01/19/2012 06:28 EST | Updated 03/20/2012 05:12 EDT

Two Quebec construction companies have licences suspended after fraud cases

MONTREAL - Quebec's building regulator has temporarily suspended the licences of two construction companies after they were found guilty of tax fraud.

Construction Louisbourg has had its licence suspended between Feb. 1 and June 10 while Simard-Beaudry Construction will not be able to operate between Feb. 1 and June 30.

The companies were fined $4.1 million in December 2011 for defrauding Revenue Canada as part of a false billing scam. They were also sanctioned for a number of health and safety violations between 2006 and 2010.

Their guilty pleas in the fraud case prompted the order from the Regie du batiment that they have to cease work on current projects and they also cannot get public contracts for four years.

About 80 per cent of the contracts held by the company are public and they are operating five work sites, although most of the work is either finished or near completion.

However, there is little danger unfinished work will not be completed because of construction guarantees in their contracts.

Construction-industry corruption has been a hot-button issue for Quebec's government since allegations surfaced of widespread organized crime influence in the sector.

Besides creating a special anti-corruption squad, a provincial inquiry has also been convened.

Labour Minister Lise Theriault said the recent rulings by the building board clearly illustrates the government's intention to clean up the construction industry.

"I believe that entrepreneurs will see that it is better to play by the same rules as everyone else," she said.

Premier Jean Charest echoed Theriault at a news conference on the economy in Quebec City.

"Quebecers have been sent a serious signal in regards to the seriousness of the measures adopted by the Quebec government concerning the construction industry," he said.

Parti Quebecois spokesman Bertrand St-Arnaud welcomed the ruling, saying that companies getting government contracts must have an unblemished record.