Winnipeg Free Press - PRINT EDITION

A welcomed scrutiny of city hall

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The referral to the RCMP of a series of construction contracts and real estate deals city hall struck with private firms is welcomed. It sends a salutary notice to city officials and the private sector that if business deals skirt the rules they will be subject to scrutiny.

The provincial Justice Department on Friday handed over to the RCMP a series of audits of real estate transactions dating from 2006, including the project to turn the former Canada Post building into the new police headquarters and the construction of four new fire halls. Audits of both projects found the administration, notably the now-former chief administrative officer, Phil Sheegl, did not follow the rules when awarding private contracts and construction agreements.

A broader audit also released this summer on 33 major real estate transactions made discouragingly similar findings of mismanagement and misconduct.

Suspicions over how the deals were handled mounted with successive revelations sparked by information real estate developer Shindico listed for sale a fire hall on Grosvenor Avenue before Winnipeg city administrators had declared it surplus. It was reminiscent of Shindico's jumping the gun in 2009 to list the Winnipeg Square parkade before property managers officially decided to sell it.

Auditors concluded Shindico has been given preferential treatment and early information on listings in various deals, including the fire hall contract that saw officials swapping three pieces of city property for land on Taylor Avenue owned by Shindico. A new fire hall was built on the land, which the city still does not own.

And yet the audits' damning revelations were often met with little more than a shrug from some, including outgoing mayor Sam Katz, a former business partner and friend of Shindico owner Sandy Shindleman. Mr. Shindleman and Mr. Sheegl -- the mayor's close personal friend -- both slammed the audits, noting they weren't interviewed by auditors who reviewed the real estate transactions.

Mr. Shindleman has said some of the auditors' findings were just wrong, despite documents, including emails, showing his firm received preferential treatment or considerations that undermined an open, competitive bidding process.

At the heart of the matter is whether the conduct strayed beyond mismanagement or dereliction of duty and into the criminal arena. The fire hall deals made with Shindico bore little resemblance to the project initially approved by city council. Former fire chief Reid Douglas told reporters that in 2009, when firms were being asked to compete for the contract, Mr. Sheegl had said: "I want Shindico to build these fire halls." To which, Mr. Douglas said, he replied: "Then let's hope they're the lowest bidder."

The RCMP will review the material the Justice Department was sent by city council for an opinion on whether any law was broken, from an egregious failure of duty by a public servant or to something more serious that would warrant criminal charges.

The department confirmed this is not a perfunctory review. "When we looked at the material, we saw...that we had issues that we felt warranted further review," associate deputy minister Greg Graceffo said.

Ultimately, the RCMP may not find an investigation is called for, but a law-enforcement agency's request for information carries greater heft than that of an audit firm. Further, it can seek a court order for production of evidence.

For too long, a pall of suspicion has enveloped city hall. Winnipeggers need to have the question of criminality in these deals resolved.

And, as city hall yet again writes new rules to protect taxpayers' interests and the integrity of contracting, it sends a cautionary message to those who would treat rules as an inconvenience that eventually, they too, will be held to account.

Editorials are the consensus view of the Winnipeg Free Press’ editorial board, comprising Catherine Mitchell, David O’Brien, Shannon Sampert, and Paul Samyn.

Republished from the Winnipeg Free Press print edition August 16, 2014 A16

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