The City of Winnipeg has submitted new evidence in its lawsuit against its former chief administrative officer, consisting of dozens of previously undisclosed email exchanges that document frequent communication between Phil Sheegl and Caspian Construction president Armik Babakhanians.
The emails include invitations to weekend meetings and discussions about box seats for Winnipeg Jets hockey games, and the revelation that the contractor responsible for the downtown Winnipeg Police Service headquarters project paid for a deck built at Sheegl’s home.
The city launched the civil lawsuit in January 2020, alleging the former top city bureaucrat accepted a bribe in 2011, shortly after he was granted authority to award Caspian Construction the contract to build the $214-million police headquarters.
In April 2020, the city was granted access to thousands of documents seized by the RCMP during a 2014 raid of Caspian’s office, as part of a police investigation into the construction of the police HQ.
The city is now seeking more than $627,200 from Sheegl plus interest and legal costs.
“The evidence is overwhelming in support of the city’s claim against Phil Sheegl … for bribery,” City of Winnipeg lawyer Michael G. Finlayson wrote in a brief to Manitoba Court of Queen’s Bench last month.
In a May 2021 affidavit to the court, Sheegl said he and Babakhanians were acquaintances because they are both members of Glendale Golf and Country Club. The former CAO described his role overseeing the Winnipeg police headquarters project as being from “a distance of 50,000 feet.”
The city says the emails tell a different story, however, revealing Sheegl and Babakhanians discussed details big and small during the tendering and construction of the new police headquarters.
In an Aug. 11 brief to the court, the city says Sheegl fabricated a story about selling interest in Arizona land to Babakhanians, after 2017 media reports that Sheegl and former Winnipeg mayor Sam Katz had accepted “secret payments” totalling $327,200.
“Having told the story, he must now stick to it. And so he does,” Finlayson wrote in the brief.
In court filings, Sheegl has denied the bribery and conflict of interest accusations. He says he simply signed off on recommendations made by bureaucrats working under him during the police HQ project.
“At no time did Mr. Babakhanians offer me a bribe, or did I accept a bribe from Mr. Babakhanians as alleged by the City of Winnipeg,” Sheegl wrote in a May 31 affidavit to the court.
In fact, Sheegl says his company Winnix Properties Corporation is “contractually obligated to pay” Babakhanians when and if a parcel of land in Arizona is sold.
In 2005, Sheegl and Katz purchased an interest in a 24-acre (roughly 10 hectare) piece of vacant land in a master planned community called Tartesso, located in Buckeye, Ariz. They paid $188,000 US for their share of the deal through Winnix Properties Corporation, according to a city affidavit.
Sheegl says in 2011, they sold 25 per cent of their interest in that land to Babakhanians for $327,000 US, which Sheegl’s May 31 affidavit says Winnix is obliged to repay “upon the sale of Tartesso.”
In 2011, a Babakhanians-owned company gave Sheegl a $200,000 payment, which he split with Katz. A year later, Katz received a cheque for $127,000 US, which he shared with Sheegl.
While Sheegl admits he didn’t tell the city about the payment, he says it was no secret he had business dealings in Arizona.
In court documents filed in May, the city calls Katz — who is not named in the lawsuit — one of Sheegl’s “co-conspirators.”
“Sheegl actually appeared to be saying that because one of his co-conspirators, fellow bribee Katz, was aware of the July 2011 $200,000 payment, he had satisfied his disclosure obligation,” reads the brief filed in support of an application for summary judgment in Manitoba’s Court of Queen’s Bench last month.
Contractor made numerous requests, emails show
The RCMP investigation into the police HQ construction project concluded in December 2019, after five years. No charges were laid.
During the course of the police probe, the Mounties got court orders to search emails, text messages and bank accounts belonging to Babakhanians, Sheegl and Katz.
The city says it received a 10-terabyte hard drive from the RCMP containing a copy of the thousands of documents seized by the Mounties, which the city searched for references to Sheegl. CBC News reviewed more than 2,500 pages of documents, including emails sent by or to Sheegl, some of which date back to 2010.
The email exchanges appear to show Babakhanians calling the shots and Sheegl responding to numerous requests from the contractor, including extending the bid submission deadline, lowering the bonding requirements for the project, and terminating people and companies involved in the police HQ project that Babakhanians complained about.
In numerous emails, Babakhanians complained to Sheegl about the engineering firm AECOM, and eventually said he wouldn’t work with them. He suggested the city instead hire Peter Chang, with the Ottawa structural engineering firm Adjeleian Allen Rubeli, and Patrick Dubuc of the Ottawa firm GRC Architects.
Chang and Dubuc were eventually hired and are now co-defendants in the city’s separate suit against Caspian.
In his court filings, Sheegl said AECOM’s termination was a decision made by the project team and steering committee “based on a multitude of reasons.”
In another 2011 email, Babakhanians complained to Sheegl that John Garcea, the principal for the Manitoba company S&J Construction, failed to get security clearance to work on the police gun range, which was part of the HQ project.
In another message, Babakhanians and his son said Garcea was looking for a way in, but they later appeared concerned that if they asked Sheegl to intervene people would get suspicious of their relationship.
“It will be way too easy for somebody to start drawing lines BW Sheegl, Garcea and Caspian,” Armik’s son, Shaun Babakhanians, wrote in an email submitted to the court by the city.
It’s not clear from the emails submitted by the city if Babakhanians asked Sheegl to intervene on Garcea’s behalf.
“Garcea has a personal relationship with Babakhanians,” an RCMP officer wrote in a 2015 court affidavit.
The affidavit opposed a CBC News application for access to the information police provided the courts for approval to search Caspian.
“Garcea has been previously accused of uttering threats, in a RCMP file from 2014,” the officer wrote. “Witness information in that file indicates Garcea has previously threatened clients and competitors.”
RCMP expressed concerns for the safety of two witnesses in particular if the information became public.
No charge of uttering threats has ever been laid against Garcea.
Sheegl also shared confidential information with Babakhanians, according to the court documents.
In an email before the results of the bidding were made public, Sheegl told Babakhanians’s son the names of the companies Caspian was bidding against.
Sheegl said in May court filings he didn’t have the authority to award contracts, and that the city had a process that it followed.
He’s asking the court to award him a summary judgment to dismiss the claim against him.
In an Aug. 31 brief to the court, Sheegl’s lawyer said the RCMP concluded their investigation without laying charges because they could not say for certain the payments were not part of a real estate transaction.
“Counsel for the city, on the other hand, feels he is more qualified to make those allegations,” wrote Robert Tapper, Sheegl’s lawyer.
Deck built at Sheegl’s home
In May 2013, Babakhanians vented to Sheegl, warning that due to increasing construction costs, a budget increase would be required.
Babakhanians said the project cost would be approximately $168 million and there would be a budget shortfall of approximately $6 million, according to the city’s affidavit.
In June 2013, Babakhanians sent an email to Sheegl with the subject line “Your deck,” saying “it’s schedule[d] … for June 13th.”
The deck builder provided a Caspian employee with an invoice. After Sheegl emailed to say he was satisfied with the work, Babkhanians replied, “Good I will have him paid in full.”
In a court affidavit filed on July 16, Sheegl said he engaged a company linked to Babakhanians to find a subtrade to install a deck at his personal residence, and that he paid back the payment for the deck.
As proof, Sheegl produced a copy of a cheque for $8,534.41, dated Oct. 15, 2017 — more than four years after the deck installation was completed and following media reports on the bribery allegations, according to court documents.
“The publicity regarding the previous payments and the RCMP seizure suggested to Sheegl that it would be prudent to reimburse [the Caspian-linked company],” reads the city’s brief.
New conflict of interest allegation
In an affidavit, current City of Winnipeg CAO Michael Jack said the city didn’t know that Richard Akman, the owner of Akman Construction, was a co-investor with Sheegl and Katz in the Arizona land deal.
Akman Construction and Caspian were awarded Phase 1 of the police HQ construction project in February 2011.
The joint venture was dissolved shortly after the award.
Sheegl says he met Babakhanians at Winnipeg’s Glendale Golf and Country Club, where he has been a member since 1986.
“In my experience, membership at Glendale is also used for business networking,” Sheegl wrote in his May 31 affidavit.
He says in the fall of 2010, Babakhanians asked specifically about his real estate dealings in Arizona, and that he and Katz agreed to let Babakhanians purchase an interest in their Tartesso share.
Sheegl said they made a handshake deal in June or July 2011, then later put it in writing.
Sheegl says when he was hired by the city in 2008 as director of the property and planning department, he was upfront about his real estate investments in Canada and Arizona and was clear he didn’t intend to stop.
He says when he was later interviewed for the role as CAO, he talked about his real estate investments, which didn’t appear to be a problem for the selection committee.
“At no time was any concern raised surrounding my personal business activities, or was it suggested that the continuation of my involvement in these real estate investment projects would be a conflict of interest,” wrote Sheegl in the May 31 affidavit.
Jets box seats
In February 2011, Babakhanians sent an email to himself.
“Phil said he will get approval for 126m. However I think he wanted 2+2 for sam and phil but the rest for us,” he wrote. “This will remain confidential for ever.”
When asked about that under oath by the city’s lawyer, Sheegl claimed he didn’t recall ever telling Babakhanians that he would get approval for $126 million, according to the city’s motion for summary judgment filed in May.
As for the reference to “2+2 for sam and phil but the rest for us”, Sheegl claimed “that this was in regards to Jets tickets,” the court documents say.
Sheegl went on to say that meant “that Sam and I each had four season tickets” to the NHL team’s home games, the court documents say.
“We were lucky enough to secure them when the Jets moved back, and Sam had access to a luxury suite that Armik wanted access to. So I agreed to give up two of my seats, and Sam agreed to give two of his seats. In the end, I kept all four of my seats, and Sam and Armik made their own arrangements.”
The city says that email conversation happened in February 2011 — months before it was made public the Jets were coming back to Winnipeg. Tickets were not sold until June 1, 2011.
The city also included email excerpts showing Sheegl and Babakhanians discussed sharing a box after it was eventually revealed True North Sports and Entertainment had purchased the Atlanta Thrashers — the team that would become the Jets — on May 31, 2011.
EPC asked for Sheegl’s ‘immediate termination’
By October 2013, members of city council’s executive policy committee asked for the “immediate termination” of Sheegl on the grounds they had “lost confidence in the CAO’s ability to manage the affairs of the City of Winnipeg.”
Sheegl later threatened to sue the city for damages and was given a $250,000 severance package.
Tapper says while Sheegl “perhaps committed an error of judgment in entering into the transactions with Armik Babakhanians … there is a stretch between that and a breach of fiduciary duty.”
CBC News reached out to Babakhanians, who had no comment on this story. CBC also reached out to Garcea for comment but didn’t hear back.
Tapper had no comment on behalf of Sheegl, Katz or Akman.
It’s not clear when the judge will make a decision on the applications for summary judgment.
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