‘I’m guessing’

The main contractor for the Winnipeg Police Service headquarters project said he can’t pin down his company’s exact costs to complete the work, amid allegations it might have been paid tens of millions of dollars extra.

Caspian Projects owner Armik Babakhanians testified for a second straight day at a public inquiry into the project Tuesday. He also appeared as a witness in February.

Heather Leonoff, the legal counsel for the provincial inquiry, asked Babakhanians multiple times to provide his best estimate of what Caspian paid to cover its entire cost, including payments to subcontractors, its own staff and all equipment.

While Babakhanians initially estimated that figure to be between $117 million and $120 million, he described that as merely a guess, noting many of his documents were seized during an RCMP investigation.

“There’s no way I can verify that… I’m just going with my memory (on) what it was. That’s what I’m guessing,” he said.

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

Babakhanians said Caspian’s cost would have significantly exceeded its $100-million cost ledger for the project. He said that figure wouldn’t account for multiple in-house equipment or material costs, such as heating and covering structures during winter months.

Leonoff questioned if the amount Caspian was paid for the headquarters construction was notably higher than its costs.

“You got about $40 million in additional funds to Caspian over and above what you laid out in cheques?” she asked.

Babakhanians repeated a few more times that he could not give an accurate estimate.

“In my final number there, I have no idea what it is now,” he said.

“I’m just going with my memory (on) what it was. That’s what I’m guessing.”

On Monday, Babakhanians testified that he submitted hundreds of false invoices for the HQ project but stressed he didn’t overcharge the city for the work. He also told the inquiry that the invoices he submitted aimed to cover the project’s guaranteed maximum price and his expected profit of $13 million to $15 million.

On Tuesday, he clarified he hoped to get about $17 million to $18 million of profit. He said he wouldn’t have signed on to the project to earn only the $7-million management fee noted in Caspian’s contract with the city.

“No. If I’m not allowed to make profit, I wouldn’t sign,” he said.

Problems related to the headquarters at 245 Smith St. have triggered multiple legal battles since it was completed in 2016. First expected to cost $135 million, the price soared to $214 million, when late flood damage and security upgrades are included.

The provincial inquiry heard from a forensic accountant earlier this month, who estimated $45 million to $50 million in excess claims were filed for the project. Babakhanians has strongly denied allegations that his company overcharged the city to receive that amount.

Michael Finlayson, a lawyer for the city, suggested the Caspian owner should have determined exactly what his company spent on the work, especially after the city launched a lawsuit in 2020. That suit alleged a fraudulent scheme inflated the price of the project.

“Why are you just guessing six years after the fact? How do you not know the amount that Caspian projects spent on this project? You’ve had years to ascertain that…. (It’s) ridiculous,” said Finlayson.

Babakhanians said those numbers remain unclear because his company at times used its own equipment, material and staff without specific records.

“In my final number there, I have no idea what it is now.”

“It is unfair by you, after this many years, to come in here when my office was raided, my documents were hijacked, (and expect) me to go and quantify (that),” he told Finlayson.

The City of Winnipeg expects to receive a combined settlement of up to $28 million for the fraud lawsuit and a separate one alleging construction deficiencies in the project.

Finlayson also asked about Triple D Consulting Services, a shell company the inquiry previously heard had transferred money between companies.

The lawyer displayed an email that indicates the company was originally referred to as DDD. Finlayson asked Babakhanians about a claim he came up with that name as an insult to the city.

“Peter Chang (of HQ project designer Adjeleian Allen Rubelli) said it was your idea, and he said it was reference to the city as dumb, dumber and dumbest. He said that to the RCMP,” said Finlayson.

Babakhanians denied making the reference.

Leonoff also asked Babakhanians numerous questions about specific Caspian invoices, some labelled with handwritten notes of “inflated” or “fake inv” (for invoice).

In many cases, the contractor said he couldn’t confirm that the notes were in his handwriting. In some cases, he said he couldn’t recall what the document reflected.

For example, two bills appear to note the same list of costs for one smaller project, with one priced at $19,000 and the other at $66,000.

“If I’m not allowed to make profit, I wouldn’t sign.”

Babakhanians suggested the documents were filed too long ago for him to recall if both reflected the same work.

“You’re expecting me to remember this (from more than 10) years ago? I don’t know,” he said.

The inquiry will resume Wednesday.

joyanne.pursaga@freepress.mb.ca

X: @joyanne_pursaga