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City alleges kickbacks in new filing for police HQ construction lawsuit

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The City of Winnipeg claims kickbacks to its project manager and overpayments to contractors resulted in millions of dollars in taxpayer money being scammed during the building of the Winnipeg Police Service headquarters.

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The City of Winnipeg claims kickbacks to its project manager and overpayments to contractors resulted in millions of dollars in taxpayer money being scammed during the building of the Winnipeg Police Service headquarters.

In additional documents recently filed in Manitoba Court of Queen’s Bench as part of its lawsuit against individuals and companies involved in the construction of the downtown HQ, the city claims Ossama AbouZeid, and his company, Dunmore Corp., received a $105,000 kickback from Mountain Construction, a company controlled by Armik Babakhanians.

Babakhanians-owned Caspian Construction was the main contractor for the project to convert the former Canada Post building into WPS headquarters.

In additional documents recently filed, the city claims Ossama AbouZeid, and his company, Dunmore Corp., received a $105,000 kickback from Mountain Construction, a company controlled by Armik Babakhanians. (Ken Gigliotti / Free Press files)

The kickback to AbouZeid “and the promise of further kickbacks,” the statement of claim says, was made in May 2011 — a month before AbouZeid was hired by the city to manage the construction project and given an untendered $263,000 contract.

At the time, then-mayor Sam Katz said AbouZeid, then-chief executive officer of the Winnipeg Football Club, was hired because of his experience getting a guaranteed maximum price for construction of IG Field.

By July 2011, the city revealed the WPS project was $28 million over budget.

AbouZeid was also part of what the city called a major project steering committee, which included then-Winnipeg chief administrative officer Phil Sheegl.

In March, Chief Justice Glenn Joyal of Manitoba Court of Queen’s Bench ruled Sheegl, who resigned in October 2013, had accepted a bribe of more than $320,000 in connection with the WPS project. Joyal ordered Sheegl to pay back $1.1 million in damages; his lawyer says Sheegl is planning to appeal.

The new allegations against AbouZeid and others is included in court documents filed by the city asking the judge for permission to add new parties to its ongoing lawsuit.

The construction project, which was supposed to cost about $130 million, including the cost of buying the building, ballooned to about $214 million by the time it opened its doors in 2015.

The city says it has also been forced to fix numerous mistakes and deficiencies in the building in the years since. Earlier this year, Winnipeg Police Association president Moe Sabourin said chicken wire had to be erected on the interior ceilings in some areas to prevent chunks of concrete from falling onto work desks.

Also in the court documents, the city says it was scammed out of millions of dollars by being over-billed.

Some of these alleged incidents — the city said it was billed almost $14 million for work which cost about $8.15 million — include:

The city claims it paid about $857,000 to Caspian for installation of a ceramic floor and wall tile, but Caspian’s payments to Tuscany Construction, which did the actual work, didn’t go over $700,000.

The city says it “only discovered the fraud and other tortious conduct” of Peter Giannuzzi Sr. and G&G Interiors in April 2021, when it found while Caspian billed the city about $8 million through G&G invoices, and $1.7 million for claimed G&G quotations, Caspian paid G&G less than $6 million.

The city also claims while it paid Caspian about $2.6 million for construction of a berm and other road work by Strada Construction for a new police rifle range originally planned to go on the roof of the downtown building, the work was actually done by BayView Construction for $1.4 million — which the city also paid for after Caspian billed it.

The city further alleges it paid Caspian about $740,000 for concrete-related change orders detailed by S&J Construction quotations, but Caspian only appeared to pay S&J and Granite Construction about $50,000 for the work.

The allegations have yet to be tested in court.

kevin.rollason@freepress.mb.ca

Kevin Rollason

Kevin Rollason
Reporter

Kevin Rollason is one of the more versatile reporters at the Winnipeg Free Press. Whether it is covering city hall, the law courts, or general reporting, Rollason can be counted on to not only answer the 5 Ws — Who, What, When, Where and Why — but to do it in an interesting and accessible way for readers.

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