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Canada Inquiry hears more about 3-per-cent Montreal kickback system

Michel Lalonde, head of engineering firm Genius conseil (formerly Groupe Seguin), is shown in a frame grab as he testifies at the Charbonneau inquiry looking into corruption in the Quebec construction industry Wednesday, January 23, 2013 in Montreal

Ryan Remiorz/THE CANADIAN PRESS

An executive from a Quebec engineering firm says he was forced to donate hundreds of thousands of dollars in illegal cash to the party headed by former mayor Gérald Tremblay so his company would get its share of the city's construction business.

Michel Lalonde, president of Génius Conseil, testified Wednesday at Quebec's corruption inquiry that he coughed up $100,000 cash to help the mayor win re-election in 2005, and was forced to give three per cent from then until 2009. His firm received $26-million in city contracts during the period.

Mr. Lalonde said the 3-per-cent system was set up by Bernard Trépanier, the head fundraiser for Union Montréal, in 2004 as a way to simplify under-the-table cash donations from his firm, and others. While Mr. Trépanier has been called "Mr. Three Per Cent" before for the millions he allegedly skimmed from construction and engineering firms to finance the party, it's the first time one of Union Montréal's under-the-table cash donors has testified under oath that he handed money to Mr. Trépanier, who literally stuffed party coffers with cash well into 2009.

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Quebec's Charbonneau commission has heard a long string of allegations about corrupt officials from both Union Montréal and the city who collected millions in bribes and kickbacks skimmed from city construction contracts.

Mr. Lalonde, whose firm was known as Groupe Séguin before 2010, described how he would work with friendly construction firms to add "extras" worth 25 to 30 per cent of contracts. In many cases, his company was supposed to be supervising the construction sites.

"There was some imagination involved … but we had to be logical about it, too," Mr. Lalonde said. Mr. Lalonde reassured the commission that completing top-notch work remained the priority. "There was never a compromise on quality," he said.

The commission was distracted for much of this week revisiting the testimony of a former party official, Martin Dumont, who recanted some of his testimony, including that an office receptionist once complained to him that she was forced to count $850,000 in illegal donations.

While Mr. Dumont's credibility was damaged, the broad lines of his testimony were corroborated by Mr. Lalonde: Union Montréal operated a vast illegal financing machine that skimmed taxpayer money for campaign purposes.

Even after Mr. Trépanier quit his job with Union Montréal in 2006, he continued to collect for the party, Mr. Lalonde said, setting up meetings in restaurants and other off-site locations. "Nothing changed, it was continuity," Mr. Lalonde said.

The system went unnoticed by law enforcement until 2010, when Revenue Canada investigators uncovered a scheme to write off $36,000 in false bills between Mr. Lalonde's firm and a company owned by Mr. Trépanier. Mr. Lalonde said he paid $300,000 in fines and costs.

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Mr. Tremblay, who resigned as mayor in November, led the party for a decade and won at least two elections with the financing system in place. The new mayor of Montreal, Michael Applebaum, was a borough mayor under the Union Montréal banner throughout the time.

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