In a political bombshell, a former construction boss testified in Montreal that 3 per cent of the value of contracts obtained from the city of Montreal was funnelled for years to the party of Mayor Gérald Tremblay.

Lino Zambito made the statement at the Charbonneau inquiry probing corruption and collusion in Quebec's construction industry.

Mr. Zambito testified that he began giving the 3 per cent cut starting in 2005-2006. He said another 2.5 per cent of the value of city contracts went to the Mafia.

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"People told me the 3 per cent we gave went to the political party of Mayor Tremblay," he told the inquiry.

In other explosive testimony, he said 1 per cent of the value of contracts went to a senior city of Montreal engineer named Gilles Surprenant, who was responsible for drawing up the contracts. Mr. Surprenant is now retired.

The remittance to Mr. Surprenant even had a name: TPS, the French-language equivalent of GST. TPS stood for Taxe pour Surprenant, or Tax for Surprenant, according to Mr. Zambito.

Mr. Tremblay, who was previously scheduled to meet reporters on an unrelated matter, was more than 30 minutes late before he spoke to the press.

"I won't comment each time there are allegations at the Charbonneau commission," the mayor said, adding that he didn't want to make more detailed remarks until the inquiry has concluded.

He said the city has previously postponed public contracts each time the entrepreneur has been named in the inquiry.

"I don't intend to resign," Mr. Tremblay said.

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The mayor added that Quebec's chief electoral officer, who regularly receives financial statements from Mr. Tremblay's Union Montréal party, has never raised any concerns.

Questions about political financing at city hall had already been raised this spring with the arrest of Frank Zampino, a former city councillor who was the right-hand man of the mayor, and former fundraiser Bernard Trépanier.

Mr. Trépanier, 74, was nicknamed "Mr. 3 per cent" at city hall about three years ago after a political rival accused him of demanding that percentage for Mr. Tremblay's political party from some city contractors, the allegation now corroborated by the testimony at the Charbonneau commission.

Municipal opposition leaders said it was time for Mr. Tremblay to step down.

Alluding to testimony last week that the Mafia took a 2.5 per cent cut on public contracts, Richard Bergeron, leader of Projet Montréal, said Mr. Tremblay's party was greedier than the mob.

"This is a higher rate than the Mafia. The Mafia took 2.5 per cent, Mr. Tremblay's party took 3 per cent," he said.

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"Enough is enough, Mr. Tremblay has to resign right now."

The shocking testimony came as Quebec's former transport minister Pierre Moreau announced he will run for the leadership of the Quebec Liberal Party.

Mr. Moreau, whose year as head of transport ended with the Liberal defeat Sept. 4, said he is confident his former department will be spared any similar bombshells.

"When we named this commission we named it knowing witnesses like this morning were to come. We aren't hiding from it," Mr. Moreau said in an interview.

"We received three independent reports and 80 recommendations. We implemented all of them. I'm proud that in Quebec we're taking proper action. It's not in the Transport Department that the problems are."