The names have changed, but the play­ers haven’t

‘Move­ment to­ward con­cen­tra­tion’ in city con­tracts post-Char­bon­neau

Montreal Gazette - - FRONT PAGE - KATH­LEEN LÉVESQUE, LINDA GYULAI, THOMAS DE LORIMIER AND KA­TIA GAGNON

Some com­pa­nies have changed names. Oth­ers are un­der new man­age­ment. A few have merged. But as a joint Mon­treal GazetteLa Presse in­ves­ti­ga­tion re­veals, one thing that hasn’t much changed un­der the Coderre ad­min­is­tra­tion is that the ma­jor­ity of mu­nic­i­pal en­gi­neer­ing and in­fras­truc­ture con­tracts re­main in the hands of the same key in­dus­try play­ers.

That’s one of the main find­ings of the two news­pa­pers’ anal­y­sis of the com­pa­nies do­ing the most busi­ness with the city of Mon­treal since De­nis Coderre be­came mayor in 2013.

The anal­y­sis was done us­ing data pro­vided by Mon­treal’s fi­nance depart­ment re­gard­ing pay­ments made by the city to its sup­pli­ers be­tween Jan. 1, 2013 and Oct. 2, 2017. The Mon­treal Gazette and La Presse re­ceived the in­for­ma­tion af­ter try­ing for more than two months to glean the data from dif­fer­ent sources, such as the city’s con­tract data­base, Vue sur les con­trats, which proved to be a ver­i­ta­ble ob­sta­cle course.

The con­cen­tra­tion of con­tracts awarded to com­pa­nies that on the sur­face will seem to be new play­ers in the Mon­treal mu­nic­i­pal con­tract mar­ket is clear. For ex­am­ple, while Louisbourg and Con­struc­tion Garnier — two com­pa­nies that made head­lines dur­ing the Char­bon­neau Com­mis­sion hear­ings that be­gan in 2012 — are not among that list, they have not ex­actly dis­ap­peared.

Louisbourg, which had been part of con­struc­tion mag­nate Tony Ac­curso’s em­pire, was sold — as were Gastier, Ci­ments Laval­lée and some of the hold­ings of Si­monBeaudry, all part of that em­pire — to Groupe Hexagone in the spring of 2013.

Just over a year later, Hexagone, fac­ing ma­jor fi­nan­cial dif­fi­cul­ties, was swal­lowed up by Trans­e­lec/Com­mon Inc., which in­te­grated the en­tity’s ac­tiv­i­ties in Group TNT.

To­day, the group­ing of com­pa­nies — in­clud­ing the sub­sidiary Ne­olect — all have the same pro­pri­etor, which ranks at the top of the list of com­pa­nies that ob­tained city en­gi­neer­ing and in­fras­truc­ture con­tracts.

Com­bined, they ob­tained the lion’s share of the city’s pay­ment to sup­pli­ers, with about $275 mil­lion in con­tracts over the past four years.

The French com­pany Eurovia, owned by VINCI, is now pre­par­ing to buy Groupe TNT. The trans­ac­tion is cur­rently in the due dili­gence stage, and should be com­pleted by the end of Novem­ber. Eurovia al­ready owns DJL, a com­pany that the Char­bon­neau Com­mis­sion re­ported had been part of an asphalt car­tel in Mon­treal along with Sin­tra, Soter and Pav­ages Chenail, which also ap­pear on the top con­trac­tors list.

Com­ing in a dis­tant sec­ond on the list is Les En­treprises Michaudville, which re­ceived $156 mil­lion from the city for in­fras­truc­ture work in the past four years. Michaudville ap­pears to be a new player in Mon­treal, and it’s true that the ma­jor­ity of its busi­ness un­til 2013 was on the South Shore. But at the time the com­pany re­cruited three di­rec­tors from Con­struc­tion Garnier, which had be­come an empty shell fol­low­ing dev­as­tat­ing tes­ti­mony from its CEO, Giuseppe (Joe) Borsellino, at the Char­bon­neau Com­mis­sion, where he ad­mit­ted that, in Mon­treal, “ev­ery­thing is truqué.”

In third place are the con­struc­tion and con­crete di­vi­sions of Demix, which re­ceived $118 mil­lion from the city for mu­nic­i­pal in­fras­truc­ture

work over four years. The Char­bon­neau Com­mis­sion had iden­ti­fied Demix as part of a group that rigged bids for con­tracts awarded by Que­bec’s min­is­ter of trans­port in the Mon­treal re­gion.

The top three groups — TNT, Michaudville and Demix — re­ceived a to­tal of $549 mil­lion over the past four years, or 16 per cent of the $3.5 bil­lion the city of Mon­treal paid to the top 100 pri­vate en­ti­ties on its sup­plier list, all sec­tors com­bined, be­tween Jan. 1, 2013 and Oct. 2, 2017.

Data pro­vided by the city of Mon­treal also re­veal that the to­tal num­ber of sup­pli­ers has con­sis­tently dropped over four years, from 62,000 to 40,000.

While th­ese num­bers are in­dica­tive of less com­pe­ti­tion, the Coderre ad­min­is­tra­tion main­tains that it saves the city money in terms of bu­reau­cratic and trans­ac­tional costs, such as by re­quir­ing fewer or­der sheets and in­voices, for ex­am­ple.

Through­out the man­date that ends on Sun­day, Coderre and his po­lit­i­cal team have in­sisted that “new play­ers” have emerged in the pub­lic in­fras­truc­ture do­main, cre­at­ing a health­ier mar­ket for pub­lic con­tracts. In an in­ter­view

on Fri­day, the ad­min­is­tra­tion re­it­er­ated that po­si­tion, not­ing that all com­pa­nies do­ing busi­ness with the city must now be au­tho­rized by the Au­torité des marchés fi­nanciers, and that any ring­leaders of past col­lu­sion have been elim­i­nated.

“It’s pos­si­ble some of the same play­ers are still around,” said Pierre Des­rochers, the out­go­ing

chair­man of Mon­treal’s ex­ec­u­tive com­mit­tee. “But that doesn’t mean that the habits and the ways of do­ing busi­ness of th­ese play­ers re­main the same.

“In any case, I don’t know what they’re do­ing, and I’m not able to man­age them. It’s their busi­ness. But what we’ve done is set our­selves up so that (past prac­tices) no longer take place.”

Among en­gi­neer­ing firms, five com­pa­nies ranked among the city of Mon­treal’s top ser­vice providers: SNC-Lavalin, SM, les Ser­vices EXP (for­merly HBA Teknika), Cima+ and WSP (for­merly Géni­var). Th­ese com­pa­nies re­ceived, in de­scend­ing or­der, be­tween $30 mil­lion and $12 mil­lion in pro­fes­sional con­sult­ing con­tracts since 2013.

Ac­cord­ing to tes­ti­mony at the Char­bon­neau Com­mis­sion, all five of th­ese com­pa­nies were iden­ti­fied as hav­ing par­tic­i­pated in a bidrig­ging sys­tem to split con­tracts in Mon­treal. Last month, the head of SM, Bernard Poulin, and vi­cepres­i­dent Dany Moreau, were ar­rested by l’Unité per­ma­nente an­ti­cor­rup­tion (UPAC) as part of the Fronde in­ves­ti­ga­tion into col­lu­sion in Mon­treal, as were Kaz­imierz Olech­now­icz, the for­mer CEO of Cima+, his col­league Yves Théberge, and Nor­mand Brousseau of HBA Teknika.

Af­ter ex­am­in­ing the data com­piled by the Mon­treal Gazette and La Presse, UQAM pro­fes­sor Danielle Pilette, a mu­nic­i­pal af­fairs spe­cial­ist, noted “a greater and greater move­ment to­ward con­cen­tra­tion.”

“Com­pe­ti­tion is not at its best,” Pilette said. “That’s prob­a­bly due to cer­tain fac­tors that aren’t nec­es­sar­ily the same ones as be­fore.” The top fac­tor, she said, is that “the con­tracts are too big.”

The time­lines to com­plete con­struc­tion projects are very short, and there are ex­pe­ri­ence re­quire­ments that en­gi­neer­ing firms must have — such as hav­ing com­pleted a sim­i­lar con­tract in the past two years — that are more strin­gent now, and that limit com­pe­ti­tion, she added.

This ea­ger­ness to com­plete projects can also be seen through a po­lit­i­cal lens, Pilette ex­plained, be­cause all gov­ern­ments want their in­fras­truc­ture in­vest­ment pro­grams to yield re­sults that they can bran­dish dur­ing elec­tion cam­paigns.

The work of the Char­bon­neau Com­mis­sion led to sev­eral reg­u­la­tory changes and the adop­tion of new laws, notably Loi 1 sur l’in­tégrité en matière de con­trats publics, which im­posed stricter eth­i­cal guide­lines for com­pany di­rec­tors, share­hold­ers and ad­min­is­tra­tors. How­ever, that leg­is­la­tion was soft­ened some­what in 2015 “to avoid com­pletely de­stroy­ing the con­struc­tion in­dus­try ’s eco­nomic ecosys­tem,” ex­plained Pierre- Olivier Brodeur, who was an an­a­lyst for the Char­bon­neau Com­mis­sion and is now a mem­ber of the com­mit­tee that is fol­low­ing up on the rec­om­men­da­tions made in the com­mis­sion’s re­port.

What hasn’t changed at all — un­for­tu­nately, in Brodeur’s view — is the pre­vail­ing rule of award­ing the con­tract to the low­est com­pli­ant bid­der in the case of in­fras­truc­ture con­tracts. “If you don’t change this man­ner of award­ing con­tracts, how can you hope that the eco­nomic milieu will change? Spon­ta­neously? By magic?”

An­toine Pel­lerin, a doc­toral stu­dent in law at l’Univer­sité Laval in Que­bec City, crit­i­cizes the no­tion that it’s only the cost of the con­tract that’s of pub­lic in­ter­est.

Cost is an ob­jec­tive mea­sure but it’s also a con­ve­nient ex­cuse, he said. “For a long time, we thought that cost would al­low us to avoid cor­rup­tion and col­lu­sion. The Char­bon­neau Com­mis­sion showed the ex­act op­po­site. There’s noth­ing eas­ier for en­trepreneurs to come to an agree­ment on when the only way to as­sess the con­tract is price.”

GRA­HAM HUGHES/THE CANA­DIAN PRESS FILES

The work of Jus­tice France Char­bon­neau’s com­mis­sion led to sev­eral reg­u­la­tory changes and new laws.

Comments

Newspapers in English

Newspapers from Canada

© PressReader. All rights reserved.