A mass resignation of the board of the non-profit corporation that manages Montreal's public markets appears to be linked to fraudulent and illegal activity outlined in a report by the City of Montreal's comptroller.

The entire board of the Corporation de gestion des marchés publics de Montréal (CGMPM) resigned last week, citing the need to maintain their "personal integrity."

The internal report, published in December and obtained by Radio-Canada, says the management and board were either unwilling or unable to resolve these issues.

"The corporation seems to have lost control, to the profit of certain members," says the report, noting that the personal interest of some members prevented the non-profit from making much-needed changes to how it is run.

Jean-Talon Market is the site of the allegedly fraudulent activity, according to the report.

Robert Beaudry, the city's executive committee member responsible for economic and commercial development, said the Montreal police are investigating reports of intimidation and vandalism.

Projet Montréal Coun. Robert Beaudry is a member of the city's executive committee. (Radio-Canada)

A spokesperson for the SPVM would not confirm there is an ongoing investigation, citing security concerns.

Beaudry said he was disappointed and surprised by the resignations last week.

"There are those who don't want anything to change because they have an interest in it," he said Wednesday on Radio-Canada's La Matinale d'été.

He said Isabelle Laliberté, who was hired as director-general of Montreal Public Markets two months before the report was published, is working to resolve the non-profit's problems.

Part of the comptroller's recommendations is to more clearly define the powers of the director-general.

Laliberté did not return a request for comment.

Selling leases at a profit

The city owns the land where the Jean-Talon, Atwater, Maisonneuve and Lachine markets are based, but the non-profit manages the city's markets independently.

This "renter-tenant" relationship between the two bodies should be revised, according to the report, including allowing the city to conduct audits on the corporation's books.

While a delegate from Montreal can attend board meetings, the report says no one from the city had been present for several years.

"We're [only] connected by a lease, but we definitely want to make sure there's good governance," Montreal Mayor Valérie Plante said Monday.

The corporation that manages Montreal's public markets is seeking a new board after mass resignations last week. (Paul Chiasson/The Canadian Press)

The comptroller report outlines several situations where apparent conflicts of interest impeded board members and administrators from fulfilling their legal duty toward the non-profit.

The CGMPM's current rules require board members be either producers, resellers or merchants who have at least one stand at a market. Beaudry said that as part of its reforms, the city is looking to diversify the makeup of the board.

The report found that tenants were acting as if they were the owners of their stalls, illegally subletting their stalls to make a profit.

It also found that others were being paid to transfer their lease, effectively selling a piece of the non-profit. The report says that it was common knowledge that a vendor would use the fee they received for transferring their lease as a form of retirement plan.

The non-profit's rules require that vacant stalls be posted publicly, but the report found that wasn't happening for a majority of stalls.

This led the non-profit to lose control over the diversity of products sold at its markets, the report said. It also could not determine whether members were renting more stalls than they were permitted under the corporation's rules.

Most tenants paid rent in cash and were not given receipts, which presented the opportunity for fraud and security concerns for the employee responsible for depositing the cash at the bank, the report said.

It said that Laliberté has made progress in this area since becoming director-general.

Producers, resellers unaccounted for

In 2012, the report found 16 members were resellers, but it could not determine how many were resellers last year.

It also found that, in some cases, products that claimed to be from local producers were identical to those that could be found in Montreal grocery stores.

Another issue is a warehouse that was intended to hold market equipment was instead used personally by staff who maintain market buildings. The report found no corrective action that had been taken.

In addition, it found that the non-profit's credit card had been used to buy gas on the South Shore, with no proof that this was for the benefit of the company. It says the employee responsible is no longer with the non-profit.

The report also anticipated a "resistance" to the city's proposed reforms from those whose "personal interests come, in some ways, at odds with those of the corporation and the city."