City of Winnipeg hasn’t collected any money it’s owed in police-HQ settlement, puts $28M mortage on properties

Posted on November 5, 2024 by Peggy

The City of Winnipeg has collected zero dollars of the millions it’s owed as a result of civil litigation against the contractor of the Winnipeg Police Service headquarters and the former city chief administrative officer who was found to have accepted a bribe from the builder.

The city quietly placed a $28-million mortgage on at least five properties associated with police headquarters contractor Caspian Construction this past April.

The move came one year after city council voted to settle with the so-called Caspian defendants over lawsuits alleging fraud, secret commissions and construction deficiencies in the procurement and building of the headquarters downtown on Graham Avenue.

The city has not seen a penny of the $21.5-million — and growing — settlement it entered into with Caspian, company principal Armik Babakhanians, his wife and son, and several associated companies.

“We have property now that’s secured as to ensure we are paid back the monies owed,” Coun. Jeff Browaty, who chairs the city’s finance committee, said on Friday.

The amount owing increases as time goes on. Caspian has already missed the first deadline to pay $21.5 million, which means it owes $22.5 million if it pays by March 2025, $23.5 million if payment is made the following year, and $28 million if full payment is not made by March 2026.

Image one-storey building with Caspian sign. — Caspian’s former office on McGillivray Boulevard is one of at least five properties the city has secured with a $28-million mortgage. (Trevor Brine/CBC)

Browaty said appraisers have been sent out to estimate the value of Caspian’s assets.

“If they were to default,” Browaty said, “certain properties were guaranteed to the city if they should not pay.”

According to property records, the city has placed the $28-million mortgage on at least five Caspian-associated properties, including:

611 Academy Rd., which is assessed at $4.8 million.
621 Academy Rd., which is assessed at $3.5 million.
2245 McGillivray Blvd., which is assessed at $1.8 million.
2233 McGillivray Blvd., which is assessed at $5 million.
1225 Plessis Rd., which is assessed at $3.9 million.

Other properties may have been secured by the city, but when asked for a list, city spokesperson David Driedger told CBC News he’s not able to share any more details.�

“The city continues to take steps to ensure that both the court-awarded damages as well as the terms of settlement approved by council are completed,” Driedger wrote in an email.

Photo of a window with signs that read Caspian and Jags Development Ltd. — The City of Winnipeg registered a mortgage on 611 Academy Rd., one of several properties it has secured to make sure it recoups a multimillion-dollar settlement payment from Caspian, the contractor on the police headquarters project. (Trevor Brine/CBC)

No payment from Sheegl

Driedger said the city has not received payment from former CAO Phil Sheegl, either.

Sheegl was initially named in the city’s case against Caspian, but he fought and won the right to have his case heard separately.

He faced allegations that he received a secret commission.

Manitoba Court of King’s Bench Chief Justice Glenn Joyal found that Sheegl accepted a $327,000 bribe from Armik Babakhanians.

It’s an “irrebuttable presumption” that Babakhanians intended to influence Sheegl by the payment, and Sheegl was influenced by that payment and the city suffered damage, Joyal wrote in his March 2022 decision.

Brown brick two-storey building featuring an atrium-style lobby. — This building on McGillivray Boulevard, assessed at $5 million, is one of at least five properties the city has secured in the event Caspian does not pay a multimillion-dollar settlement in connection with lawsuits related to the police headquarters project. (Trevor Brine/CBC)

Joyal ordered Sheegl and his companies to pay back the bribe, his $250,000 severance package from the city, plus court costs, damages and interest, for a total of about $1.1 million.

The lawyers representing the Caspian defendants and Sheegl did not immediately respond to CBC’s requests for comment.