Union demanded cash from firm: witness

Ganotec paid $1.2 million for valued employee

A local company paid a union leader $1.2 million in kickbacks over a number of years as a finder’s fee for recruiting a key employee.

Testifying at the Charbonneau Commission on Wednesday, Serge Larouche, the director of an industrial construction and maintenance company called Ganotec, said the money went to Gérard Cyr, the head of Local 144 of the Conseil provincial des métiers de la construction (International). The union represents pipe fitters and pipe welders.

Cyr helped Ganotec secure the hiring of Eugène Arsenault in 2000. Arsenault was a key man in the in-

“He said something like, ‘Now I’m clean.’ Then he said, ‘I’ve been told to knock you off.’ ”

SERGE LAROUCHE, GANOTEC

dustry and helped Trois-Rivières-based Ganotec secure lucrative contracts to do maintenance work, particularly in refineries in Montreal.

According to the testimony, Arsenault approached Cyr to help him find work. Cyr then contacted Ganotec and pitched the idea of hiring Arsenault. Larouche said the company jumped at the chance to hire him.

After he was hired, Larouche said Ganotec won a lucrative contract to work on maintenance at the PetroCanada refinery.

A few months later, Larouche was informed that Cyr had asked for a kickback. “In the spring, (the president of the company, Léopold Gagnon) came to me and told me Gérard had asked for one per cent of the contracts that we had with Petro-Canada and Shell,” he said. “We discussed this, and we agreed it made no sense at all.”

At the end of the summer, however, Gagnon came back to Larouche and said the company would be giving Cyr a half per cent kickback of each contract with Petro-Canada and Shell.

“And he said we didn’t have a choice,” he said. “I took it as if Léopold had come to an agreement with Gérard.”

Cyr wielded such power in the industry, it was known he had to be paid off to avoid getting employees or foremen from the “bottom of the barrel,” Larouche said.

When asked why he didn’t try to report this problem to authorities, Larouche said he met with the Commission de la construction du Québec but got nowhere. He also brought it up with then-labour minister Laurent Lessard in March 2005.

“It was in a hotel in TroisRivières, and the minister was there,” he said. “There were other contractors there too. When Gérard Cyr’s name was brought up, Lessard said, ‘I won’t touch that.’ ”

Larouche said he had a bit more success with Lessard’s successor, David Whissell, who told him he was upset to hear about the problem.

The commission showed documents from Ganotec that demonstrated Cyr received a cut of contracts between 1998 and 2006, which amounted to $1.2 million overall.

Larouche told the commission that Ganotec was paying Cyr so much that they had to hire a person to help launder money.

He said Louis-Pierre Lafortune set up a system of false invoicing and brought cash to Ganotec president Gagnon. Lafortune would keep a 10 per cent cut. One of the names of fake companies set up in this scheme: Riche Lieu.

Lafortune would keep the cash in his underpants and pass it to Cyr in the bathroom of a restaurant.

But the payment system stopped when Ganotec was bought by Omaha-based Kiewit in 2007. Larouche, who had been a 20 per cent shareholder of the company, continued on under the new ownership. However, a condition of the sale was that Cyr’s payments would be stopped.

The day after Larouche told employees the company would be sold, workers ceased working at an Ultramar refinery in Montreal. Larouche eventually paid Cyr $10,000 of his own money to keep things moving.

Later that year, Cyr began lobbying refineries not to work with Ganotec. Larouche gave him a $20,000 Christmas gift, again from his personal wealth. The next month, Cyr met his union members and declared war with Ganotec, Larouche was told. However, he testified, he was not able to get confirmation of this fact from any of his employees.

Larouche said in an effort to “find allies,” he told several refinery managers that Cyr had been extorting money from Ganotec. In March, Cyr met Larouche in a restaurant and inexplicably returned $30,000 in cash.

“He said something like, ‘Now I’m clean,’ Larouche said. “Then he said, ‘I’ve been told to knock you off.’”

After that time, Cyr received no more payments from Larouche or Ganotec.