No charges laid after second review into Winnipeg police headquarters scandal By: Dan Lett Posted: 6:33 PM CST Wednesday, Feb. 26, 2025

Hey there, time traveller!
This article was published 26/02/2025 (562 days ago), so information in it may no longer be current.

An independent prosecutor hired by Manitoba Justice to review an RCMP investigation into the Winnipeg Police Service headquarters construction contract has recommended no criminal charges be laid against any of the individuals involved.

The review was ordered in part to satisfy concerns that had arisen about the 2019 decision to not lay criminal charges, despite findings by RCMP that “financial crimes” involving more than $33 million had taken place.

A statement to the Free Press from Manitoba Justice did not specify when the new review was conducted. However, sources indicate it started late last year and was completed near the beginning of February, just prior to an announcement by the NDP government that it had struck a commission of inquiry to examine the troubled project.

A statement from the Manitoba Prosecution Service acknowledged a civil lawsuit launched by the city against former chief administrative officer Phil Sheegl — a principal in the WPS headquarters scandal — had sparked increased public interest about whether criminal charges were warranted.

WPS HQ Statement.pdf

The civil trial found Sheegl had received a $327,000 bribe in exchange for the construction contract for the new downtown WPS headquarters. There was also evidence Sheegl had shared the bribe with former mayor Sam Katz.

In its statement, the Manitoba Prosecution Service said it would be wrong to use the results of the civil trial as proof that criminal charges could or should be laid.

The statement noted the standard required to prove guilt in a criminal proceeding is much more stringent than in a civil trial. In particular, prosecutors in a criminal trial must prove “criminal intent beyond a reasonable doubt;” intent is not necessary to reach a finding of civil liability.

Despite this, the prosecution service asked a “retired prosecutor” to review the case files to determine if criminal charges should be laid for accepting a secret commission, fraud or breach of trust.

“Ultimately, the conclusion reached was that no criminal charges could be laid because there was no reasonable likelihood of conviction,” the statement said.

Concerns over the original decision not to prosecute first arose in 2021, when the then-opposition NDP tabled a 2017 confidential briefing note that confirmed RCMP had recommended charges be laid “relating to financial crimes with an estimated value of over $33 million.”

The concerns were amplified during the civil trial against Sheegl, who made the decision to award the WPS headquarters contract to Caspian Construction.

To aid their lawsuit, the city won a court order to gain access to “any financial, accounting or banking documentation” seized by RCMP from Caspian and 26 other defendants.

Court of King’s Bench Chief Justice Glenn Joyal found Sheegl was guilty of “a breach of trust and a breach of loyalty.” Joyal ordered Sheegl to pay the city more than $1 million, which was calculated based on the size of the bribe, along with the value of his severance he received when he resigned his job, and punitive damages.

Sheegl appealed that decision. Notwithstanding the lower burden of proof in civil proceedings, the appellate court described Sheegl’s transgressions as “large-scale bribery” and “systemic ignorance of fiduciary duties.”

“The conduct of Sheegl was so serious and so reprehensible that the bounds of rationality could have justified a much higher award of punitive damages than $100,000 to satisfy the need for retribution, deterrence and denunciation in light of the total award and conduct in issue,” wrote Justice Christopher Mainella of the Manitoba Court of Appeal.

The province recently announced it would hold an inquiry into the WPS headquarters scandal. Chief commissioner Garth Smorang has been asked to review “the dealings of previous elected officials, including the mayor, and senior employees of the City of Winnipeg, including the chief administrative officer.”

Smorang, who will be asked to complete his work by Jan. 1, 2027, has a budget of $2 million.

The inquiry fulfils a pledge made by Premier Wab Kinew shortly after the NDP won the October 2023 election. At the time, Kinew said Manitobans needed answers to “factual questions” about the downtown project and the roles played by Katz and Sheegl.

Originally pegged at $135 million in 2009, the project to establish the new police headquarters on the site of the former Canada Post warehouse and office tower at Smith Street and Graham Avenue was beset by delays and cost overruns. By the time it was completed in 2016, the price had soared to $214 million.

In 2014, the city hired KPMG to conduct an audit. It raised issues about the processes for awarding contracts and procuring materials. The KPMG report and two other audits, one of which probed questionable real estate transactions, were provided to the RCMP for review.

The city continues to pursue the payment of financial settlements and court-ordered payments from those involved.

Sheegl has made no effort to pay the city the more than $1 million he owes as a result of the civil proceedings.

In March 2023, city council approved a $21.5-million settlement of the separate civil suit against Caspian, principal Armik Babakhanians, his wife and son, and several related companies.

The settlement increases depending on when it’s paid. Because Caspian missed the first deadline, it owes $22.5 million if it pays by March. The city placed a $28-million mortgage on several properties linked to Caspian last year.

dan.lett@freepress.mb.ca

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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.