First they were named, then they were shown on video handing cash to mobsters, then today one of their own spilled the beans, in detail, about how Quebec construction companies colluded to inflate prices and how they paid a tax to the Mafia.
In stunning testimony Thursday at Quebec’s inquiry into construction-industry corruption, a former executive of a major City of Montreal contractor said he took part for years with other entrepreneurs in a scheme to rig the bids on public works projects.
The system was overseen by the Mob, he said, to whom participants paid a fee, in cash.
Lino Zambito was vice-president of Infrabec Construction, a company that obtained at least $68.7 million in public-works contracts from Montreal and Laval between 2006 and 2011, when it filed for bankruptcy protection.
But while those municipalities’ open bidding systems were supposed to ensure taxpayers got value for their money, Zambito said about a dozen companies in his line of business — mainly civil engineering and sewer work — colluded to divvy up the business.
“There were rules to follow, established rules. When I decided to do work in Montreal, I was told what the rules were,” he said under questioning from inquiry lawyer Denis Gallant. “It was my place to decide whether I wanted to work in Montreal and follow those rules there. Though I want it to be understood that it was similar elsewhere.”
The system was simple, Zambito said: The companies involved in the scheme would rotate between them who was supposed to get each city contract, and they wouldn’t underbid each other.
“The way to do it was when the project was allocated to you, between the companies in an alternating way, the entrepreneur to whom the contract was allocated had the responsibility to call the others and to tell them the amount at which they should submit their bids, to assure that we were the lowest conforming bid.”
The more established companies that had been around for 20 or 25 years, like Catcan Enterprises, might get a slightly larger share of the pie than his much younger firm, Zambito said. But he said business was good: Infrabec would pull in an average of $10 million to $12 million a year in contracts from the city of Montreal, about 15 per cent of the total in his line of work.