Quebec election laws routinely ignored, corruption inquiry hears

Gilles Cloutier, ex-employee of Roche engineering firm, is seen in a frame grab from the video feed at the Charbonneau inquiry looking into corruption in the Quebec construction industry in Montreal, Tuesday, April 30, 2013.

MONTREAL -- Quebec's landmark election-financing law that inspired similar rules elsewhere in Canada has been systematically flouted almost from the very start, a witness at the provincial corruption inquiry recalled Tuesday.

The elderly political veteran said that, about three years after Rene Levesque's Parti Quebecois introduced political reforms in the late 1970s, they were being circumvented by unscrupulous fundraisers.

The law was introduced in 1977 in the wake of scandals tied to the Bourassa Liberals and it banned corporate donations and limited personal contributions in Quebec.

It has since been emulated in numerous jurisdictions including the federal level, where donations can no longer come from companies and must be less than $1,000 per person.

But the latest witness at the Charbonneau commission said the effects of the 1977 law were short-lived in Quebec and, he said, the majority of donations collected by political parties are illegal.

Gilles Cloutier, a retired engineering executive and former political organizer, says it didn't take long to find loopholes in the stricter rules. He said it was easy to find people to pose as donors because they would get reimbursed, along with the added bonus of a tax credit.

"A few years later -- I'd say two or three years later -- the law was being outsmarted," Cloutier, 73, told the inquiry.

"The director general of elections didn't check and it was easy to find strawmen because of the tax credit. Everyone called me because it was essentially a $300 gift."

He cited one historic example of where the law was broken: the 1995 Quebec independence referendum. He said he used unaccounted cash to pay for billboards promoting the No side. That side ultimately won by less than one percentage point, keeping Canada together.

Cloutier's political involvement began with Maurice Duplessis' now-defunct Union Nationale party and carried on through the just-concluded Charest Liberal era.

Cloutier estimated that during the time that he was involved political fundraising, five to 10 per cent of municipal financing came from the legal contributions of private citizens. At the provincial level, that number was 10 to 20 per cent, Cloutier said.

Everything else came from private firms.

Additional attempts to strengthen the rules met with the same result. Until 2001, contracts between municipalities and companies were negotiated directly. In 2001, new rules forced contracts valued from $25,000 to $100,00 to undergo a tendering process.

Those new rules were quickly circumvented, too. Cloutier said that, within a year, firms were colluding and dividing the contracts among themselves.

Cloutier, whose background is in business development and has been working in politics since his teens, has been interviewed previously by Radio-Canada's investigative show Enquete.

His political organizing career dates back to the era of former Quebec premier Maurice Duplessis in the 1950s. He worked afterwards for Liberal governments, as Duplessis' Union Nationale party dissolved.

Cloutier recalled using cows, television sets and washer-dryers as means of bribing votes while working on elections in the early years.

Then there was the 1995 independence referendum.

Cloutier described it as a tough battle. Signs were constantly being destroyed in suburbs north of Montreal, where he was in charge of the campaign. He had to hire private security to help and, Cloutier said, those expenses and others weren't declared.

The inquiry is now turning its gaze away from Montreal and beginning to look more closely at financing elsewhere, like the so-called "turn-key" elections conducted in the suburbs.

"Turn-key" elections are where companies, like construction and law firms, provide everything and candidates step right into a privately financed campaign operation.

Cloutier offered the inquiry a crash course in election-rigging.

He said he owned a numbered company that would launder money destined for political coffers, while he also worked for engineering firms.

The use of two sets of books -- one official document sent to the party and a second set, containing the real expenses -- was common in elections he worked on. Cloutier said many party official agents were aware there were two sets of books but most did not ask any questions.

For the most part, he said, it was don't ask, don't tell.

Cloutier said turn-key elections were so well-organized in some municipalities that the result would be a foregone conclusion.

"In some municipalities, we were able to determine how much a candidate could win by," Cloutier said.

"It gave people confidence to know how much they'd win by."

Cloutier has co-operated with inquiry lawyers and investigators.