Ex-Winnipeg CAO accepted bribe, could be on hook for $700K, court rules

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This article was published 15/03/2022 (972 days ago), so information in it may no longer be current.

Former City of Winnipeg CAO Phil Sheegl could be on the hook for more than $700,000 in damages and restitution after a judge agreed with the city’s claim he accepted a bribe tied to construction of the Winnipeg Police Service headquarters.

“The city has persuaded me… that the elements of bribery have been satisfied,” Queen’s Bench Chief Justice Glenn Joyal said in a 126-page ruling released Tuesday.

In a lawsuit filed in January 2020, the city alleges contractor Caspian Construction, “in concert” with two dozen other defendants, including Sheegl, conspired and “schemed” to inflate the cost of the project for their own benefit. The city filed its lawsuit after a five-year RCMP investigation ended with no charges.

The case against Sheegl was severed from that of the other defendants in 2020 after his lawyer, Robert Tapper, argued the allegations against Sheegl are separate from the allegations that form the substance of the city’s lawsuit.

Joyal agreed to the city’s request for a summary judgment in the amount of $327,000 — equal to the bribe he is alleged to have accepted from Caspian president Armik Babakhanians — another $250,000 equal to the severance package he received from the city and $100,000 in punitive damages ($50,000 less than requested by the city). Joyal also awarded the city “reasonable” court costs to be determined later.

The city alleged in July 2011, shortly after Sheegl awarded the contract to Caspian, the company paid $200,000 to co-defendant Mountain Construction (also owned by Babakhanians), which then paid the same amount to Sheegl’s company, Financial Support Services Inc. A year later, Babakhanians paid Sheegl another $127,000.

Sheegl claimed it wasn’t a bribe, but payment for a real estate deal to purchase an acre of land Sheegl and then-Winnipeg mayor Sam Katz owned in Tartesso, Ariz.

The deal was never disclosed to the city and there was no evidence provided to court to substantiate it, Joyal said.

It “was incumbent on Sheegl to disclose to the city in a prompt and full way pursuant to the (city’s) code of conduct,” Joyal said. “Put simply, this was a breach of trust and a breach of loyalty.

“Were I to find that Sheegl’s undisclosed receipt of the $327,000 payment from Armik… did not constitute a breach of fiduciary duty, I would in my view be sending a preposterous message,” Joyal said. “That message would be nothing short of suggesting that high-ranking public officials can do business in secret with persons seeking contracts from the very public bodies for whom they work. Neither the law or common sense support or justify such a dubious conclusion or message.”

Joyal said Sheegl cannot be allowed to keep the $327,000 paid to him as a bribe, but further submissions to the court will be necessary to determine where the money should go.

dean.pritchard@freepress.mb.ca

Dean Pritchard
Courts reporter

Someone once said a journalist is just a reporter in a good suit. Dean Pritchard doesn’t own a good suit. But he knows a good lawsuit.

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