Construction firms colluded to boost prices: report
Last Updated: Thursday, October 15, 2009 | 9:42 PM ET
CBC News
The report suggests Quebec taxpayers are paying 35 per cent too much for many infrastructure projects. (CBC)A small number of construction firms are colluding to control bidding and keep prices high on major municipal infrastructure projects in the greater Montreal region, with taxpayers footing the higher costs, an ongoing Radio-Canada investigation suggests.
The province has committed to spending billions of dollars on construction projects over the next decade and several whistleblowers have come forward to say a small group of contractors has cornered many of the contracts.
The report suggests taxpayers are paying up to 35 per cent too much.
Paul Sauvé, president of the Montreal masonry firm LM Sauvé, said a small group of companies, dubbed by some the Fabulous 14, obtained most of the infrastructure contracts in Montreal. The firms would essentially take turns winning contracts, Sauve told Radio-Canada.
Francois Beaudry, who was a consultant for Quebec's deputy minister of transport, said he learned how the system worked thanks to the help of an informant.
'Everyone is focusing on Montreal, but it is a problem across the province of Quebec,'—Montreal Mayor Gérald Tremblay
Beaudry told Radio-Canada that in 2003, an anonymous contractor called to tell him the results of calls for tender on 10 major projects in Laval — the day before they were to be awarded.
"There was collusion and a last-minute change on two of the 10 projects," said Beaudry.
Beaudry eventually began working as an intermediary between Quebec provincial police and the informant.
Alleged Mafia involvement
A contractor who asked that his identity be kept confidential corroborated Beaudry's version of events.
The bids were fixed using a code based on a fictitious golf game, the contractor told Radio-Canada.
One firm would organize a fake game of golf, and tell the others that nine players would be leaving from the fourth hole at 11 o'clock, said the contractor.
Former transport ministry consultant Francois Beaudry said he learned how the system worked with the help of an informant. (CBC)
The "fourth hole" was code for $4 million and "nine players" would indicate $900,000, so that the winning bid would be $4.9 million and the other companies involved would have to bid above that.
Radio-Canada has also learned that non-complying companies have endured threats of physical violence and damage to equipment.
"It's the Montreal Mafia, the Italian Montreal Mafia that controls what happens at the city of Montreal relating to the construction of roads," said Beaudry.
The federal Competition Bureau suggests collusion in the construction industry can jack up prices 20 per cent and more.
Calls for inquiry
Laval Mayor Gilles Vaillancourt said he was not aware of the situation.
"There are police investigations underway — and I think we have to let the police investigators do their work — and then if necessary, we will make additional decisions," said Vaillancourt.
"I'm not surprised [by the report]" said Montreal Mayor Gérald Tremblay, who has asked the province to create a special squad to investigate allegations of municipal corruption.
"Everyone is focusing on Montreal, but it is a problem across the province of Quebec," Tremblay said.
The city is already implementing practices to make sure the city gets the best price possible and that calls for tender are open to as many bidders as possible, he said.
The office of Quebec's Public Security Minister Jacques Dupuis said the government would wait for the results of police investigations before deciding whether further action is needed.
But the opposition parties at the national assembly said it is time for the government to launch a public inquiry.
"It is urgent," said interim Action Démocratique Leader Sylvie Roy.
"We need a public inquiry before the all the money that we want to invest in our infrastructure — $43 billion — is spent," Roy said.
