Getting Plowed

Getting Plowed

In this exclusive investigative report from Montreal, Maisonneuve exposes the bid-rigging, violence and sabotage at the heart of an unlikely racket: snow removal.

By Selena Ross April 18, 2012

Illustration by Anna Minzhulina.

One winter morning a few years ago, a driver steered his snowblower down the streets of a Montreal neighbourhood. It was the day after one of the season’s first snowfalls, and the roads were lined with fresh, white drifts. As usual, the driver’s co-worker walked ahead of the huge vehicle, warning pedestrians to move out of the way, then waving the all-clear. Suddenly, the man on foot signalled frantically for the driver to stop. He’d spotted something half-hidden in a nearby snowbank: a massive steel rod that would have destroyed the machine.

The driver slowed, and his co-worker sighed with relief. But it was already too late. The adjacent snowbanks were filled with concealed cinder blocks, which had smashed against the blower’s internal blades and sent chunks of cement flying all over the sidewalk. The cinder blocks wrecked the blades, costing the vehicle’s owner a minimum of $10,000 in repairs, according to someone associated with the company. The snow removers’ shock quickly turned to rage. This was no accident; they were under attack by industrial saboteurs.

Not long before, their boss, the owner of a small snow-removal business, had won a multimillion-dollar contract to clear snow in that borough for the first time ever. A different contractor had been working in the area, but when it came time to place bids that year, the upstart business named a lower price, and the old company lost out. The two workers knew exactly who was responsible for the booby-trapped snowbank. Although their boss had won the bid fairly, moving in on another company’s territory is considered stealing in Montreal’s snow-removal industry—a sector in which businesses rarely bid on contracts they haven’t already marked as their property. It was only $10,000 in damage, but to the newcomers, the message was clear: don’t step out of line again.

Montreal is famous for its turf wars, which have brought firebombings and shootings to some rather unexpected places: daycares, funeral homes, pet stores. Snow removal is no exception. In true local style, no patch of snow or rusty sidewalk blower is trivial enough to escape the collusion, death threats and property destruction that have long been hallmarks of doing business in la belle ville.

Every year, Quebec companies secretly and illegally divvy up construction contracts worth millions of dollars, according to a number of whistleblowers, government probes and recent press investigations. Instead of submitting their bids independently, the biggest firms allegedly conspire to determine who will win which government contract and how much they’ll charge. As a result, the province pays about a third more for construction projects than it would otherwise. Politicians are bribed in exchange for doling out the most lucrative jobs, and organized crime is frequently involved, as media outlets such as Radio-Canada and the book Mafia Inc. have reported. This fall, a scathing report by Jacques Duchesneau, the province’s independent anti-collusion investigator, was leaked to the press; it depicts a broken, deeply corrupt contracting system. On October 19, facing mounting pressure, Premier Jean Charest finally called a public inquiry into the construction industry. (A few days later, Duchesneau was fired after publicly criticizing his boss, the head of Quebec’s anti-corruption unit.)

Most public scrutiny has focused on the construction industry, but sources say that illegal bid-rigging extends into the hardscrabble, wintry sphere of snow removal. Plowing companies have been convicted for collusion before, and Duchesneau’s report briefly mentions snow removal, calling it “fertile ground for collusion.” Although it’s a smaller sector than construction, snow removal still costs Quebec municipalities about $700 million annually, according to one study. Most plowing contracts pay between a few hundred thousand and a few million dollars per year—not much compared to the hundreds of millions of dollars that major construction jobs are worth. But many construction and landscaping companies also operate snow-removal subsidiaries. These private companies do about half of Montreal’s public snow removal, while municipal labourers do the rest.

Over the course of a year-long investigation, Maisonneuve analyzed about 250 snow-removal contracts and interviewed more than a dozen private contractors, their employees and the municipal bureaucrats who administer their work. (All sources requested anonymity for their own safety; identifying details have also been omitted.) These sources described bid-rigging as a fact of life in the industry. More crucially, they said, Montrealers don’t understand how fiercely the system is maintained through violence and coercion. Those who obey are rewarded with extra, ill-gotten profits. Those who don’t play along are punished. A former employee of one of Montreal’s snowplow giants put it succinctly. “Snow removal,” he said, “is one of the biggest rackets there is.”

Two years ago, Transports Québec whistleblower François Beaudry exposed how the so-called “Fabulous Fourteen”—a powerful network of construction tycoons—fixed bids on public contracts: they used golf lingo during coded phone calls. “Nine players leaving from the fourth hole at 11 o’clock,” for example, meant $4 million plus $900,000, for the lowest, winning bid of $4.9 million. Every other company would then be forced to bid above that amount, Radio-Canada reported.

Although the terms “collusion” and “bid-rigging” are often used interchangeably, they mean slightly different things. Collusion refers to a group of firms secretly working together to gain an unfair market advantage; bid-rigging, a form of collusion, involves companies coordinating their bids to ensure one of them wins a contract. Bid-rigging is more specifically criminal, and carries a maximum fourteen-year sentence in Canada, according to statute 47 of the federal Competition Act.

As in construction, bid-rigging in snow removal is typically conducted over the phone, according to contractors and employees. But the snow-removal industry, construction’s unsophisticated little brother, is less subtle; there are no tête-à-têtes about golf here. “This year you get this one,” was how one person described the conversations. Or: “This isn’t for you. You’re going to bid on it anyway, and we’re going to tell you how much you’ll bid.”

Other sources also emphasized the tight-knit nature of the industry. Aspiring entrepreneurs in Montreal can’t just start their own snow-removal businesses, admitted another contractor. Instead, you have to get permission from the major players, or buy someone else’s company when the owner retires. You can’t advertise your business, because then private clients might think they can shop around. If new customers call anyway, you have to name an unreasonably high price so they won’t hire you. Every company in the city knows what the others are doing, he said, and many contractors hang out at the same garage in Notre-Dame-de-Grâce. “There’s a lot of talk between the guys,” he explained.

If the contractors do as they’re instructed, they won’t be left out in the cold. One small-business owner described how he found himself completely out of work after being told to ignore that season’s calls for tender, when Montreal’s boroughs invite bids for contracts. (Each of the city’s nineteen boroughs handles its snowplow contracts independently, and most contracts last for five years; a handful of new jobs become available around the city each year, usually in the summer and fall.) A bigger company, recognizing that he had been a good sport, gave him one of its own contracts. “He’s a good guy,” the contractor said of the larger company’s owner. “That’s fair. It should be like that. I’m also doing him a service because if I had bid on other contracts, he would’ve lost some, too. He likes it that way.”

But maintaining this system requires more than a simple gentlemen’s agreement. If you don’t play by the industry’s internal rules, brace yourself for violence and equipment destruction, said veteran contractors from small- to mid-sized companies. The former employee of the major snow-removal firm said there are three initial stages of coercion—and, hopefully, no one has to face the fourth.

The first stage is sabotage. Montreal may be the only city in the world where, during bitter underworld wars, enemies have sugared the tanks of each other’s snowplows—a popular tactic in the nineties, according to one east-end company owner. The windows of entire lots of loaders, graders and other trucks have been smashed overnight. Firebombing—the Montreal mafia’s favoured method of destroying cafés and pizzerias—is occasionally extended to snow-removal equipment. In late October, the Montreal Gazette reported, a Molotov cocktail–like device was thrown through the window of a snow-removal company in the city’s northwest. “It’s a rough business—and this is a war that’s been going on for years,” the company owner told the Gazette, noting that, in 2010, someone had torched two of his plows.

If equipment damage doesn’t dissuade competitors, bankruptcy comes next. The big firms have huge profit margins, said the ex-employee of the large contractor, allowing them to chronically underbid smaller, errant companies, shutting them out of contracts in retribution. But damaged property and bankruptcy are still just warnings; ignoring them means risking physical violence. Sources were reluctant to discuss this subject, and no one interviewed admitted to having been badly injured. “The ones that get hurt aren’t going to be the ones who will talk to you,” said the former employee, describing one construction contractor who, in 2009, was beaten “within an inch of his life.” “When something like that happens,” he continued, “you’re going into the corner to lick your wounds and thank God you’re still breathing.” Another man described how a competitor had threatened him, slicing his finger across his throat.

Industry sources agreed that violence and casual threats have become almost routine. “When you reach a certain point, you can’t let it get to you,” one said. “The guy that steals contracts from another expects that it’s gonna mess things up.” But sometimes these violent turf wars spill over unexpectedly. According to a city employee, a large, successful contractor once hired a goon to threaten and “take care of” some residents of St. Henri, a low-income neighbourhood, who weren’t moving their cars during designated snow-removal times; the cost of the resulting towings was coming out of his budget. “There’s zero tolerance where a lot of money is involved,” the city employee said. “You run into a difficult area—are you gonna kill anyone who leaves his car on the street?”

Even without insider testimony, the high cost of snow removal in Montreal should raise questions about collusion. The city spends at least 37 percent more on snowplowing than most other municipalities in Quebec, according to a study released in January 2011. Using the province’s data, economist Paul Daniel Muller and news agency QMI found that, each winter, Montreal pays $23,470 per kilometre of road for snow removal. Quebec City has the second-highest costs of any large municipality, at $17,015 per kilometre, while Laval, north of Montreal, pays $12,377.

There are many factors that could increase costs in Montreal, which is unlike most of Quebec’s urban centres in its layout and population density, city spokesperson Philippe Sabourin told Maisonneuve. Because relatively few Montrealers have driveways, residents mostly park on the street, impeding snow removal and leading to thousands of towings. Snow must also be dumped far outside the city, raising transportation costs considerably. “From our point of view, we’re paying the correct price for this service we’re having in Montreal,” Sabourin said, arguing that the QMI study was not rigorous enough.

Muller admitted that the study didn’t examine possible contributing factors—just the numbers. But his research did reveal some strange price gaps. “There were some significant spreads between, let’s say, Montreal and Quebec City. That can be explained by legitimate reasons,” Muller said. “But then there are spreads between suburbs that are next to each other on the North and South Shores [of Montreal]. You’ve got suburbs that are on the South Shore that are the same structure, the same type of climate. They’re both suburban. There would be a place for digging.”

Sabourin said that Montreal had recently taken steps to prevent fraud and collusion, such as establishing an ethics hotline for employees and a comptroller general’s office to oversee contracts. But concerns persist that Montreal’s snowplowing costs are exorbitant and opaque. When it released the study, QMI noted that, in 2009, the city had recalculated its total kilometres of road: in 2008, Montreal had 6,141, but the next year, the city officially gained nearly 50 percent more, bringing the total to 9,141 kilometres. That suddenly reduced Montreal’s per-kilometre cost of snow removal by more than 35 percent. When asked about this change, Sabourin said that kilometre-counting is a complicated process negotiated by Transports Québec and the municipalities.

Sources’ bid-rigging stories fit well with Maisonneuve’s analysis of the last twelve years of municipal snow-removal contracts. These documents, obtained from city archives and borough offices, reveal patterns that suggest some companies may have communicated before bidding. They indicate that there is little conformity in how contracts are documented and accounted for at the borough offices. It also appears as though city workers rarely carry out checks that would help prevent crooked bidding.

Many of the archives’ roughly 250 contracts hint at recurring relationships between companies: when a certain contractor won a bid, the same three or four others were often the losers. Sometimes the win-lose relationship was reversed, but the same five or so companies were still involved. Some companies in these constellations rarely, if ever, won contracts. Geography offers little explanation for these patterns, since snow-removal companies often work across the city from where they are based, either by renting parking space or incorporating the extra fuel costs into their bids.

Boroughs have a standard vetting process for contracts, and some winning bids are later rejected due to the firm’s insufficient size or its failure to produce certain financial guarantees. In those cases, the contract then goes to the next-lowest bidder. According to the archives, relatively small companies sometimes bid high on contracts that seemed much too large for them to fulfill. But their bids still lent an air of healthy competition to the entire tendering process—even if the companies never intended to win the contracts in the first place.

According to Canada’s Competition Bureau, the independent agency that investigates fraud and collusion, a few key warning signs can point to the presence of bid-rigging. The agency’s website advises particular vigilance in industries involving “simple products or services; goods/services which have not seen significant technological advances…a small number of suppliers or customers; supplier base with few new entrants.” Other red flags include suppliers who normally bid failing to do so; the same suppliers winning frequently; winning companies subcontracting work to losing companies; and any pattern suggesting a rotating bid-winning system. All of these warning signs are present in Montreal’s snow-removal industry.

The vast majority of the city’s plowing contracts are awarded without the oversight needed to help reveal collusion and ensure the fairest possible price. Quebec auditor general Renaud Lachance has repeatedly decried the province’s inconsistent record-keeping about the industries that bid on public tenders. In his 2009-2010 annual report, Lachance made a few suggestions to Transports Québec about awarding construction contracts: if there is only one bidder, find out why no one else bid; if a company requested information but didn’t bid, call and ask why; whenever the lowest bid exceeds cost estimates by 10 percent or more, get the company to explain, in detail, why the price is higher; and conduct comparative cost analyses with municipalities elsewhere in Quebec. The report also suggested that Transports Québec train its staff to “detect potential problematic situations regarding market conditions.” (Municipal employees who spoke to Maisonneuve—some of whom had worked for multiple boroughs—said they had never heard of any borough staffer being trained to carry out any of these steps.)

Between 1998 and 2010, by Maisonneuve’s count, fourteen contracts were recorded as having only one bidder. Record-keeping was generally patchy: around half of all records didn’t mention the names of any losing companies at all, and even fewer winning prices were listed. The documents rarely explained why larger-than-expected price hikes were considered acceptable. In some cases, even the name of the winning company was not recorded. Out of the approximately 250 contracts from that twelve-year period, only nine included the names of the winners and losers, the price of the bid and the total value of the contract.

Even companies that have already been found guilty of collusion win borough contracts. In 2000, six Quebec firms were convicted of bid-rigging on highway snow-removal and fined $1 million. But when the same companies later won borough contracts, their criminal pasts were not mentioned in the city’s records. One of the companies, Roxboro Excavation, won Montreal snow-removal contracts in 2003, 2004, 2005 and 2009; another, Nepcon, won a contract in 2003. (In 2009, La Presse reported that four of the companies had also been granted lucrative provincial contracts after their convictions.)

Montreal auditor general Jacques Bergeron, who has jurisdiction over the city’s contracts, declined to be interviewed for this article; his spokesperson said that he is currently involved in a court case related to collusion. But Michel Samson, an assistant auditor general for the Quebec government, said that many authorities make the same recommendations that Lachance did in his report. Samson admitted that he wasn’t very familiar with Montreal borough procedures. “But in the Quebec government, it’s a good practice to call the other contractors or other persons who didn’t bid,” he said. “They came to get the call for tenders, but they didn’t put in a submission. It is also what the Treasury Board recommends in their guide—to try to find out, why didn’t the others bid?”

Despite these recommendations, several city employees said that Montreal borough staffers typically don’t ask questions when, for example, only one company bids on a contract. Staffers can reject bids that are deemed too high, and the past decade’s records show that they have, albeit infrequently. But when capable contractors do not bid, no subsequent investigation is mentioned in the reports available in the archives, which summarize bidding results for the borough councils. In many cases, fifteen to twenty interested companies requested information about a contract, but only about five bid (often the five who regularly bid on the same contracts). Final reports rarely address this discrepancy.

But borough employees insist that policing snow-removal companies is not their job. Municipal employees don’t see the companies’ bids until they’re removed from identical envelopes at a table in the borough office, in the presence of the bidders and any interested members of the public. The contract must go to the lowest bidder, as long as all the financial guarantees and correct documents are in place.

When a borough puts out a public call for tenders, any company is welcome to submit a bid. “So whoever doesn’t [bid], that means that they’re just not interested, or something else is going on,” one borough employee said. “But it’s not for us to find out why you’re not bidding or why this other guy’s not bidding. When it goes out public for these big events, you don’t bother asking questions… It’s not for an engineer or an agent technique to go out. It’s more for...the head honchos.”

Samson, from the Quebec auditor general’s office, disagreed with that attitude. He said it was worth maintaining a base level of vigilance. “It’s the responsibility of the ministry or municipality to know why I have just one person who bid on my tender,” he said. “I think it’s important to have the preoccupation that it’s public funds.”

Montreal’s nineteen boroughs are relatively decentralized, which may make it harder for officials to spot suspicious patterns in snow-removal contracts across the city. Samson noted that large provincial ministries are motivated to avoid faulty tendering processes because they cost the government extra money; when only one contractor bids, Quebec ministries sometimes cancel the tender and start again. But provincial-style oversight is harder to achieve on a municipal level. Although each borough has its own mayor, staff and council, the offices are still small and self-contained. It’s safer to have “a big strong team that can detect the problems and the irregularities,” Samson said.

Media reports on the construction industry have mainly focused on corruption in the provincial government, and one insider noted that the relative insularity of Montreal’s boroughs could also enable a culture of kickbacks and bribes. But in the boroughs, he said, there isn’t a well-oiled payoff system for small contracts like snowplowing. The insider said that corruption in Montreal used to be much more common; a few decades ago, those in power were showered openly with trips and other gifts. But now, he said, “each borough is its own little clique. Certain municipalities are more corrupt than others.” He added, “We can’t put them all into the same basket. There are some that are very above-board and are careful about making sure everything stays above-board.”

Borough staffers who spoke to Maisonneuve weren’t just concerned about overstepping the bounds of their office. They also dismissed the idea of speaking out in a city where, they said, collusion in all publicly contracted industries—garbage, construction, water works, snow removal—is so entrenched that it almost goes without saying. It would be ridiculous, not to mention unsafe, to publicly accuse anyone of bid-rigging, one municipal employee said. “It’s a silent law that you don’t go bidding on a sidewalk contract in Montreal. You’re gonna end up in the river. That’s known by everyone,” he said. “And the market is divided. You work in Laval [and the] North Shore, and I work on the South Shore, and you work in the central city, and that’s it. It’s been cut like that for decades.”

The culture of resignation among borough employees is nearly as pervasive as collusion itself. Working for the city is not only an education in civil engineering, public administration or contract management, but a long study in power dynamics: learning what you can and can’t control, and which lines not to cross. One borough staffer—who described snow removal as a “civilized mobster business”—admitted that, eventually, he stopped caring. “We work with these guys every day,” another municipal employee said. “We play like we don’t know anything.”

When confronted, some contractors play it the same way. According to the city’s records, a certain small company bid on twelve different contracts between 2001 and 2010, losing almost all of them to the same few major players. (The only contract the company did win during this period was later rejected because its bid was still exorbitantly high.) That small contractor shares an address with a construction company long linked to organized crime, and there’s no record that it has ever performed snow removal for the city. When Maisonneuve asked one of its managers whether the company had been told to bid high in order to lend legitimacy to past contracts, he hinted that it had been. “I remember I got phone calls from companies saying, you have to do this, you have to do that. Or I was being pressured to do certain things,” he said.

But he also protested that it wasn’t as bad as it looked. He claimed that his company had done some work for the boroughs, though he declined to say what that work was. That information would normally be publicly available, but it was nowhere in the archives, and few city records omit the names of contract winners. The man argued that the archives must not be complete.

“I don’t want to mention what kind of jobs I’ve had or have. Know what I mean? It’s my business,” he said. He added that trying to draw conclusions from patterns in the contracts was futile; there were too many factors influencing pricing decisions. For example, he said, some companies can consistently bid lower in certain regions because they have lower transportation costs. “You see a company, you say, ‘Oh, they’ve got the same job all the time.’ You’re like, ‘Maybe they’re doing it on purpose,’” he said. “You can’t do that on purpose. You can’t call everyone and fix it like that. It doesn’t make sense.”

The man also claimed that bid-rigging went out of style a few years ago. Now, there’s more competition than there was before, he said, and it’s harder to collude if you have to call ten other companies to fix a contract. He added that the government had recently cracked down on crooked contracting because of all the “bullshit in the paper” about construction.

It’s difficult to pin blame on specific colluders when just about everyone is guilty. The media typically links construction companies owned by Italian and French Canadians to organized crime, and that pattern does seem to extend to snow removal—which, in many ways, is just an extension of construction. “You have to realize that, for the bigger contracts, it’s a lot of the same people involved. If it’s not directly the same company name, it’s associated with them one way or another,” said one insider. “In the end, it all comes down to the mob.”

But the sources interviewed for this article said that almost every snow-removal company participates in bid-rigging. As one man put it, the problem cuts “across all races”—not just Italian and French Canadians—implicating anyone who makes a living in snowplowing. When Montreal cracked down on the mafia in the 1970s, it upset local organized-crime structures and discouraged anti-competitive behaviour. Today, many sources, including small-company owners, say the same thing: collusion has moved beyond formal organized crime, and simply become the way the industry works. “It’s almost not free enterprise, eh?” one contractor laughed.  “It’s almost like warlords trying to take other guys’ stuff.”

Those who are serious about working in snow removal must learn to accept collusion. Many don’t, said a mid-sized contractor; they aren’t willing to befriend the right people, and they refuse to accept beatings and sabotaged equipment as the cost of doing business. “A slap doesn’t hurt, you know,” he said. “We take a punch and it doesn’t really hurt. It hurts more when a guy loses a contract—it hurts his heart. Some businesses don’t know a lot of people. They go back home with all their equipment because they have no contracts. They’ve invested $700,000 to $800,000 in equipment—that’s no fun. A lot of businesses go under.”

The system also works well, sources said. One business owner pointed out that snowplowing is not highly paid work. Business owners help each other, he continued, and everyone benefits from the security of knowing that they will keep the same contracts and enjoy certain profit margins. There isn’t enough motivation to snitch. “I guess it’s an old-school mentality,” he said, shrugging. “There’s a bit more protection.”

A borough employee admitted that bid-rigging in snow removal is rarely investigated because colluding companies still clear the streets well, at prices reasonable enough to avoid unwanted attention. “We have activities that are done by city workers. Let’s say their cost is $100,” he said. Private companies “will not charge you $200. They will ask for $130, $140. What they want is no problems and guaranteed nice profits.”

If you’re looking for the ringleaders of collusion, think big. Smaller companies don’t threaten each other, said small-business employees. It’s no accident that the major firms are in charge: they have a take-no-prisoners approach and are dedicated to keeping minor competition in check—not to mention their mafioso financing, which, competitors alleged, helped them grow quickly. But, like construction’s Fabulous Fourteen, these giants are rarely named in the media due to legal concerns. (Maisonneuve did not name companies in this article for the same reason.) Away from the spotlight, these companies elude probes, court cases and tax audits. Even employees from smaller companies admitted they only felt angry about the bid-rigging system when larger companies hoarded all the work.

Collusion, vandalism and violence—all for something as banal as snowplowing. If you think it seems too extreme, you don’t understand how public contracting in Montreal works, said the former employee of the major company. The same tactics are used throughout the city, even in the tiniest industries; it’s a culture, a way of life. “I have seen a guy get threatened when he bid on a grass-mowing contract in Ville St. Laurent. They don’t care. It’s just about maintaining control over those areas,” he explained. “The people that talk about corruption in the construction industry don’t realize it’s not just construction. It’s everywhere in public works.”

Additional reporting for this article was contributed by Anthony Lecossois.