National Post (National Edition)
Quebec firm banned over bribery claims
MON Tr e A L • Quebec engineering firm Dessau, whose work includes a recent expansion of Montreal’s Trudeau International Airport, may be the first major company banned from public contract work in the province because of its involvement in corruption.
Quebec last year passed a law forcing any company that wants to win taxpayer-funded work to meet an integrity test and obtain an ethics certificate from Quebec’s securities regulator before it can do business with government bodies.
The regulator, the Autorité des Marchés Financiers (AMF), has the power to mandate audits and refuse to grant an authorization if it believes public confidence is undermined by the company’s dishonesty.
Montreal-based dessau, which calls itself the sixth-largest engineering-construction firm in Canada and is one of the largest players in Quebec, confirmed late Thursday night that the AMF has decided to add it to its list of non-eligible firms for public contracts. It vowed to contest the ban under a process giving it 90 days to appeal the decision.
If the decision is not overturned, dessau and affiliate Verreault construction would be banned from bidding on public contracts for five years, until 2018. Quebec public work currently represents 75% of its revenue, a company spokesperson said.
dessau warned it would experience “significant repercussions” as a consequence of the judgment and its fallout.
“dessau’s management team will strive to do everything in their power to minimize the impact this decision will have on our 5,000 employees and their families, of which 3,700 work in Quebec,” the company said in a statement Thursday, adding some short-term layoffs will be necessary.
Privately held dessau has taken significant steps to avoid government sanction, including accepting the resignation of chief executive Jean-Pierre Sauriol last week.
Mr. Sauriol’s brother rosaire, also a dessau executive, told Quebec’s Charbonneau inquiry into corruption that he participated in collusion and illegal political financing. More specifically, he testified that dessau made donations of $2-million to municipal and provincial political parties through falsebilling schemes over a five-year period from 2005 and 2010. In exchange, the company won often-lucrative public contracts.
“Although the AMF acknow- ledges that dessau has implemented several actions up until now to re-establish its integrity, these are considered recent,” dessau said. “We nonetheless intend to pursue our efforts to meet the AMF’s integrity criteria.”
Other engineering firms that admitted to wrongdoing to the Charbonneau inquiry are expected to face similar bans in coming days and weeks. Several executives have testified to the existence of a bid-rigging system in the 2000s that saw a cartel of engineering and construction firms divvy up Montreal municipal contracts at inflated prices in exchange for political donations. Bid-rigging occurred in Longueuil as well, according to the testimony.
The Quebec government has a tricky balancing act between meting out sufficient punishment that will satisfy the public while not crippling companies that employ thousands of people and pay millions in taxes.
“The actions that were taken in the past have had a very negative impact on the economy and on the confidence of the public,” Quebec Treasury Board president Stéphane Bédard told reporters in Montreal Friday. “Corruption and collusion is not a way to do business in Quebec.”
Mr. Bédard said several companies are co-operating with the government to resolve their past transgressions and enter into a period of “rehabilitation.”
“In the case of dessau, certain steps were unfortunately taken too late,” Mr. Bédard said. “On the other hand, we do see a real will by the company to redeem itself. So we will accompany them in that process.”
The government will seek to maintain projects currently underway by banned firms as much as possible in order to protect employment and finish the work, Mr. Bédard said. In such cases, companies allowed to complete current projects may face oversight by an external auditor, he said. He said a ban does not prevent the government from taking legal action against companies to recoup taxpayer funds.
The AMF’s vetting process currently applies to public contracts worth more than $40-million. That threshold will soon be lowered further, to $10-million.
In April, the city of Montreal decided to act alone and initiated its own ban on dessau, freezing the company out of city contracts for five years. Since then, former mayor Michael Applebaum, who led that decision, has himself been charged with 14 criminal offences, including fraud toward the government, breach of trust, conspiracy and municipal corruption. An agent from the Competition Bureau enters
Dessau’s offices in Laval, Que., last year.