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Former chairman of the city's executive committee Frank Zampino walks past reporters as he leaves Quebec Provincial Police headquarters after being arrested by the anti-corruption unit Thursday, May 17, 2012 in Montreal. Police arrested nine people in a massive anti-corruption sweep that nabbed several former key members of Montreal Mayor Gerald Tremblay's inner circle.Ryan Remiorz/The Canadian Press

A former organizer with Montreal Mayor Gérald Tremblay's political party says the safe at party headquarters was once so stuffed with $50, $100 and $1,000 bills, the door would no longer close.

Quebec's public inquiry into corruption marched up the food chain at Montreal city hall on Monday, with new evidence glancing past the mayor but making direct hits on his former political right-hand man, Frank Zampino, and his former chief money man, Bernard Trépanier.

Martin Dumont, a former Union Montréal fundraiser, testified that he never saw enormous amounts of cash at party headquarters – except for one day in 2004 when his boss, Mr. Trépanier, called him into his office for help. He needed a hand closing a safe (60 by 60 by 60 centimetres in volume) with hundreds of thousands of dollars in cash spilling out of it, Mr. Dumont said.

The bills were no ordinary fives, 10s or 20s according to Mr. Dumont, who often collected such denominations at spaghetti dinners and membership drives. "It was full, but I was particularly struck by the colours of the bills. Red, brown, pink," he said. "He took out a few stacks and put them in his jacket. … I was shaken. I was nervous, and I made a joke he should change safes. Two weeks later, he got a bigger safe."

Mr. Dumont moved on to federal politics a short time later, where he went to work for the Conservative government as a policy adviser.

Mr. Dumont, also described a cosy relationship between the mayor and the construction magnates who, the inquiry has heard, colluded on Montreal construction contracts to inflate prices and pocket millions, while kicking back money to the mayor's party and corrupt officials.

In advance of a referendum to undo part of Montreal's amalgamation, 14 of those construction and civil engineering bosses donated $10,000 each for a private encounter with the mayor, who they addressed as "Gérald." They praised the way "jobs were being split up" in the newly amalgamated city under Mr. Tremblay's watch. Quebec's strict fundraising laws didn't apply to the referendum campaign, Mr. Dumont said.

In another revelation damaging to the mayor, Élio Pagliarulo, a former associate of construction boss Paolo Catania, said he assembled $300,000 in cash in 2006 from a loan-sharking business he ran with Mr. Catania to pay off Mr. Zampino, then the head of Mr. Tremblay's executive committee.

Mr. Pagliarulo, who described himself as Mr. Catania's former best friend, said he delivered the money to meetings between Mr. Zampino and the construction boss, just as Mr. Catania was preparing to cash in on a real estate development deal where he obtained a $50-million piece of land from the city for $5-million.

Mr. Catania obtained "a false report saying land needed to be decontaminated when it was never going to be decontaminated," Mr. Pagliarulo said.

Mr. Zampino, Mr. Catania and Mr. Trépanier are all facing criminal charges and have yet to respond publicly to the allegations.

Mr. Pagliarulo testified that Mr. Catania liked to call himself "Mr. Extra" for all the fake expenses he would get paid from public projects, according to testimony by one of his former associates.

The construction boss went from modest means in the 1990s to a man who owned a Lamborghini and 20,000 bottles of wine by 2008, largely on the strength of a corrupt construction industry, according to Mr. Pagliarulo.

The moniker "Mr. Extra" became something of a running joke, and Mr. Catania once bragged that his biggest "extra" score was $600,000 cash on one project, according to Mr. Pagliarulo. (This was in addition to the systematic inflation the commission has heard added up to many millions for Mr. Catania's firm alone.)

Mr. Pagliarulo described how the younger Catania would share the secrets of the business in casual conversation or over dinner or while smoking a cigar. Much of it matched testimony already heard: A cartel of construction companies, their Sicilian-Canadian owners and the mob rigged bids on Quebec construction projects, driving up costs by up to 35 per cent, while kicking back cash to corrupt political and civic officials.

"We were best friends. He knew a lot of my personal life and business life. I knew a lot about his," Mr. Pagliarulo said.

What started as sporadic low-level corruption in the 1990s turned into a well-oiled system of collusion by 2000, where the majority of contracts in places like Montreal were corrupt, he said.

"Where Frank Catania might give an envelope to an inspector to get a job or extras [fake expenses in the 1990s], Paolo was in a much more sophisticated system," Mr. Pagliarulo said.

The Charbonneau commission is beginning to show how fine the line was between the construction bosses and the mobsters who organized the corrupt tendering system.

Mr. Pagliarulo had married into the Catania family and was the owner of a chain of pastry shops when he started a loansharking business with Paolo Catania and his father, Frank Catania, in the early 2000s.

Mr. Pagliarulo described how the $5-million illegal enterprise fell apart around 2007 when some major debtors left the country.

The Catanias insisted Mr. Pagliarulo cover their share of the loss, about $1.8-million. When Mr. Pagliarulo couldn't come up with the money, he was threatened by his former best friend, Paolo Catania, and then kidnapped and beaten by assailants who told him he'd better pay. Mr. Pagliarulo said he hid in his house for some weeks after his recovery, but finally went to police.

Paolo Catania was arrested in connection with the incident. The charges were later dropped.