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Design engineer repeatedly told city officials police behind HQ’s rising costs, delays Correspondence reveals lawsuit defendant accused of fraud threatened to quit over mistreatment, claimed pressure to censor report to protect WPS

A key player in the construction of Winnipeg’s downtown police headquarters repeatedly raised concerns with senior city administration about design changes pushed by the police service causing significant cost overruns and schedule delays.

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A key player in the construction of Winnipeg’s downtown police headquarters repeatedly raised concerns with senior city administration about design changes pushed by the police service causing significant cost overruns and schedule delays.

Internal project correspondence newly obtained by the Free Press reveals the degree of frustration that was mounting for Peter Chang and the design firm Adjeleian Allen Rubeli Ltd., on the construction project.

On at least two occasions, Chang threatened to walk away from the job, complaining his firm had been mistreated by the city and police service. On another occasion, he accused the city of instructing him to censor a progress report critical of the Winnipeg Police Service.

The correspondence sheds new light on steps taken by city hall to limit the exposure of the police service in the controversial capital project.

The headquarters construction sparked two external audits, allegations of kickbacks and corruption, an RCMP criminal investigation and ongoing civil litigation launched by the city against more than a dozen defendants.

MIKAELA MACKENZIE / WINNIPEG FREE PRESS The Winnipeg Police Services headquarters building in Winnipeg. The defendants are alleged to have fabricated and inflated invoices and pushed change orders to drive up construction costs.

Chang is one of the defendants accused by the city of participating in a conspiracy with the main contractor, Caspian Construction, to defraud the municipal government.

The defendants are alleged to have fabricated and inflated invoices and pushed change orders to drive up construction costs. The allegations have not been tested in court, and the criminal investigation into the project closed without charges.

AAR conducted a routine site inspection in late-February 2014, and soon after filed a progress report to the city, which included a comment from Caspian regarding change orders initiated by the police service.

“Ongoing design changes issued via site instruction (caused by site conditions & WPS requests) continued to negatively affect construction schedule,” reads the report.

This comment drew the ire of Abdul Aziz, a police service civilian employee, who twice served as WPS HQ project manager — first from February 2010 to May 2011, and again beginning in January 2014.

“Ongoing design changes issued via site instruction (caused by site conditions & WPS requests) continued to negatively affect construction schedule.” – AAR report

Aziz complained to Iain Day, who held several major roles on the job from 2010 to 2014, including a stint as project director towards the tail end of construction.

“AAR is working for the city. It is their duty to represent their client, the city… It is my request that all future reports should go to the project director for approval before they are shared with others and/or the contractor,” Aziz wrote.

On March 20, Day took the matter up with Chang.

“There was a comment regarding WPS personnel and ongoing design changes affecting the construction schedule,” Day wrote.

“While I understand that there is a desire to be as accurate as possible with the observations in the report, I would appreciate that a comment such as this is substantiated before it is included or at the very least raised with me for review.”

Chang fired back that “all decisions, change orders and site instructions” had been fully vetted by WPS staff and accused the city of instructing him to censor reports.

“(We) WILL NOT censor Caspian’s report, this is not legal from the terms of our contract and we have never been asked to provide any sort of censorship… (We) have never and will never censor any reports or correspondence,” Chang wrote.

“It is censorship/withholding of information that will get people into trouble, especially in light of any audits that will be forthcoming.”

“(We) WILL NOT censor Caspian’s report, this is not legal from the terms of our contract and we have never been asked to provide any sort of censorship.” – Peter Chang

Chang further claimed his firm had been mistreated by the city and repeatedly subjected to “free shots” and unfair criticism.

“The next time we hear of anything that questions our professionalism or commitment, we will escalate things further and the City of Winnipeg can go find themselves another group of suckers to complete the project,” Chang wrote.

In April 2014, the firm Turner & Townsend — which had been hired by the city to conduct a value-for-money audit of the project — was in Winnipeg for site inspections and to speak with key players on the job.

Shortly afterwards, Chang sent an email to city chief financial officer Mike Ruta and acting chief administrative officer Deepak Joshi, raising concerns the WPS was attempting to influence the audit.

“We do not understand why WPS (Abdul Aziz) is involved with the quantity survey. WPS accompanied us during our walkthrough the HQ and Wyper Road facilities, as well, Abdul was present throughout our meeting with TT,” Chang wrote.

“It was clear to us that from Abdul’s comments and conversations with representatives from TT, that WPS goal is to influence the audit in a way that shed costs and responsibility from WPS.”

The “Wyper Road facilities” reference referred to the construction of the Winnipeg Police Service gun range.

In July 2014, another audit into the project, this one from KPMG, was released to the public.

MIKAELA MACKENZIE / WINNIPEG FREE PRESS FFILES The Winnipeg Police Services headquarters building in Winnipeg. The headquarters construction sparked two external audits, allegations of kickbacks and corruption, an RCMP criminal investigation and ongoing civil litigation launched by the city against more than a dozen defendants.

Shortly before the audit was released, Chang sent an email to senior city staff — including Ruta, Joshi, capital projects manager Jason Ruby and then-head of legal services (and current CAO) Michael Jack — to flag KPMG concerns regarding the police service’s role in the project.

“KPMG asked me, why were the WPS user representatives so involved with decision making. KPMG interviewers kept referring to the number of police officers involved in the owner’s meetings, of which they have all the minutes of the meetings,” Chang wrote.

“It’s one thing to have WPS user being informed and reviewing design, but being in the owner’s meeting has raised a lot of flags with KPMG and the action items initiated by WPS.”

The KPMG audit concluded that Aziz lacked experience executing a construction project of significant size and complexity, and noted he was replaced by the city following difficulties as work progressed.

The Free Press obtained a draft of the KPMG audit report and subjected it to a side-by-side analysis with the final version that was released to the public.

As reported last week, key findings critical of the WPS — including the police service’s role in the 81 change orders on the job that totalled $18.89 million, as well as the questionable hiring of a retired officer as a consultant — were scrubbed from the final version.

Earlier in 2014, Chang complained to Ruta, Day and Joshi that WPS staff had repeatedly signed off on designs throughout construction, only to change their minds at a later date and request alterations that drove up costs and pushed back the schedule.

“There is no accountability of WPS… We were asked to involve WPS and we welcomed them as part of our team, yet despite our best efforts and professionalism, we never got any accountability for their decisions,” Chang wrote in February 2014.

“WPS participated in all owner meetings and were fully aware of the process and timelines. The excuse of not understanding construction is very weak because we would assume that any normal person would understand what 100% implies and what signing-off on design means.”

“WPS participated in all owner meetings and were fully aware of the process and timelines.” – Peter Chang

Chang ended the email by again threatening to walk away from the project, making clear he was at the end of his rope.

“Perhaps it is best for the City of Winnipeg to terminate their agreement with AAR/GRC, as we do not have a signed agreement for our extension,” Chang wrote.

“Just pay us for the month of January and you can use the balance of our agreed upon fee to hire… any other consultant who can sign off on occupancy for you.”

The draft report of the KPMG audit concluded the WPS was “able to dictate their requirements largely unchecked throughout all stages of design and construction” — although that finding was cut from the final version released to the public.

In response to Free Press reporting last week, WPS Chief Danny Smyth said it was unfair to compare the draft report of the KPMG audit to the final version, adding that no one should be surprised the police were involved in the project.

“We were involved with the designers. The building was customized for the police service… The design plans at headquarters were not complete when they started the project,” Smyth said.

“We did have some input into some of the changes that came out of that, because they weren’t included in the design process… We weren’t the decision-makers.”

In a written statement Friday, the city’s director of corporate communications, Felicia Wiltshire, declined comment.

Chang also declined comment, citing the ongoing civil litigation.

ryan.thorpe@freepress.mb.ca

Twitter: @rk_thorpe

Ryan Thorpe

Ryan Thorpe
Reporter

Ryan Thorpe likes the pace of daily news, the feeling of a broadsheet in his hands and the stress of never-ending deadlines hanging over his head.

Timeline of controversy

It has been called one of the biggest scandals in Winnipeg’s history.

Here are key developments in the Winnipeg Police Service headquarters construction project, some of which have only recently come to light through an ongoing Free Press investigative series.

2008

The push for a new downtown WPS headquarters picks up steam after cost estimates for repairing the Public Safety Building skyrocket.

In February, an estimate from the firm Hanscomb pegs the cost of purchasing and renovating the old Canada Post building into a police headquarters at $179 million.

2009

City council approves $135 million in funding to purchase the old Canada Post site and renovate it into the new WPS HQ.

The Hanscomb estimate of $179 million is withheld from city council. Instead, a lower estimate — which had soft construction costs pulled out and appears to have originated from a Shindico feasibility study — is used to sell the project.

2013

City council learns the project is going to cost tens of millions of dollars more than expected. As a result, council orders two external audits.

2014

The two external audits into the WPS HQ construction project are finalized. The first is a KPMG report that finds numerous city policies were not followed and the capital project was mismanaged.

Last week, the Free Press revealed that an earlier draft version of the KPMG report was scrubbed of negative findings regarding the WPS’s role in cost overruns and schedule delays.

The second external audit, from Turner & Townsend, determines the city received good value on the project, with the final price tag falling within the “acceptable range of cost for a facility of this nature.”

Those audits — alongside two other external audits into city hall controversies — are forwarded to Manitoba Justice for review which, in turn, passes them along to the RCMP.

The RCMP launches not one, but two criminal investigations — Project Dalton (into the WPS HQ) and Project Dioxide (into a string of controversial real estate deals and capital projects under the administration of former mayor Sam Katz).

RCMP Project Dalton becomes public knowledge when the Mounties raid the headquarters of Caspian Construction that December. RCMP Project Dioxide is not made public until this year when the Free Press uncovers evidence of its existence.

2015

The City of Winnipeg takes possession of the new WPS HQ.

2019

RCMP Project Dalton closes after five years with no authorization of criminal charges.

2020

The city launches a lawsuit against Caspian Construction, former chief administrative officer Phil Sheegl, and more than a dozen others connected to the WPS HQ construction project, alleging they conspired to defraud the municipal government of millions of dollars.

2022

Manitoba Court of Queen’s Bench Chief Justice Glenn Joyal rules that Sheegl accepted a bribe in connection with the awarding of the construction contract on the WPS HQ job, ordering him to pay back at least $667,000 to the City of Winnipeg.

Cases involving the other defendants remain before the courts.

History

Updated on Friday, June 10, 2022 7:15 PM CDT: Clarifies it was a progress report in paragraph three

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