National Assembly introduces Integrity in Public Contracts Act Nov 12, 2012

[authors: Nathalie Beauregard and Timour Breslavski]

On November 1, 2012, the National Assembly of Québec introduced Bill 1, a bill amending the Act respecting contracting by public bodies (Bill). The Bill was introduced in order to fight corruption and enhance integrity in the public contracts process in the Province of Québec. It would require all companies to pass an integrity test before being allowed to bid on public contracts worth $25,000 or more.

Both contractors and subcontractors would first have to obtain an authorization from the Autorité des marchés financiers (the AMF), before being allowed to enter into such contracts. However, the AMF would be required to refuse the granting or renewal of an authorization, or revoke an existing one, if:

  1. the enterprise has, in the preceding five years, been found guilty of an offence listed in the Act such as bribery of judicial officers or fraud;
  2. any of the enterprise’s shareholders holding 50% or more of the voting rights attached to the shares that may be exercised under any circumstances has, in the preceding five years, been found guilty of an offence listed in the Act;
  3. any of the enterprise’s directors or officers has, in the preceding five years, been found guilty of an offence listed in the Act;
  4. the enterprise has, in the preceding five years, been found guilty by a foreign court of an offence which, if committed in Canada, could have resulted in criminal or penal proceedings for an offence listed in the Act;
  5. the enterprise has been found guilty of an offence under section 641.2 of the Act respecting elections and referendums in municipalities, section 221.1.2 of the Act respecting school elections or section 564.3 of the Election Act, and the prohibition prescribed by that section in connection with the offence has not expired;
  6. the enterprise has, in the preceding two years, been ordered to suspend work by a decision enforceable under section 7.8 of the Act respecting labour relations, vocational training and workforce management in the construction industry; or
  7. the enterprise has, in the preceding two years, been ordered by a final judgment to pay an amount claimed under subparagraph c.2 of the first paragraph of section 81 of that Act.

In addition, the AMF would have broad discretionary powers when deciding to grant, renew or revoke such an authorization if it considered that “public confidence would be undermined by a lack of integrity on the part of the enterprise, any of its partners, directors or officers or a person or partnership that has direct or indirect legal or de facto control over the enterprise.”

The AMF would be assisted in its functions by the Associate Commissioner for Audits, appointed under the Anti-Corruption Act, which would conduct audits of the enterprises and provide advisory opinions to the AMF.

The authorization granted by the AMF would be valid for three years, but could be revoked at any time (along with the contract) if the enterprise is found to be in violation of the Bill.

If the Bill is adopted, the definition of “public body” in the Act respecting contracting by public bodies would be extended to include other State entities, such as Hydro-Québec, Loto-Québec and entities such as the metropolitan communities of Montréal and Québec.

Overall, the Bill is expected to toughen up the province’s stance on corruption and both of Québec’s main opposition parties have offered their support for the Bill, while reserving the right to propose several amendments.

If you have any questions, or should you wish to discuss this matter further, please contact Nathalie Beauregard.