Over the last few years, the public sector of the Quebec province has been confronted by numerous corruption and collusion scandals. Various allegations and concerns have been raised more particularly with respect to the construction industry and its relations with the public sector in various contractual matters and calls for a public inquiry on the matter have been made. The Government has responded with the establishment of various anti-corruption measures, including the creation, last February, of the Permanent Anti-Corruption Unit, followed, in March, by the appointment of an Anti-Corruption Commissioner. Although these individual initiatives were well received, they lacked sufficient coordination, organization and a defined mandate. With the adoption of the Anti-Corruption Act on June 8th 2011 the Government’s efforts in battling corruption will be centralized and undoubtedly more focused.
The Act establishes the office of the Anti-Corruption Commissioner who is charged with ensuring, on behalf of the Government, the overall coordination of anti-corruption actions in contractual matters within the public sector. The Commissioner is empowered to receive, record and investigate any disclosures of wrongdoings, in order to decide whether the actions disclose merit either penal or criminal investigation and sanctions. He may also, of his own initiative, initiate investigations in order to detect the commission of any wrongdoings.
The Act defines, at section 2, a “wrongdoing” as :
- a contravention of a federal or a Québec law or of a regulation made under any such law, if the contravention pertains to corruption, malfeasance, collusion, fraud or influence peddling in awarding, obtaining or performing contracts granted, in the exercise of their functions, by a body or a person belonging to the public sector;
- a gross mismanagement of contracts within the public sector; or
- directing or counselling a person to commit a wrongdoing described in paragraph 1 or 2.
The Act covers a wide range of public institutions including most public agencies, university level institutions, school boards, municipalities and health institutions.
A process for disclosure of any wrongdoing is set out and is, to a large extent, modeled on “whistler blower” type legislation. Section 26 provides that any person may disclose any information to the Commissioner that the person believes could show a wrongdoing has been committed or is about to be committed or that could show that the person has been asked to commit a wrongdoing. The Commissioner must take the required measures to protect the identity of the person making the disclosure and the Act specifically prohibits any reprisals or sanctions against any such person. A fine ranging from $10 000 to $250 000 may be imposed for any corporation found guilty of having taken any actions against a person for having made a disclosure to the Commissioner.
The investigations will be conducted either by the Commissioner’s personnel or by investigation units designated by the Government. In both cases, they will be under the authority of the Commissioner, who will be in charge of directing and coordinating them. In parallel, the Act provides for the establishment of an Associate Commissioner for Audits, whose role will be to coordinate audit teams. The audit teams will be designated by the government to work on civil audits. They will have to report to the Associate Commissioner periodically, and they will have to inform him of any matter under audit that they think could be more appropriately dealt with by a penal or criminal investigation. It is important to add that all of the auditors and investigators designated by the government will continue to carry out their regular mandates in their field of authority while accomplishing their new tasks under the Anti-Corruption Act.
The Act includes provisions targeting expressly the construction industry. Over the past few months concerns have been raised about the close relationship that is perceived to exist between the investigators of the Commission de la construction du Québec charged with enforcing the legislative and regulatory provisions regulating the industry and the various industry stakeholders. An independent audit team is created, within the Commission de la construction du Québec. The Government implemented defined measures to ensure the independence of the audit team and stipulated that its members will exercise their functions on an exclusive basis and that the team reports directly to the chairman of the Commission de la construction du Québec rather than reporting to all of its members.
The Act respecting contracting by public bodies which regulates the public procurement process including the procurement of construction services is amended by the addition of a section entitled “Accountability Reporting” which requires that the Chair of the Treasury Board report to the Government every 5 years. The Ministers of Health and of Education, among others, must determine what will be required of them to satisfy this reporting requirement.
The Chair of the Treasury Board is also invested with new audit powers and can audit a public body’s contract award process and its enforcement of the management of those contracts. The focus of the audit is to assess compliance of the public body’s contractual activities with applicable laws, regulations, policies and directives.
The Act respecting contracting by public bodies is further amended to provide that a contractor who is found guilty of an offence set out in the Regulations will be inadmissible to any further public contracts and that a public register is established for all such contractors. The duration of their inability to contract for public contracts will be determined by regulation but will not exceed 5 years.
A public body who has an ongoing contract with a contractor who becomes inadmissible during the course thereof will have to obtain the authorisation of its Minister to pursue the execution of the contract. The Minister is provided wide discretion to impose conditions to allowing the contract to continue.
The Act obliges the public bodies to verify the Register to determine whether any bidders or contractors are listed in the Register and if so, whether the period of inadmissibility has lapsed. The Act imposes a similar obligation on the contractor with respect to its subcontractors.
This new legislation’s long reach will likely result in changes to various practices that were common place in Québec. Obviously the true nature and extent of its implications will only be determined with time as investigations and/or audits are carried out. Public bodies will have to be much more rigorous in the administration and enforcement of their procurement policies as they may find themselves involved in audits and having to respond and justify their actions to their responsible Ministers.