Former Winnipeg CAO denies taking bribe on HQ project, despite court ruling By: Joyanne Pursaga Posted: 10:32 AM CST Tuesday, Feb. 17, 2026 Last Modified: 7:27 PM CST Tuesday, Feb. 17, 2026 Updates

A former city leader, who a court ruled had taken a bribe linked to the police headquarters project, adamantly denied doing so Tuesday, though he now agrees he had a conflict of interest on the project.

Former Winnipeg chief administrative officer Phil Sheegl appeared as a witness at the public inquiry into the Winnipeg Police Service headquarters project on Tuesday.

Sheegl said he now believes conducting a private business deal with key HQ contractor Caspian Construction, while also working on the HQ as CAO, amounted to a conflict of interest.

“I completely acknowledge today that it was a conflict. At the time, I did not realize… In hindsight, it was stupid of me not to realize that,” he said.

Concerns over the headquarters project at 245 Smith St. have plagued city council for years. The building opened in June 2016 at a cost of $214 million, well above its original $135-million price tag and an external audit found the project had been severely mismanaged.

“I completely acknowledge today that it was a conflict.”

In 2022, a court ruled Sheegl had accepted a $327,000 bribe from Caspian and ordered him to pay the city compensation. Last month, the city revealed it had received a $1.15-million payment from Sheegl.

On Tuesday, the former CAO was asked if he ever discussed getting a share of Caspian’s profits from the project with the company’s owner, Armik Babakhanians.

“Absolutely, unequivocally, no,” he answered.

A Manitoba Court of Appeal ruling in 2023 denied Sheegl’s appeal of the bribe finding. In that decision, Justice Christopher Mainella wrote that Katz “received precisely half of the money.” It also noted Katz was not a defendant in the legal action against Sheegl and is “presumed to have done nothing wrong.”

Last week, Katz told the inquiry he is greatly offended by the allegation, which he also denied.

Both Katz and Sheegl said payments from Caspian covered a real estate deal to sell one acre of land in Tartesso, Ariz.

Sheegl said the sale was a “handshake deal” that did not follow a formal appraisal of the property. He confirmed he received a $200,000 cheque from the business owner in July 2011, then sent Katz a $100,000 cheque a few days later.

When asked about his relationship with Babakhanians, Sheegl noted he initially knew him through the construction industry and golf.

The former CAO stressed he was open to meeting with many people about city projects and opportunities.

On Tuesday, Sheegl also testified that he believed a controversial decision to greatly reduce the construction bond on the Winnipeg Police Service headquarters project was the right move, since it would allow smaller bidders to compete for the work.

He also acknowledged he knew doing so would benefit Babakhanians.

“I didn’t want him to get shut out… Being a bona fide bidder and having done projects… for the department of national defence and Canada Post, I thought he was a good choice,” said Sheegl.

The city’s decision to reduce a construction bond from $40 million to $25 million on $80 million of HQ redevelopment work was scrutinized at the inquiry last week.

The bond reflects the amount of money a construction company must put up to guarantee it can complete the work. If the work wasn’t completed, the city could cash in the bond.

Sheegl suggested subcontractors could provide further financial assurance through their own bonds on the project.

On Tuesday, the inquiry heard Sheegl sent many emails to Babakhanians, including one noting he would send a blind copy of a confidential email to him, stating “Please be careful with it, its part of my strategy to get this done for you.”

Sheegl became the city’s chief administrative officer in 2010.

He confirmed Tuesday that he had done multiple business deals with Katz when he interviewed for the CAO position and considered the then-mayor a friend.

Sheegl also testified the police headquarters at the time was in great disrepair, so a replacement was urgently needed.

“The situation was critical,” he said.

The city bought the former Canada Post building at Smith Street and Graham Avenue in 2009 to replace the former WPS headquarters in the Public Safety Building on Princess Street, which has since been demolished.

Sheegl said the Canada Post building was ideally suited to replace the PSB, since it was located in a prime spot downtown.

It was also built to withstand disasters, something required for a police HQ, he said.

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Repairing the building was a much cheaper option for the city than building a new headquarters from scratch, which could have cost hundreds of millions more, he said.

“These (issues) are so incidental, on a project of this size, that we at the city thought it was a just great opportunity,” said Sheegl.

— With files from Tyler Searle

joyanne.pursaga@freepress.mb.ca

X: @joyanne_pursaga

Joyanne Pursaga
Reporter

Joyanne is city hall reporter for the Winnipeg Free Press. A reporter since 2004, she began covering politics exclusively in 2012, writing on city hall and the Manitoba Legislature for the Winnipeg Sun before joining the Free Press in early 2020. Read more about Joyanne.

Every piece of reporting Joyanne produces is reviewed by an editing team before it is posted online or published in print — part of the Free Press‘s tradition, since 1872, of producing reliable independent journalism. Read more about Free Press’s history and mandate, and learn how our newsroom operates.