The creation of a police anti-corruption squad three years ago had an immediate effect on public-works costs in Quebec, driving down the price of contracts by about 15 per cent, the Charbonneau Commission probing the construction industry heard on Wednesday.
“I heard that entrepreneurs were worried,” after the Charest government set up Operation Hammer, said Lino Zambito, who has been identified as a one-time member of an exclusive “cartel” of Quebec construction firms that colluded on lucrative public-works contracts.
Mr. Zambito said that once he no longer has to pay “taxes” to the Mafia, to city bureaucrats, or to the political party of Mayor Gérald Tremblay, he found himself able to participate in free competition for bids, he said.
He said that apart from some companies trying to collude on snow-removal contracts, which he heard about, he believes that most construction firms are now in open competition.
Still, Mr. Zambito, whose construction firm Infrabec Inc. went bankrupt last year, said the benefits could be short-lived.
He said fear has settled over the industry and the civil service, where files are virtually frozen.
“This has created a bigger problem,” he said.
He believes that small and medium-sized players in the industry will fail, leaving the field to major players and multinationals. Within two or three years, prices will rise “artificially” as large companies take control of the business, he said.
“It’s what I hear on the street every day,” he said.
The commission, which has sent shockwaves through Quebec with its near daily disclosures of kickbacks and corruption, has already heard that Mr. Zambito paid a 3 per cent "tax" on city contracts to Mayor Tremblay's political party. This came on top of a 1-per-cent tax to a top city engineer who was drafting contracts, and 2.5 per cent to the Montreal Mafia.