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A tremendous story of corruption within CRA in Qubec.

The RCMP probe into alleged corruption among Canada Revenue Agency officials in Montreal has ballooned to other offices of the tax-collection agency across Quebec, sources say.

The RCMP and the Canada Revenue Agency have received new allegations that federal auditors used their privileged positions to line their pockets.

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Launched in 2008, the RCMP investigation was targeted at operations in the CRA's tax services offices in downtown Montreal under the codename Operation Coche. However, the RCMP has recently created an investigation into other CRA offices throughout Quebec under the codename Operation Critique, sources said.

The new investigation is deemed "extremely sensitive" in police circles because it probes links between federal tax auditors and major players in the private sector.

The growing scope of the police investigation is raising questions in the top echelons of the federal government about the state of the CRA, a powerful agency that collects hundreds of billions of dollars annually and is expected to operate with unimpeachable integrity.

Revenue Minister Gail Shea refused to comment on the situation. Her office released a written statement on her behalf.

"Our government appreciates that this is a very serious issue and we cannot tolerate the types of activities that are alleged," she said in the statement. "An RCMP investigation into these matters is ongoing, and CRA officials are co-operating fully."

Sources said that Operation Critique has been set up to look into allegations of irregularities outside of Montreal, fed in part by tips from CRA officials who say they engaged in or witnessed irregularities and from taxpayers. A source said that some of the cases involve allegations that CRA officials sought compensation in exchange for the favourable treatment of tax filings.

Sources have told The Globe and Mail and Radio-Canada that the RCMP has referred several files to prosecutors as part of Operation Coche. Federal prosecutors are acting on behalf of their provincial colleagues in the matter to accelerate the process, a source said.

RCMP search warrants allege that CRA officials in Montreal helped firms in Quebec's construction industry to evade taxes. In addition, some of the CRA officials targeted by Operation Coche allegedly collected kickbacks from businessmen, such as restaurant owners, in exchange for lax audits or for turning a blind eye to unreported income.

The RCMP has also alleged in search warrants that CRA officials received gifts or compensation from a construction firm, including free home renovations, trips to Las Vegas and the Bahamas, and an upscale evening at a Montreal Canadiens home game.

A former CRA official is currently in court trying to invalidate search warrants that were used in 2009 to seize documents, computers and pictures from his home. In court documents, former team leader Adriano Furgiuele says the CRA and the RCMP obtained information on suspected wrongdoing via tax audits instead of through full-blown police investigations, which is prohibited under tax laws.

No charges have been laid as part of the RCMP investigation and none of the allegations in the search warrants have been proven in court.

Two CRA auditors, including Mr. Furgiuele, were fired in 2009 after investigators alleged that they shared a bank account containing $1.7-million in the Bahamas with Francesco Bruno, owner of construction firm B.T. Céramique. At least seven other officials in the CRA's offices in Montreal have since been disciplined in relation to various files, including allegedly fraudulent research-and-development tax credits.

According to guilty pleas in a tax-evasion case last year, shell companies belonging to Mr. Bruno supplied fake invoices to construction firms operated by Antonio Accurso.

Last year, two construction companies that Mr. Accurso had administered pleaded guilty to committing $4-million in tax fraud by claiming non-deductible expenses such as the construction of a luxury yacht and jewellery purchases. Mr. Bruno has pleaded guilty to tax evasion.

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