Seven people, including Revenue Quebec employees and officials with computer companies IBM and EBR, were arrested this morning in connection with an alleged corruption scheme aimed at obtaining a government IT contract worth $24 million.

Two Revenue Quebec employees, Hamid Iatmanene and Jamal El Khaiat, stand accused of providing privileged information about an upcoming government contract to a consortium made up of IBM and Quebec company Informatique EBR Inc.

UPAC officials allege the companies then used that information to design their bid before the public call for tenders was launched.

Fifty officials with Quebec's anti-corruption squad, UPAC, carried out raids at several homes in the greater Montreal region and in the Quebec City area early Wednesday morning.

UPAC is still seeking one other suspect.

The contract in question involved supplying the technology for a Revenue Quebec data management system.

"I want to emphasize the full co-operation of Revenue Quebec in the investigation that included two of its officials," said Robert Lafrenière, head of UPAC.

Fraud, breach of trust, conspiracy charges

The other accused include Mohamed El Khayat and Jean-François Robidas, who were directors at Informatique EBR at the time of the alleged infraction. Three IBM employees, Patrick Fortin, Gilles Gariépy and Daniel Letourneau, were also arrested.

Jamal El Khaiat of Revenue Quebec, and Mohamed El Khayat of Informatique EBR are brothers, confirmed Capt. André Boulanger of UPAC. He said the difference in spelling could be a transcription error.

A public security ministry employee, Abdelaziz Younsi, was also arrested.

Younsi and El Khayat, were previously charged in connection with another corruption scheme aimed at obtaining a different government contract with the Public Security ministry.

All seven accused will face fraud, breach of trust and conspiracy charges.

Lafrenière said IT contracts are an area of increasing interest for UPAC. He said because the contracts are lucrative, they are attractive to fraudsters. Lafrenière said the accused made "personal gains" from the fraud scheme, but would not give more details.

"The fight against corruption continues and all citizens must continue to actively participate," said Lafrenière.

Securities regulator approved companies

Martin Coiteux, president of the treasury board, confirmed today that Informatique EBR had just been reviewed by the AMF, Quebec's securities regulator two weeks ago, and had been approved to bid on government contracts. Coiteux says the AMF was unaware of the UPAC investigation at the time.

"This new information is serious. That's why I wrote to the AMF. They will review the cases of these two companies," said Coiteux.

Informatique EBR has at least 14 existing contracts with various government departments, while IBM has 24. Coiteux says all government departments will be asked to review these contracts to determine whether the accused individuals were involved. If so, he said, they will pass on that information to UPAC.

"We can't generalize from specific cases like those today, but we can't dismiss them either," said Coiteux. "We have to take them seriously,"

"Today's arrests confirm that the system works," said Coiteux.

But Éric Caire, Coalition Avenir Québec (CAQ) MNA, is calling for the government to launch a public inquiry into corruption in government IT contracts.

"These fiascos have been piling up for months and it leads us to believe that the events of this morning are just the tip of the iceberg," said Caire.