Per Cent," Deschamps said he had to fire Trepanier in February 2006 on orders from the mayor.

He said Tremblay asked what it would take to get rid of Trepanier, who was making $82,000 a year as the party's director of financing.

And while he walked away with a settlement of four months' pay and $25,000 in severance, Trepanier continued to raise funds for the party until 2009 on a volunteer basis and he said Tremblay knew of the continued relationship.

Deschamps said Trepanier was also confused by the dismissal.

Deschamps said Tremblay didn't explain why he wanted Trepanier out until a conversation with him last October, when he apparently cited Trepanier's "proximity" to Zampino as a reason. No other reason was ever revealed to Deschamps.

Inquiry counsel Paul Crepeau suggested a reason for Trepanier's departure: that the mayor had caught wind of a rumour that Trepanier had tried to extort $1 million from a shopping-centre promoter.

Deschamps said he'd never heard of the allegation.

He also said he'd never heard of another bombshell suggestion from Crepeau — that Trepanier walked out of Union Montreal offices with shoe boxes filled with $100 bills after he was fired.

He conceded that Trepanier might have been let go for the sake of appearances.

"He was asked to leave," said Deschamps.

"I do not know the exact words that were used."

Deschamps' evasive answers about Trepanier's departure, and the fact he continued to work for the party, led to a testy exchange.

"Don't play dumb — there's a reason," commission chair France Charbonneau told the witness. Deschamps replied that he wasn't aware of any.

Trepanier stood out from other fundraisers as the most successful in the party's history, Deschamps said.

He said he never inquired into why that was the case. And he rebuffed an assertion from commissioner Renaud Lachance that it was his responsibility to make sure Trepanier acted within the rules.

Deschamps said it wasn't his job to make sure everything was legitimate. Having to oversee every donation would have been a huge task, he said.

"You set the bar too high," Deschamps told Lachance.

Also Monday, Sauriol announced his resignation from Dessau Inc. just days after he testified at the inquiry. Sauriol's resignation is effective immediately. He had worked since 1986 at the firm, which was founded by his father and is headed by his brother.

Sauriol admitted that his company orchestrated a political-donation scheme with the help of fake sales bills and cash transfers.

Sauriol said the company gave the provincial Liberals and Parti Quebecois at least $1 million between 1998 and 2010 — about 60 per cent of which went to the Liberals. There were other donations to the provincial, municipal and federal level.

The company said in a release that it has been working to changes its business practices and reinforce its code of ethics since 2009.