Winnipeg Free Press - PRINT EDITION

Backpedal replaces dismissive shrug

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The "who, me?" shrug is definitely gone from Mayor Sam Katz's bag of tricks.

The shrug is what Katz typically used whenever someone accused him of a conflict of interest. Usually involving allegations he was using his office to help out friends and business associates. The shrug was traditionally accompanied by assurances there was nothing to the accusations, that critics and reporters were too simple-minded to follow the real story, or that he was the victim of a vendetta of undefined source.

Ah, but there are no casual Katz shrugs at city hall these days.

This week, faced with reports he bought a shell company from chief administrative officer Phil Sheegl, the shrug has been replaced by the backpedal.

The story confirmed in March that Katz bought a shell company, Duddy Enterprises LLC, from Sheegl for $1. Katz said he purchased Sheegl's company to avoid having to pay the legal fees to set up one of his own. He claims the company doesn't own anything, and isn't worth anything.

Initially, the mayor tried to use the shrug, accusing the accusers of a "witch hunt" against him and Sheegl. He maintained he has full knowledge of municipal official conflict-of-interest rules, and stipulations about declaring interests in companies.

The next morning, however, Katz grudgingly acknowledged he should have registered his own company to avoid the "perception" of a conflict of interest. Katz only admitted a mistake in judgment after concluding "reality doesn't count."

OK, so he didn't backpedal enough to admit there was a conflict of interest, only the perception of one. However, even the fact he would acknowledge the issue of perception is a step forward. Or backward, if you prefer.

It is somewhat ironic for those of us who follow municipal politics closely that the acquisition of a worthless shell company in Arizona is at the heart of the story that appears to be causing Katz so much grief. Katz has frequently allowed his political and professional lives to overlap. And in many of those instances, the abuse of process and the degree of what many would see as a conflict of interest was arguably more severe than it is in this most recent instance.

Consider that in March 2005, Katz accepted $50,000 from business partners to buy him out of an interest in the Walker Theatre. Then, just six months later, Katz introduced and voted on a motion to give those same business partners $220,000 in city grants. Katz said at the time that when he took his buyout, he ceased to have a relationship with the Walker consortium. Virtually no one at city hall pursued the matter. Katz shrugged dismissively, and we all moved on.

Now, however, Katz is in full retreat mode. Over the summer, Katz was forced to recuse himself on a council vote on whether to sell a prime parcel of city-owned land to a water park developer across from the baseball park he owns at The Forks, even after denying he had any obligation to avoid the vote. And then, concurrent now with the Sheegl matter, Katz reluctantly launched a review of a controversial land deal with Shindico Realty, after dismissing concerns there was anything wrong.

Concern about the depth of the personal and business relationship between the CAO and the mayor is exactly the reason many criticized Sheegl's appointment in the first place. Sheegl and Katz, who are good friends, continue to deny they have any specific "business relationship." But this was certainly a business transaction. Friendly, perhaps. But selling an asset to your friend to help him avoid paying legal fees is still first and foremost about business.

The CAO must be free of fear or favour when it comes to his relationship with the mayor. He is a check and balance on political whim, the source of objective fact and fair interpretation of law and regulation. In other words, the CAO does not serve the mayor, but the citizens of Winnipeg. It is tough to see Sheegl fulfilling those roles given this most recent revelation.

Only the vagaries of the law have allowed the mayor and the CAO to claim they are acting appropriately. It is not proper and continued assertions to the contrary make this bad situation worse. In the end, this is just another example of how Katz and Sheegl don't understand a fundamental tenet of life in the public service: When it comes to personal and professional relationships, perception is indeed reality.

dan.lett@freepress.mb.ca

 

Republished from the Winnipeg Free Press print edition September 13, 2012 A4

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