For Marois, a crackdown and a conundrum

MONTREAL — The Globe and Mail

Premier Pauline Marois is expected to propose new laws to battle corruption in the construction industry. (JACQUES BOISSINOT/THE CANADIAN PRESS)

In Quebec, political pundits have been taking bets on how often Pauline Marois will say “integrity” when she delivers her inaugural speech at the National Assembly on Wednesday. Odds are Ms. Marois will pepper her address with the buzzword.

As horrific as the Charbonneau commission has been so far for Montrealers, the public inquiry that is investigating the ties between the construction industry, organized crime and municipal politics has been a godsend for the PQ Premier. She hopes to move past her government’s rocky start – and there’s no better way than by banging on the nail of the public works industry.

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For days, Quebeckers have been watching with morbid fascination the damning testimonies that expose Montreal’s city administrators as corrupt to the bone, and show how everyone – including Montreal Mayor Gérald Tremblay, according to the last witness – just looked the other way.

There is the city engineer who skimmed more than $700,000 on inflated construction projects over 18 years.

There is the group of 10 companies known as the “sewer cartel” who split up almost all of the contracts, blowing up costs by 20 to 35 per cent.

There is the former construction boss who explained how he regularly paid a 3-per-cent kickback to the mayor’s party, on top of a 2.5-per-cent kickback to the Montreal mafia.

There was the safe at the headquarters of Mr. Tremblay‘s party, which was so stuffed with $50 to $1,000 bills in 2004 that its door could no longer close, according to a former fundraiser.

And the Charbonneau commission is only in its early days. It hasn’t set its sights on Quebec’s Transport Ministry or the Montreal suburb of Laval, where the air has carried the odour of scandal for years.

So expect Ms. Marois to come out swinging with proposed new laws to be introduced in Quebec’s legislature as early as this week.

One of these bills hopes to eliminate the loopholes in an existing law that bars an entrepreneur from bidding for a public contract for five years after he has been found guilty of fiscal fraud or of a serious criminal infraction.

Quebec construction mogul Tony Accurso landed $180-million of Transport Ministry contracts after acquiring a bankrupt firm – even though two of his flagship companies, Simard-Beaudry Construction and Construction Louisbourg, lost their licences after pleading guilty to fiscal fraud.

Quebec is also looking for a way to depose a mayor who is accused of a serious criminal offence, even if he still hasn’t been found guilty. This would allow the government to forcibly remove an elected official like Mascouche Mayor Richard Marcotte, who is refusing to step down temporarily even if he is accused of fraud, corruption and abuse of power.

No one is going to fight Ms. Marois on her integrity crusade. Yet these new attempts to crack down on corrupt construction firms spell a not-so-sweet hereafter for the industry.

While the construction industry as a whole is very fragmented, the public works sector in Quebec is dominated by larger players, entrepreneurs who have been kept extremely busy these past years.

Quebec started investing in its crumbling infrastructures after the Concorde viaduct collapsed in 2006, killing five people. And when the recession led to large-scale government stimulus programs, the work has kept piling on. Public works will account for 37 per cent of the construction hours worked in 2012, according to the Commission de la construction du Québec (CCQ).

Under scrutiny or facing justice, many entrepreneurs are throwing in the towel. Accused of fraud and corruption in two unrelated affairs, Mr. Accurso intends to sell his group, a dozen of privately held companies that employ 3,500 workers. Paolo Catania, head of Catania Construction, who reportedly gave $300,000 to Mr. Tremblay’s right-hand man on the city’s executive committee in exchange for a favourable land deal, has renounced bidding for public contracts.

Problem is, there just aren’t that many firms that can do all the specialized civil work under way. Expect delays and expect cost overruns, warns Jean Sexton, an associate professor of industrial relations at Laval University who has worked for three public inquiries into the construction industry.

And if the remaining public works firms are kept busy around Montreal, Hydro-Québec will have an even harder time finding contractors for its work sites in Northern Quebec. Same goes for the Plan Nord promoters.

Even residential projects are being delayed, says a former Montreal-area mayor who was consulted by European investors for an important development. No promoter in need of city land or a change in zoning wants to hold public hearings under a tainted administration.

Call it the law of unintended consequences if you like. But this does not bode well for a $47-billion construction industry that accounts for 14 per cent of Quebec’s GDP.

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