Winnipeg Free Press - PRINT EDITION

Selinger far from keen to step into Katz flap

Insists city has powers to clean up its own house

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Figuratively and physically, Premier Greg Selinger does not have to look far to see the black cloud hanging over Winnipeg's city hall. The Manitoba legislature is located precariously close to the seat of municipal power in the capital city. So close, the premier can likely smell what's cooking in Mayor Sam Katz's kitchen.

Never a stranger to controversy, Katz has been particularly hounded by recent allegations of several conflicts of interest. Whether it is his acquisition of an Arizona shell company from chief administrative officer Phil Sheegl, a longtime friend, or the acquisition of a million-dollar Phoenix home from the sister of an executive at Shindico Realty, a real estate company that does millions of dollars in business with the city, Katz has been under scrutiny.

Concerns about a deal that saw a fire and paramedic station built on land owned by Shindico finally boiled over last week, prompting council to order a detailed audit of real estate transactions. The city auditor, with outside help, is looking into the city's business with Shindico and other private real estate companies.

Selinger and the province have been passive observers of this narrative. The city is a creation of the provincial legislature and more than once, the NDP government has been asked to step in and create a system for the fair and expeditious investigation of municipal conflict-of-interest allegations. No such system exists. In fact, short of a private citizen paying the freight on a civil lawsuit, there is almost no effective way to lodge a conflict-of-interest complaint. Despite this, the province has seemed reluctant to remedy the situation.

Selinger said provincial inaction has nothing to do with a lack of interest. Instead, he firmly believes the city should solve this problem itself.

"We're trying not to jump into every little issue at city hall," Selinger said in an interview. "But the reality is, they have the tools to do what's necessary."

Is this a buck-passing exercise, or can the city devise its own solution? In large part, the answer is yes. And no.

In February 2009, council narrowly adopted a resolution demanding the province amend the Municipal Conflict of Interest Act to establish a code of conduct for elected officials and a conflict-of-interest commissioner. At the time, the motion was seen as a significant defeat for Katz, who spoke against the resolution, voted against it and then when it was passed by a 7-6 margin, complained it was all part of a witch hunt organized by the media and political opponents.

In August 2009, Local Government Minister Steve Ashton wrote a letter to Katz arguing the city had, in the powers granted it under the City of Winnipeg Charter, the authority to create an independent office of a conflict-of-interest commissioner. "Council may wish to explore this option, if this issue continues to be a priority for the city," Ashton wrote. That last comment seems ironic, even prescient given the growing concern about the personal and business relationships of Katz, Sheegl and Shindico.

The province is correct to point out there are tools at city council's disposal to create greater oversight and better reporting channels for conflict-of-interest concerns. However, although the tools are there, it's not fair to suggest a majority of council has the will to wield them.

The majority of this council has, for all intents and purposes, demonstrated either an intense disinterest in, or a hardened contempt for, conflict-of-interest allegations. In fact, the smart money said any attempt to haul the mayor's business dealings before an official inquiry of some sort would have died a quick death.

Support for this audit was unanimous but that support came only after councillors admitted they received a flood of emails and phone calls from disgruntled citizens. That is to say, most of the councillors saw nothing wrong with the land deals until their constituents saw something wrong. And the city auditor only became involved after the mayor, who is at the centre of the conflict-of-interest concerns, asked him to get involved. There was already more than enough information on the public record on this and other controversies to justify a review by that office.

Does this sound like a group that would, of its own volition, compose a code of ethical conduct and establish an independent ethics commissioner? Hardly.

In this context, the premier's expectations seem hollow. To be fair, Selinger also said he is not prepared to stand by idly if the city fails to tidy its growing closet of dirty laundry.

"The one thing we know now is that this doesn't pass the public smell test of ethics. Nobody thinks that this stuff is OK after the information that has come out. However, I think we have to wait to see the outcome of this high-profile investigation," Selinger said. "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."

The province is clearly reluctant to solve the problem. To date, however, the city has done little to demonstrate it has the capacity to solve the problem on its own. That means the premier has a decision to make. He can either be part of the solution or just another contributor to the problems at city hall.

Republished from the Winnipeg Free Press print edition October 5, 2012 A4

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