The big news in local government ethics yesterday was the
publication of the final report of Quebec's Charbonneau Commission,
which investigated bid rigging in the Montreal area, involving not
only government officials and contractors, but also the Mafia and
Hells Angels (see <a href="http://www.cityethics.org/content/bid-rigging-organized-crime-and-state…; target="_blank">my
2012 blog post on the investigation</a>).<br>
<br>
The bad news is that <a href="https://www.ceic.gouv.qc.ca/" target="_blank">the
report</a>, at least so far, appears to be available only in
French. Although I read French, the report is 1,700 pages long, so
I'm going to depend on articles about the report. In addition, <a href="http://www.cbc.ca/news/canada/montreal/snow-removal-montreal-collusion-…; target="_blank">Montreal's
inspector general published a report</a> this week on bid rigging
in Montreal's snow removal, which is a pretty big expense there
($155 million a year).<br>
<br>
First, for the snow removal business, which reflects the ways things
worked in general. According to the Montreal <i>Gazette</i> article
linked to above, "the report found evidence of
collusion between certain contractors to bid only
on contracts in agreed-upon sectors, which affected
the price of winning bids. 'Contractors would contact each other
during the call-for-tenders period in order to know one
another's intentions in terms of contracts they were planning
to bid on.' ... Some snow-removal contractors refused to acknowledge
that such deal-making existed. However, the report said what
they hinted at was just as significant. 'When questioned by the
inspector general's office, those entrepreneurs said that "everyone
decides to stay in his own territory," admitting to have told their
competitors, "You stay in your turf and I'll stay in mine."'<br>
<br>
In addition, other potential bidders were threatened with physical
violence.<br>
<p id="yui_3_11_0_1_1448461325279_28">The report's recommendations
include: </p>
<ul>
<li>The creation of an online bidding platform to assure
the anonymity of bidders.</li>
<li>Mandatory disclosure of any bidder's contact with other
snow-removal companies during the call-for-tenders period and
justification for any contact made.</li>
<li>Prohibiting contractors from transfering their own
contracts to other entrepreneurs.</li>
<li>Increased monitoring to ensure city rules
governing subcontracting are respected.</li>
</ul>
<br>
The last two of these four recommendations have the most promise.
But more important is the fact that Montreal is to take on a bigger
role in coordinating snow clearing among its 19 boroughs, with
only one snow-removal policy and program. This will make it very
difficult for contractors to divvy up the boroughs among them.<br>
<br>
Equally important was the creation of the inspector general's office
in late 2013. This hopefully shows that the current administration,
unlike former administrations, will actually do something about the
reports on procurement problems, which go back to 1996 (those
reports were internal, unlike the ones that came out this week).<br>
<br>
The Charbonneau Commission report determined that there is a
political machine operating in Quebec, with a deeply rooted culture
of impunity. The report contains the following
recommendations:<p>
<ul>
<li>Creation of an independent authority to oversee public
contracts.</li>
<li>Better protection for whistleblowers.</li>
<li id="yui_3_11_0_1_1448460701198_28">Requirement that
construction companies report acts of intimidation or violence.</li>
<li>Increased penalties for construction companies that break the
law, up to and including cancelling their licence under
Quebec's building authority.</li>
<li id="yui_3_11_0_1_1448460701198_29">Increased penalties for
people who make use of so-called "strawman" schemes.</li>
</ul>
<br>
Unfortunately, there do not appear to be recommendations involving a
better government ethics program, to prevent ethical misconduct from
turning into criminal misconduct, to provide training and advice,
and to make investigations and enforcement faster and less
expensive.<br>
<br>
Much of the report's factual sections are blacked out, due to
ongoing criminal investigations. This includes much of the section
on the Hells Angels. But here is something interesting that was
left in, because it is historical and general:<blockquote>
<br>
About 75 per cent of Hells Angels members own their own companies,
often in the construction industry. The masonry industry is
particularly vulnerable to criminals because companies tend to be
small, with seasonal cash-flow problems. Legitimate companies with
liquidity problems “often have no choice but to turn to illegitimate
sources of funding to the often very high (interest) rates.”</blockquote>
<br>
Yes, the unavailability of credit is one of the ways in which
organized crime stays in the game. Will masonry companies be looking
online for their loans in the future?<br>
<br>
<a href="http://montrealgazette.com/opinion/editorials/editorial-lessons-from-th…; target="_blank">A
Montreal <i>Gazette</i> editorial today</a> states that the costs
of the bid rigging and other misconduct "can be measured in
unnecessarily high taxes, inferior infrastructure and an erosion of
societal values."<br>
<br>
Robert Wechsler<br />
Director of Research-Retired, City Ethics<br />