City council has approved a multimillion-dollar settlement of fraud and construction deficiency lawsuits launched over the Winnipeg Police Service headquarters project.

On Thursday, council voted 14-2 to accept a settlement that will result in the City of Winnipeg receiving at least $21.5 million.

Mayor Scott Gillingham said he’s confident the deal is the best option for taxpayers.

“What we have before us is a… recommendation that will provide, I think, a measure of certainty and recovery for the people of Winnipeg… It will secure $21.5 million for taxpayers, at a minimum,” Gillingham said during the council meeting.

Serious concerns surrounding the WPS downtown headquarters project, which included the purchase and renovation of a former Canada Post facility, have plagued city council for years. The building opened at 245 Smith St. in June 2016, at a cost of about $214 million — well-above its original $135-million price tag. An external audit later found the project was severely mismanaged.

The RCMP conducted a lengthy investigation into fraud and forgery allegations, but no criminal charges were laid.

In 2018, the City of Winnipeg filed a statement of claim to seek damages for alleged construction deficiencies from major contractor Caspian Projects and structural engineering consultant Adjeleian Allen Rubeli.

The statement alleged both companies were “negligent” in their work on the downtown WPS headquarters. In 2020, the city launched a civil suit against Caspian, AAR and dozens of other defendants, alleging a fraudulent scheme inflated the price of the project.

The allegations have not been proven in court.

Caspian declined comment; AAR did not respond to an interview request.

Couns. Russ Wyatt and Matt Allard voted against the settlement agreement, after raising an unsuccessful motion that councillors be provided private, direct legal counsel, without city staff involvement, on the issue.

Wyatt said he was not convinced the settlement was the best the city could get.

“I believe our evidence is overwhelming and I think we could probably get, at very minimum, a better deal,” he told reporters.

The call for more legal advice came after Wyatt missed the first council seminar on the matter. While he attended a second one, the Transcona councillor said he left the session after being told his executive assistant could not also attend.

Wyatt said he still feels he has enough information to question the deal itself: “You can gather information without attending a meeting, by Q and A.”

Allard, who seconded the motion, attended a council seminar on the settlement but said he felt more advice was needed.

“It’s so that we can ensure that it’s completely impartial (and) that council is getting advice that is only for council,” he said.

Gillingham said external lawyers already provided years of work on the file and seeking more legal advice could create a delay that would put the settlement offer at risk.

“It could jeopardize the settlement that is before us,” he said.

Wyatt also raised a motion at Thursday’s meeting that called on council to ask the province for a public inquiry on the headquarters project, the convention centre expansion project, and other Winnipeg construction previously explored in a 2014 real estate management review.

He said it is needed to “protect the public trust and ensure that these things never happen again.”

Councilors cast an 8-8 vote on that motion — a tie that equates to a loss under council rules.

Couns. Wyatt, Allard, Evan Duncan, Ross Eadie, Cindy Gilroy, John Orlikow, Vivian Santos and Jason Schreyer voted in favour of the inquiry; Gillingham joined Couns. Jeff Browaty, Markus Chambers, Shawn Dobson, Janice Lukes, Brian Mayes, Sherri Rollins and Devi Sharma to oppose it.

Gillingham said he didn’t support that vote because the scope of the proposed inquiry was too broad and open-ended, though the mayor stands behind council’s 2017 call for a public inquiry on the WPS HQ.

“I still support that,” said Gillingham, elected in 2022 after eight years as a councillor.

Had council rejected the settlement, trial dates for both matters were scheduled to take place in 2024.

Under the settlement terms, the city will receive: $21.5 million, if the payment is made in full within 12 months of council’s approval; $22.5 million, if paid within 24 months; or $23.5 million, if paid within 36 months.

If the payment is not made within 36 months, the city would ask the Court of King’s Bench to be paid $28 million.

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The settlement will end court action against all remaining defendants in the cases.

Fraud allegations against former City of Winnipeg chief administrative officer Phil Sheegl, and companies connected to him, were separated from the civil suit, so the settlement does not apply to that court action.

Last year, a judge found Sheegl accepted a bribe from Caspian owner Armik Babakhanians. Sheegl was ordered to pay the city nearly $1.1 million. The former CAO denies the allegations and is appealing the decision.

joyanne.pursaga@freepress.mb.ca

Twitter: @joyanne_pursaga

Joyanne Pursaga
Reporter

Born and raised in Winnipeg, Joyanne loves to tell the stories of this city, especially when politics is involved. Joyanne became the city hall reporter for the Winnipeg Free Press in early 2020.

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