IBM, Revenue Quebec employees arrested in UPAC raid

Seven people, including Revenue Quebecemployeesand officials with computer companies IBM andEBR, were arrested this morning in connection with an alleged corruption scheme aimed at obtaining agovernment IT contract worth $24 million.

Two Revenue Quebec employees,HamidIatmaneneand JamalElKhaiat, stand accused of providing privileged information about an upcoming government contractto a consortium made up of IBM and Quebec companyInformatiqueEBRInc.

UPACofficials allege the companies then used that information to design their bidbefore the public call for tenders was launched.

Fiftyofficials with Quebec's anti-corruption squad,UPAC, carried outraids at several homes in the greater Montreal region andin the Quebec City area early Wednesday morning.

UPACis still seeking one other suspect.

The contract in question involved supplying the technology fora Revenue Quebec data management system.

"I want to emphasize the full co-operation of Revenue Quebec in the investigation that included two of its officials," said RobertLafrenire, head ofUPAC.

Fraud, breach of trust, conspiracy charges

The other accused include Mohamed El Khayat and Jean-Franois Robidas, who weredirectors atInformatique EBR at the time of the alleged infraction. Three IBM employees,Patrick Fortin,Gilles Garipy and Daniel Letourneau, were also arrested.

• UPAC makes 2 arrests, including IT manager at Public Security Ministry

Jamal El Khaiatof Revenue Quebec, and Mohamed El Khayat of Informatique EBR are brothers, confirmedCapt.Andr Boulanger of UPAC. He said the difference in spelling could be a transcription error.

A public security ministry employee, Abdelaziz Younsi, was also arrested.

Younsi and El Khayat, were previously charged in connection with another corruptionschemeaimed at obtaining a different government contract with the Public Security ministry.

All seven accusedwill face fraud, breach of trust and conspiracy charges.

Lafrenire said IT contracts are an area of increasing interest for UPAC. He said because the contracts are lucrative, they are attractive to fraudsters. Lafrenire said the accused made "personal gains" from the fraud scheme, but would not give more details.

"The fight against corruption continues and all citizens must continue to actively participate," said Lafrenire.

Securities regulator approved companies

Martin Coiteux, president of the treasury board, confirmed today that Informatique EBR had just been reviewed by the AMF, Quebec's securities regulator two weeks ago, and had been approved to bid on government contracts. Coiteuxsays the AMFwas unaware of theUPAC investigation at the time.

"This new information is serious. That's why I wrote to theAMF. They will review the cases of these two companies," saidCoiteux.

Informatique EBR has at least 14 existing contracts with various government departments, while IBM has 24. Coiteux says all government departments will be asked to review these contracts to determine whether the accused individuals were involved. If so, he said, they will pass on that information to UPAC.

"We can't generalize from specific cases like those today, but we can't dismiss them either," said Coiteux. "We have to take them seriously,"

"Today's arrests confirm that the system works," said Coiteux.

Butric Caire, Coalition AvenirQubec (CAQ) MNA, is calling for the government to launch a public inquiry into corruption in government IT contracts.

"These fiascoshave been piling up for months and it leads us to believe that the events of this morning are just the tip of the iceberg," said Caire.