Court files detail link between former city CAO and police HQ builder

Hey there, time traveller!
This article was published 15/09/2021 (1154 days ago), so information in it may no longer be current.

Recently filed court documents paint a picture of an increasingly cosy relationship between ousted former city CAO Phil Sheegl and Caspian Construction owner Armik Babakhanians, the man accused of bribing Sheegl to secure the construction contract for the new Winnipeg Police Service headquarters.

“The evidence is overwhelming in support of the city’s claim against Phil Sheegl for bribery,” said lawyer Michael Finlayson in a motion brief filed on behalf of the city last month.

At a hearing last week, Finlayson urged Queen’s Bench Chief Justice Glenn Joyal to order a judgment against Sheegl for $327,000 — equal to the bribe he is alleged to have accepted — another $250,000 equal to the severance package he received from the city, and $150,000 in punitive damages. Joyal has reserved his decision.

In its motion brief filed in August, the city alleges that from December 2010 to October 2013, Sheegl repeatedly used his influence to steer the construction project into Caspian’s hands — reducing the bonding requirement at Babakhanians’ request, obtaining a deadline extension for project bids, hiring a project director favoured by Caspian, and “sidelining” the city’s project manager.

Sheegl, the city alleges, sent confidential emails to Caspian, met only with Caspian representatives and no other bidders to the project.

In September 2010, Babakhanians arranged a meeting for the following month with Sheegl and then-mayor Sam Katz “to discuss a possible business arrangement,” the city alleges.

On Nov. 18, the city issued a request for proposal (RFP) for Phase 1 of the construction project. That same day, the city alleges, Sheegl directed his assistant to forward the RFP to Babakhanians.

After another meeting was arranged for Sheegl and Babakhanians in December, Babakhanians sent an email to his son Shaun and other Caspian reps telling them to “have the place ready and welcome him… (Sheegl) could be Caspian friend for long time to come.”

In a Dec. 16 message related to the bonding requirements, Sheegl told Babakhanians he was about to send him a confidential email, saying: “it’s part of my strategy to get this done for you.”

On Feb. 17, 2011, Babakhanians sent an email to himself appearing to summarize a phone call with Sheegl, writing: “Phil said he will get approval for 126m. However, I think he wanted 2 + 2 for Sam and Phil but the rest for us… This will remain confidential forever.”

During an examination for discovery, Sheegl told court he could not recall telling Babakhanians he would get approval for $126 million, and claimed “2 + 2” was in reference to an arrangement for Winnipeg Jets tickets.

“This suggestion… was at best confabulation,” the city said in its motion brief, pointing out the announcements of the Jets’ return to Winnipeg was not made public until May 31, 2011.

“As to why the supposed arrangement for Jets tickets would need to ‘remain confidential forever,’ or why the arrangement would be sandwiched between discussions relating to the (construction project), Sheegl could offer no explanation,” the motion brief said.

In July 2011, Caspian issued a cheque for $200,000 to another one of its companies, Mountain Construction, which in turn issued a cheque for the same amount to Sheegl’s company, Financial Support Services Inc., for “consultant services.” A week later, Financial Support Services cut a cheque to Katz with the memo line: “loan.”

Sheegl, in an affidavit, said the $200,000 — and another $127,000 payment a year later — was not a bribe, but payment for one acre of land Sheegl and Katz owned as part of an Arizona real estate development.

“The problem for Sheegl is that even if there were a (non-fiction, bona fide) real estate transaction of the type asserted, Sheegl’s conduct in connection with it necessarily means that he breached his duties of trust, good faith and loyalty to the city and that he acted in a way wherein his interests and those of the city directly conflicted,” says the city motion brief. “The measure and type of damages for these breaches are the same as they are for bribery.”

In a May 30, 2013 email with the subject line “Your Deck,” Babakhanians told Sheegl: “It’s scheduled for June 13.” On June 19, the deck builder sent an invoice to Babakhanians, who responded that he would ask the client if they were satisfied with the installation.

Sheegl replied in an email: “They did a good job, it looks fabulous.” Babakhanians told Sheegl: “Good. I will have him paid in full.”

The city filed a lawsuit last year alleging Caspian, “in concert” with two dozen other defendants, including Sheegl, conspired and “schemed” to inflate the cost of the HQ project for their own benefit. The case against Sheegl was severed from that of the other defendants.

dean.pritchard@freepress.com