Charbonneau Commission: corruption and collusion in public contracts

What is the Charbonneau Commission? Why should all Canadians be concerned? How does it relate to Nanaimo?

The Charbonneau Commission is an inquiry on corruption and collusion in the  management of public construction contracts in Quebec.

The inquiry opened last fall with testimony revealing an elaborate scheme that enriched participants and exploited taxpayers.

The Charbonneau Commission revealed how one sidewalk contractor saw a massive spike in his business between 2006 and 2009, from $5 million in public contracts a year to more than $20 million a year.

In Montreal, cement companies dwindled from more than four dozen to just a handful over a span of 15 years. As competition dropped prices for projects escalated; examples showed of $100,000 increases to sidewalk projects compared to similar projects six months earlier. Bid rigging on public projects resulted in driving out legitimate competition.

Government infrastructure spending is the biggest economic driver for Vancouver Island, Vancouver and Montreal. The BC government spent $14 billion on infrastructure projects for the 3rd quarter of 2010.

Out of 128 highway projects carried out on Vancouver Island, 104 had cost overruns, while out of 36 tunnel and bridge projects carried out in the same region, 29 had cost overruns.

Controlling costs and corruption for public construction projects is difficult for the following reasons:

  • Many projects are unique and costs are often difficult to compare.
  • Lack of expertise on the purchasing side also makes it easier to inflate costs (and hide bribes).
  • Bribes and inflated claims can also be more easily hidden and blamed on other factors, such as poor design or mismanagement.
  • Low bids followed by change orders drive up costs which are justified as necessary.
  • Close relationships between engineering firms and construction companies create serious issues regarding conflict of interest.
  • Commercial confidentiality tends to take precedence over public interest and it is almost impossible to have a transparent accounting.
  • Political and judicial influencing through disguised financial contributions through construction projects.

On a local level Nanaimo residents are being crushed by taxes to pay for projects. Currently, taxpayers are faced with the Colliery Dams removal or replacement. This is a multi-million dollar project that has red flags: a rushed timeline, in-camera meetings,  redacted information and a wide project cost estimate.

What should be done:

  • increase transparency
  • use performance specs
  • use explicit formulas to calculate costs
  • have regulatory regimes
  • utilize a neutral 3rd party to participate in the procurement process

In many cases these inflated projects have forced communities into debt resulting in bankruptcy. To pay for the debt, public assets which taxpayers have previously paid for are sold off.

Every taxpayer should care. Squeezed too far with less disposable income to spend, what will people be forced to cut back on?

For the latest developments follow the Charbonneau Commission on twitter using the hashtag #CEIC.