A former executive director of the FTQ Solidarity Fund was forced to explain at the Charbonneau Commission Wednesday why the fund invested in a strip club.
The investment fund's mission is to invest in Quebec companies with potential for growth, while guaranteeing reasonable returns for the 500,000 Quebec investors holding RRSPs.
In 2008, the real-estate arm, called SOLIM, went into business with a man named Ronnie Beaulieu to buy a now-defunct furniture store. Beaulieu was a Hells Angels associate with a loansharking conviction.
Former fund director Guy Gionet said the board was aware of the connection.
“The issue of his criminal background didn’t even come up for discussion,” he said.
The investment was a failure and Beaulieu defaulted on his loan.
Beaulieu's business interests were not limited solely to a furniture store, however; he also wanted the fund to invest in a strip club he owned, the 10-35 Club on Highway 10 in Carignan.
FTQ-Construction director Jocelyn Dupuis asked Gionet to invest over $1 million, giving the official reason that SOLIM was interested in the surrounding land.
The true motive was more complex, said Gionet, explaining that Beaulieu needed to buy the building to keep his strip club going, because banks wouldn't loan him money.
Gionet authorized the loan, but allegedly hid the fact that Beaulieu was behind the deal.
Gionet was fired when the information came out, though he now claims he was made a scapegoat.
“I think everyone knew we were investing into a strip joint, but no one wanted to see the connection on paper,” he testified.
This week Gionet has said repeatedly that he had to respect the wishes of a small group of influential board members while turning a blind eye to illegal activity and ties to criminal figures.
"There was really no discussion at the board. There were no debates on the situation," said Gionet.
Gionet told the commission that the real power lay in the hands of union head Jean Lavallée, and that any contradiction of Lavallée's requests would have cost him his job.
"Listen, one of our partners, one of our lenders, in that case pleaded guilty. It was not really one of our partners but one of our lenders pleaded guilty. There was not even a debate or a discussion," said Gionet.
Gionet also said that after the union's ties to criminal organizations became a public matter, the union executive attempted to cover up wrongdoing by severing all ties with Tony Accurso, but paid little attention to its own flawed guidelines.
After he was fired, Gionet threatened to sue the SOLIM for wrongful termination and was offered a $1.3 million severance package.
Lavallée’s testimony begins Thursday.
