Councillor calls for CAO's dismissal over sale of business to mayor

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Mayor Sam Katz addresses the media at City Hall on Wednesday. (KEN GIGLIOTTI / WINNIPEG FREE PRESS ) Photo Store

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Winnipeg Mayor Sam Katz says he should have created his own shell company in Arizona instead of buying one from the city’s chief administrative officer.

In March, Katz bought a Scottsdale, Arizona-based company called Duddy Enterprises LLC from CAO Phil Sheegl. On Tuesday, the mayor suggested media scrutiny of the move amounted to witch hunt, in combination with other scrutiny since he was first elected mayor in 2004.

On Wednesday morning, a more contrite Katz conceded the purchase of a company from the city’s top bureaucrat and longtime friend invites negative perceptions. Katz said he should have instead spent several thousand dollars in legal fees to create his own shell company.

"Next time I incorporate a company, I will basically use a lawyer and pay the fees as opposed to saving money. That’s really the bottom line," Katz told reporters outside his office.

Katz said Duddy Enterprises LLC is dormant and has no value.

"When you’re in the world of politics, the sad statement is reality doesn’t count. As you’ve heard the expression, perception is reality and perception appears to be extremely important. So should one exercise more caution? I think the answer is a definitive yes," he said.

"My world has always been dealing in a world of reality and I will continue to deal in a world of reality. But I think what I’ve certainly learned is you also must always be cognizant of perception."

Nonetheless, Mynarski Coun. Ross Eadie called on Sheegl to resign – or face dismissal if he declines to do so.

By selling a company to the mayor, Sheegl has lowered the public estimation of city hall and promoted further cynicism about elected officials, Eadie argued.

"If you’re running a city and you’re supposed to have the skills to do so, you have to know you’re not supposed to do that," Eadie said in an interview.

"He screwed up and the mayor should fire him. This personal relationship they have is untenable."

Katz and Sheegl were friends before the latter joined the city as planning, property and development director in 2008. Six months later, Sheegl was promoted to deputy chief administrative officer.

Eadie was among five councillors who voted against hiring Sheegl as CAO in 2011, arguing the personal relationship between the two officials would compromise their professional relationship.

Land-swap review expected in 10 days

The mayor also said Wednesday morning he now expects chief financial officer Mike Ruta’s review of the city’s proposed fire-hall land swap – a controversial deal that has engulfed city hall on controversy since August – to be completed within the next 10 days.

Katz said Ruta has enlisted the city auditor’s help as well as the opinions of outside appraisers to scrutinize a plan to swap two old fire halls and a parcel of vacant land for the Taylor Avenue site of the new fire-paramedic Station No. 12, owned by Shindico Realty.

Katz also said he does not believe it made any sense for the city to build a fire-paramedic station on private land. But he said he will not judge the outcome of the review into the deal.

St. Boniface Coun. Dan Vandal has called for an external, third-party review, while Fort Rouge Coun. Jenny Gerbasi has called for a broader audit of city real-estate transactions. Several councillors have said they would vote against the land swap if it comes to council.

If such a deal is rejected, it is not clear whether the city will have any other choice but to purchase the Taylor Avenue property from Shindico and whether that purchase price will be the $990,000 valuation determined by negotiations with Winnipeg Fire Paramedic Chief Reid Douglas.