City argues former CAO should pay $700K for alleged kickback scheme

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This article was published 09/09/2021 (1790 days ago), so information in it may no longer be current.

The city’s former chief administrative officer, Phil Sheegl, was back before the court Thursday as the city lawyer’s argued he should be ordered to pay more than $700,000 for his alleged involvement in a kickback scheme tied to the construction of the Winnipeg Police Service headquarters.

In a lawsuit filed in January 2020, the city alleges contractor Caspian Construction, “in concert” with two dozen other defendants, including Sheegl, conspired and “schemed” to inflate the cost of the project for their own benefit.

The case against Sheegl was severed from that of the other defendants last year after his lawyer, Robert Tapper, argued the allegations against Sheegl are separate from the allegations that form the substance of the city’s lawsuit.

Lawyer Michael Finlayson, who represents the city, argued Thursday the evidence against Sheegl is clear. He urged Queen’s Bench Chief Justice Glenn Joyal to order that he pay $327,000 — equal to the bribe he is alleged to have accepted from Caspian president Armik Babakhanians — another $250,000 equal to the severance package he received from the city, and $150,000 in punitive damages.

The city alleges in July 2011, shortly after Sheegl awarded the contract to Caspian, the company paid $200,000 to co-defendant Mountain Construction (also owned by Babakhanians), which then paid the same amount to Sheegl’s company, Financial Support Services Inc. A year later, Babakhanians paid Sheegl another $127,000.

“The memo on that cheque said ‘Re: consultant services’ and it was dated two days after the city had resolved to increase its budget for the Winnipeg Police headquarters project to an amount consistent with what… was recommended by Armik Babakhanians, Phil Sheegl… among others,” Finlayson said.

“This cheque was two days after the city, in the same resolution of council, had authorized Phil Sheegl to award the contract” for the project to Caspian, he said.

The money wasn’t a bribe, but payment for a real estate deal to purchase an acre of land Sheegl and then-Winnipeg mayor Sam Katz owned in Tartesso, Ariz., Tapper said.

No criminal charges against anyone, including Sheegl, were laid after a five-year investigation by the RCMP.

Police affidavits provided to court “make it clear that they can’t exclude the reality that there was a transaction,” Tapper said

Court has been provided a handwritten court document Tapper alleges is evidence of the real estate deal, but which the city charges is a “phony deal” to cover up the alleged bribe.

Finlayson said just because the Crown didn’t charge Sheegl doesn’t mean there was no bribe.

“The onus in a criminal case is beyond a reasonable doubt,” Finlayson said. “The onus here, despite what (Tapper) said… is just a balance of probabilities.

“The law of civil bribery has no place in the criminal law. The idea that somehow the Crown’s decision not to prosecute for bribery has any bearing at all is a spurious argument.”

Further submissions are expected to be heard next week.

dean.pritchard@freepress.mb.ca