The former head of Quebec's anti-collusion squad, Jacques Duchesneau, has told the province's corruption inquiry Tuesday that more than two-thirds of political party financing in Quebec is illegal, spawning from a "clandestine empire" larger than he'd ever suspected.

Duchesneau told the Charbonneau Commission Tuesday that he believes 70 per cent of the money used by Quebec's provincial parties comes from outside registered donations.

"This clandestine empire I'm talking about comprises links between the construction world and the illegal financing of political parties," he told Quebec Superior Court Justice France Charbonneau, who is presiding over the inquiry.

"According to the testimony, we have before us a widespread and brazen culture of kickbacks."

Commission president France Charbonneau.

The former Montreal police chief said the problem is rampant at the municipal level as well.

Duchesneau is a star witness at the inquiry, which is mandated to explore allegations of corruption in Quebec's construction industry, ties to the Mob and political party financing.

The one-time head of Quebec's anti-corruption squad UPAC shared an anecdote, from an anonymous source, who told him a certain municipal party was so awash in cash it literally could not close the door on its safe.

The system appears well organized, according to Duchesneau. He says political organizers would demand donations from engineering firms. These firms, in turn, would inflate invoices for work being done on public projects.

He estimates that, during his investigative research over the last three years, he found as many as 50 engineering firms submitting false invoices in Montreal alone.

Tuesday was Duchesneau's fourth day of testimony at the inquiry. He is being questioned about an incendiary report he authored while heading an anti-collusion unit in Quebec's Ministry of Transport.

Earlier in his testimony, Duchesneau admitted leaking the report to media because he was worried the Liberal government would ignore its troubling allegations about the construction industry's illegal donation to political parties.

With files from the Canadian Press