09/24/2012 10:02 EDT | Updated 11/24/2012 05:12 EST

'Donnie Brasco' Quebec Corruption: Joseph Pistone Testifies At Quebec Construction Corruption Probe

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BEVERLY HILLS - JULY 12: Former FBI undercover agent Joseph Pistone attends the panel discussion for 'Gangland Graveyard' during the PBS 2005 Television Critics Association Summer Press Tour at the Beverly Hilton Hotel on July 12, 2005 in Beverly Hills, California. (Photo by Frederick M. Brown/Getty Images)

MONTREAL - Quebecers might be shocked by reports of Mafia control over the construction industry, which is allegedly so rife with corruption and collusion and inflated costs that the provincial government has been forced to call a public inquiry.

To the man known as "Donnie Brasco," it's old news.

The police officer who infiltrated the New York Mafia and inspired a Hollywood movie described Monday how the New York City underworld took over the construction industry using methods that would be familiar to anyone who watches the news in Quebec these days.

Joseph Pistone, a legendary FBI agent who spent six years undercover as a Mafia associate starting in the late 1970s, told the Charbonneau Commission about the inner workings of the Mob in the United States during his testimony.

He said the Mob controlled the industry thanks to its stake in labour unions and raw-materials companies — so that it consistently managed to claim a piece of the profit, even when public contracts went to a business not controlled by crime.

"They did it with the cement, the steel, anything that had to be used in the construction of that building, they were getting a piece of it," Pistone said.

In another example he cited, Mafia-run construction companies would submit claims for more expensive unionized labour while actually paying cheaper non-union rates.

They would pocket the difference, he said.

In some cases they would pressure legitimate companies to bid higher to ensure the Mafia-controlled business got the deal. Pistone said profits from the construction industry were divided equally among New York's powerful Five Families.

He said the Mafia had a knack for finding people to corrupt, including public officials and business people. He said it would target vulnerable people and exploit a personal problem or addiction — gambling, drinking, drugs, womanizing or financial difficulties.

He described mobsters as bullies who force their way into people's lives. Pistone urged people, from governments to business owners, to remain vigilant and fight the Mafia.

Pistone lamented that the general public has romantic notions about the Cosa Nostra, thanks to Hollywood-fuelled images of men with colourful vocabularies wearing $5,000 suits.

"Believe me — they don't quote Shakespeare," Pistone said. "This is not the movies... They are a dangerous plague on our society."

"The public has an image of an honourable society. The Mafia is not honourable," he said. "Legitimate businessmen, when they are approached by the Mafia, should report it to law enforcement.

"Once you give in and once you pay one extortion, you never stop. It's never just one time that they come to you."

While still involved in lucrative industries like the drug trade, more and more Mafia members are branching out into legitimate business and white-collar crime.

"They're very good at assessing where they can make money — whether it's legitimately or illegitimately," Pistone said.

Mob scams ultimately get passed on to taxpayers and consumers, in the form of higher prices.

He used the example of office space — saying a tenant might have to pay an extra $1,000 a month because the landlord was forced to pay more to have the building built. He also said clothing might cost more, if manufacturers are paying more for fabrics owned by the Mob.

He said such corruption drives up costs in numerous other businesses — from truck deliveries, to everyday groceries, to public works: "The government, taxpayers, are paying more, when the Mafia is involved in any particular business."

Quebec's commission is looking into criminal corruption in the construction industry and its ties to organized crime and political parties.

The corruption scandals in the province blew wide open three years ago, with media reports of a construction cartel called the "Fabulous 14" that allegedly colluded on bids for public-works projects. Pistone described a similar system in the U.S.

In his testimony earlier in the day Monday, he told colourful tales about how he infiltrated the Mob while pretending to be a jewel thief.

He also discussed the ways of the underworld, including its moral codes and its list of offences that would get people killed.

His early testimony had been a mish-mash — or, as he calls it, a "mix-mash" — of anecdotes from the Mafia life he observed three decades ago, laced with street-wise lingo.

In one example he described taking a slap from a so-called "made" man and thinking that, under ordinary circumstances, he would have punched the guy; he had to refrain, he said, because full Mafia members were untouchable.

What Pistone did not do is delve into the workings of the Canadian Mafia.

There was a brief reference to ties between the New York families and their Canadian counterparts. Pistone referred to a 1981 killing of Mafia capos committed by a hit squad that included Montreal's Vito Rizzuto, although he did not mention Rizzuto by name. He did say the Canada-U.S. Mob ties are still alive.

Pistone, now 73, testified under heavy security at the inquiry behind a screen. Commission chair France Charbonneau has imposed a ban on the broadcasting or publication of any image of Pistone from Monday's hearing.

The ban does not extend to photos or footage taken in the past.

Much of Pistone's testimony has been the subject of books he has already written, as well as the 1997 Hollywood blockbuster "Donnie Brasco."

He was pulled from the undercover operation just as he was about to become a made man, Pistone said. He had been told to kill someone. The FBI intervened and pulled him off the job.

Pistone said he was disappointed to see the operation suspended.

"No one had ever gotten this close to a Mafia family," Pistone said.

"My argument that was we're going to embarrass them by having an undercover with them for all these years, can you imagine if it comes out they inducted an FBI agent?"

Pistone's undercover work led to some 20 trials and 200 convictions across the U.S.

Pistone's testimony at the Charbonneau commission was intended to help the inquiry better understand the murky world of the Mafia as a whole. Last week an Italian academic and Ontario police officer also testified about how Mob families function.

Loyalty is key, Pistone said. Orders to underlings are to be carried out without question — even when the order is to kill someone. There is no debate or discussion.

"Your sworn allegiance is to your Mafia family: it's your Mafia family, then your regular family, then your church and country," Pistone said.

"But your first allegiance is to that family that you're a part of."

Pistone, who assumed the Brasco identity during his undercover days from 1976 to 1981, is still hiding from the Mafia as a result of his old career.

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