Construction Collusion

Most Montrealers picture bullets flying through the streets, not bricks and mortar, at the mention of Hells Angels, but that’s starting to change.

For years, the city was plagued by a biker gang war that resulted in 164 murders between 1994 and 2002. But after a major roundup and the arrest of hundreds of biker gang members, the city has enjoyed relative peace. The crime rate has plummeted, and the murder rate is the lowest it has been 
in decades.

But while the city’s biker gangs appear to have faded away, it seems they continue to wield significant influence in the city’s construction industry, as do many other members of organized crime.

“People think that the construction industry is about two-by-fours, and big conglomerates who sell those two-by-fours, but it’s really labour-driven,” says Paul Sauvé, the owner and president of the masonry company L.M. Sauvé, which was founded by his grandfather in 1954. “Organized labour in Quebec is completely controlled by [organized crime] and I found that out the hard way.”

Sauvé says he made a deal with the devil three years ago when he approached the Fédération des travailleurs du Québec (FTQ), the province’s largest labour union, representing 500,000 members, for funding. He was told at the time he needed to get on the good side of Louis-Pierre Lafortune, the vice president of Grues Guay, the province’s largest operator of cranes, and Normand Ouimet. He made Lafortune a member of his board of directors. Sauvé found out later that Ouimet was a Hells Angels member, and that Lafortune was his childhood friend. Both were arrested in November, with eight others as part of an investigation into the masonry industry by Quebec’s provincial police force, the Sûreté du Québec (SQ). Among those arrested was Guy Dufour, 42, a representative with the FTQ’s construction wing.

SQ Inspector Denis Morin told the Montreal Gazette that Ouimet planned to create a consortium of masonry firms through “threats, intimidation and extortion.” Morin said Ouimet laundered money through masonry companies in part by paying bricklayers under the table. He then used the money to buy real estate and moved the profits from that into offshore investments. The laundered money is believed to have come from drug trafficking. The SQ continues to investigate the construction industry. It has opened several investigations into complaints of collusion at Montreal’s city hall, and influence peddling by bureaucrats. It has also created a special squad to investigate the construction industry as a whole. The Canadian Competition Bureau is helping in the investigation.

Sauvé says as soon as he found out who he was dealing with, he realized he made a big mistake. He says Lafortune took control of the company’s financial records, and tried to take over his company. Then earlier this year, when Sauvé won a $10.6-million contract to repair City Hall’s copper roof, he says he was forced to use a roofer who had ties with the Italian mafia. Sauvé says that man asked for a $40,000 bribe for two city councillors to keep that contract. Sauvé refused, and received death threats, as well as threats against the lives of his wife and ten-year-old daughter. His car was twice rammed into by another car. He travelled around with bodyguards, and one of his cranes, valued at $500,000, was burned. That’s when he blew the whistle and complained to the SQ, which is still investigating the City Hall affair. Meanwhile, Sauvé’s Montreal-based company has filed for bankruptcy. It’s one of 11 companies under the L.M. Sauvé banner.

Sauvé’s case is one of hundreds in Montreal. In fact, recent reports have come to light of an intricate bid-rigging system for contracts in Montreal, whereby a group of construction firms agree in advance on a price and which company will submit the lowest bid for each project. Industry insiders say a group of 14 companies, dubbed the Fabulous 14, receives the lion’s share of public tenders from the city. As a result, construction work in Montreal costs about 35 per cent more than anywhere else—this according to retired Transports Québec official François Beaudry.

Sauvé says political parties and organized crime take a cut of the inflated prices in order to contribute to these big political campaigns.

There is a long history of collusion in Montreal’s construction industry, says Antonio Nicaso, an award-winning journalist, a bestselling author and an internationally recognized expert on organized crime.

“This is something that has existed at least since the 1970s,” says Nicaso. “That’s why when the reports came out about this, I wasn’t surprised at all.”

Nicaso doesn’t doubt that the mob is a big investor in the construction industry, and has been for many years. It makes sense for organized crime to get into the construction industry, as it allows criminals to launder money that comes from smuggling and dealing drugs.

Nicaso says Montreal isn’t alone. There are similar ties between construction companies, the mob, and politicians in every city in Canada. The difference is that the Montreal mafia has wielded influence for much longer, since the 1940s or 1950s, so the system is much more intricate there.

Nicaso says wherever there is big money to be made in the construction industry, criminals are trying to take advantage. “Organized crime is becoming less visible, and less violent, and more involved in business. But the fact that the mafia controls everything, I don’t believe.”

Nicaso said while mobsters don’t necessarily control the construction industry, the collusion among industry players who set prices and strong-arm those who don’t follow the rules they set is similar to tactics of gangs who have historically cooperated to set the price of illicit drugs.

While bid-rigging may be good for the construction firms involved, it’s a serious problem for the industry in general, says Pierre Hamel, the director of legal affairs at the Association de la construction du Québec, which represents 15,000 construction companies.

“When collusion is accompanied by threats and physical reprisals, that’s a big problem for our members,” says Hamel. The association is offering its members legal assistance to help members speak out against collusion. But Hamel says, “The problem is no one has come forward.”

Both Nicaso and Hamel say the problem isn’t just construction companies, it’s also a political system that allows bid-rigging to take place. They would like to see a wide public inquiry into the construction industry as a whole and its connections with both organized crime and politicians.

At Quebec’s national assembly, opposition parties have been calling for such an inquiry since May 2009, but so far Quebec Premier Jean Charest has resisted. He says he’d like to wait until police investigations have concluded before going further.

Under intense political pressure in the last municipal election campaign, Montreal’s Mayor Gérald Tremblay pledged to clean up the system. After re-elected to a third term in November 2009, Tremblay announced he was freezing all non-urgent city contracts until a new, more transparent bidding process could be adopted. Two weeks later, Quebec Municipal Affairs Minister Laurent Lessard announced plans to adopt a bill by February 2010 that will give the province the power to conduct random audits of infrastructure contracts and would keep the names of contractors private until bids are opened.

There is no such plan to review the bidding process at Transports Québec, which manages the province’s major highways, says spokesperson Réal Grégoire. That’s because the process was already reviewed two years ago.

“For every contract, we have a group of experts that evaluates how much it should cost, and if bids are at least ten per cent higher than that estimate, we cancel the process and start again,” says Grégoire. “Since this was introduced, our estimates usually come within two per cent of the actual cost.”
Grégoire says he believes Transports Québec pays a fair price for infrastructure. However, his department is in the process of doing a cost analysis which would compare roadwork in Quebec to work done in other provinces.

A study by Transport Canada done in 2000 showed Quebec’s total road costs accounts for about 18 per cent of the national total, while its population in that year accounted for 24 per cent of the national average, meaning that the cost of road construction in Quebec is actually slightly below the national average. Transport Canada cautioned that the study’s figures are purely theoretical, and it doesn’t have any studies comparing the cost of one kilometre of road in each of the provinces.

Sauvé says he doesn’t think much will change as a result of police investigations currently taking place.

“They’ll arrest a few little guys to make an example, but the big guys will continue doing what they do,” he says.

Nicaso agrees. “In Canada, there is no political commitment to fight organized crime. If an 11-year-old boy is hit by a car bomb, there is a public outcry, and politicians are forced to act. But if you don’t see blood on the streets, it doesn’t mean that there is no mafia presence or activity. Actually, it’s better, because that means there’s no conflict, so they’re making more money.” 

Jason Magder is a Montreal-based freelance writer and frequent contributor to ReNew Canada.