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Montreal water-meter contract fiasco not about the bidding process, ACQ president says

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by Ian Harvey

The city auditor-general’s investigation into a $355 million, 25-year contract to supply and install water meters in Montreal should be completed before any consideration of a full- scale public inquiry, says the head of the province’s construction association.

L’Association de la Construction du Québec

The city auditor-general’s investigation into a $355 million, 25-year contract to supply and install water meters in Montreal should be completed before any consideration of a full-scale public inquiry, says the head of the province’s construction association.

“At this stage we think it’s more to do with the politics and administration than it is to do with the construction sector or the bid process,” says Pierre Hamel, president of the L’Association de la Construction du Québec (ACQ). “There is an investigation internally underway and that should be completed first. There is little point in an inquiry at this stage.”

However, he says, if the initial investigation turns up more questions than answers and calls into question the integrity of the bidding process, then a full public inquiry should be considered.

The allegations surrounding Simard-Beaudry Construction Inc began as an investigation into tax fraud in 2007 involving a ceramics company.

Initially the probe, dubbed Project Légaux, looked at B.T. Céramiques Inc. and 3703436 Canada Inc. The CRA says employees falsified a tax audit and appear to have transferred more than $1.7 million to two corporations in Switzerland and the Bahamas to evade taxes.

Revenue Minister Jean-Pierre Blackburn says at least three companies and four Canada Revenue Agency employees were charged.

“The Canada Revenue Agency has reasons to suspect that three companies under investigation — Simard-Beaudry Construction Inc., Construction Louisbourg Ltee., and Hyprescon — funnelled close to $4.5 million to two dummy corporations that have no commercial viability and that were part of a false invoicing scheme,” Blackburn said.

The probe widened when CRA discovered that in addition to sending fake invoices to B.T. Céramiques, the numbered company also sent them to Simard-Beaudry and Hyprescon, another company owned by the same man.

Patrice Chouinard, director of the CRA’s Montreal office, said the numbered company had no real business activities and was a shell.

The two key figures at the heart of the arrangement were identified as Francesco Bruno, owner of B.T. Céramiques and Tony Accurso, who owns Simard-Beaudry, Hyprescon and Construction Louisbourg Ltd. CRA says the three companies paid $4.5 million to Bruno’s companies over three years.

As news of the tax scheme hit the headlines recently, the ripples quickly spread to Montreal’s city hall where it was revealed that Mayor Gérald Tremblay’s former top aide had gone on vacations aboard Accurso’s 119-foot custom built luxury yacht.

It was also revealed that the head of the Fonds de solidarité FTQ, a business development organization funded with $100 million from the federal and provincial governments and the president of the Fédération des travailleurs et travailleuses du Québec, a labour group, also had close ties to Accurso. The fund has invested $250 million with Accurso over the last 20 years.

Opposition critics quickly began calling for an inquiry.

The connection between Tremblay’s office and the Génieau consortium which won a $355 million contract for 32,000 water meters, however, quickly became the focus when it was learned Accurso was part of the group. Critics said the technology — which would track water consumed against water generated from the main plant to pinpoint leakage — is unproven, has not been piloted and was $150 million more expensive than other systems already proven and in use in Toronto and Ottawa.

Tremblay has bowed to pressure and suspended the water meter contract to the Génieau consortium.

The mayor said that the suspension was temporary so that the auditor general, once his investigation is complete, will be able to verify whether the contract was properly awarded.

“I don’t think that I can say today that there is some defaults or there is information we did not have,” he said. “I think that our team acted in a very professional manner. We’ve asked for outside advice as a result of that.”

Opposition leaders Benoît Labonté of Vision Montreal and Projet Montréal’s Richard Bergeron say all contracts — total $1.3 billion — should be reviewed.

Further complicating the landscape, the charges follow a week of raids by Quebec police on construction companies in another probe into money laundering and organized crime.

That investigation, in which no charges have yet been laid, links FTQ-Construction, the federation of construction unions affiliated with the Quebec Federation of Labour whose executive is also on the Fonds and has ties to Accurso.

The timing is critical because the stakes are high with the Quebec government set to spend $42-billion on construction and infrastructure projects, among them two super-hospitals, a hydro-development project on the Lower North Shore, and a sports facility in Quebec City, as well as roads and water treatment plants.

“It’s unfortunate,” says Michael Atkinson, president of the Canadian Construction Association. “It’s not the kind of image the construction industry wants to project. It’s isolated incidents like these which colour people’s perception of the entire industry.”

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