NEWS
05/21/2014 07:47 EDT | Updated 07/21/2014 05:59 EDT

Corruption inquiry puts MUHC under the microscope

A former representative from the government agency responsible for public-private partnerships told the province's corruption commission that there were irregularities in the process to award contracts for the new McGill University Heath Centre, but he never suspected there had been collusion. 

Gabriel Soudry worked for the government agency PPP Quebec when the bids for the superhospital contract were being evaluated.

He said the selection committee that was evaluating bids for the $1.3-billion hospital project was dominated by MUHC staff. Of the committee's 11 members, six were from the MUHC. 

The Charbonneau Commission is taking a closer look at Montreal's English-language superhospital and how an alleged fraud of $22.5 million sprouted from one of Canada's most expensive public works projects.

Soudry also told the inquiry that, during the selection process, MUHC officials were trying to disqualify the Spanish consortium OHL's bid. OHL was the main competitor of Montreal-based engineering firm SNC-Lavalin. 

He said St-Clair Armitage, who was a consultant for the MUHC, wrote a bogus report trying to discredit OHL.

Soudry also said that former MUHC director Arthur Porter halted the entire selection process after his agency gave a higher score to OHL's bid.

Despite those inconsistencies, Soudry said he didn't suspect there was any bid-rigging in the works. He said he was taken aback when an arrest warrant was issued for Armitage, who is still considered a fugitive and is wanted by Interpol.

He said he didn't think Armitage was involved in the alleged conspiracy involving the former CEO of SNC-Lavalin Pierre Duhaime and Porter. 

Eight people have been criminally charged to date in connection with alleged fraud and collusion connected to the superhosptial contract.

The case is slowly winding its way through court and a preliminary hearing scheduled for early next year.

Bribe allegations

Earlier this week, one of the investigators involved in the complex case outlined what police found during their investigation into the MUHC affair. 

"According to the information available… it is the biggest fraud and corruption investigation in Canadian history," Jean-Frederick Gagnon told the inquiry Tuesday.

Under the scheme, high-ranking SNC-Lavalin executives allegedly paid off senior officials with the McGill University Health Centre in order to obtain the lucrative contract.

Those accused include Arthur Porter, Canada's former spy watchdog who served as head of the McGill hospital project 

Gagnon said charges before the courts estimate the alleged fraud at $22.5 million but the amount was originally believed to be as much as $30 million.

He said investigators found a contract drawn up between SNC-Lavalin and a shell company called Sierra Asset Management that suggested the engineering giant was planning three $10-million payments, disguised as instalments for a gas contract in Algeria signed by SNC-Lavalin.

Gagnon testified the amount of the fraud likely changed after SNC-Lavalin officials began to question the transaction. In the end, the dollar amount that was traced was $22.5 million, allegedly split between Porter and Yanai Elbaz, Porter's deputy.

Each man allegedly received $11.25 million in 2010, about three weeks after the SNC-led consortium won the contract.

Gagnon testified the money went to the Porter-controlled Sierra Asset Management. From there, Porter's share went mostly to Regent Hamilton Lumley Associates, a shell company under his wife's name.

Gagnon also said Elbaz had his own fictitious firm, Pan Global Holdings, which he controlled with his brother.

"It was Arthur Porter and Yanai Elbaz who each received $11.25 million under their control," Gagnon said. "Elbaz also had his brother Yohann as a beneficiary and it was these individuals who got the money.

Gagnon also said the investigation suggested regular contact between all the accused throughout the awarding for the contract.