Police HQ project was ‘doomed,’ developer testifies

The developer of the Winnipeg Police Service headquarters said internal fighting between designers, builders and bureaucrats threatened to derail the project.

“That project was doomed because everybody was challenging who was the bigger boy… in the room, and that didn’t go far, did it? And the WPS was let down by that whole process,” Armik Babakhanians testified at a public inquiry into the project on Friday.

Babakhanians, owner of Caspian Projects, was the key contractor behind the headquarters project.

Problems with the development at 245 Smith St. plagued the city for years. The building was subject to repeated delays, change orders and cost overruns nearing $80 million before it opened in June 2016. It was later subject to two civil lawsuits, an RCMP investigation and an external audit that found the project had been severely mismanaged.

The provincial government called the public inquiry to determine what went wrong with the project and seek recommendations to prevent the same mistakes from being repeated.

Babakhanians pointed the finger at others involved in the project for its issues, saying they did not understand the needs of the police service and the complex construction requirements involved. Instead, they were focused on determining the maximum amount the project would cost, before the design and construction plans were fully settled, he said.

“I can write a book or two on this project — how misunderstood the whole thing was,” Babakhanians said.

“Some bunch of bureaucrats are sitting there and putting a cap without asking the WPS, ‘What are your requirements? What are your conditions for today and 50 years from now?’ That is wrong,” he said.

Babakhanians also answered several rounds of questions about his role in a bribery finding linked to the project.

In 2022, a court ruled that former Winnipeg chief administrative officer Phil Sheegl had accepted a $327,000 bribe from Caspian and ordered him to pay the city compensation.

Babakhanians, Sheegl and former mayor Sam Katz have all testified at the inquiry that no bribe took place; they said the business owner made payments to invest in land in Tartesso, Ariz.

On Friday, city lawyer Michael Finlayson noted the RCMP investigation into the project included seizing 350,000 emails contained in terabytes of digital data from Caspian’s office in December 2014.

Finlayson suggested that raid, and legal matters that followed, made it clear Babakhanians should disclose all relevant documents yet there was “not a single document disclosed by a single Caspian defendant” that refers to the Tartesso land.

“I can write a book or two on this project – how misunderstood the whole thing was.”

The business owner replied by saying the land deal was done by “handshake.”

“I do that all the time. The deal is a handshake deal. Whether there was email confirmation or not makes no difference for me,” he said.

Babakhanians said he did not search his email for mentions of the agreement.

Finlayson also displayed a Dec. 12, 2011 email in which a Caspian employee asked Babakhanians if he needed her to send a “real” invoice.

“Is this a ‘real’ invoice? Since our books are being audited we have to show a paper trail,” wrote Pam Anderson in the email.

Babakhanians said he didn’t know what Anderson meant by that question.

He also testified he was suffering from severe health issues when he answered questions from Finlayson about the project in 2022, including over a key email he sent to himself that has been repeatedly raised in the inquiry.

The February 2011 email that followed a meeting with the HQ project steering committee and includes the line: “However, I think he wanted 2+2 for sam and phil but the rest for us.”

Finlayson displayed a 2022 transcript that states Babakhanians confirmed to the city’s lawyer that he believed the statement did refer to being asked to give $2 million each to Sheegl and Katz.

“The deal is a handshake deal. Whether there was email confirmation or not makes no difference for me.”

“That’s what you said when I questioned you about it in 2022, correct?” Finlayson asked Friday.

“That’s the transcript,” said Babakhanians.

“Given my condition at the time, that’s my transcript and I’m standing by it,” he later added.

Later Friday afternoon, Babakhanians said he was forced to cut questioning short at times during the 2022 interview due to serious health problems.

“I had a post-surgery problem that was extremely painful,” he said.

The business owner also stressed he never accepted or offered a bribe to anyone as part of any project.

Looking back, Babakhanians said he has mixed emotions about the outcome of the police headquarters project.

“I thought I’m building a legacy. (Unfortunately), this all has become a nightmare, to say the least,” he said.

Babakhanians said he believes the headquarters is a beautiful structure that he is proud of, though the controversy surrounding it has been difficult for his family.

“I thought I’m building a legacy. (Unfortunately), this all has become a nightmare, to say the least.”

“Our (lives) have been turned upside down… All of a sudden, we were ridiculed publicly,” he said.

The inquiry will resume on Monday and is expected to wrap up in mid-June.

joyanne.pursaga@freepress.mb.ca

tyler.searle@freepress.mb.ca

X: @joyanne_pursaga