Witness says city agency bent rules to help developer
Contrecoeur trial hears how former SHDM director expedited sale of land
The city’s real estate agency offered unusually generous terms on a $14.6-million loan to the company at the heart of the Contrecoeur corruption trial, a key witness said Friday.
The Société d’habitation et de développement de Montréal (SHDM) also bent its own rules to fast-track a $2.9-million cheque to Construction Frank Catania et Associés in 2008. The payment was authorized without passing through the SHDM’s board of directors or its director of finance, according to Jean-François Bertrand — the former associate director of the SHDM.
Bertrand told the court Friday that former SHDM director Martial Fillion threatened to fire the agency’s head of finance when she initially refused to sign off on the $2.9-million payment.
“Fillion got mad ... he (told me), we’ll replace her if she can’t do the work,” said Bertrand. “I was called in to intercede.”
This was all part of Fillion’s efforts to speed up the sale and development of a 38-hectare tract of city-owned land in the Hochelaga-Maisonneuve district, according to Bertrand. The project, called Faubourg Contrecoeur, was awarded to the Catania firm in what police describe as a plot to defraud the city.
Construction magnate Paolo Catania and the former No. 2 man at city hall, Frank Zampino, are on trial for fraud and conspiracy in connection to the Contrecoeur land deal. Fillion was arrested alongside them in 2012 but died of illness before the trial began.
In his testimony Friday, Bertrand described Fillion as a micromanager who, on several occasions, seemed to advocate on the Catania firm’s behalf. In 2007, Fillion offered discounted terms on a $14.6-million loan to help Construction Frank Catania decontaminate the Contrecoeur site.
Usually, the SHDM lends money at a four per cent interest rate, but Bertrand claims Fillion insisted on setting a 2.5 per cent rate on the loan. Instead of passing through the agency’s board of directors to approve the modified terms, Fillion allegedly set the terms first and had the board retroactively sign off on them.
“There was a willingness to act quickly on (the Contrecoeur) file,” said Bertrand, one of four board members at the SHDM at the time. “The board ratified many things after the fact.”
Among the things the board ratified after the fact was a $2.9-million cheque written out to the Catania firm. The payment was compensation for delays in the Contrecoeur project caused by the city.
“The time lapse between when the cheque was signed and when it was approved by the board of directors was very long,” said Bertrand. “It caused (a rift) between Fillion and the (SHDM’s) head of finance.”
In essence, Fillion’s micro-management was so notorious that the board’s decision-making process often felt like “rubber stamping,” according to Bertrand.
Bertrand also recounted a dispute with Fillion over changes in the SHDM’s development agreement with Construction Frank Catania. He said that one of the SHDM’s project supervisors brought him a copy of the contract with modifications that hadn’t been approved by the agency’s board of directors.
“I met with Mr. Fillion and asked him to explain the discrepancy,” Bertrand said. “He told me, ‘There are no changes.’ ... I asked him to re-submit (the contract) to the board. He said ‘I don’t see why I should.’ ”
The modifications were made by Catania, Bertrand told the court.
Since the outset of the fraud trial, the Crown has maintained that Catania’s firm benefited from a close relationship with Zampino and the SHDM. In 2007, the city’s real-estate agency sold the Contrecoeur land to Construction Frank Catania for $4.4 million, even though the municipal evaluation was $31 million.
Zampino and Fillion also had close ties. The SHDM head served as former mayor Gérald Tremblay’s chief of staff while Zampino acted as Tremblay’s right-handman between 2001 and 2008. Bertrand said Zampino had a remarkable ability to get things done on the Contrecoeur file.
“If Mr. Fillion mentioned he had the okay from (Zampino) ... we knew there would be no problems with the process,” he said.
Defence lawyers will cross-examine Bertrand on Monday morning.