City of Montreal asks companies to repay collusion cash

The City of Montreal is asking construction companies that it suspects ripped it off to pay it back 20 per cent of the total value of all contracts dating back nearly two decades, in order to avoid future lawsuits or other penalties.

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The city has mailed letters to 380 companies that it's had dealings with since 1996, asking to be reimbursed.

Under Law 26, passed unanimously in the National Assembly last March, those contractors who do not come forward with the cash could be subject to lawsuits, starting in October 2016, and could also be refused future contracts with Montreal.

Who is being targeted?

All companies that did business with Quebec public bodies, municipalities, government ministries and agencies since 1996 are being asked to repay 20 percent of the value of all of their contracts.

Former Quebec Superior Court Chief Justice François Rolland will soon tour the province to meet with company executives and urge them to make the payment voluntarily.

How will it be enforced?

"There's a presumption in the law that if you have participated in collusion, you have overcharged by 20 per cent," Rolland told CBC's Daybreak Tuesday.

A government agency is entitled to seek more than a 20 per cent rebate on past contracts, if it can demonstrate a company defrauded taxpayers by more than that percentage.

Conversely, companies could seek to pay less if they can make a convincing case that they were not involved in misconduct or if they overcharged a government agency by less than 20 per cent.

Companies that fail to pony up by the end of October 2016 could be subject to lawsuits or be the target of other punishments.

Why it won't work

One Montreal lawyer said that companies will not likely feel compelled to respond to requests for repayment. 

"If I am a company, and I have received no notice or indication that the government is looking into my practices in public contracts, and I basically have no indication that I'm about to get sued, then my inclination to participate in this program will be fairly low," said Simon Seida, whose firm Blake, Cassels & Graydon specializes in business law.

Seida said that the government will have to be more menacing if it wants to get companies to pay up .

Why it will work

Rolland said he believes companies will pay up in order to avoid possible fraud charges and to avoid losing the right to bid for future public contracts. He said they will also seek to avert higher penalties down the road.

Companies that participate might also be favoured in future bidding, Rolland said.

"That would give you a chance to rehabilitate yourself to obtain more contracts and avoid further suits," he said.

Will paying up have any effect on criminal charges?

Participation in the program will not have any bearing on current or future criminal cases. 

Will the public know which companies came forward to pay up? 

Negotiations between the company and government officials will remain private, but the law is ambiguous when it comes to the issue of transparency.

"The law says that it can be public or confidential," Rolland notes. "I suspect that the companies have the choice of publicizing their participation or maintaining their confidentiality."

"But for all public corporations and major engineering societies, they would like their participation to be known because that will be a way for them to rehabilitate themselves," he suggests.