11/20/2012 15:11 EST | Updated 01/20/2013 05:12 EST

Contractors were told to stop bidding, corruption inquiry hears

Many contractors were told to keep their hands off public works contracts, according to testimony heard at the Quebec corruption inquiry Tuesday.

The former head of Les Excavations Panthère, André Durocher, told the Charbonneau commission that a small number of companies in Montreal and Laval kept control of bidders through threats, violence and intimidation.

"There were drawbacks to not going along with the system of collusion," he testified.

Durocher said he and his family were targeted because his company received contracts wanted by members of the controlling group.

He said he received threatening calls after his company bid on a job on Montreal's Chabanel Street in 2008.

His equipment was vandalized and his brother was punched in the face with brass knuckles, he told the commission.

'You better call'

Eventually, he said, four men in a black Cadillac showed up at his office. Two came to hand him a piece of paper with a phone number. He said the men told him "you better call."

Durocher said he ignored the suggestion. Shortly after, he received a call from his insurance agent who told him "André, we're going to have our legs broken. You're not bidding on Chabanel. I'm… cutting off the insurance on all your equipment if you submit a bid for Chabanel."

Durocher said he withdrew his bid.

In the end, Conex Construction, a company belonging to Tony Conte – whose name was mentioned in previous testimony – got the $1.8 million contract

City auditor general allegedly knew about corruption

Michel Leclerc who worked for construction company Terramex, told the corruption inquiry on Tuesday that Montreal auditor general Jacques Bergeron was told about corruption in the city's construction industry, but failed to act on that knowledge.

He told the commission that information on two separate sidewalk contracts led Luc Bédard, one of his associates, to go to Bergeron with information on the fraudulent bidding process.

One of the contracts was for a housing project near Place Norman Bethune in 2008.

In this case, Leclerc told the commission alleged Mafia middleman Nicolo Milioto of Mivela Construction pocketed $700,000 more than what the contract was really worth despite the fact that Terramex had done all the work.

He says another contract in 2009, this time for Montreal's Dorchester Square at Place du Canada, was also rigged.

According to Leclerc, Bédard told the auditor general that Ramcor was awarded the contract organized by Franco Cappello d'Excavations Super, but the company allegedly made a 30 per cent profit margin when he should have been happy with 12 or 15 per cent.

Leclerc said that the auditor general didn't do anything, even after he visited the Dorchester site and saw that there were no Mivela crews at work.

"We wanted to stop the system," said Leclerc. "We wanted to stop the system… we thought it could lead to good results."

According to him, the city never took action.

Auditor general's office responds

A news release from the auditor general's office sent out Tuesday afternoon confirms the meeting with "an individual that informed him of potential collusion between entrepreneurs doing business with the City of Montreal." It also mentions that the auditor general's office never tells people about the process it takes to investigate complaints.

The release points to the 2009 annual report, in which Bergeron underlined doubts he had about the way contracts are awarded in Montreal.

"Though the contracts were awarded to the lowest bidder, I remain perplexed about the fact that certain boroughs award a large portion of their contracts to the same entrepreneurs," wrote Bergeron in 2009.

He said he believed new measures taken by the city would help fix the issue. At the time, Montreal had decided to stop publishing the list of bidders and had also adopted an ethics code to prevent fraud and collusion.

In a special report released in the fall of 2009, Bergeron said he did not believe the city had what it needed to protect itself from corruption and also failed to control project costs.

Leclerc wasn't allowed to play

Despite its willingness to yield to allegedly colluding companies, Leclerc said Terramex was never a big player in the alleged bid-rigging scheme.

Leclerc said that alleged Mafia middleman Nicolo Milioto made close to $1.2 million on two contracts despite doing little to no work on the projects.

He said his own company focused mostly on making sidewalks but had thought about starting work on water systems and sewers. Leclerc said he talked to Milioto, who he believed was orchestrating the collusion.

Leclerc said he was diverting three per cent of the value of his contracts to Milioto. He was told the money was destined for "politics."