Carpet-cleaning contracts are behind a criminal investigation at three Ontario government ministries, according to court records, with civil servants accused of accepting kickbacks and rigging bids to line their pockets with cash and electronics.
Premier Dalton McGuinty said last week that three government ministries were under investigation by the Ontario Provincial Police, but did not say why.
Speculation has been rife, but on Tuesday an unsealed portion of an OPP search warrant brought clarity, showing that investigators suspect that taxpayers and two government subcontractors have been defrauded of about $393,000 in the scheme.
The documents state that staff in the Ministries of Transportation, Economic Development and Trade and Community and Social Services are being investigated by the OPP for a scam that was centred on carpet-cleaning contracts.
None of the ministries would comment, other than to say they were co-operating with investigators. Two subcontractors - CB Richard Ellis and SNC Lavalin Profac - are also named in the filing.
Neither the police nor the province has identified the carpet-cleaning company at the centre of the probe. The court document simply refers to the company as a "vendor of record," which is what the government calls any company that has been awarded a contract after going through the tendering process.
It is also not clear how many employees are being investigated.
"We are aware of the situation and we are co-operating with the OPP on the investigation, but we haven't had to take any action in response to the situation," said SNC Lavalin Profac spokesman Gopal Bensal.
No one has been charged in connection with the investigation, which police say centres on irregular financial transactions between government and outside vendors. The court document is a one-page overview of the investigation, which is the only public portion of a sealed court file.
"It is alleged the Ontario government, SCN Lavalin Profac and CB Richard Ellis employees who were involved in the awarding of service work (typically carpet cleaning) to a vendor would accept kickbacks in the form of cash payments, the provision of free personal services and/or the provision of personal electronics," the document states.
The document says that sometimes, invoices would be issued for work that was never done. In other cases, the contract would be artificially inflated so employees could spread the cash among themselves.
"For smaller jobs that were invoiced at a couple of thousand dollars or less, the vendor provided the suspect employee with 10 to 20 per cent of the invoiced amount," the document states. "For larger jobs … the vendor provided the suspect employee with approximately 50 per cent of the inflated amount."
The police are also investigating claims that the civil servants and private contractors would tell the service vendor what other vendors were bidding for a contract, so they could undercut them and win the business and keep the scam going.
"It is alleged that in some instances, kickbacks were provided to the suspect employee for bid rigging in the form of cash payments and/or free personal services," the document says.
The documents state that the scam cost the Ministry of Community and Social Services at least $300,000, the Ministry of Economic Development and Trade at least $50,000, and the Ministry of Transportation at least $16,000.
SNC Lavalin Profac and CB Richard Ellis were said to have lost approximately $27,000. The two companies provide real estate services to the Ontario government on a contract basis.
A CB Richard Ellis spokesperson said the company has been working with the Ontario government since October, 2009, and would co-operate with the investigation.
"CB Richard Ellis has strong policies regarding ethical behaviour and business practices that all our employees are required to follow," Margot Friedman said. "We have zero tolerance for illicit or unethical activity in any form. Because the investigation is ongoing, it would be inappropriate to comment further at this time."