The vice-president of Dessau, one of Quebec’s largest construction and engineering firms, says the system of false invoicing to pay for political donations was a "cancer" that had spread "everywhere" by 2009.
Rosaire Sauriol, the second-in-command at Dessau, told Quebec's corruption commission this afternoon that his firm was involved in a false-invoicing practice to free up cash for political-party fundraising for five years.
But in 2011, with the mounting pressure of police investigations and media reports, the firm decided to come clean and proactively disclose the $2 million dollars it paid out in phony bills to get cash back, Sauriol testified.
The company paid back all the taxes it owed on that money, as well as interest and taxes that weren’t recovered from the business that supplied the false bills and kept 10 per cent as its cut.
"That total was almost the total of the [fake] bills we paid," Sauriol told the commission. "So it cost the company $2 million."
Dessau, based on Montreal's South Shore, is a big engineering-construction firm that deals in large-scale transportation, building and infrastructure projects. The company grew rapidly, Sauriol said, and through the acquisition of other companies, it expanded into the rest of Canada and Latin America.
About 65 per cent of Dessau's business is in the public sector, Sauriol said.
During that expansion period, as the company was moving into more and more territory in Quebec — and more and more electoral ridings — the pressure to contribute to political parties intensified, Sauriol said.
"The pressure continued," he said. "The only way we had, or, the way we decided to come up [with the cash] was to, unfortunately, do false invoicing."
Sauriol said he had a contact that had a "network of businesses" involved in the practice of invoicing for cash.
The company got bills, all of which were classified under its sales and marketing department, and paid them out by cheque. A few days later, it got that money back in cash, minus the 10 per cent fee.
Sauriol admitted he knew the practice was illegal and maintained that only himself and his brother, the president of the company, knew about it.
"It stayed at a high level," he said. "I was responsible. You said it is a criminal act? You’re right."
In 2009, the company started reviewing all of its business practices and its ethics code. It brought in external consultants and made a decision to stop all political financing, he said.
In 2010, it discussed the files with its lawyers and, the next year, voluntarily disclosed the fake invoicing to fiscal authorities.
Sauriol’s testimony continues tomorrow.