Former construction company owner Lino Zambito says he had to pay the mayor of Laval bribes in order to win contracts in Quebec's third-largest city.

Resuming his testimony before the Charbonneau Commission, Zambito said it was an open secret that Mayor Gilles Vaillancourt demanded a 2.5 per cent cut of all construction contracts.

Zambito said that at one point he had difficulty collecting $400,000 from the city of Laval for extras on a construction contract, at which point he was told explicitly by an engineer named Marc Gendron that if he paid Vaillancourt $25,000 cash, his payment would come through.

In a difference between what allegedly happened in Montreal, Zambito said payments to Vaillancourt were not made through the Mafia, but instead through assorted middlemen, including Gendron.

Zambito said his firm completed half a dozen contracts in Laval, and that he discovered the 'collusion clique' in 1998.

In recent weeks the permanent anti-corruption squad UPAC has searched Mayor Vaillancourt's homes, Laval City hall, and multiple construction firms that won contracts in Laval.

Early Monday afternoon city of Laval press attache Johanne Bournival told CTV news that Mayor Vaillancourt denied everything said by Zambito, and that the mayor has never accepted any money from Zambito or any other contractor in exchange for public works contracts.

Zambito also spoke of shady contracts in other cities. After winning a contract in St-Jerome, Zambito said he had his equipment set on fire when he used a demolition company from outside the area.

In one town, Terrebonne, he said engineering firms peddled privileged information to help specific companies submit the winning bids for contracts.

He described some towns north of Montreal as "guarded fiefdoms."

All political parties received kickbacks: Zambito

He also accused a prominent Loto-Quebec executive of demanding a $30,000 cash payment for the provincial Liberal party -- which was 10 times the legal limit.

But such schemes went far beyond the provincial Liberals, Zambito testified.

Zambito said he funnelled $88,000 over the last decade to all Quebec political parties through other donors -- notably through family, friends and employees. The lion's share went to the then-governing Liberals, while smaller amounts went to the Parti Quebecois and the now-defunct ADQ.

He said the practice helped parties circumvent the province's then-$3,000 donation limit, all part of a broken system where political parties relied on engineering firms for cash; engineering firms went to get it from construction companies; and construction companies relied on their contacts to get work.

"I wasn't an angel," Zambito said.

"I manipulated public tenders, corrupted people, but the system existed. If I wanted to work in construction I didn't have the choice."

Zambito explained that he later reimbursed associates who made donations in their own name.

Zambito regrets embarrassing reluctant donors

On the witness stand Monday, Zambito expressed remorse for embarrassing his friends, family and employees who might never have wanted to donate.

He said some of these people didn't care about politics -- like one ex-spouse he described as resolutely "apolitical." Zambito said he was the one who urged them to participate, and said they did not deserve to see their names dragged out on a donors' list at a public inquiry.

Zambito had already delivered shocking testimony about how he and his company paid kickbacks to officials with the city of Montreal, to the Mafia, and participated in shady fundraising deals for the Liberal party of Quebec.

Before discussing the situation in Laval and other municipalities in Quebec, Zambito talked about how fundraising gets political parties into trouble.

Zambito said that during his time in construction he donated more than the legal limit of $3,000 to the Liberal party, the Parti Quebecois, and to Action Democratique du Quebec, not out of ideological conviction, but simply as a cost of doing business.

Cabinet ministers asked to raise $100,000/year: Zambito

He said that with the most recent government, Liberal cabinet ministers were asked to raise $100,000 per year, and that often ministers would walk into fundraising events with no idea about what would happen.

Zambito said at one point he was asked for $30,000 by Pierre Bibeau, a Liberal fundraiser who was also a Vice-President of Loto-Quebec, and who was dating then-education minister Line Beauchamp.

"I entered his office and he was seated at a table. There was a small table with chairs in front of his desk. I sat with him, gave him the envelope, we had a discussion about politics," said Zambito.

"At that moment I recall very well, the television was on in his office and he was watching the beginning of the debates at the National Assembly."

Increase the donation limit, says Zambito

Zambito said he feels that cutting down on the legal limit for donations would be a mistake.

He offered two suggestions for fixing the fundraising system: Increase the public subsidy for political parties, or increase the donation limit.

Otherwise, Zambito said, a black market will inevitably develop. He said political parties are desperate for cash to finance their campaigns, and without sufficient fundraising channels they will be tempted to resort to illict means to get it.

The limit was slashed to $1,000 under the previous Liberal government and the current PQ government has proposed lowering it again, to $100.

But Zambito said that without a significant increase in public subsidies the best solution might be higher donation limits -- like $10,000, with the real donor's name listed on the provincial registry.

He said that would be more honest than a system where heaps of cash from unknown sources were funnelled through middlemen.

"Why be hypocrites?" he said.

Zambito said the longstanding system would force innocent people into an awkward spot. He cited the example of his secretary, who gave 10 per cent of her $30,000-a-year salary to the old ADQ party and the Liberals in 2007 and 2008.

"In the end, those people just tried to help a boss or their company," Zambito said.

"The financing system is ill and the problem is not the employees, it's the system that's sick and corrupt."

Zambito was delivering his sixth day of testimony, which had already seen an explosive volley of allegations.

None of Zambito's allegations have been proven in court and his allegations have been met with denials of any wrongdoing.

With a report from The Canadian Press

The original version of this article said Gendron works for the city of Laval. He actually works for engineering firm Tecsult.