Lachute Mayor Carl Péloquin. File Photo (Photo: Tara Kirkpatrick)

City of Lachute asks for refunds from companies suspected of padding contract bids

The City of Lachute has sent nearly 100 legal notices to companies and individuals it suspects of being involved in corrupt dealings with municipal contracts, including former mayor Daniel Mayer. These people and companies are suspected of ripping off the city and inflating costs. They have been asked to repay 20 per cent of the value of these contracts to avoid lawsuits or other penalties. They could also be refused future contracts with the city.

In March 2015, Quebec’s National Assembly unanimously passed Bill 26, which created a voluntary reimbursement program which aims to recover amounts overpaid as a result of fraud or fraudulent tactics undertaken in connection with public contracts.

Under Bill 26, in cases where there is evidence of fraud, or fraudulent tactics, there is an automatic presumption of prejudice in favour of the government. The presumption of prejudice can be as high as 20 per cent of the total cost of the work. Government agencies and towns are entitled to go back up to 20 years in their records and to seek damages against companies they suspect of having defrauded them. The voluntary reimbursement program began on November 1, 2015 and it is scheduled to end on October 31, 2017. Cities and other government agencies have until October 31 of this year to issue their notices of intent, in order to participate in the program.

By participating in the voluntary program, companies have the chance to clear their names and gain limited protection from future legal remedies. After receiving a notice, companies have 30 days to submit a settlement proposal. Section 22, of the Act says that once a settlement has been reached, companies will not be subject to a lawsuit. This does not protect participants against penal or criminal prosecutions.

Lawyers will take 10 per cent of the money that comes back to the city or government agency that issues these notices.
Lachute Mayor Carl Péloquin told The Review that the city’s investigation into its own records indicates that corrupt practices have been going on for at least the past 20 years.

Corruption and collusion can appear in many ways. Péloquin referred to some of the schemes as being highly creative. He said that one of the easiest ways to commit fraud at this level is to inflate the cost of contracts by about 20 per cent. In a situation like this, the person who authorizes the contract may hypothetically have received a gift for their generosity. The exact circumstances surrounding these dealings, remains confidential.

Péloquin was able to confirm that some companies have already come forward to begin negotiations with the city. He said that in some cases, this was to avoid losing existing and future contracts. The names of these companies will not be made public, but Péloquin did say that council will be advising the public of the amount of money that is being recovered during this process.

Former Lachute Mayor Daniel Mayer, who was mayor during the period under investigation, has also received a notice. Péloquin said that Mayer, who served as mayor for 22 years, is the only public official or city representative to receive a notice.

No criminal charges have yet been laid against Mayer, but Péloquin said that a file on the former mayor has been forwarded to the Unité permanente anticorruption (UPAC), which deals with corruption in Quebec. The UAPC was founded by the provincial government in 2011 to fight corruption, collusion and other economic crimes. It is administered by Quebec’s Ministry of Public Security and was created to serve as an alternative to a public inquiry commission.

In a resolution passed by Lachute council during its regular meeting in early October, the city says that during the 2013 Quebec municipal elections rumours began to circulate about possible instances of corruption and collusion at city hall. The city says that numerous citizens came forward with concrete allegations involving numerous cases of fraud. Certain elected officials and businesses were named in these allegations, which Péloquin says were taken seriously.

In 2014, the City of Lachute launched a massive internal audit. They hired forensic accountants at Accuracy Canada to comb through their records. The investigation focussed on all administrative matters relating to the city, including its involvement with the Régie Intermunicipale Argenteuil Deux-Montagnes (RIADM), which administers the garbage dump, and the city’s economic promotion agency, the “Société de promotion économique de Lachute (SPEL).”

Based on the initial results of this investigation, the city fired its general manager and treasurer. It also passed a resolution recommending that all of the records relating to the SPEL be transferred to the Sûréte du Quebec (SQ).

“We are doing everything we can to preserve the people’s money,” said Péloquin.


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