10/02/2012 11:26 EDT | Updated 12/02/2012 05:12 EST

Quebec Corruption Inquiry Zeroes In On Robert Abdallah, Man With Ties To Harper PMO


MONTREAL - The ripple effect from a corruption inquiry that has focused so far on local wrongdoing in Montreal has moved closer to federal circles with testimony alleging a scam involving a man once linked to the office of Prime Minister Stephen Harper.

Quebec's inquiry was told Tuesday that the man the Harper government once promoted as its preferred candidate to run the Port of Montreal played a role in the corruption schemes that were rampant in the local construction industry.

Robert Abdallah was accused of participating in a kickback system at the City of Montreal during testimony before the inquiry, which is examining the construction industry and its links to organized crime and politics.

He strongly denied the allegations in media interviews. Still, the testimony reverberated onto the floor of the House of Commons. The federal government was forced to fend off opposition queries about its relationship with Abdallah and it stressed that, in the end, he didn't get the port job.

Harper's office downplayed Abdallah's federal ties.

"We have no comment on the allegations made against former City of Montreal staff," a prime ministerial spokesman said in an email.

The issue emerged during the third day of Lino Zambito's bombshell-dropping turn on the inquiry witness stand.

The former construction boss has already described an industry that operated as a tightly controlled, price-fixing cartel. While taxpayers were getting milked, he said, profits were being split with the Italian Mafia, corrupt local bureaucrats and even the mayor's political party.

At the end of the day Tuesday, Zambito dropped another one: he hinted that the blast radius from his testimony is about to significantly expand.

He suggested that he is set to share secrets about jurisdictions outside Montreal, including party financing at the provincial level and about corruption in smaller municipalities. Without naming names, he suggested some places were more corrupt than Montreal.

"In Montreal we've talked a lot about organized crime being there — but I can tell you that in some places the role of organized crime was played by elected politicians," he said. Zambito hinted that he was set to explain how companies faced pressure to make political donations.

Earlier Tuesday, he had testified that Abdallah, when he was the top civil servant in the city, instructed him through a middleman to use piping from a particular firm while working on a major sewer contract.

The piping was more expensive — but Zambito says he was assured by a city engineer acting as a middleman that he would be compensated. He says he was informed that $300,000 would go to Abdallah, then Montreal's city manager, as part of the deal.

Members of the board of the Port of Montreal have said that they were pushed to appoint Abdallah by a one-time senior aide to Harper, Dimitri Soudas.

Abdallah was not appointed in the end. After leaving city hall, he went on to work at a well-connected construction company. The allegations against him at the Charbonneau commission have not been proven in court and he has vehemently denied them in media interviews.

Mayor Gerald Tremblay has also denied any wrongdoing. But in the meantime, the city has suspended three employees pending an internal investigation.

Zambito has testified that 2.5 per cent of the value of his municipal contracts went to the Italian Mob. He has also said a top Mafia don, Vito Rizzuto, acted as a mediator when there was a dispute with another company in the bid-rigging cartel.

He has said the cost of doing business also meant: a three per cent kickback from municipal contracts to the mayor's party; a one per cent bribe to a certain local bureaucrat; and countless gifts and cash benefits to other local employees.

Zambito says that after bidding successfully in 2005 on a $10-million sewer contract in east-end Montreal, he was summoned to a meeting one week later and told he had to use concrete piping furnished at a higher cost by supplier Groupe Tremca.

The former construction boss says his plan relied on a cheaper solution and didn't involve buying pipes.

But Zambito says the order to use Tremca was given to him by an engineer for a private firm, Michel Lalonde of Groupe Seguin, which handled oversight for the city in its east end. Lalonde told him that the order came from Abdallah, the city manager at the time.

Zambito said he initially balked because buying from Tremca was more expensive. But Zambito said he ultimately realized that he had few options.

"In my head it was clear that there was an arrangement between Mr. Abdallah and Tremca and I had no choice but to buy pipes from Tremca if I wanted the contract," Zambito said.

He said the message was obvious: "You either get on board or the contract goes back to tender," was how Zambito described his dilemma.

Zambito decided to participate since the contract was valuable and he was assured that any extra costs would be covered.

He said the engineer was firm with him.

"He said, 'If you want the project to be done, the pipes must be purchased from Tremca.' The price was determined," Zambito told the commissioners.

"'We'll compensate you — and the $300,000 difference is the amount that the folks at Tremca will have to give to Mr. Abdallah to ensure the project is granted by the City of Montreal.'"

Zambito said it was the only time he could remember being told that he had to deal with a specific supplier.

The former owner of Infrabec says he never personally met Abdallah about the contract and crossed paths with him only once at a community fundraising event.

In interviews with various Quebec media, Abdallah vigorously denied Zambito's allegations. He told Radio-Canada that the testimony was "a pack of lies" based on third-party hearsay.

Abdallah, a long-time construction executive, was the city's director general from 2003 until 2006, when he left the job for unspecified reasons.

He went on to work for a company owned by Tony Accurso. Accurso is a key player in the Quebec construction industry, whose name has been raised in connection with some of the most explosive testimony to date at the inquiry.

While testifying, Zambito has described a dispute with Accurso and said he was surprised when his rival called in Mafia boss Vito Rizzuto to help settle it. Accurso denied Monday that such an encounter ever took place and also denied having had a dispute with Zambito.

The Conservatives have acknowledged that the government indicated a preference for Abdallah as president of the Montreal port board in 2007, as did the City of Montreal.

But the Conservatives denied any wrongdoing in the matter and said the decision was ultimately up to the Port Authority's board — which selected another candidate, in any case.

On Tuesday, Zambito spent much of the day going over 70 municipal contracts tendered in 2004 and 2005 and answering the questions of inquiry lawyers.

He said that by looking at company names and dollar figures, he could identify contracts where bid-rigging had obviously occurred. In the cases where he didn't recognize the names of companies, or if the bids came in at a reasonable price, he said they clearly weren't fixed.

But in the majority of cases studied by commission lawyer Denis Gallant, Zambito said there was a manipulation of the process — and he was actively involved in some of those cases.

In one example, Zambito discussed a contract that went to Accurso's Simard-Beaudry Construction, even though three or four companies were involved in the bidding for a $16 million sewer contract in 2005.

Zambito said the contract was awarded as a "political command." Early in the day, he said he didn't know where that order came from — but in the afternoon he laid the blame with Frank Zampino, a man who was once the city's second-most powerful politician after the mayor.

"The businessmen weren't happy to see this project go to Simard-Beaudry, but the information sent to us was that there was a political command that the contract had to go to Simard-Beaudry," Zambito said.

He explained that collusion wasn't an exact science.

He said some company bosses told competitors exactly what amount to bid on a public tender. Zambito, for his part, said he gave competitors a certain dollar figure to bid over, which ensured he won the contracts that the cartel had assigned to him.

He said sometimes accidents occurred.

In August 2006, he said a smaller firm won a contract to dismantle an interchange which was supposed to go to one of Accurso's companies. Zambito says he was aware of the scam because he was in on it — and he intentionally submitted one of the inflated bids that were destined to lose.

The contract was cancelled by the city.

It was sent back to tender, and another one of Accurso's companies won the contest.

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