Developer testifies he ‘aggressively’ pursued police HQ contract

The key Winnipeg developer behind the downtown police headquarters project testified Thursday that he “aggressively” pursued civic officials during the bidding process — promising it would become their “legacy for many years to come” if he was awarded the contract.

“When I go after projects, I go to the top,” said Armik Babakhanians, the owner of Caspian Projects and a part owner of Caspian Construction.

“I pursue as aggressively as I can, and I’m not apologizing.”

Problems with 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.

Babakhanians is the latest witness in the public inquiry looking into the project.

He also commented on a Feb. 17, 2011 email he had sent that wound up being featured prominently in a bribery ruling linked to the HQ project. The business owner said a key sentence he wrote in that email made him uncomfortable, though its meaning was not even clear to him.

The line in question stated: “However, I think he wanted 2+2 for sam and phil but the rest for us.”

Babakhanians testified he wrote the email after speaking with Phil Sheegl, who was deputy chief administrative officer for the city at the time. The business owner said Sheegl didn’t say the words “for sam and phil,” deeming those his own words, but did note “2+2.”

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“What I wrote… is a note to myself. The 2 and 2 I heard. But what implications (there were), I don’t know. I can’t say for certain,” said Babakhanians.

The business owner said he spoke with his son after the meeting because he felt uncomfortable, though the two ultimately opted to continue doing “business as usual.”

In 2022, a court ruled Sheegl had accepted a $327,000 bribe from Caspian and ordered him to pay the city compensation, with that email noted in the decision.

On Thursday, Heather Leonoff, the legal counsel for the provincial inquiry, directly asked Babakhanians if he ever paid Sheegl money “as a thank-you gift” for helping Caspian get the project.

“I pursue as aggressively as I can, and I’m not apologizing.”

“I categorically reject that. I’m going to go on the record to say I work hard enough. I don’t have to pay people to work,” he answered.

Babakhanians said money passed between the men reflected the sale of land in Tartesso, Ariz., which matches testimony from Sheegl and former mayor Sam Katz earlier in the inquiry.

A Manitoba Court of Appeal ruling in 2023 denied Sheegl’s appeal of the bribe finding. In the same 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.”

The “2+2” email is also noted in that ruling and also includes the line: “This will remain confidential for ever.”

Leonoff asked Babakhanians why the details in the email needed to remain a secret.

“I didn’t like the tone of it, that’s all… What I wrote I didn’t like the tone of,” he said.

The business owner said the phrase bothered him but he didn’t know exactly what it meant.

He also said the land deal was a casual “handshake” arrangement. He said he does not know who owns the Arizona land in question now.

In one email, Babakhanians pledged to make Sheegl proud.

“I work hard enough. I don’t have to pay people to work.”

“We will bring this under cost control and (build) a project which will be your and your group’s legacy for many years to come, you have my word on it,” he wrote.

Prior to Babakhanians’ testimony, Sheegl, who was the city’s CAO from May 2011 to October 2013, finished speaking.

His lawyer, Richard Wolson, presented several documents regarding the value of the Tartesso land.

Wolson stated the land was worth about $120,000 per acre, far more than a long-noted $47,000-per-acre figure.

Sheegl said he previously confirmed the lower number, though doing so was a major error made at a difficult time in his life.

“I wasn’t paying attention… It was a huge mistake to make but I have nothing to say other than based on the state of mind that I was in, I had checked out,” said Sheegl.

The lower land value had been noted by a judge as sparking questions about the deal, since it didn’t match the sale price.

Sheegl called the lower number “ridiculously undervalued.”

He testified he had no experience dealing with $100-million or $200-million projects when he joined the city as planning, property and development director, then took on multiple large projects at once.

Wolson asked his client if Babakhanians ever bribed him or gave him any money, which Sheegl denied.

“I wasn’t paying attention… It was a huge mistake to make.”

When asked if the former CAO himself ever asked Babakhanians for money, Sheegl answered “absolutely not.”

The former CAO also discussed his friendship with former Mayor Sam Katz, stating the two have known each other since they were teenagers.

Sheegl said the men drifted apart when each of them had young children at different times.

— With files from Tyler Searle

joyanne.pursaga@freepress.mb.ca

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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.