Inquiry into WPS headquarters construction will begin next winter, commissioner says

A $2-million provincial inquiry into scandal-plagued construction of the Winnipeg Police Service headquarters will begin next year.

Inquiry commissioner Garth Smorang issued a news release Monday announcing hearings are being planned for winter and spring 2026.

Individuals and groups that want to be granted standing, allowing them to participate, have until Aug. 8 at 4 p.m. to apply. For more information, the inquiry has set up a website at www.wpshqinquiry.ca.

“The inquiry will examine the circumstances surrounding the redevelopment of the Winnipeg Police Service headquarters and determine what measures are necessary to restore public confidence in the City of Winnipeg’s ability to build large, publicly funded construction projects,” the release stated.

The troubled history of what is now the headquarters of the Winnipeg Police Service began 16 years ago when the city, which had been looking into whether to renovate or demolish the Public Safety Building, bought the former Canada Post building at Smith Street and Graham Avenue for $29.25 million.

At the time, Sam Katz was mayor and Phil Sheegl was head of the city’s planning property and development department. Sheegl later became the city’s CAO.

The original estimate for converting the building, which had formerly housed Canada Post’s offices and warehouse, was $135 million. But as the project was repeatedly delayed, costs ballooned to $214 million. After it opened, additional costly repairs were needed in several areas.

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

Over the next five years, two separate RCMP criminal investigations — linked by the involvement of Katz and Sheegl — were conducted. However, in 2019, Manitoba Justice announced it would not lay any criminal charges. No explanation was given for the decision.

Concern about that decision erupted again in 2021, when then-Opposition leader Kinew tabled a copy of a 2017 confidential briefing note that confirmed the RCMP had recommended charges be laid “relating to financial crimes with an estimated value of over $33 million.”

In a 2022 civil proceeding, Manitoba Court of King’s Bench Chief Justice Glenn Joyal found that Sheegl had accepted a $327,000 bribe from Caspian Construction, the HQ project’s general contractor, in 2011.

Joyal ordered Sheegl to pay the City of Winnipeg $1.1 million in severance payments and penalties.

The city’s civil suit was based on case files from the RCMP, obtained via court order after Manitoba Justice decided not to charge anyone.

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 2025. The city placed a $28-million mortgage on several properties linked to Caspian last year.

As of late 2024, neither Sheegl nor Caspian had paid the city any money.

During the 2023 provincial election campaign, Kinew promised that an NDP government would hold a provincial inquiry into the matter. Earlier this year, the province announced it had hired Smorang to head the probe.

fpcity@freepress.mb.ca