Two construction companies associated with Montreal businessman Tony Accurso must pay a combined $8 million in fines and back taxes after pleading guilty to federal charges of tax evasion on Tuesday.
The charges against Construction Louisbourg Ltd. and Simard-Beaudry Construction Inc. mean one of Canada's largest infrastructure projects may be affected.
Simard-Beaudry, one of the major companies tapped to work on Montreal's $1.3-billion superhospital project, now has its licence under review.
Quebec raised the possibility of such sanctions Tuesday, hours after the two companies pleaded guilty to tax evasion at the Laval courthouse.
The guilty pleas come a day after the Canada Revenue Agency laid charges against the construction companies following a lengthy investigation.
The agency said the two companies claimed non-deductible expenses worth $19 million over a five-year period from 2003-08.
The companies admitted they submitted invoices for work that was not done and for work that was not related to the construction industry.
Construction Louisbourg will have to pay back $3,346,959 in unpaid taxes in addition to a fine of the same amount, for a total of $6.7 million.
Simard-Beaudry will have to pay back $783,269 in back taxes and the same amount in fines, so its total is more than $1.5 million.
Both firms avoided trial by pleading guilty.
McGill superhospital project may be affected
The tax evasion charges have potential implications for projects, including Montreal's proposed mega-hospital, which has been planned for nearly two decades, and is to be completed by 2014.
The McGill University Health Centre's Glen Campus superhospital is one of the largest construction projects in Canadian history, and the largest public-private partnership ever in Quebec.
Simard-Beaudry is part of consortium involved in construction.
The Quebec government ordered the provincial building-code authority – the Régie du batiment – to investigate the two companies and decide whether they should face sanctions.
The province introduced new laws last December designed to fight criminality in the construction industry.
"They must still conduct an investigation about what type of sanction to apply," Labour Minister Lise Thériault said in Quebec City.
"We can revoke a licence, we can suspend a licence, we can limit [a licence]." The investigation should be complete in a matter of weeks, Thériault said.
Company claimed expenses for boat
According to an agreed statement of facts filed at the Laval courthouse on Tuesday, some of the expenses Construction Louisbourg wrote off were related to the building of Accurso's yacht, Touch.
The company tried to claim expenses related to the construction of the boat, including $1.6 million in salaries.
Accurso is not charged in connection with the Canada Revenue Agency probe. Up until last Thursday, the businessman was listed as an administrator of both companies.
Accurso was in the news in 2009 when Simard-Beaudry was part of a consortium that got a controversial $355-million water meter contract from the City of Montreal. The contract was later cancelled.
Several prominent public figures have reportedly vacationed on Accurso's yacht.