02/05/2013 11:53 EST | Updated 04/07/2013 05:12 EDT

Puppet-master in Montreal corruption schemes? A mid-level city employee: witness

MONTREAL - A corrupt cartel that controlled Montreal's construction industry was not set up by the Mafia, or by company bosses, but by a municipal functionary, according to testimony heard Tuesday.

That account, provided by a construction boss at Quebec's corruption inquiry, marked a dramatic departure from previous testimony heard in recent months.

Earlier testimony had suggested that city officials simply drew financial benefit by co-operating with the bid-rigging system in public procurement.

But, to hear Joe Borsellino tell it, a mid-level bureaucrat was the one pulling the strings.

The Garnier Construction boss said it was city engineer Gilles Surprenant — who has since earned the nickname "Mr. GST" — who masterminded the collusion.

Borsellino said he had heard rumours about collusion in the Montreal construction industry since the 1980s, but he said his first experience with the system came in an encounter with Surprenant.

He said that as his company became active in public bids, Surprenant urged him to partner up in schemes with other companies.

Borsellino said nothing came of that first conversation. But he said Surprenant convened another meeting in the mid-1990s and said to three construction bosses, "Guys, work together."

Borsellino explained why construction companies might be vulnerable to such pressure. He said contractors face financial disaster when a job goes wrong, and the early 1990s were especially tough.

"We suffer. We suffer because we don't get paid," he said. Municipal decision-makers have considerable power to delay or hinder a project, he said.

"When the key man (in the city) calls and says, 'Come and see me, I can solve your problem,' (we go)."

He bluntly predicted that, despite all the ongoing efforts in Quebec to clean up the industry, such a dynamic will always exist.

"It happened. And it's going to continue to happen in the years to come. There's people at the city who were very powerful," Borsellino said.

"And they could tell a contractor, 'You're not gonna make any money unless you listen to me.'"

The inquiry has previously heard that, for many years, a cabal of construction companies conspired to inflate the price of construction projects in Quebec, and split the profits with political parties, the Mafia and friendly civil servants like Surprenant.

Commission chair France Charbonneau appeared to be treating the Surprenant narrative with a heavy dose of skepticism, stepping in to question the witness' suggestion that a civil servant could wield that much power in such a risky business.

"So what you're telling me is the great mastermind of all of this was Gilles Surprenant, when he was 30 years old?" Charbonneau asked.

"Yes," Borsellino replied.

He said he was extorted, too. Borsellino said he often argued with Surprenant about how much he had to give as a payout because the latter always wanted more.

Many times during his testimony, Borsellino was short on specifics.

The witness had trouble remembering if the first attempt at a rigged contract between three firms worked. He couldn't remember how much Surprenant received as a kickback.

Surprenant has already admitted to inflating prices on projects and collecting more than $700,000 in kickbacks over the years.

But the retired bureaucrat offered a different version of the facts about the origins of the corruption when he testified last fall.

"I'm not a villain. I am a civil servant who has been corrupted," Surprenant said, emphasizing that the corruption originated with contractors themselves.

Also Tuesday, Borsellino said he buttered up a powerful union boss with expensive hockey tickets, fancy dinners and even a trip to Italy.

He couldn't say if he got anything in return.

Borsellino admitted he was generous with the former head of the Quebec Federation of Labour's construction wing, Jocelyn Dupuis.

He called him a friend.

On the stand for a second day, Borsellino faced a grilling from commission counsel about his relationship with Dupuis, who once ran Quebec's most powerful construction union.

The testimony didn't always go smoothly.

Borsellino, who was heard speaking fluent French on police wiretaps, said Tuesday that he was having trouble understanding questions being put to him in that language.

His responses were a Montrealesque blend of both official languages, with the two frequently mixed into the same sentence.

In one example, when asked why he gave Dupuis so many gifts, Borsellino offered a reply in French and English.

"Well, he's a friend, mais aussi (but also) because he's at the union," Borsellino said

Borsellino said that while he never gave Dupuis money, he often plied him with gifts like hockey tickets to Montreal Canadiens games, fancy meals and even a trip to Italy with their wives in October 2008.

Others joined that trip too: former municipal public-works boss Robert Marcil and Yves Lortie, a vice-president from another construction firm.

Borsellino said a number of cancelled City of Montreal contracts, worth millions, were what pushed him to invite Marcil. "I wanted to improve my relationship with the city," Borsellino told the commission, adding that he never gave Marcil any money.

Borsellino paid for much of the Italy trip out of pocket and it cost him $50,000.

He also gave him access to a $300,000 luxury condominium in an Old Montreal building for three years until it was sold in 2010.

The building, located on De la Commune Street, has made headlines in the last week, being described in reports as a haven for biker gangs and Mafia associates.

The inquiry heard wiretaps of Dupuis and Borsellino discussing a $40 million contract to refurbish a Rio Tinto plant in Saguenay and whether Dupuis might be able to help him get the winning bid.

A wide range of topics came up during the calls: a potential investment in Parasuco Jeans by the FTQ's investment wing; a Club Med development project in Florida; and then-provincial cabinet minister Tony Tomassi.

Borsellino said he had done a "little thing" for Tomassi, who later resigned from politics in scandal and who now faces fraud charges. He did not specify what that "little thing" might have been. None of the projects ever materialized and Garnier did not win the contract for the Rio Tinto project.

"If I had a project, I talked to him. He was a friend," was how Borsellino described his relationship with the union boss. "To the best of my knowledge, he didn't help me get any contracts."

Dupuis headed FTQ-Construction between 1997 and 2008. It is the largest construction labour union in the province.

He was forced to resign in September 2008. Dupuis is now facing unrelated fraud charges.

Borsellino did not agree to be pre-interviewed by inquiry investigators and his testimony has been laden with incomplete answers and frequent memory lapses.

At one point inquiry chair France Charbonneau intervened and warned Borsellino that vague answers wouldn't get him anywhere.

His name has been mentioned previously by former city employees who say they received kickbacks from Borsellino.

Another high-profile witness, Lino Zambito, has said that Borsellino's company Garnier was one of those that belonged to a cartel of companies that controlled sewer contracts.