Benoît Labonté says he won't be a scapegoat for a system that is rotten. (CBC)

Montreal's former opposition leader says the city's political system is run by a Mafia-like system — and his opponents know it.

On the weekend, Benoît Labonté was forced to resign from his party and drop out of the campaign for the city’s Nov. 1 election over allegations he met with, and accepted donations from, a controversial construction entrepreneur.

Labonté initially denied the allegations.

Now, in an interview with Radio-Canada, Labonté has admitted he lied.

He said he did so in order to protect the Vision Montreal Party and for fear of reprisals.

Labonté said he is now coming clean in an attempt to salvage his reputation — saying he won’t be a scapegoat for a system that is rotten.

Unethical practices

In the interview, recorded at a secret location outside Montreal, Labonté acknowledged that while not illegal, accepting money from construction entrepreneur Tony Accurso was unethical.

Though political leadership races are not governed by the province’s chief electoral officer, Quebec election law only permits donations to political parties from individuals, not from corporations. Also, those donations must be made by cheque.

Labonté also described how parties get around the law by recycling corporate cash donations to individuals who would return the money through cheques.

Labonté said the practice is used "in all the parties, municipal and provincial," and is still ongoing at Vision Montreal.

"Is there a mafia-like system that is running the city of Montreal, the answer is yes," said Labonté.

Mayor knew: Labonté

Between 2005 and 2007, Labonté was a member of Mayor Gérald Tremblay’s Union Montreal Party.

During that time, Labonté said he tried to warn Tremblay about rumours circulating that companies that won contracts were giving kickbacks.

“He leaned back in his chair and looked at me candidly,” said Labonté.

“[He] said "you see Benoît, in municipal politics… that's what it's all about.’”

Last month, Tremblay was forced to cancel the biggest contract ever to be awarded by the city, following a damning report from Montreal’s auditor general.

The auditor launched his investigation into the awarding of the $355-million water-meter contract after Tremblay’s former right-hand man – former executive committee chairman Frank Zampino – admitted to having vacationed on board a yacht belonging to Accurso.

Accurso’s company, Simard-Beaudry, was part of the consortium that won the contract in 2007.

On Thursday, Quebec’s Public Security Minister Jacques Dupuis announced the creation of a special squad to investigate allegations of collusion in the construction industry.

Asked to respond to Labonté’s allegations, Dupuis invited him to speak with the provincial police.