Caspian misses deadline, city off to court to fight for $28-M settlement

The city is going to court after a Winnipeg construction company missed the deadline to pay millions in a settlement for fraud and construction deficiencies connected to the Winnipeg Police Service headquarters project.

Mayor Scott Gillingham said the deadline for Caspian Construction to pay the $23-million settlement was Monday at 4:30 p.m., but the city has received only $500,000.

“The city’s legal team will take immediate action to move for a $28-million judgment as the settlement deadline was not met,” Gillingham said in a statement Tuesday.

“We will take every reasonable step to recover this money on behalf of Winnipeg taxpayers.”

City spokesman David Driedger said no further information can be released because “it relates to the assets over which the city has security.”

Coun. Jeff Browaty, chair of the civic finance committee, said the original $23 million has already been earmarked for the city’s fiscal stabilization reserve.

“We count it as revenue, even though we don’t have the actual cash in the bank,” Browaty said.

“The incremental $5 million that became due today hasn’t previously been considered a receivable.”

Browaty said because a property tax increase of one per cent raises about $8.4 million, the $28 million would be the equivalent of a 3.3 per cent property tax increase.

During the public inquiry into the construction project Monday, Caspian Projects owner Armik Babakhanians testified he had signed documents to make sure the city received the payment, but lawyers were still finalizing the transfer of money earlier that day.

Babakhanians said he agreed to pay the city $23 million for both personal and business reasons.

“We count it as revenue, even though we don’t have the actual cash in the bank.”

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“It was a commercial decision, but also it … just tore our family (apart). I just couldn’t see the pain (anymore).”

The inquiry was called by the provincial government to look into problems with the construction of the police headquarters.

An external audit said the project was severely mismanaged. The original $135-million budget jumped to $214 million.

City council voted to approve the settlement and the timeline in March 2023. Under its terms, the city was to be paid around $23 million, if transferred within three years, but if the deadline was missed, the city would ask the Court of King’s Bench to order the company to pay $28 million.

kevin.rollason@freepress.mb.ca

Kevin Rollason
Reporter

Kevin Rollason is a general assignment reporter at the Free Press. He graduated from Western University with a Masters of Journalism in 1985 and worked at the Winnipeg Sun until 1988, when he joined the Free Press. He has served as the Free Press’s city hall and law courts reporter and has won several awards, including a National Newspaper Award. Read more about Kevin.

Every piece of reporting Kevin 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.