Dessau Inc. could become the highest-profile company to suffer the consequences of the new Parti Quebecois government's Bill 1 — which requires companies to get a certificate to be eligible for public contracts.
The provincial stock-market regulator, the AMF, is responsible for managing the process and says it will not grant a certificate to Dessau following advice from the province's anti-corruption police squad, UPAC.
"The results of the checks led UPAC to make a negative recommendation and the AMF examined the file and maintained that recommendation," said Sylvain Theberge, a spokesman for the regulator.
The process is not entirely finished: under the law, the provincial government has 60 days to overrule the decision. Treasury Board President Stephane Bedard is expected to comment on the AMF decision Friday.
Barring a government intervention, Dessau and an affiliated company, Verreault construction, would not be eligible for public contracts until June 19, 2018.
Dessau's outgoing president recently called the AMF certificate "crucial" to the company.
The announcement could prove extremely damaging as the Montreal-based company of 5,000 employees counts public works as a major chunk of its business.
Dessau had recently made drastic moves to avoid such an AMF punishment.
Last week it announced the resignation of Jean-Pierre Sauriol as chief executive officer and president of the family-founded business.
It was his brother Rosaire Sauriol, a fellow company executive, who testified at Quebec’s corruption inquiry about his participation in collusion and illegal political financing schemes.
Rosaire Sauriol told the Charbonneau Commission that his company donated $2-million through false-billing schemes alone, at the municipal and provincial level, between 2005 and 2010.
The benefits of being close to certain local politicians were spelled out at the inquiry. One chart produced at the probe showed how Dessau's contracts suddenly dried up, and other companies' skyrocketed, when there was a change in government in a municipality near Montreal.
He was asked whether he used that same practice to contribute to federal parties and he responded: "Yes." The Charbonneau probe will not delve into federal politics.
In a departure letter to employees, Jean-Pierre Sauriol said it had become clear that if he stayed on board, the company might no longer be eligible to win public contracts.
"I have made this decision in what I believe to be in the best interest of Dessau and its 5,000 employees," Sauriol said in a statement released last week by the company.
"In light of the exchanges we had with the (AMF), it became evident to me that Dessau would not obtain this certification if I maintained the leadership of the company.
"I am therefore leaving the company to put in the best standing possible to obtain this certification, which is crucial for the continuation of its activities and further development."
The AMF process applies to public contracts in Quebec larger than $40 million — although the AMF has said the threshold will be lowered further, to $10 million.
Sauriol's departure is only the latest in a series of changes in the industry, which has been rocked by corruption scandals.
Canada's largest engineering firm, SNC-Lavalin Group Inc., has also lost its former president, Pierre Duhaime, who now faces several criminal charges. An executive who testified at the Charbonneau inquiry has also left the business.