Shindico brothers give up $50-million in property, but may have dodged $85,000 bullet

Could a $50-million legal defeat actually turn out to be a victory for Shindico Realty?

In a judgment released last week, Manitoba Court of King’s Bench Justice Sadie Bond ordered Sandy and Robert Shindleman to relinquish ownership and control of three valuable commercial properties, including the lucrative Wesport development on the western edge of the city.

The properties — estimated to be worth $50 million — will be turned over to their former partner John Pearson, who sued Shindico in 2022 after trying unsuccessfully to dissolve their partnership. The decision gives Pearson one of the highest-profile commercial developments in the city.

How could that judgment be positioned as a victory for the Shindleman brothers? Financial losses aside, if the Shindlemans accept the court’s decision and move on, they may have successfully contained allegations raised in court that they paid a bribe to a high-ranking city official.

In last year’s court proceedings, Pearson testified he sought to free himself from a partnership with Shindico, in part, because the company and its principals — Sandy and Robert Shindleman — had been the subject of “allegations of corruption” in the news media.

Pearson said those concerns were amplified during the discovery stage of the lawsuit, when he uncovered financial documents detailing an unexplained $85,000 loan made in 2009 to a company owned by Phil Sheegl who, at the time, served as the City of Winnipeg’s chief administrative officer.

Although the allegation of a bribe was raised in testimony, it has not been proven in court. In his own testimony, Robert Shindleman said no bribe was ever offered to Sheegl.

This is not the first time Sheegl has been accused of receiving bribes in return for favours to select companies in the construction and real estate sectors.

A separate civil trial in a suit filed by the city found that Sheegl had received a $327,000 bribe from the owner of Caspian Construction, the contractor that oversaw the retrofit of the former Canada Post building so that it could become the new headquarters for the Winnipeg Police Service.

Pearson testified that after obtaining the loan documents, he determined the money was never repaid. As a result, Pearson testified he believes it was a “bribe.”

Pearson did not speculate in his testimony about the purpose of the alleged bribe. However, a quick check of the history books shows that it happened just prior to the start of the ill-fated WPS headquarters project, and that Sheegl had given Shindico an untendered contract to buy the property for the city.

Over his time at the city, Sheegl did big business with Shindico, often giving the property developers preferential access to lucrative real estate transactions.

Audits found that Sheegl repeatedly gave exclusive listing and brokerage contracts to Shindico on deals worth tens of millions of dollars, often accompanied by inside information that gave the Shindleman brothers an advantage over other bidders.

However, the highest-profile Sheegl-Shindico deals involved the WPS headquarters project, which has been the subject of two criminal investigations and the civil suit that determined Sheegl had received a $327,000 bribe.

In 2009 — the same year as the Shindico “loan” — Sheegl hand-picked Shindico to be the exclusive broker for purchase of the Canada Post building. Originally estimated by Sheegl to cost $137 million, the project ballooned to $214 million and was immediately the subject of speculation about fraudulent billing.

Remarkably, with all this history between Sheegl and the Shindlemans, it is unlikely anyone will dig into the bribe Pearson alleged had been paid to the former CAO in 2009.

The judge overseeing the Pearson-Shindico lawsuit did not allow the loan documents to be entered into evidence. As a result, Pearson cannot legally release them to anyone other than a government agency.

If the Shindlemans decide against appealing the decision to split the real estate portfolio accumulated during their partnership with Pearson, it’s quite likely those documents will become yet another unresolved footnote in the history of questionable dealings between Sheegl and the Shindlemans.

The province has launched a public inquiry into the WPS headquarters deal with hearings scheduled to begin in February.

Although it is expected participants such as former mayor Sam Katz and Sheegl will testify, Premier Wab Kinew has significantly tightened the scope of that inquiry to exclude any collateral real estate deals.

Would this preclude inquiry commissioner Garth Smorang from examining the Shindico loan documents that Pearson uncovered? It is unclear whether Smorang will categorize that transaction as being directly part of the WPS headquarters scandal or an unrelated event.

Kinew has said the inquiry will not be designed to assign blame or pave the way for criminal proceedings. Instead, he said he wants the inquiry to provide the city with checks and balances to ensure that nothing similar ever happens again.

Those are worthy goals, to be sure. However, Kinew’s efforts to limit the scope of the inquiry is providing yet another avenue for Sheegl, Katz and the Shindlemans to avoid any serious legal repercussions.

It all means that for the time being, the Shindlemans appear to have won the legal battle to keep the loan documents away from the public without having to worry about fighting a larger war over their alleged misdeeds down the road.

And all it cost them was $50 million.

dan.lett@winnipegfreepress.com