Millions lost in building sales
Leclerc concludes taxpayers could be out $18.6 million as result of real estate deal
The government’s real estate arm broke the most elementary rules of sane management in selling three government buildings at a discount in 2008, Quebec’s auditor-general says.
In a blistering report tabled in the National Assembly Thursday, Guylaine Leclerc said the Société immobilière du Québec (SIQ) completely bungled the sales, which took place in the years when Jean Charest was premier of Quebec.
In its haste to sell off the real estate in Montreal and Quebec City, the report says the SIQ consistently failed to listen to readily available advice from its own personnel and ignored warnings about the long-term financial impact.
According to the auditor, the SIQ agreed to $59.6 million worth of concessions to fast-track the sale, while the buyers increased their offer by only $41 million, leading the auditor to conclude that taxpayers might be out $18.6 million.
Those concessions included signing agreements to sell the buildings, then renting the space back from the new owners over a 20-year period at a hefty price and agreeing to cover the costs of expensive repairs and renovations.
The sales were authorized by the SIQ’s board of directors, “based on insufficient and erroneous” information, the auditor concluded.
“Basic prudence and sound management rules that should guide such significant transactions were not followed,” Leclerc wrote, adding she has a second investigation underway into who potentially profited from the lease arrangements.
Two of the buildings are in Quebec City (Place Québec and édifice J.-A.-Tardif) and one is in Montreal (500 René-Lévesque Blvd.).
Radio-Canada’s investigative program Enquête revealed last year that three prominent Liberal Party fundraisers, Charles Rondeau, Franco Fava and William Bartlett and former SIQ director general, Marc-André Fortier, benefited financially from the transactions.
Two of the buildings, the one in Montreal and the J.-A. Tardif, wound up in the hands of businessman George Gantcheff while Place Québec became the property of groupe SOLIM-Accurso.
It was after Enquête aired the allegations that the government mandated the auditor-general to look into the events.
Leclerc was unwilling to speculate on the reasons the SIQ chose to sell the buildings in the manner it did and to the parties in question.
“I am not in a position to say if the shortcomings were voluntary or not,” Leclerc said at a news conference later. “Actually, there is a police investigation underway. It will be up to them to decide. I am not in a position to know anyone’s intentions. Only a criminal investigation can reveal that.”
But in the legislature, the opposition parties pounced with Coalition Avenir Québec leader François Legault reminding the house Gantcheff is a “significant Liberal donor.”
“So the Liberal government handed an $11-million gift to George Gantcheff,” Legault said.
The CAQ has alleged the government of the day knew exactly what it was doing in selling the buildings to Gantcheff in a sweetheart deal in which he picked up the buildings at a good price and then leased overpriced space back to the state, which also agreed to pay for maintenance.
But Treasury Board President Pierre Arcand, who is responsible for the SIQ, which is now called the Société québécoise des infrastructures, said the government is taking the report very seriously.
“It’s deplorable, it’s unacceptable,” Arcand said responding to questions. “We are working with our lawyers and police authorities to see if we will be able to recoup the funds.”
Later, pressed by reporters, he added: “I put my trust in the police system, our lawyers.”
And the auditor-general had other revelations on the question of immigration.
In another chapter of her report, the auditor said that, between 2010 and 2016, only a third of immigrants admitted to Quebec who said they did not have a working knowledge of French signed up for government-sponsored Frenchlanguage training courses.
Of those who did sign up, nearly a third failed to attend class or dropped out. Worse still, 90 per cent of those who completed the course are unable to function in French on a daily basis. In 2015, only nine per cent attained the standard for oral French and only 3.7 per cent for written French.
Quebec invested $74.5 million in its French language program for immigrants last year. Between 2010 and 2016, the province welcomed 283,000 newcomers over 16 years of age.