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Montreal whistleblower quit after 'sense of trust was broken' over rigged land sales, inquiry told

Former municipal employee Joseph Farinacci testifies at the Charbonneau inquiry looking into corruption in the Quebec construction industry Monday, February 4, 2013 in Montreal.

Ryan Remiorz/THE CANADIAN PRESS

A whistleblower who ran real-estate deals for the city of Montreal lasted just 28 months before he quit his high-level job, testifying he finally gave up trying to stop the rigging of city land sales by his political masters.

Joseph Farinacci, who took a job as director of real estate transactions for the city in late 2004, testified Monday that he walked into a system where public tendering appeared to be a process meant to rubber-stamp preordained winners on bids for Montreal's vacant public land.

The latest testimony at the Charbonneau inquiry adds a new dimension to the vast system of corruption it has uncovered under the watch of former mayor Gérald Tremblay's administration in the first decade of the 2000s. While much of the commission's time has so far been spent examining inflated costs, bribes and political kickbacks on infrastructure work, it has now moved into the domain of shady public land deals.

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In at least two major residential developments, each worth tens of millions of dollars, Mr. Farinacci found he was ignored as he advocated for clean bidding processes to draw out the highest bidders. In each case, vacant land worth millions was allegedly sold for a song.

Mr. Farinacci quit in March, 2007, after concluding he could not do his job properly. "I had to fight on certain transactions just to try to apply well-established practices," Mr. Farinacci said. "When I resigned, I understood I could no longer fight. They were going around me. The sense of trust was broken."

Mr. Farinacci testified Monday that he was barely a year on the job when the tendering process on a residential development called Marc-Aurèle Fortin was derailed. The second-in-command at the city, Frank Zampino, wanted to impose a winning bid for a firm he decreed "was due" to win a contract, Mr. Farinacci said.

A firm named Development Iberville had won the process with a bid of $1.5-million on 1.2-million square feet of vacant land in eastern Montreal. The price was well below the usual market value, Mr. Farinacci said, because an engineering firm had delivered infrastructure cost estimates that were unusually high.

Mr. Farinacci said Mr. Zampino quickly complained that it was the turn of another company, named Groupe Petra, to win the contract. The company, run by construction boss Giuseppe Borsellino, had made the lowest of three offers on the land, coming in at $1-million.

When Mr. Farinacci refused to cancel or alter the bidding process, the city ended a months-long standoff by obtaining a legal opinion that excluded Iberville because the company planned to build a higher-density neighbourhood than what was asked by the city. (The selection committee had already taken this into account.)

A new selection committee was struck, and Petra received the contract. "I had never seen anything done this way before," he said.

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The real-estate director marched into a meeting with his superior, deputy city manager Marc J. Tremblay, and Mr. Zampino to demand Petra cough up an extra $500,000 to the city.

Mr. Farinacci said the two men accused him of being "presumptuous" but they later persuaded Petra owner Mr. Borsellino to pay the extra money. Mr. Farinacci said he travelled to Petra's office with Mr. Tremblay to collect the cheque. He didn't want to send a subordinate on such a delicate matter.

Mr. Farinacci described Mr. Borsellino taking him aside for a chat during the visit. "Mr. Borsellino told me in a private fashion that he found I was costing him dearly," Mr. Farinacci said.

Mr. Farinacci, who now works managing his own properties, acknowledged his own were not exactly standard procedure, but he felt obligated to extract fair value for the city.

Mr. Farinacci also testified Monday about a second case, this one involving Faubourg Contrecoeur, a mammoth real-estate development in eastern Montreal. Because several of the players in the case, including Mr. Zampino, are facing criminal trials for fraud, the testimony was under a publication ban.

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About the Author
National correspondent

Les Perreaux joined the Montreal bureau of the Globe and Mail in 2008. He previously worked for the Canadian Press covering national and international affairs, including federal and Quebec politics and the war in Afghanistan. More

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