10/09/2012 11:18 EDT | Updated 12/09/2012 05:12 EST

Corruption extends to Quebec Liberals, inquiry hears

The former Montreal construction boss who has stunned Quebec with his testimony about collusion and kickbacks in the awarding of municipal contracts now says the corruption extended to the highest levels of the previous Liberal provincial government and involved schemes to funnel taxpayer money into the party's coffers.

Most of Lino Zambito's fifth day of testimony at Quebec's Charbonneau commission last Thursday is covered by a publication ban, but portions were made public Tuesday, and they suggest that a widespread system of graft went all the way to the offices of Quebec's one-time deputy premier and the former labour minister.

In one case, Zambito said, he was asked to contribute $50,000 in cash to the Liberals to help resolve a business issue he was facing. He said the request came from Christian Côté, a fundraiser for the then labour minister, David Whissell.

Zambito, erstwhile vice-president and co-owner of the now-defunct Infrabec Construction, decided to try to address the issue through other means. He had his uncle, former senator Jean Rizzuto, make calls that eventually solved the problem without his having to cough up any money.

Zambito said other schemes involved engineers tasked with overseeing Transport Ministry construction projects. The engineers would push the companies they were supervising to make political donations, including tens of thousands of dollars to the Liberal Party. In exchange, Zambito said, his company could bill for cost overruns on its contracts and the engineers would approve it — using money that came from the provincial treasury and, ultimately, taxpayers.

Fundraising dinner for Normandeau

At one point, Zambito testified, he organized a fundraising event in Laval, the city north of Montreal, for the then deputy premier and municipal affairs minister Nathalie Normandeau. Zambito said attendees included his peers in the construction and engineering business — he named representatives of Catcan Enterprises, Groupe Roche, Génivar and Groupe Séguin, all of which have received public contracts from the City of Montreal. They paid $5,000 a head for the dinner, where they got to meet and chat with the minister.

Many of the attendees brought along an elected official as their invited guest, and paid for their guest's ticket, Zambito said. That meant some of them were paying $10,000 total to the Liberal Party. At that time, Quebec law limited political contributions to an aggregate of $3,000 per year per candidate and per party (last year, the annual limit was lowered to $1,000).

Zambito said some attendees skirted the rules by bringing their payments in up to four cheques of $2,500 in the names of various family members, associates or employees. He raised $110,000 this way, he said — though the Liberal Party's financial return for 2008 only lists $77,500 in contributions from the dinner, and the admission price is reported as just $1,000.

"The law, you can't give more than $3,000. So, once you've reached $3,000, I'd have to ask my spouse, I have to ask my parents, people around me to write cheques," he said.

"And when it's my spouse and my parents, I take the cheque and I don't reimburse the money. But of course when I ask my employees, my engineers, to write cheques for $3,000, they're not interested in contributing to the Liberal Party or any other party, so I have to reimburse them in cash."

Illegal to use dummy donors

Zambito said he would also ask his subcontractors on public contracts to cut cheques for political donations, and he would reimburse them by letting them invoice him for the amount.

It is illegal to dodge Quebec's political-financing laws by using dummy donors who are reimbursed for their contributions, but Zambito said the practice wasn't rare in the industry.

He said he also donated to the Parti Québécois and the former Action Démocratique du Québec party, but did not organize fundraisers or solicit contributions for them.

"Our position as a company obliged us to go to various events," Zambito said. "But honestly, there wasn't anything personal in it…. I saw it as 'business development.' "

Testimony resumes next week at the Charbonneau commission, which is looking into construction-industry corruption in the awarding of public contracts in Quebec and possible ties to organized crime and political parties.