A Manitoba judge has ruled in favour of the City of Winnipeg that a former high-level employee conspired with builders to manipulate procurement, drive up costs and get rid of undesirable contractors for the city’s downtown police headquarters project.
In his judgment on the civil case, Manitoba Court of Queen’s Bench Chief Justice Glenn Joyal noted that extensive records show Phil Sheegl, Winnipeg’s former chief administrative officer, worked to extend deadlines, lower bonding requirements, leak confidential information and sever a design contract to benefit Caspian Construction.
Caspian was awarded the contract. The $214-million purchase-and-renovation project ended up $79 million over budget and was completed in 2016.
For his assistance, it was alleged by the city that Sheegl was paid more than $327,000 from Caspian owner Armik Babakhanians. Sheegl claims this was for a real estate deal in Arizona, an explanation the judge swept aside.
He said believing this “requires suspension of reasonable belief, not to mention an acceptance of a line of reasoning that only the most naïve could endorse or accept.”
Joyal noted the sum was well above what the deal should have been worth and the parties went to great lengths to ensure the supposed real estate deal was done secretly with no paper trail.
“Sheegl’s conduct in the present case is deserving of the court’s denunciation and sanction,” wrote Joyal. “No less important and deserving of sanction were Sheegl’s continuing attempts to cover his wrongdoing.”
He added the entire Arizona land deal was a “concocted story” made up by Sheegl just after the RCMP uncovered the bribe.
“As part of the city’s submission for punitive costs, it underscores that this is a case about the acceptance of a bribe by a high-ranking city official, from a person with whom the city was then negotiating a multimillion-dollar contract,” wrote the judge. “The city insists that if such a breach of fiduciary, contractual and moral duty is not worth of this court’s sanction then nothing is so worthy. I agree.”
Documents in the case allege Sheegl took bribes to manipulate who was put in charge of the project, terminate a contract with AECOM, increase the project’s budget, steer the project towards using a guaranteed maximum price contract without competitive bids and ensure Caspian was awarded the contract.
Winnipeg asked the courts for $700,000 in damages. This included the repayment of the $327,200, $250,000 in severance paid to Sheegl and a further $100,000 in punitive and legal costs.
The court agreed with the city on the severance, punitive and legal costs and said Sheegl is not allowed to keep the bribe, but more work will be done in the courts to determine how that money will be distributed.
Sheegl’s attorney, Robert Tapper, declined to comment on the result.
The Sheegl case is separate from another civil case that is proceeding against Babakhanians and nearly two dozen other defendants.
Following the court’s decision, Winnipeg Mayor Brian Bowman told reporters the case is one of the biggest scandals in the city’s history and called on Premier Brian Pallister to conduct a provincial inquiry.
The civil case was filed after a massive, five-year RCMP investigation into Caspian Construction ended with no charges in 2019.
At the time, Manitoba Justice stated there was not enough evidence for anyone to face serious allegations including fraud, forgery and money laundering relating to the building of the Winnipeg Police Service headquarters and a Canada Post processing plant.
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