Developer testifies Shindico documents suggested ‘bribe’ paid to disgraced city administrator By: Dan Lett Posted: 7:02 PM CDT Wednesday, Oct. 23, 2024 Last Modified: 7:29 AM CDT Thursday, Oct. 24, 2024 Updates

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A developer who co-owned and developed large retail centres with one of the city’s most influential real estate companies told a Winnipeg courtroom Wednesday he discovered financial statements that suggested an $85,000 “bribe” was paid to a firm owned by the then-chief administrator for the City of Winnipeg.

The surprising allegation arose during the third day of a civil trial involving John Pearson, president of ICI Properties, who is suing the principals of Shindico Realty Inc., Sandy and Robert Shindleman. The lawsuit seeks a $5.1-million financial settlement related to the dissolution of various business partnerships and agreements.

While they were in business together, the Pearson-Shindleman collaboration resulted in more than $220 million in commercial real estate involving many of the best-known big-box retail stores in the country. However, on Tuesday, Pearson told court that starting in 2022, he sought to end his relationship with Shindico.

One of the main reasons was mounting concerns over negative headlines involving Shindico.

Pearson told court he grew concerned that his reputation as a real estate developer would be impaired by “corruption allegations between (former mayor) Sam Katz and Sandy Shindleman.”

Pearson went further during cross examination by Shindico lawyers Wednesday.

Pearson alleged that while reviewing documents provided by the Shindlemans as part of the “production” phase of pre-trial proceedings — where both parties to a lawsuit are compelled to provide certain documentation to the other — he came across Shindico financial records showing an $85,000 transaction involving Phil Sheegl, who served as the City of Winnipeg’s chief administrative officer while Katz was mayor.

The transaction was a loan in 2009 provided to a Sheegl-owned company, Financial Support Services, and was connected to a contract Shindico later won to build a new Winnipeg Fire and Paramedic Service station in Sage Creek. This was one of four contacts to build new stations that were awarded to Shindico.

A city audit later determined the contracts, which ended up costing the city $3 million more than anticipated, were awarded through a compromised bidding process where Shindico was given inside information not available to other contractors. It was also learned that a fire hall on Taylor Avenue was built on Shindico-owned land even though the city owned land nearby.

Pearson said that as of 2023, the loan had not been repaid, suggesting it was a “bribe.”

This allegation has not been proven in court.

Jason Kendall, the lead attorney for Shindico, did not respond directly to Pearson’s allegations during cross examination. Outside court, Kendall said his clients would not comment on the bribe allegation.

“It’s a complex case and I think all the facts need to be heard … by this court before any determinations can be made about what really happened here between these parties,” Kendall said.

Sheegl could not be reached for comment. Lawyer Robert Tapper, who represents Sheegl, said he could not comment on the matter at this time and was unable to contact his client.

This is not the first time Sheegl and Financial Support Services have been implicated in a bribery scheme.

In 2022, the city filed a lawsuit against Sheegl alleging he had accepted a $327,000 bribe in return for awarding a city contract to Caspian Construction to retrofit the former Canada Post building downtown to serve as the Winnipeg Police Service headquarters. The project was plagued by delays and cost overruns; originally estimated at $137 million, the final project cost $214 million and was immediately the subject of speculation about fraudulent billing.

The city’s lawsuit, which was based largely on financial records uncovered during an RCMP fraud investigation, revealed evidence Caspian had paid a bribe directly to a company Sheegl owned in Arizona, and indirectly through a subcontractor to Financial Support Services. Katz was never named as a defendant in the city’s lawsuit but the RCMP alleged in information used to obtain search warrants that he received a portion of the money paid to Sheegl.

Court of King’s Bench Chief Justice Glenn Joyal agreed Sheegl had accepted a bribe and in doing so, had engaged in “a breach of trust and a breach of loyalty.” He ordered Sheegl to pay the city $1.1 million in costs, damages and to reimburse the severance he received when he resigned his job.

The city continues to offer few details as to whether Sheegl has paid any of the money he owes to city.

As well, the city is saying little as to whether Caspian Construction, the company’s owner Armik Babakhanians, and 10 other Caspian-related defendants have paid back the minimum $21.5 million agreed to in a March 2023 settlement to end the Winnipeg police headquarters lawsuits.

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Under the agreement, the amount to be paid escalates the later it is paid. For example, $21.5 million was to be paid during the first year, which ended in March. In the second year, it rises to $22.5 million. If payment isn’t made until the third year, $23.5 million is owed.

After that, the city can ask the courts to order the defendants to pay $28 million.

In a statement Wednesday about the money owed by both parties, city spokesman Kalen Qually said “the city continues to take steps to ensure that both the court awarded damages, as well as the terms of the settlement approved by council, are completed.”

The Pearson-Shindico court case continues.

— with files from Kevin Rollason

dan.lett@winnipegfreepress.com

Dan Lett
Columnist

Dan Lett is a columnist for the Free Press, providing opinion and commentary on politics in Winnipeg and beyond. Born and raised in Toronto, Dan joined the Free Press in 1986.  Read more about Dan.

Dan’s columns are built on facts and reactions, but offer his personal views through arguments and analysis. The Free Press’ editing team reviews Dan’s columns before they are posted online or published in print — part of the our tradition, since 1872, of producing reliable independent journalism. Read more about Free Press’s history and mandate, and learn how our newsroom operates.