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Videotaped scenes of money changing hands are no laughing matter, inquiry told.Graham Hughes/The Canadian Press

Images of an old Mafia don stuffing cash into his socks elicited online jokes from peope watching Quebec's corruption inquiry Wednesday.

But a police officer explained why those videotaped scenes are no laughing matter: They're part of a monumental scam that drives up the price of construction, he testified.

The stacks of money being stuffed into Nicolo Rizzuto's socks came from players in an industry that, according to the Montreal municipal officer, would see its costs ramped up by as much as 30 per cent because of a tax imposed by the Mafia.

Eric Vecchio, a Montreal police detective now working for Quebec's Charbonneau Commission, said he now hears that despite all the province's construction scandals the levy continues to exist.

The Mob's rates have dropped, he said. The fees being charged now are half what they were when the Rizzutos were still at the height of their power, he said.

"We'd heard that 30 per cent was billed and now that number is 15 per cent," Lieutenant Detective Vecchio said.

"They've brought the number down to an amount they consider to be more reasonable."

He said there were no clear or steadfast rules as to who paid what. One entrepreneur might pay 2 per cent while another might pay 5. By the end of a project, Lt. Det. Vecchio said, the average cost would be driven up by about 30 per cent.

The higher cost of construction in Quebec was referred to three years ago, in investigative media reports that raised alarm bells about potential collusion in the industry. Such reports, over time, pushed the provincial government to call the inquiry.

Lt. Det. Vecchio went further Wednesday in describing the alleged system.

"It was effectively a tax – a cut that was given to make sure things went well," said Lt. Det. Vecchio, who described the cut as a way to get protection, to buy peace or gain the influence of certain individuals.

"It's clear the people who were paying this tax believed this – or they wouldn't be paying it."

The inquiry was told about, and saw, the cash flowing during hours of police surveillance video shared Wednesday.

Those images were gathered by the RCMP as part of surveillance operations in 2004 and 2005 – and they were largely ignored until now.

The memorable scenes included the onetime don of the country's most powerful Mafia family, the late Nicolo Rizzuto, at meetings with construction-industry players where he received wads of cash and stuffed them into his socks.

Construction industry bosses were seen handing cash to Mr. Rizzuto or other Mafia types; there were also scenes from a Christmas party where businessmen and senior members of the Cosa Nostra exchanged affectionate two-cheek kisses as they milled about a snack table.

At one point a high-level Mafia captain is seen giving a gentle tap on the face to a man involved in Montreal-area municipal snow removal. "In the Italian culture you don't do that with someone you don't know," was how Mr. Vecchio summed up the scene while narrating the video from the witness stand.

The scenes were gathered by cameras hidden at a Montreal "social club" that served as the Mafia's headquarters.

Among those featured in the videos was a construction businessman, Nicola Milioto, who was allegedly seen at the hangout 236 times over two years. Police had never heard of him before but, Lt. Det. Vecchio said, it appeared he was a key "middle man" between the construction industry and the once-dominant Rizzuto clan.

The video evidence showed him arriving with money on different occasions. Sometimes, those amounts were significant – with as much as $20,000 at a time exchanging hands.