MONTREAL — The ripple effect from a corruption inquiry that has focused so far on local wrongdoing in Montreal has moved closer to federal circles with testimony about a scam involving a man once linked to the office of Prime Minister Stephen Harper.
Quebec’s inquiry heard Tuesday that the man the Harper government once promoted as its preferred candidate to run the Port of Montreal played a role in the corruption schemes that were rampant in the local construction industry.
Robert Abdallah was accused of participating in a kickback system at the City of Montreal, during testimony before the inquiry that is looking into the construction industry and its links to organized crime and politics.
The testimony caused Quebec’s inquiry to reverberate in the House of Commons. The federal government was forced to fend off opposition queries about its relationship with Abdallah and it stressed that, in the end, he didn’t get the port job.
Harper’s office also downplayed Abdallah’s federal ties.
“We have no comment on the allegations made against former City of Montreal staff,” a prime ministerial spokesman said in an email.
Earlier Tuesday, former construction boss Lino Zambito had testified that Abdallah, when he was the top civil servant in the city, instructed him through a middleman to use piping from a particular firm while working on a major sewer contract.
The piping was more expensive — but Zambito says he was assured by a city engineer acting as a middleman that he would be compensated and informed that $300,000 would go to Abdallah as part of the deal.
Members of the board of the Port of Montreal have said that they were pushed to appoint Abdallah by a one-time senior aide to Harper, Dimitri Soudas.
Abdallah was not appointed in the end and, after leaving city hall, he went on to work in the construction industry. The allegations against him at the Charbonneau commission have not been proven in court and he has denied them in media interviews.
The testimony emerged during the third day of Zambito’s bombshell-dropping turn on the inquiry witness stand.
He has already described a local construction industry that operated as a tightly controlled bid-rigging cartel that fixed prices; while taxpayers were getting milked, he said, profits were split with the Italian Mafia, corrupt local bureaucrats and even the mayor’s political party.
Mayor Gerald Tremblay has denied any wrongdoing.
Zambito has testified that 2.5 per cent of the value of his municipal contracts went to the Italian Mob. He has also said a top Mafia don, Vito Rizzuto, acted as a mediator when there was a dispute with another company in the bid-rigging cartel.
He has said the cost of doing business also meant: a three per cent kickback from municipal contracts to the mayor’s party; a one per cent bribe to a certain local bureaucrat; and countless gifts and cash benefits to other local employees.
Zambito says that after bidding successfully in 2005 on a $10-million sewer contract in east-end Montreal, he was summoned to a meeting one week later and told he had to use concrete piping furnished at a higher cost by supplier Groupe Tremca.
The former construction entrepreneur says his plan relied on a cheaper solution and didn’t involve buy pipes.
But Zambito says the order to use Tremca was given to him by an engineer for a private firm, Michel Lalonde of Groupe Seguin, which handled oversight for the city in its east end. Lalonde told him that the order came from Abdallah, then the city’s top-ranking bureaucrat.
Zambito said he initially balked because buying from Tremca was more expensive. But Zambito said he ultimately realized that he had few options.
“In my head it was clear that there was an arrangement between Mr. Abdallah and Tremca and I had no choice but to buy pipes from Tremca if I wanted the contract,” Zambito said.
He said the message was clear: “You either get on board or the contract goes back to tender,” was how Zambito interpreted the process.
Zambito decided to participate since the contract was valuable and he was assured that any extra costs would be covered.
He said the engineer was firm with him.
“He said, ’If you want the project to be done, the pipes must be purchased from Tremca.’ The price was determined,” Zambito told the commissioners.
“’We’ll compensate you — and the $300,000 difference is the amount that the folks at Tremca will have to give to Mr. Abdallah to ensure the project is granted by the City of Montreal.”’
Zambito said it was the only time he could remember being told that he had to deal with a specific supplier.
The former owner of Infrabec says he never personally met Abdallah about the contract and crossed paths with him only once at a community fundraising event.
In interviews with various Quebec media, Abdallah vehemently denied Zambito’s allegations. He told Radio-Canada that the testimony was “a pack of lies” based on third-party hearsay.
Abdallah, a long-time construction executive, was the city’s director general from 2003 until 2006, when he left the job for unspecified reasons.
He went on to work for a company owned by Tony Accurso. Accurso is a key player in the Quebec construction industry, whose name has been raised in connection with some of the most explosive testimony to date at the inquiry.
While testifying, Zambito has suggested that he once had a dispute with Accurso and that he was surprised when his rival called in Mafia boss Vito Rizzuto to help settle it. Accurso has vehemently denied that such an encounter ever took place.
The Conservatives have acknowledged that the government indicated a preference for Abdallah as president of the Montreal port board in 2007, as did the City of Montreal.
But the Conservatives denied any wrongdoing in the matter and said the decision was ultimately up to the Port Authority’s board — which selected another candidate, in any case.
On Tuesday, Zambito spent much of the day going over 70 municipal contracts tendered in 2004 and 2005 and answering the questions of inquiry lawyers.
He said that by looking at company names and dollar figures, he could identify contracts where there was clear bid-rigging going on. In the cases where he didn’t recognize the names of companies, or if the bids came in at a reasonable price, he said they clearly weren’t fixed.
But in the majority of cases studied by commission lawyer Denis Gallant, Zambito said there was a manipulation of the process — and he was actively involved in some of those cases.
In one case, Zambito discussed a contract that went to Accurso’s Simard-Beaudry Construction, even though three or four companies were involved in the bidding for a $16 million sewer contract in 2005.
Zambito said the contract was awarded as a “political command.” Early in the day, he said he didn’t know where that order came from — but in the afternoon he laid the blame with Frank Zampino, a man who was once the city’s second-most powerful politician after the mayor.
“The businessmen weren’t happy to see this project go to Simard-Beaudry, but the information sent to us was that there was a political command that the contract had to go to Simard-Beaudry,” Zambito said.
He explained that collusion wasn’t an exact science.
He said some company bosses told competitors exactly what amount to bid on a public tender. Zambito, for his part, said he gave competitors a certain dollar figure to bid over, which ensured he won the contracts that the cartel had assigned to him.