10/17/2012 10:31 EDT | Updated 12/17/2012 05:12 EST

A star witness in Quebec probe leaves the stand, tattered reputations behind him

A star witness' appearance at a Quebec corruption inquiry has ended, with his bombshell-dropping performance leaving behind a trail of tattered reputations.

As Lino Zambito wrapped up his eighth and final day of testimony Wednesday, a number of people lined up to defend themselves in the aftermath of an appearance that has shaken the political system and prompted endless speculation about what testimony might come next.

His description of a construction cartel that colluded with the Mafia and corrupted political parties managed to dent reputations in Montreal, various parts of Quebec, and it also left smaller scuffs on the federal scene.

People began fighting back Wednesday on multiple fronts: at the federal level, the provincial level, the municipal level, a provincial agency and at the inquiry itself.

In Ottawa, Conservative Sen. Leo Housakos made a rare public statement about the ongoing scandals in order to distance himself from one of the people Zambito accused of wrongdoing.

Housakos told reporters he never urged anyone in the Harper government to have Robert Abdallah appointed as the head of the Port of Montreal. He confirmed that he knew Abdallah but said he wasn't involved in getting the Prime Minister's Office to promote his ultimately unsuccessful candidacy.

"He never asked me to intervene. I never had a conversation with Mr. Abdallah nor with anyone else on that subject," Housakos said.

"The first time I heard anything about this was in the newspapers."

It's unclear whether any players on the federal scene will be asked to testify at the inquiry. A spokesman for the Charbonneau commission told The Canadian Press that the inquiry views federal politics as extraneous to its mandate and said it could even interrupt any testimony that strays too close to Ottawa.

The senator issued his denial as Abdallah himself was preparing to go public with his own counter-attack.

A former Montreal city manager, Abdallah has called a news conference for Thursday to address allegations about a $300,000 kickback allegedly destined for him. He is expected to refute, "point by point," the allegations that have been made about him, a statement released Wednesday said.

A senior executive at Quebec's provincial gaming corporation was also scrambling to protect his reputation.

Pierre Bibeau, a prominent organizer in the provincial Liberal party, has been temporarily reassigned from his job as a vice-president at Loto-Quebec while he fights to clear his name, according to a statement Wednesday.

Bibeau is alleged to have solicited and received a $30,000 cash donation from Zambito for a fundraiser featuring his former spouse, who was then Quebec's environment minister. Zambito testified that the transfer took place inside the gaming corporation's offices.

In a statement, the Crown corporation announced that Bibeau had agreed to the reassignment. Bibeau was in charge of public affairs and communications.

"(Bibeau), like any other citizen, enjoys the presumption of innocence, and he has in a statement strongly condemned the allegations of the witness against him," Loto-Quebec said in a statement.

Bibeau's reassignment came one day after construction magnate Tony Accurso announced his retirement while denouncing the testimony heard at the inquiry.

He had already denied testimony that he called in a Mafia don, Vito Rizzuto, to have a chat with his business rival, Zambito, when he tried to compete for a lucrative public contract.

Zambito delivered his testimony matter-of-factly, in a blue-collar patois, and he flinched only rarely — such as when he chose his words carefully to describe industry ties to the Cosa Nostra.

He ultimately declared that he turned over 2.5 per cent of his proceeds to the Mob, in addition to myriad political kickbacks and big-rigging schemes that ramped up the cost of construction. Zambito is no longer in the construction business, after having been arrested, and he faces criminal charges.

His allegations about Abdallah brought the inquiry uncomfortably close to the seat of federal power.

The Prime Minister's Office originally tried to have Abdallah appointed in 2007 to run the Montreal port — a site of considerable economic importance. His candidacy was resisted by the port authority's board, and he was ultimately rejected.

A mysterious audio recording surfaced last year, in the midst of a federal election campaign, that hinted at a nexus between Accurso, Abdallah and the federal government. Abdallah once worked for Accurso and also knew Housakos from the senator's days working for the municipal government.

The recording purported to feature a chat between Accurso and another construction executive; two voices could be overheard discussing plans to use Housakos to get an influential friend in the PMO — Harper's then-spokesman Dimitri Soudas — to push Abdallah's candidacy.

Housakos was asked Wednesday why his name came up on that tape.

"That's a very good question. A very good question," he told reporters during an exchange after the weekly Conservative caucus meeting.

"The only thing I can tell you is that I never tried to influence a political decision of the federal government. Period."

Meanwhile, the inquiry testimony was being challenged on other fronts; Zambito spent his final two days of testimony being cross-examined by various lawyers.

A lawyer for the City of Montreal was challenging the star witness to explain memory gaps and probed for possible inconsistencies in his story.

City lawyer Martin St-Jean questioned Zambito on specifics about a 2005 city contract Zambito said Abdallah tampered with through an intermediary, an engineer overseeing the work.

Zambito said he never met directly with Abdallah or discussed the matter with him. He said he didn't even know if the cash — which was to come from a separate piping company — was ever actually turned over to Abdallah.

"There was an engineer who was representing the city who told me that the contract would be authorized if I bought ... extra piping," Zambito insisted. "I told you what was reported to me by the engineer who is representing the city who is contact with Mr. Abdallah."

The exchange grew testy at times, as the city lawyer suggested Zambito was recklessly tarnishing the reputations of people who might be innocent.

For example, Zambito could not put a dollar figure on the three per cent cut of rigged contracts that he allegedly paid to Mayor Gerald Tremblay's Union Montreal party through a Mob-linked middleman. He even failed to recall the name of the person who he says asked him for that partisan kickback.

"It's easy to throw names out there but, at some point, you have to come back with solid details," St-Jean told Zambito.

The commission chair appeared to defend the witness.

"In an inquiry, you have to start somewhere and the evidence will come gradually over time," France Charbonneau said.

One established provincial party has emerged relatively unscathed from the early stages of testimony, including after Zambito's eight days on the stand: the Parti Quebecois.

If the last PQ government was involved in any shady business, Zambito didn't see it.

Under questioning from a lawyer for the PQ, Zambito said he never made any illegal, unregistered cash donations to that party while it was in power until 2003. In fact, the sum total of his registered donations to the party during that era was $600.

He said he did participate in some rigged provincial contracts in that earlier period, too. But he downplayed their scope compared to the ones he participated in later.

For instance, he said the PQ-era schemes were worked out by the construction companies themselves — with no help from the provincial level.

Later, he said, companies got privileged information to help them win contracts from engineering firms that, under hire from the provincial government, oversaw projects. He said those same firms were also instrumental in illegal party fundraising.

Zambito said that, on average, non-rigged contracts carried a profit margin of between six and eight per cent, compared to an average of 15 per cent for rigged contracts.

Zambito was adamant that the quality of the work he did for the provincial Transport Department was always top-notch.

Surprisingly, a lawyer for the Quebec Liberal party, renounced his right to cross-examine Zambito. He had testified about illegal cash donations to the Liberals, including one for $50,000 and another for $30,000 paid through Bibeau, and described his friendly ties with deputy premier Nathalie Normandeau.

Zambito was also asked why he chose to testify.

"I wanted to give testimony that reflected, to the best of my knowledge," he replied, "what I went through."

A commission lawyer chimed in with his own, alternate, interpretation: "I call that a subpoena," Denis Gallant quipped.