Former Winnipeg mayor Sam Katz expressed deep disappointment and offense during testimony at a public inquiry into the police headquarters project that occurred under his administration.
Testimony on Controversial Payments
Katz, who served as mayor from 2004 to 2014, addressed payments received by the city’s former chief administrative officer (CAO), Phil Sheegl, and later shared with him. He rejected characterizations of these transactions as a bribe.
“I take great offence. To me, the key thing in life is your reputation and your credibility,” Katz stated during questioning by his lawyer, Danny Gunn.
The inquiry examines the renovation of a former downtown Canada Post facility into a new Winnipeg Police Service headquarters, which faced significant delays, cost overruns, audits, an RCMP investigation with no charges, and multiple lawsuits.
Court Rulings on the Land Deal
A 2022 Manitoba Court of King’s Bench decision by Chief Justice Glenn Joyal determined that Sheegl accepted a $327,200 bribe in 2011 from Armik Babakhanians of Caspian Construction, the project’s contractor. The ruling described a land deal in Tartesso, Arizona, involving Sheegl, Babakhanians, and Katz as a “concocted story” fabricated in 2017 after the RCMP uncovered the payment.
The following year, Manitoba Court of Appeal Justice Christopher Mainella noted that Sheegl achieved nearly a 700 percent return on his Tartesso investment in under seven years, despite a market crash in 2007-2008. As a trustee, Sheegl failed to inform all beneficiaries in the Winnipeg consortium and shared profits only with Katz.
Details of the 2011 Transactions
A Sheegl-controlled company received $200,000 from a Babakhanians-controlled company on July 22, 2011—two days after city council authorized Sheegl to award the construction contract. Sheegl’s company then paid Katz $100,000.
These details emerged from RCMP affidavits in 2016 and civil court documents. Katz insisted the arrangement was a legitimate sale of property interest, expressing offense at any suggestion otherwise.
During cross-examination by City of Winnipeg lawyer Michael Finlayson, Katz admitted he never instructed Sheegl to disclose the payment from Babakhanians, noting it did not occur to him at the time.
Katz Defends Decisions and Relationship
Katz described Sheegl as a former friend but stated their relationship had drifted since his mayoral term. He praised Sheegl’s efforts: “Mr. Sheegl, in my opinion, was working very hard to get a new police headquarters built. Just like any other project.”
A $100,000 cheque to Katz, marked “loan,” was presented as an exhibit; Katz clarified it was payment for the Arizona land. He affirmed that no personal investments influenced his mayoral decisions.
Phil Sheegl’s counsel, Evan Roitenberg, highlighted that in 2013, when the executive policy committee lost faith in Sheegl and sought his removal, Katz complied despite their friendship. “Your fiduciary responsibilities to the city trumped all. Would that be fair?” Roitenberg asked. “That is accurate,” Katz replied.
Project Timeline and Inquiry Scope
City council approved the $135 million purchase and renovation in 2009. By the 2016 move-in, costs reached $214 million due to delays, change orders, and flood damage.
Sheegl has paid the city $1.15 million in damages, while Babakhanians settled separately for $500,000 toward a potential $28 million total.
The inquiry, held at the Public Utilities Board offices, will hear over 30 witnesses through June to assess the project’s issues and recommend measures to rebuild public trust in large public projects. Cross-examination of contracts expert Eleanor Andres continues Friday, with Sheegl and Babakhanians scheduled next week.
