Bowman seeks public inquiry in wake of allegations of kickbacks to Sheegl, Katz

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This article was published 25/01/2017 (2845 days ago), so information in it may no longer be current.

City hall will ask the province to conduct a public inquiry following the revelation of RCMP allegations that kickbacks were made to former mayor Sam Katz and his long-time friend and the city’s former CAO Phil Sheegl, stemming from the awarding of the contract for the Smith Street police headquarters project.

Mayor Brian Bowman told reporters Thursday he’ll bring a motion to council at the February meeting asking the province for the inquiry, explaining it’s necessary to resolve outstanding questions surrounding the RCMP allegations and to restore the public trust in city hall.

“The new RCMP allegations that we’re just learning today are the most seriously damaging to public trust at city hall to date,” Bowman said during a news conference outside his office. “I am deeply disturbed, distressed and angered by the allegations and I think all Winnipeggers should be… The public needs to know we’re taking this seriously. The public needs to know that we’re doing everything we can to restore trust and faith in city hall.”

Justice Minister and Attorney General Heather Stefanson said in a statement: “While our government understands the concerns raised by the mayor of Winnipeg, it would be premature for the Attorney General of Manitoba to comment on an issue that remains under active criminal investigation. This is vital to ensure the integrity of the process.”

RCMP alleged in affidavits filed with the court last June that they believe Caspian Construction owner Armik Babakhanians paid a secret commission of $200,000 to Sheegl. The RCMP allege that Sheegl then split that $200,000 with Katz, giving him $100,000.

Katz and Sheegl could not be reached for comment. Their lawyer, Robert Tapper, said he was not available to respond but he had told the CBC the allegations are unfounded and the result of sloppy work by the RCMP.

Tapper told the CBC that Babakhanians had given funds to Sheegl and that Katz had received a share of it but said the payments were part of a real estate deal between the three men in the spring of 2011. Tapper told the CBC the payment to Sheegl was a downpayment on a 25 per cent interest Babakhanians had acquired in an Arizona property owned by Sheegl and Katz.

Tapper said the spring 2011 deal between the three men had been done on a handshake that wasn’t formalized in writing until a year later.

CAO Doug McNeil said, if the allegations prove true, city officials will examine how to recoup the severance paid to Sheegl when he left city hall.

Katz, a former concert promoter and owner of the Winnipeg Goldeyes, was first elected mayor in a byelection in 2004. He held office for 10 years before deciding not to run in the 2014 election, which Bowman won.

Sheegl became the city’s CAO in May 2011, having first been hired in April 2008 to run the planning department. He resigned from the city in October 2013, following additional cost overruns at the police headquarters project.

Bowman’s announcement that he will be asking for a public inquiry followed a chorus of similar calls from councillors earlier in the day.

“How deep does it go and who else is involved and who knows more?” asked Coun. Janice Lukes, who said the RCMP allegations are “shocking.”

Lukes (South Winnipeg-St. Norbert) said only a public inquiry can determine what other projects might have involved wrongdoing in a similar fashion.

Coun. Shawn Dobson said while he knows the allegations haven’t been proven in court, the fact the RCMP made them gives them a ring of authenticity that cannot be ignored.

“We have to change the system so, if it’s true, it can’t happen again,” Dobson (St. Charles) said, adding he, too, believes a public inquiry is necessary.

Bowman said the exact wording of the request for an inquiry still needs to be determined, adding he’ll be consulting with councillors and the city’s legal department to set out the scope and terms of the inquiry.

Bowman said that while he has confidence in the Winnipeg Police Service, he said the inquiry could be asked to examine why the WPS had not launched its own criminal investigation when witnesses approached it with similar allegations, and explain why the WPS did not turn the case over to the RCMP. 

Coun. John Orlikow, who along with Coun. Russ Wyatt — both members of the previous council — had moved a motion in July of 2014 asking for council to have the province call for a criminal investigation into the police headquarters project, said an inquiry is the necessary next step to remove the questions that hang over city hall.

Orlikow (River Heights-Fort Garry) said the allegations are “disturbing and upsetting…. As a city, we need to move this forward. There are a lot of unanswered questions that the public deserves a right to know what they are.”

Coun. Ross Eadie (Mynarksi) said he’s not surprised by the police allegations, adding there were public suspicions surrounding many of the activities at city hall.

“I am very concerned about the latest allegations and look forward to the RCMP completing their investigation,” said Coun. Jeff Browaty. “If at the conclusion of their investigation it’s found there was any wrong-doing, I want to see those involved brought to justice and the City and taxpayers made whole.”

Browaty (North Kildonan) said he’s open to considering a public inquiry at the end of the police investigation if questions remain surrounding the police project or other projects.

Coun. Marty Morantz, chairman of council’s public works committee, said he was upset with the reported allegations.

“If these allegations are proved in court to be true, I’m deeply troubled,” said Morantz, who was elected to council in 2014 and did not serve with Katz.

Coun. Jenny Gerbasi, who was first elected to city hall in 1998 and is currently the longest serving member of council, said while the police must be allowed to complete their investigation, the outcome may prompt the need for a public inquiry.

“I’m hoping for the RCMP investigation to be concluded speedily and see people held accountable for any wrongdoing that is proven,” Gerbasi (Fort Rouge-East Fort Garry) said, adding it was the former council that called on the province to initiate the current criminal investigation. “While this has been painfully slow and frustrating, the authorities must be allowed to complete their work.”

While the RCMP has been investigating allegations of wrongdoing surrounding the police headquarters project for two years, no charges have yet been laid. Affidavits filed in court by the RCMP previously have alleged that Babakhanians had offered a bribe to another city official and that Caspian had inflated invoices from subcontractors working on the police headquarters project.

The RCMP made the allegations in a June 2016 court application to obtain access to financial records connected to two bank accounts belonging to Sheegl and a third bank account connected to Katz.

RCMP alleged Babakhanians transferred $200,000 through a Caspian-controlled company to another company controlled by Sheegl on July 22, 2011, two days after city council gave Sheegl the authority to award contracts for the police project on his own.

aldo.santin@freepress.mb.ca

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