Police HQ contractor filed inflated invoices after scandal uncovered: RCMP

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This article was published 21/03/2016 (3523 days ago), so information in it may no longer be current.

The RCMP allege the main contractor at Winnipeg’s police headquarters padded construction invoices after the scandal over cost hikes had already erupted at city hall and an audit concluded the project was severely mismanaged.

In court documents, the Mounties allege Caspian Construction inflated quotes or invoices from nine of its subcontractors between February 2011 and December 2014. As part of a fraud and forgery investigation, the RCMP allege Caspian received invoices from subcontractors, increased the amounts on those invoices and then submitted inflated invoices to the city.

No charges have been laid as a result of the investigation and none of the allegations has been proven in court. As well, Caspian president Armik Babakhanians has denied the allegations.

Some of these alleged alterations took place after September 2013, when the disclosure of $17 million worth of additional police-HQ construction precipitated a scandal at city hall, while a fraction took place after July 2014, when a KPMG audit concluded the construction project was severely mismanaged.

The RCMP have been engaged in a criminal investigation of the police headquarters that began in December 2014 with the execution of a search warrant at Caspian’s McGillivray Boulevard offices. Over the course of three days, the Mounties seized thousands of financial documents contained in four filing cabinets and 46 banker’s boxes. The RCMP also copied six terabytes of electronic data and 200,000 emails from Caspian computers.

The materials seized during the execution of the initial search warrant and other information led the Mounties to execute a second search warrant at the police-headquarters complex itself in June 2015, according to statements made by RCMP Const. Julie Cote in an application for permission to conduct the second search.

In this application, Cote stated she believed employees and/or owners at Caspian defrauded the city by submitting falsified documentation “in order to benefit financially,” stating the RCMP have uncovered “numerous instances where employees of Caspian inflated quotes and/or invoices,” which resulted in Caspian charging the city more than the cost of the work.

Cote stated a review of “a small fraction” of 81 change orders and contract-change notifications related to the project resulted in the city spending $2.5 million more than necessary.

For example, a $40,950 invoice from Calado Crane Rentals was submitted to the city as $93,450, a $21,034 Wes-Man Mechanical invoice was increased to $41,034 and the city was quoted $725,551 for work Caspian paid Western Industrial Services $242,526, Cote alleges in the request for the June search warrant.

Cote states Ottawa-based structural engineering company Adjeleian Allen Rubelli, hired by the city in 2011 to complete the police-HQ project’s design, “recommended the costs to the city based on the submission of of Caspian’s inflated documents” and in turn, forwarded them to the City of Winnipeg for payment. On this basis, the Mounties sought access in June 2015 to the firm’s police-HQ office, where they seized binders and spreadsheets.

Cote also said the Mounties “noted several times where Caspian displayed questionable business practices, such as requesting sub-trades to create fictitious invoices, billing the city more than once for the same work, or billing the City of Winnipeg for work done at unrelated jobs,” in some cases apart from the change orders and contract-change notifications related to the police-HQ project.

Peter Chang, the principal engineer at Adjeleian Allen Rubelli, said his firm is co-operating with the RCMP. Chang said while he cannot comment on the specifics of the allegations, he said they are not true.

The City of Winnipeg, meanwhile, would not address the fact some of the alleged invoice and quote changes took place when the police-HQ project already faced considerable public scrutiny. “Given the ongoing RCMP investigation into the Winnipeg Police Service headquarters project, we will not be commenting,” city spokeswoman Alissa Clark said.

Jonathan Hildebrand, a spokesman for the mayor’s office, reiterated Mayor Brian Bowman’s support for a public inquiry “if outstanding questions remain following the investigation.”

Hildebrand said “all options are on the table with respect to legal recourse to recoup taxpayer money should it be determined taxpayer money was misappropriated” and noted efforts taken by the current administration to beef up capital-project oversight and create an integrity commissioner.

bartley.kives@freepress.mb.ca