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Oct. 31 (Bloomberg) -- Montreal got the nickname Sin City during Prohibition, when Americans crossed the border into Canada to drink, gamble and buy sex. The epithet is making a comeback this month.

 

Allegations of price fixing, kickbacks and ties to organized crime are marring tomorrow’s election for mayor of Canada’s second-biggest city. Almost two-thirds of respondents in an Angus Reid poll released yesterday said the scandals will influence their vote.

 

“This is Sin City all over again,” said Harold Chorney, a political science professor at Concordia University in Montreal. “Corruption is part of the history here.”

 

Gerald Tremblay, the mayor since 2001, in September canceled a C$356 million ($330 million) pact to install water meters after La Presse newspaper reported that a city councilor vacationed on a yacht owned by the contractor who led the winning bid. Challenger Louise Harel, who leads in the polls, ousted her deputy this month after he admitted that his staff took improper cash donations.

 

The corruption allegations are diverting attention from economic challenges facing the city of about 1.7 million people. The winner of the election faces rising costs for mass transit, policing and water, according to a May 21 Moody’s Investors Service report.

 

Montreal has the highest debt load of any Canadian city, and ran a deficit of about C$330 million in 2008, compared with a surplus the previous year, said Ryan Domsy, senior financial analyst in Toronto at DBRS Ltd., a debt-rating company.

 

Close Race

 

The mayoral race is too close to call, according to an Angus Reid poll published yesterday in La Presse. Tremblay, 67, a Harvard Business School graduate, trails with 30 percent support. Harel, 63, a non-English-speaking lawyer and former minister in the separatist Parti Quebecois provincial government, leads with 34 percent. Richard Bergeron, 54, an architect who says the Sept. 11 attacks were carried out by the U.S. government and wants to ban cars from Rue Saint Catherine, the city’s busiest shopping street, is second at 32 percent.

 

About 25 percent of respondents in the Angus Reid poll singled out transparency and the fight against corruption as the city’s No. 1 priority. Angus Reid polled 804 Montreal residents Oct. 28 and 29, with a margin of error of plus or minus 3.5 percentage points.

 

“It’s one of the first really open races for years in Montreal,” Julie Belanger, 32, a Montreal office worker, said after an Oct. 27 candidates’ debate. “Usually you can guess who’s going to win, but this time it could be anybody.”

 

Yacht Trips

 

Tremblay canceled the water-meter contract, won by a group of local engineering firms, and fired two top bureaucrats after a report from Montreal’s auditor general found that elected officials lacked the necessary information before approving the project.

 

The probe was sparked this year by a La Presse report that Frank Zampino, formerly head of the city’s executive committee, vacationed in January 2007 and February 2008 on a yacht owned by Tony Accurso, who led the group that won the water-meter order, the city’s biggest contract. Zampino retired from politics last year. Accurso’s lawyer, Louis Demers at De Grandpre Chait, didn’t return a call seeking comment.

 

According to the auditor general’s report, the water-meter project was estimated in 2004 to cost C$36 million, about a 10th of the final contract’s price.

 

“All of these allegations of corruption certainly don’t help Montreal’s reputation,” said David Love, a trader of interest-rate derivatives at Le Group Jitney Inc., a Montreal brokerage. “The city looks bad right now.”

 

Sweeping Clean

 

Harel’s Vision Montreal party based its platform on ridding city hall of its “culture of secrecy and collusion” and restoring trust in the municipal administration. Harel has called for public inquiries into the allegations of corruption at city hall, as has Bergeron’s Project Montreal party.

 

“At first I thought a broom would be useful to clean this mess, but now I think I will need a very large vacuum cleaner,” Harel said in a television interview Oct. 28.

 

Harel’s credibility was undermined after she forced the resignation on Oct. 18 of the head of her executive committee, Benoit Labonte, for ties to Accurso.

 

Three days later, Labonte told Radio-Canada television in an interview that people close to him took money from Accurso, owner of Simard-Beaudry Construction Inc. Labonte said kickbacks and corruption are rampant in city hall. Maclean’s, Canada’s weekly news magazine, ran this headline on its cover this week: “Montreal is a corrupt, crumbling, mob-ridden disgrace.”

 

“There’s an underground system,” Alex Dion, economic development officer for the borough of Montreal, said after a candidates’ debate. He said the allegations hurt Montreal’s reputation in the rest of Canada.

 

Home of Ponzi

 

Still, Howard Silverman, chief executive officer of CAI Global Inc., a consulting firm that helps foreign companies invest in Quebec, doesn’t think the allegations will deter investors from Montreal, the city that Charles Ponzi called home for almost a decade a century ago. Ponzi was charged in 1920 for using new funds from investors to pay redemptions by other investors, a type of fraud that now bears his name.

 

“It’s not good for the city, it looks bad, but it won’t have much of an impact,” said Silverman, who counts investors such as London-based miner Rio Tinto Group among his clients. “Every North American or global city has its scandals or its problems.”

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Faut dire que les américains surtout à NYC et surtout à WS s'y connaissent en Ponzi ....et ca vient donner des leçons aux autres...quand NYC a été deux fois en faillite et que la mafia de wall street a mis la terre entière dans la m ...

 

Ouais, mais oublies pas que les démocrates ont créé les lois leur permettant et leur obligeant de faire ces folies et leur garantissant que si ils se plantent, le gouvernement leur donnera des bailouts. Les démocrates sont de bons amis de wall street, c'est surement pourquoi plusieurs des execs de wall street travaillent maintenant pour l'administration Obama. C'est quand même les gouvernements qui sont les plus grands opérateurs de Ponzi schemes sauf que pour eux, c'est facile et ça parait bien car il rendre leur crime légal, et ils disent qu'ils veulent aider le petit monde. Ya right!!

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