Winnipeg Free Press - PRINT EDITION

Is it time for the province to intervene?

Matter just doesn't pass the smell test; Selinger needs to step up as promised

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It's important for Mayor Sam Katz, among others, that the city hall scandal be viewed as incompetence rather than corruption.

BORIS MINKEVICH / WINNIPEG FREE PRESS Enlarge Image

It's important for Mayor Sam Katz, among others, that the city hall scandal be viewed as incompetence rather than corruption. Photo Store

Could Premier Greg Selinger be getting ready to intervene in the scandals plaguing Winnipeg city hall?

Just over one year ago, Selinger was asked whether the province would ever step in to uncover the truth surrounding the awarding of contracts to design and build four new fire-paramedic stations. At that time, council had only just voted to conduct two audits: one related to the contracts for the fire-paramedic stations and another to look more broadly at city real estate transactions.

The premier was cautious when asked if there was a role for the province in getting to the bottom of the questionable real estate transactions. The city is a creation of provincial legislation, and if there is evidence it cannot objectively investigate or remedy corruption or incompetence, then the province is obligated to act.

Selinger said, quite rightly, the province must not meddle in "every little issue" at city hall. To do so would severely impair the capacity of municipal government. Further, he correctly noted the city has within its powers the tools needed to deal with this scandal.

However, Selinger also agreed the allegations that had been levelled to that point -- concerns a single real estate developer had been given preferential treatment in multimillion-dollar transactions -- were concerning. And that if the city was not addressing these concerns in a legitimate fashion, there would be a role for the province.

"At a future date, if (the audit results) don't pass the public smell test... then of course the minister of local government can review that," Selinger said.

Neither Selinger nor any of his ministers were available Tuesday as they were on a cabinet retreat. However, now that the first audit is public, it's clear the smell surrounding city real estate transactions has not diminished. It has, in fact, got more pungent.

The audit, conducted by consulting firm Ernst & Young, found a single request for proposals to design and build four fire-paramedic stations was broken into four smaller chunks to avoid the need for council approval. And the contracts were awarded without competition to a single bidder, Shindico Realty.

The audit also found former chief administrative officer Phil Sheegl was directly involved in the awarding of contracts to Shindico.

That's pretty damning stuff. You might ask, with revelations like this, why would the province still need to get involved? In large part, because this process is being manipulated to allow those most responsible to skate away unscathed.

Mayor Sam Katz, in particular, is running around city hall with a large bucket of whitewash, trying desperately to paint the real estate scandal as the unfortunate result of incompetence rather than corruption. In this, he has been aided by the audit consultants.

Remarkably, E&Y determined none of the skulduggery it uncovered reached the level of criminality, or breached the city's ethical code of conduct. Rather, E&Y said this was a case of "mismanagement." Criminality is always difficult to prove. However, the claim there were no ethical transgressions simply does not pass, in the premier's words, the smell test.

It is very important to Katz in particular this scandal be seen as general bureaucratic bungling rather than a specific act of corruption. Otherwise, Katz would have to face disturbing questions about his long and storied relationship with Shindico principals Sandy and Robert Shindleman, and his own knowledge of the fire-paramedic station contracts. E&Y did not interview Katz for the audit, giving him a direct interest in making sure no further questions are asked.

The process was manipulated further when Katz willingly helped his longtime friend Sheegl engineer a conveniently timed exit from city hall just days before the audit was released.

Sheegl resigned suddenly last Thursday. Katz and the executive policy committee convened the same day to approve a severance agreement believed to pay Sheegl more than $240,000.

Katz presumably knew allowing Sheegl to leave the city prior to the audit would eliminate all possibility he would be questioned by angry councillors or the media about why he broke rules to help Shindico win those contracts. This process was designed to contain further digging and avoid awkward questions. This is manipulation in a pure and sophisticated form.

Sheegl's convenient, highly orchestrated departure, the illogical conclusions of the auditors and the direct hand of the mayor in trying to depict this as a case of incompetence and not corruption, should concern Selinger. So much so the premier should, as he promised he would, put the entire matter to the much-vaunted smell test.

Selinger may still find events at city hall have not reached the stage where provincial intervention is warranted.

But then, he will have to explain why he continues to stand on the sidelines with such a stench hanging in the air.

dan.lett@freepress.mb.ca

Republished from the Winnipeg Free Press print edition October 23, 2013 A5

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