Scrutiny had cleansing effect on construction industry, says Zambito

A former construction boss says the arrival of an anti-corruption police unit three years ago instantly changed the culture of bid-rigging and kickbacks in Quebec and drastically reduced the price of public works in the province.

After a series of investigative news reports created a scandal, and politicians took action, he says the construction industry started to get its act together in 2009.

Star witness Lino Zambito is back on the stand Wednesday for a fourth day at Quebec's corruption inquiry; he says things changed after the provincial police "Hammer" squad came into existence.

He says the proof is in the price: Zambito estimates that because of the new police unit, the cost of public-works contracts dropped as much as 15 per cent.

"The best way to demonstrate it is to study the contracts," Zambito said answering a question from Charbonneau Commission chair France Charbonneau.

"I think that it shows that cost of contracts has gone down."

Zambito says that, very quickly, construction bosses were no longer being forced to pay so-called "taxes" and kickbacks to various people.

Zambito has already testified that 2.5 per cent of the value of his rigged municipal contracts went to the Italian Mafia; three per cent went to the Montreal mayor's political party; one per cent was a bribe to a certain local bureaucrat; and many other gifts and cash went to other officials.

He says that all these things, along with industry collusion, pushed up the cost of construction work for years.

Zambito says municipal engineers and bureaucrats suddenly started taking their retirement after the arrival of the "Hammer" squad so the extra fees also ended.

"Right there, the prices went down six or seven per cent," Zambito said.

Zambito says that by October 2009, as the scandals erupted and the police unit was created, he was no longer dealing with the cartel so he only participated in competitive bidding.

Since then, Quebec introduced a permanent anti-corruption squad in 2011 that includes the Hammer squad.

But Zambito, who is no longer in the construction business, said he thinks prices will eventually rise again as multinationals take over smaller businesses.

In 2011, Zambito's company went out of business. He was slapped with criminal charges and his company could no longer secure credit from the bank.

"The creation of the squad and my arrest left me on the outside in the industry," Zambito said.