In Quebec, construction chaos ahead

It has become a cliché to say Jean Charest has nine lives. The Quebec premier, who has spent more than half his life in politics, has made a sport out of defying expectations with his ability to spring back, catlike, from political disaster. At 36, he brought the federal Progressive Conservative Party from the brink; in 2003, at 44, he overcame an earlier loss to Lucien Bouchard to become premier, and has ruled ever since.

Until recently, Charest had seemingly turned his rather disastrous year in office into this comeback-kid narrative. This is no small feat. Over the last 12 months, Charest’s Liberals weathered allegations of favouritism in the selection of judges, an embarrassing flip- flop on the development of shale gas resources, and have been dogged by news that the party had been the recipient of hundreds of thousands of donations (some legal, some not) from several of the province’s largest engineering and construction firms—the very ones who won lucrative construction contracts from the Ministry of Transport. Far from backing down, Charest mused he might even take a fourth kick at the can.

What a difference one leak can make. Last week, a scathing report on the province’s construction industry, leaked to La Presse and Radio-Canada, stymied Charest’s legacy and, more importantly, gave Quebecers a glimpse at the scale of corruption plaguing the province’s construction industry.

The “Duchesneau Report”—after former Montreal police chief Jacques Duchesneau, head of the Charest government’s own anti-collusion task force—is unrelenting and unequivocal in its language, detailing a “clandestine, deeply rooted universe” of corruption and criminality that is “harmful to our society in terms of security, the economy, justice and democracy.” It details tip-to-tail corruption and collusion that starts with a ginned-up tenders process and ends with engineering and construction firms using donations to leverage their way into the political process.

The picture it paints of the Ministre de Transport de Québec, the largest source of government-paid labour and linchpin of the Charest government’s economic recovery program, is equally grim: lacking in staff and resources, the MTQ is often at the mercy of the province’s engineering firms and powerful construction industry and unwittingly operates as a giant money-laundering operation for organized crime. And in a statement sure to enrage Quebec’s language hawks, Duchesneau’s report says the province’s ability to promote competition within the industry is hobbled by its insistence that all business be conducted in French.

Since 2007, the MTQ has spent $16.2 billion on roadwork in the province, including $3.9 billion (or roughly six per cent of the provincial budget) in 2011-2012. The government frames infrastructure spending as a win: “We create or maintain 53,500 jobs, improve the road system and security, and consolidate economic recovery,” the transportation minister said in February.

According to the Duchesneau report, much of this capital is liquid; it is a prime target for Quebec’s organized crime cartels. One businessman, quoted anonymously in the report, says an associate of the Hells Angels told him the biker gang was certainly in on the action: “Anything that has to do with asphalt in Montreal and the suburbs, it’s us.”

The industry is lucrative for another reason: the contracts themselves are often inflated. According to Transport Canada figures, it costs Quebec taxpayers 30 per cent more to build a stretch of road than anywhere else in the country. “People within, in the know, speak of the gangrenous nature of the industry . . . that is under the thumb of a small circle of professionals and contractors who have made it their specialty to dodge the rules and to enrich themselves to the taxpayers’ detriment,” the report reads. That small circle, the report contends, remains small in part because Quebec’s Treasury Board mandates that the tenders process must be conducted entirely in French, thereby “limiting competition and ensuring higher prices throughout the manufacturing, distribution and contracting chain.”

The troubles don’t stop once shovels are in the ground. The MTQ’s five-year plan includes 4,000 roadwork projects, for which some 700 contracts are issued annually; the ministry simply can’t keep up with the work it is generating. As a result, more and more work that used to be done by the ministry is now being contracted out. In Montreal, 100 per cent of the estimates done prior to the bidding process for roadwork contracts are now performed by private-sector firms; for the rest of the province, that figure is about 95 per cent. (In Ontario, according to Ministry of Transportation spokesperson Bob Nichols, approximately 90 per cent of designs are completed by consultants.)

The report further adds that, contrary to popular belief, the shift away from in-house expertise hasn’t generated any savings—far from it. In the case of excavation work, for instance, the total cost of preparing plans and specifications, as well as supervising the work site, is 72 per cent higher when done by private-sector firms; for road surface work, the costs are 131 per cent higher. One engineer, quoted anonymously in the report, says engineering firm managers have cash to reimburse employees who make donations to political parties—circumventing Quebec’s electoral laws banning corporate donations.

“Imagine that the engineer with the firm that’s in charge of supervising the project needs to authorize an extra $100,000 in supplemental work. He finds a way to get double that from the Ministry of Transport. When that happens, there’s a laundered $100,000 to share: the firm can use it to contribute to election campaigns and to pay its workers under the table.”

The implications of this made headlines as recently as last year, when Quebec’s Directeur général des élections uncovered 40 cases of illegal donations mostly made to the Quebec Liberal Party. Between 2006 and 2008, Charest’s party took in $113,500 of the $152,500 donated by Axor, one of the province’s largest engineering firms.

If there is any good news in the report, it’s that sunshine is an effective detergent. The most telling finding may well be that the cost of road work in the province has dropped sharply since investigators started poking around the Transport Ministry’s contracts. In 2008, the winning bid for work on projects worth more than $25,000 with the MTQ averaged 1.7 per cent less than government estimates, while in 2009, the winning bids averaged eight per cent less than the estimates. But in 2010, the work was being done at a 17.2 per cent discount from what the government had figured it would cost. The report’s authors believe some $347 million—about $45 for every person in the province—was saved due to these efforts.

What remains unclear is just how much sunshine Jean Charest’s government is willing to let in. The premier has steadfastly refused to call a public inquiry into the construction industry, saying it is a matter for the police. Given the current political climate, that obstinacy might make sense.

With Pauline Marois, the Parti Québécois is hampered with a perpetually unpopular leader who hasn’t been able convert Quebec’s collective rage into decent poll numbers. François Legault, a former PQ cabinet minister who is far and away the province’s most popular politician, is reportedly reluctant to re-enter the political arena; according to a Maclean’s source, Legault is finding it difficult to raise the millions of dollars necessary to start a party.

So Charest may yet ride out another storm. “Police investigations are long,” a La Presse columnist wrote recently. “In two, three years, the Liberals might well be out of power [and] there won’t be any political repercussions for those involved.” Given the picture painted in the Duchesneau report, it’s an astonishing proposition: Jean Charest might have political life in him yet, despite himself.