Extensive corruption in Quebec undermines competition

Extensive corruption in Quebec undermines competition

Will Quebec’s Charbonneau Commission succeed in rooting out corruption, or will the crooked culture persist? The answer to that question will have a substantial impact on the province’s prospects for economic growth.

It has been a well-known fact for decades, yet it was not until the establishment of the Charbonneau Commission in 2011 that the lid finally blew open on the extent of the culture of corruption in Quebec. The Commission has revealed a culture of collusion and bribes between politicians, labor unions, construction companies and organized crime syndicates in this important Canadian province.

The fallout from the explosive testimonies publicized by the Commission’s inquiries has been substantial. Former Mayor Gérald Tremblay governed Montreal for a decade until he was forced to resign in 2012. The Commission accused him and his party, Union Montreal, of engaging in financial cooperation with the Italian Mafia and receiving 3% kickbacks from contracts for public construction projects.

Tremblay’s successor, Michael Applebaum, lasted for less than a year before his arrest, and subsequent resignation, on charges of corruption and fraud. And Laval, a major city just north of Montreal, has been placed under provincial trusteeship after its mayor of 23 years, along with 36 co-accused, were indicted on charges of “gangsterism” and money-laundering for the mafia.

While one official after another has resigned or been indicted as a result of the Commission’s findings, the political establishment has insisted on its innocence in the scandal. Yet, it seems that systematic theft of public finances has been going on for decades, and costs to taxpayers in the province is estimated at several hundreds of millions of dollars. Corrupt officials have accepted bribes or kickbacks in return for awarding public projects on inflated contracts to construction companies, many of which have strong ties to the Italian mafia.

Provincial and municipal politicians across the province have also regularly received illegal campaign contributions from private companies. Eight of the ten largest engineering companies in Quebec are accused of providing donations to the two largest parties in the province, the Liberals and the secessionist Parti Québécois. One of its largest firms, SNC-Lavalin, was recently barred from bidding on World Bank contracts for 10 years after its shady practices were exposed. Its nefarious activity included bribing the late Libyan dictator Moammar Gadhafi.

Canada has consistently ranked among the least corrupt countries in the world, but Michael Hershman, co-founder of Transparency International, believes the business and political culture in Quebec is “by far” the most corrupt in Canada. Even before the Charbonneau Commission was established, a majority (72%) of Quebecers believed their politicians were corrupt.

Not only has the corruption culture damaged the public’s opinion of its politicians (which has rarely been very positive), but it has also undermined competition among companies and rewarded dodgy business practices over entrepreneurship and sound investments. According to some accounts, this culture is at least partially responsible for Quebec’s troubled economic performance in the last decades. From 1981 to 2006, the province’s GDP increased by 76.6%, compared to 109.9% for Canada as a whole. Quebec has the highest public debt ratio in the country at 62% of GDP. That figure is only 37% in Ontario and 19% in British Colombia.

As public money has been siphoned off to the mafia or in the form of illegal campaign contributions, infrastructure and public services have suffered throughout the province. It remains to be seen whether the Charbonneau Commission will manage to root out the damaging practices themselves – or merely expose a few rotten apples that were unlucky enough to get caught in the act.

Categories: North America, Politics

About Author

Havard Bergo

Håvard is a foreign policy analyst who works in Kampala for LPC Consult International, a consulting company that specializes on developing projects in East Africa and Mozambique. He has previously worked with the United Nations in Bangkok and as a project manager for a research project in Montreal. Håvard graduated with an MSc in International Relations from the London School of Economics (LSE).