Winnipeg Free Press - PRINT EDITION

Bungling benefited developer

Audit shows Shindico got preferential treatment

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A damning review of Winnipeg's fire-paramedic station construction project found mismanagement at city hall benefited Winnipeg developer Shindico Realty.

In a long-awaited review of the process by which new fire-paramedic stations were built in Sage Creek, River Heights, Charleswood and St. James, consulting firm Ernst & Young found Shindico was granted four contracts through a series of moves that resulted in no competitive bids for the construction contracts for any of the facilities.

The total value of the deal for Shindico, including the construction of the fire halls and the sale of its Taylor Avenue property to the city -- which has not been concluded -- is estimated at $18.6 million.

The report prompted councillors to use terms such as "troubling" and "provocative" to describe the review -- and describe what transpired as a "gong show" and "unprecedented mismanagement," among other epithets.

"The fact that one vendor, Shindico, is identified as having an advantage is beyond troubling," said council property chairman Jeff Browaty (North Kildonan). "The latest accusation made by our former fire and paramedic chief Reid Douglas that he was told before the whole process commenced that Shindico would be awarded the contracts should be further investigated."

Ernst & Young found city officials placed unjustified restrictions on the original request for proposals to construct all four fire halls, which resulted in "all contracts being eventually awarded to Shindico."

The auditors also found Shindico was given information by city officials not available to other proponents.

As well, Ernst & Young found the city owns land on Taylor Avenue suitable for the location of a fire-paramedic station, but officials decided to build a fourth station on land owned by Shindico.

These were among the litany of problems found with a program that engulfed city hall in scandal last year and appeared to contribute to the departure of former chief administrative officer Phil Sheegl and former fire-paramedic-chief Douglas.

"The review concludes the project was not well-managed," Mayor Sam Katz told reporters after executive policy committee accepted the external review, which unveiled many problems and made 14 recommendations for improvement. "This review shows corners cut and questions skipped over on many occasions."

Katz said the author of the Ernst & Young review, Steven Whitla, told councillors nothing he found indicated any criminal behaviour or violations of the city's code of conduct.

However, Coun. John Orlikow (River Heights-Fort Garry) said Katz's close friendship with Sheegl and the principals at Shindico -- brothers Sandy and Robert Shindleman -- will make it difficult for the truth to come out.

"A third party, such as the province, may need to get involved," Orlikow said.

Orlikow said Sheegl and Douglas were fired. Questions need to be answered, he said, claiming Katz and members of his executive committee are hiding behind claims of confidentiality.

"It's pretty hard for us at city hall now when you have the mayor being such a close friend with the CAO and these people involved," Orlikow said.

A spokesman for Shindico declined to comment.

The review found the project was conducted without due diligence and said Douglas did not have the expertise or resources within his department to arrange a swap of three city properties for the site of a new fire-paramedic Station No. 12, built on Taylor Avenue land the city does not own. It also found that arrangement bound the city to purchase the Taylor Avenue land, when city-owned land was available on Taylor.

It also noted Sheegl told Douglas early in 2012 to conclude the land-swap deal in an email that included the line: "Get it done."

Shindico wound up receiving four separate contracts of $3 million, $3.2 million, $3.2 million and $5.9 million. The public service has the authority to approve any contract under $10 million without council oversight.

Sheegl also said there was no need for council approval once a budget was assigned to the project in July 2010, in a report that authorized $9.7 million of low-interest borrowing from Ottawa.

"I think we followed all the procedures and policies we have," the former CAO said in 2012, when the problems with the project first emerged. "At the end of the day, this is a wonderful story. We have four new fire halls (and) our response times have improved in all those areas."

Several councillors called the audit's findings sobering.

"Particularly disturbing is the notion that processes in place to ensure openness and transparency were circumvented and we are unable to determine whether or not the City of Winnipeg received value for money for the work performed," Browaty said.

Council finance chairman Russ Wyatt (Transcona) said Sheegl was given too much authority to act as he saw fit.

"This is organized mismanagement at the highest level," Wyatt said.

Sheegl "should not have been put where he was in the first place," added Coun. Jenny Gerbasi (Fort Rouge-East Fort Garry). "The question of an inappropriate relationship between the mayor and (Sheegl) has always been a dark cloud over this council."

Republished from the Winnipeg Free Press print edition October 22, 2013 A3


Updated on Tuesday, October 22, 2013 at 6:41 AM CDT: Replaces photo, adds videos

9:53 AM: Adds blog box.

10:32 AM: Blog box moved to new story.

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