Construction ramps up on $300M Iqaluit airport

The Government of Nunavut is going forward with the biggest project in its history, despite past allegations of corruption levelled at the company providing asphalt for the construction of Iqaluits new$300 millionairport.

An official ground-breaking ceremony was held Thursday afternoon in Nunavuts capitalas the next phase of construction on the airport redevelopment begins.

Through a public-private partnership fostered by the federal government, the Iqaluit airport will geta shiny new terminal, an expanded taxiway for planes, a sophisticated thermosiphon system under the new buildings, and a new multi-purpose building. The runway's lighting system will also get an upgrade.

The new-look airport will be run for the next 30years by Arctic Infrastructure Partners, an international consortium of several companies:

• UK-based InfraRed Capital Partners is handling the finances;
• PPP Canada, the federal government's public-private investment body, will kick in $77 million for the project;
• French multinational Bouygues is handling construction through its Canadian subsidiaries, notably ColasCanada and Sintra;
• and the Winnipeg Airport Authority will handle the day-to-day operations of the airport.

The initial price tag of the projectcould change.

According to the construction contract, some costs are allowed to fluctuate. The construction project report says AIP "cannot effectively lock in the price of asphalt" for the life of the project. There is also room to accommodate changes in fuel prices, as well as the cost of shipping material between Iqaluit and Montreal.Nunavut would also have to pay for any changes to the project it might demand.

Corruption allegations levelled at asphalt company

The Government of Nunavut chose AIP for the airport redevelopment project last July.

Less than 2 months before the announcement, the company providing asphalt for the construction phase, Sintra,was making headlines in Quebec.

In May of 2013, both former president of Sintra, Normand Bedard, andSintra executive,Mario Desrochers, were arrested by UPAC, Quebec's permanent anti-corruption squad. Bedard was charged with fraud, corruptionand breach of trust. He was arrested as part of the same operation that saw the mayor of Laval, a Montreal suburb, arrested and charged with gangsterism. Desrochers was hit with six chargesincludingfraud, committing acts of corruption in municipal affairs, and fraud against the government.

The allegations have yet to be proven in court.

Two weeks after that, former Sintra executive Gilles Theberge was in the hotseat at the Charbonneau Commission, Quebecs public inquiry into corruption and collusion in the province's construction industry.

Thebergetestified that Sintra had formed a cartel with four companies in the year 2000 to collude for infrastructure projects. He alleged that Sintra routinely inflated the cost of asphalt:if it was a public works project, the company would inflate the price even more, sometimes up to 25%. He says hequit the business soon after the formation of the cartel, when his car was bombed one night in his driveway.

Bedard himself appeared at the Charbonneau commission this April. He corroborated Theberge's previous testimony about collusion, though he said it began to taper off, without completely disappearing, in 2009.

In an email to CBC, Sintra said Nunavut put a formula into the construction agreement that determines how much the cost of asphalt will rise or fall during construction. The email did not address the allegations of corruption made by its two former executives, despite a request from CBC.

Nunavut untroubled by allegations

The Nunavut government, for its part, says it was aware of the allegations, but is not troubled by them.

John Hawkins, director of the Iqaluit airport, said the government did its due diligence in examining the company over the many months it took to finalize the agreement.

"Those issues were examined," he said. "They are past activities. And we're comfortable and confident that those issues were resolved in the company now."

The territorial Department of Economic Development and Transportation said it has hired an independent auditor, London-based Leigh Fisher, to keep an eye on costs, including theconsortium's asphalt demands.

Concerns about public-private partnerships

David Macdonald is a senior economist with the Centre for Policy Alternatives in Ottawa. He has studied public-private partnerships in Canada before, and says governments almost always end up paying more than the initial price for a number of factors.

"One of the big problems of public-private partnerships is you essentially give up control of a project for 10 to 20 years," he told CBC during a telephone interview.

"The driving force behind P3s is a means of avoiding cost now in order to pay a lot later.Ten or 20 years from now, when some of these problems start to crop up, the politicians who signed the agreement are long out of office."