‘Every which way we looked, we saw some concerns’: contractor billing didn’t add up, police HQ inquiry told

A forensic accounting specialist said he found more than 200 examples of “patterns of concerns” with financial records for the Winnipeg Police Service headquarters project, which led him to estimate as much as $50 million of excess claims were filed.

Expert witness Victor Neufeld wrapped up a 3.5-day presentation at a public inquiry into the project Thursday.

He provided a summary of six key types of concerns he raised, which included inflated invoice amounts, partly or fully unpaid subtrade invoices, non-project costs being claimed or recorded, inconsistent service providers (naming the wrong contractor for the work), subtrade quotes with inflated amounts for change orders and subtrade quotes with inflated amounts for cost overage change orders.

Neufeld said he found approximately 80 invoices that appear to include non-project costs in claimed invoices or in amounts that were not claimed but were recorded in main contractor Caspian Projects’ cost ledger. He found about 40 invoices contained subtrade quotes with inflated amounts or other concerns, plus many others that raised “multiple concerns.”

“We saw concerns throughout the scope, throughout the period. Every which way we looked, we saw some concerns,” he said.

His review identified what he deemed to be about 260 examples of the six key issues overall.

Neufeld alleged that 50 invoices from the subcontractor FABCA Projects raise multiple different concerns, as do 45 Mountain Construction invoices. Mountain is a company controlled by Caspian.

“I put them … in their own category because they (pose) so many concerns and so many different levels,” he said.

Neufeld pointed out that he believes Mountain documents included examples of all six concerns.

For example, Neufeld testified that documents linked to steel work for the headquarters show the city received bills for a “blended” tab of different construction projects, not just the headquarters work. He asserts documents show $1.5 million of steel work charged to the headquarters covered other construction projects, mainly a Transit garage.

The accountant said there were also pairs of what he deemed “flow-through” invoices. For example, he said several sets of documents show Caspian paid contractor FABCA Projects a fee, then FABCA paid Mountain (a Caspian company) the same amount.

“I concluded that there are no net costs that Caspian incurred there but we have those entries … that are in the cost ledger,” said Neufeld.

He noted not every cost listed in the ledger was claimed for payment.

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 city expects to receive a settlement of up to $28 million from fraud and construction-deficiency lawsuits linked to the project, though the exact amount depends on when the money is paid out.

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Neufeld faced only a few questions to clarify his findings Thursday.

Earlier this week, he was asked how certain he can be that his review is complete, given that he had 1.7 million separate documents to assess.

The inquiry will resume Monday.

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.