01/29/2014 12:30 EST | Updated 03/31/2014 05:59 EDT

Inquiry gets details of political clout of Quebec's largest labour union

MONTREAL - The political clout of Quebec's largest labour union was on display at the province's corruption inquiry on Wednesday, as well as clear signs as to who had the ability to wield that power.

In his third day on the stand, Michel Arsenault, the Quebec Federation of Labour's former president, was forced to finally admit that he had considerable influence on the province's political class.

It was illustrated in yet another wiretap conversation played at the inquiry. When influential construction mogul Tony Accurso called to grouse about outsiders from China winning lucrative engineering contracts for major Quebec infrastructure projects, Arsenault sprang into action.

Arsenault wasted no time complaining to politicians in power, including in a January 2009 conversation with then-premier Jean Charest which was caught on a police wiretap.

The former union boss, who retired last November, has been relentlessly questioned about the organization's influence and how much sway Accurso had on the union.

Arsenault admitted to intervening with the government on Accurso's behalf on certain Hydro-Quebec related projects. But in the case illustrated by the inquiry, Arsenault denied that he was being used by Accurso, a businessman with cosy ties to his union for many years.

"I find that insulting," Arsenault said.

But Arsenault insisted his intervention after Accurso's complaint about outsiders winning an engineering contract was purely in the interest of defending the best interests of the Quebec economy and its workers.

After Accurso's call, Arsenault was heard intervening to Charest in a short phone exchange, during which he told Charest that partners of the union's investment fund weren't happy about rumblings of a foreigner getting the contract. During that conversation, Charest also informs Arsenault that he'll be named to the board of the Caisse de depot, Quebec's pension fund manager.

A few days after the conversation with Charest, Arsenault reported back to Accurso, saying Charest had "turned white like a snowbank when I told him about the Chinese getting the contracts."

Arsenault also said he'd spoken to then-opposition leader Pauline Marois and a host of ministers including then- Treasury Board president Monique-Jerome Forget.

Arsenault admitted on the stand there was an interest in pushing for Accurso's company's to succeed.

The QFL president, who was also in charge of the union's billion-dollar Solidarity Fund, a publicly-funded investment wing, was heavily invested in Accurso's companies and wanted to see him get lucrative contracts.

Arsenault has repeatedly said he didn't see any conflict of interest issues in one person holding the two powerful positions with the union and the fund.

And after days of downplaying the power the union has in provincial politics, Arsenault admitted that his former employer did have some political sway.

"I have a certain influence in politics, but I'm not the only player on the ice," Arsenault said.

Another perceived attempt at exerting this influence was explained away by Arsenault as a serious gaffe.

Arsenault said a conversation where he said a "deal" with the husband of Quebec Premier Pauline Marois was a bad idea is something he regrets ever bringing up.

The Charbonneau Commission heard in a wiretap last week that the union wanted to thwart the creation of any public inquiry into the construction industry and that it was seeking political alliances to support the federation's position that an inquiry was unnecessary.

In the 2009 recording, Arsenault was heard floating the idea of enlisting the support of Marois, who was leader of the Opposition at the time, to prevent any inquiry from taking place.

Arsenault explained he was simply "brainstorming" with Jean Lavallee, a former fellow union executive, in the 2009 conversation. He said he had the idea to speak to Claude Blanchet, Marois' husband, who had business dealings with the labour federation's Solidarity Fund through a company he owned.

The idea was to use Blanchet to persuade Marois to bring the Parti Quebecois on board.

"The PQ won't touch this," Arsenault told Lavallee, ex-president of the labour federation's construction wing. "I'll talk to Pauline."

The revelation drew denials last week from Marois and the Parti Quebecois of any such deal or union pressure. But it left the opposition parties in Quebec City wondering aloud just how much influence the province's largest labour group exerted over the party.

An embarrassed Arsenault said Wednesday he realized later it was a bad idea. A longtime political attache at the union told him a day after the wiretapped conversation it would be a terrible idea to use Blanchet to get to Marois. Blanchet was himself a director at the Solidarity Fund between 1983 and 1997.

Arsenault said there was never any intention to compromise Marois and he said he never spoke to Blanchet in the end.

"It was grandstanding between two union leaders," Arsenault said. But inquiry chair France Charbonneau said her reading of the conversation was that it looked a lot like an attempt to blackmail.

"I'm very uncomfortable with all this," said Arsenault. "It's a bad joke that I regret."

The Liberals, in power at the time, finally agreed to call an inquiry in November 2011.

Accurso's influence on the union brass was clear. In a recording involving Accurso and Arsenault played earlier Wednesday, the construction boss suggests that three previous QFL union presidents before him had vacationed with him.

Arsenault has admitted vacationing with Accurso once on his luxury yacht. He called it the greatest vacation of his life.

The inquiry heard one recorded conversation where one of the Solidarity Fund's administrators, Yvon Bolduc, told Arsenault that the publicly-funded investment fund actually paid for half of Accurso's luxury yacht. The boat was apparently called "Touch" because it was paid for with bills through Hyprescon, a company that was half-owned by the fund.

Arsenault said the investment happened before his time at the union. He said it wasn't his place to check whether that was true and he brushed it off as rumours.

"I verified on my end, I came back to him (Bolduc) and told him people are denying it," Arsenault said. "I still don't believe it's true."

The inquiry has made clear the investment fund and its real-estate arm were very generous to Accurso-led companies. Also, the inquiry has heard the fund was cautious about investing in companies that were competitors to it was already invested in.

But Arsenault said it wasn't an open chequebook for Accurso: many projects did not get funding.

And the former union boss was adamant that Accurso never asked anything of him in return for his own holiday. He said he didn't see anything wrong with accepting it either, saying it was common in the day.

"There are (practices) that have changed and are no longer accepted today," Arsenault said.

Meanwhile, in Quebec City on Wednesday, the Coalition for Quebec's Future announced it intends to introduce a bill that seeks to ensure the independence of the QFL's $9.7-billion Solidarity Fund.

Arsenault will return to the stand on Thursday.