June 17, 2013 / 4:45 PM / in 5 years

UPDATE 2-Montreal mayor arrested in latest Canadian scandal

(Adds premier calling on mayor to resign, Applebaum declining to comment)

By David Ljunggren and Julie Gordon

June 17 (Reuters) - Montreal’s new mayor, who pledged to stamp out corruption when he took office in November after his predecessor resigned under a cloud, was arrested and charged with fraud on Monday in the latest blow to the reputation of Canada’s biggest cities.

The allegations against Mayor Michael Applebaum are sure to reinforce the perception of widespread corruption in the province of Quebec, particularly in the construction industry.

A special inquiry in the mostly French-speaking province has heard allegations of municipal contract rigging, kickbacks to politicians and illegal financing of elections.

The Montreal scandal is also an uncomfortable reminder of a separate controversy surrounding Toronto’s Rob Ford, who is resisting calls to quit as mayor of Canada’s largest city after two media outlets said they viewed a video that appeared to show him smoking crack cocaine. Ford says he does not use crack cocaine, and Reuters has not been able to verify the existence of the video.

Applebaum, the first anglophone mayor in Montreal in more than a century, faces 14 charges linked to two real estate deals, police said. His alleged infractions include fraud, breach of trust, conspiracy, municipal corruption and secret payments involving several tens of thousands of dollars.

The former real estate agent was appointed after his predecessor, Gérald Tremblay, stepped down in the wake of allegations he had ignored corruption and illegal spending by his political party. Tremblay denies wrongdoing.

“The message is clear - all actions that compromise the integrity of the state are unacceptable to the public,” Robert Lafreniere, head of the Quebec police’s special anti-corruption squad, said at a televised news conference in Montreal.

“No one is above the law and you can’t hide from the law,” he added, insisting that Quebec could “no longer tolerate... reprehensible acts” such as corruption and collusion.

Quebec Premier Pauline Marois said Applebaum should resign but brushed off calls to put Montreal, the province’s largest city, into trusteeship, which would empower an outside administrator to run municipal affairs.

Applebaum’s spokesman, Jonathan Abecassis, did not respond to messages left on his work and mobile phones.

Applebaum was arrested at 6 a.m. (1100 GMT). He left police headquarters at 4 p.m. without commenting. Broadcaster Radio-Canada said Applebaum had told one of its reporters he would speak to the media on Tuesday.

Montreal, with 1.7 million people, is one of Canada’s most picturesque cities. But political scandals, crumbling infrastructure and rowdy student strikes last year sullied its reputation as a peaceful and mildly exotic vacation destination.

The charges against Applebaum cover the period from 2006 to 2011, when he was mayor in Montreal’s Côte-des-Neiges-Notre-Dame-de-Grâce borough.

The mayor of Laval, another Montreal suburb, resigned in 2012, but denied allegations of corruption. Gilles Vaillancourt was arrested last month and charged with gangsterism, fraud and corruption. Laval has since been placed under trusteeship.

The scandals reflect a decision by the anti-corruption squad and the special inquiry to focus on municipal politics, Pierre Martin, a political scientist at the University of Montreal, told Reuters.

“It would be unfair to say these kinds of situations are unique to (Quebec),” he said. “A lot of what we see now has to do with the fact Quebecers are taking the matter in their hands and investigating and trying to lance the boil.”

Other Canadian mayors in trouble include Joe Fontana in London, a city between Toronto and Detroit. He was charged last November with fraud, breach of trust and issuing forged documents. He denied wrongdoing and refused to quit as mayor.

Toronto mayor Ford, a larger-than-life figure who has polarized opinion in the city, was previously found guilty of conflict of interest, but an appeals court reversed a lower court ruling that he step down because of this.

The alleged video has done little to hurt Ford’s popularity, especially in the Toronto suburbs, where his promise to rein in municipal spending is widely supported. (With additional reporting by Peter N. Henderson in Toronto; Editing by Janet Guttsman and Claudia Parsons)

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