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Mayor Gerald Tremblay arrives to speak to reporters in Montreal on Monday. His mayoral position is being called into question as a result of a construction finance scandal.Graham Hughes/The Canadian Press

In a single day, a witness before Quebec's corruption probe sketched out an elaborate portrait of bribes and kickbacks reaching from major Montreal construction firms to top city employees and into the political party of Mayor Gérald Tremblay.

For years, Quebeckers heard allegations of ties between companies obtaining lucrative construction contracts and the financing of political parties. On Monday, former construction boss Lino Zambito said he himself had participated in a payoff scheme, and offered explosive testimony that gave the allegations substance.

Mr. Zambito testified before the Superior Court's Madam Justice France Charbonneau that he paid 3 per cent of city contracts' value through a middleman to the coffers of Mayor Tremblay's Union Montréal party. That's even more than the 2.5 per cent that he says went to members of the Montreal Mafia, or the 1 per cent "tax" to a city engineer who drew up public-works contracts.

At one point during his testimony, Judge Charbonneau asked if corruption had crept into every echelon at Montreal city hall.

"Absolutely," a forthright Mr. Zambito replied without hesitation.

He said everyone from building suppliers on up were aware of the system, which drove up the price of public works.

"I found it ridiculous," he said. "People knew about it at the city. The business people knew about it. The suppliers knew it."

The blockbuster testimony marks the first instance that the commission has heard of direct links between construction firms and political-party financing since the commission got under way in the spring.

The testimony led to opposition calls at city hall for the resignation of Mr. Tremblay, who is serving his third term as mayor. The mayor refused. He insisted his party's financial books had been verified each year by Quebec's chief electoral officer, and said his conscience was clear.

Opposition politicians weren't the only voices questioning whether Mr. Tremblay should remain in office. In an unusual foray into Montreal affairs, Quebec City Mayor Régis Labeaume told reporters in the capital city that Mr. Tremblay's position has become untenable.

"I don't know how you can run a city with allegations like that. … I'm not saying the mayor of Montreal is guilty, but I don't know how he can hold on," Mr. Labeaume said in remarks broadcast by the TVA network. "It doesn't seem sustainable."

Mr. Zambito came before the commission as a major contractor in the city of Montreal. He was former vice-president of Construction Infrabec, which worked in sewers and other infrastructure jobs. He testified last week that he joined the family business run by his father, Giuseppe, in 1998; the company began with small contracts in Montreal and during its best years grew to 130 employees and $35-million in business a year. In the mid-2000s it obtained up to $12-million a year in contracts from the city of Montreal alone, before going bankrupt last year.

Mr. Zambito said his father grew up in the same Sicilian village as Nicolo Rizzuto, the chieftain of the Sicilian Mafia in Canada who was assassinated in 2010, and the two men knew each other well.

Mr. Zambito testified last week that a group of about a dozen companies colluded to dominate the province's construction industry and paid a tax to the Mafia on contracts. On Monday, he spent an entire day before the commission shedding light on how the system inflated the price tag on taxpayer-financed construction jobs.

He claimed that a city engineer named Gilles Surprenant obtained a 1 per cent cut from construction companies on the value of the contracts that Mr. Surprenant himself drafted; he was in charge of budgets for projects, and the price tags over the years grew, Mr. Zambito testified.

The payoffs were known as the TPS – the French-language equivalent of the GST. It was a play on "Taxe pour Surprenant" or "tax for Surprenant," Mr. Zambito said. After Mr. Surprenant drew up the contract, Mr. Zambito testified, contractors would go meet him and settle their account with cash in envelopes. Mr. Zambito estimated he paid the now-retired Mr. Surprenant $100,000 to $200,000 over the course of eight to 10 years.

In another subterfuge, entrepreneurs would also bill the city for bogus "extras" once they had already begun to carry out their work. The money reimbursed for the phony extras would then be carved up, with 75 per cent going into the pockets of the entrepreneur and 25 per cent to a now-retired city engineer, Mr. Zambito claimed.

In addition to the payments, Mr. Zambito testified he took the two city officials on an all-expenses-paid golf vacation to Puerto Vallarta in 2002, after the pair pressed him to do so.

According to Mr. Zambito, Montreal city hall showed "willful blindness" to the apparent corruption. However, once the Liberal government set up the anti-corruption police squad known as Operation Hammer in 2009, he noticed that several functionaries at city hall decided to take their retirement.

Mr. Zambito's testimony also dispelled any doubts about the proximity between Montreal construction firms and the Mafia. At one point, Mr. Zambito said he wanted to bid on a lucrative Quebec Transport Department contract to repair a busy traffic circle in Montreal, only to find out that another company owned by construction titan Tony Accurso was bidding on the same contract.

Mr. Zambito said he was convened to a Laval restaurant, owned by Mr. Accurso, a controversial businessman now facing fraud and corruption charges; to Mr. Zambito's surprise, the man mediating the meeting was Vito Rizzuto, the reputed boss of the Montreal mob. (He is due to be released from a U.S. jail this week after serving a six-year jail term.)

Mr. Zambito said that after that meeting, he withdrew his bid.

In a statement late Monday, Mr. Accurso denied ever having had a dispute with Mr. Zambito or having asked Mr. Rizzuto to intervene in one. Mr. Accurso also said in the statement that the contract from Quebec's Transport Department was ultimately awarded without any rigging and that several competitive offers were fielded.

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