Police HQ contractor created excess claims, accounting specialist testifies

An estimated $45 million to $50 million of “excess claims” were filed for the Winnipeg Police Service headquarters project, a forensic accounting specialist testified Monday.

During a public inquiry into the HQ project, Victor Neufeld said he found “multiple material financial misrepresentations” in claims filed by Caspian Projects, the main contractor.

“(It appears) Caspian’s project costs were reported to the city at amounts that were higher than they actually were, resulting in excess claims,” said Neufeld.

Problems with the headquarters project at 245 Smith St. have plagued city council for years. An external audit found it had been severely mismanaged. Initially expected to cost $135 million, its price soared to $214 million, when flood damage and some late security upgrades are included.

The inquiry, which excludes some of those costs, pegs the price at $209 million.

The RCMP conducted a lengthy investigation into fraud and forgery allegations related to the project, but no criminal charges were laid.

Neufeld said “patterns of concerns” emerged in his review of the finances, which he alleged included some claims with inflated amounts, unpaid amounts for some invoices, non-project costs being included in claims and other issues.

“Information was being presented that was misrepresented, in my opinion,” said Neufeld.

For example, he estimated that out of $24.4 million claimed for concrete and demolition work, $5.4 million reflects “identified paid” costs and $19 million reflects “excess claims.”

The expert witness said a very thorough probe led to the estimate. His review of the finances involved thousands of hours of intermittent work over several years, he said.

In some cases, he said documents appeared not to have been shared with the city.

“You’ll see many documents that will say ‘for CPI only, for Caspian only.’ I would interpret that to mean that the city never saw those documents,” said Neufeld.

“Information was being presented that was misrepresented, in my opinion.”

George Orle, the lawyer for Caspian, asked inquiry commissioner Garth Smorang to stop the witness from testifying further until Orle and others could cross-examine him about his qualifications and review the findings.

“This is a report based upon thousands of pages, based upon millions of documents … I would submit that it’s a prejudice to my client to have to face a report of this magnitude without having an opportunity to determine whether or not the basis for it is correct,” said Orle.

He suggested bias is also possible, since the city had previously hired Neufeld to study the HQ project’s finances on its behalf.

After considering the formal objection over the lunch break, Smorang allowed the witness to continue, noting lawyers will be given time to question his expertise.

“An over-riding aspect of a public inquiry is fairness … I believe this to be a fair process,” he said.

The HQ project sparked multiple legal challenges in the recent past.

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The city has received $500,000 from a settlement of fraud and construction-deficiency lawsuits linked to it, with city officials noting millions more are expected to be paid.

A settlement approved in March 2023 called for the city to receive $23.5 million if paid within 36 months. If the payment is not made within 36 months, the city will ask the Court of King’s Bench to order that it be paid $28 million. That deadline will be reached on March 24.

Lawyers representing Caspian and others in the inquiry are expected to cross-examine the expert witness starting on Tuesday. Neufeld is slated to continue testifying into Thursday.

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.