Former Winnipeg mayor ‘disappointed and offended’ by claim he got bribe linked to police HQ, inquiry hears

Former Winnipeg mayor Sam Katz says he was upset to hear payments received by the city’s former CAO and later shared with him characterized in court proceedings as a bribe.

Katz testified Thursday at a public inquiry into the police headquarters project that unfolded during his time at city hall.

"I take great offence. To me, the key thing in life is your reputation and your credibility,” Katz said during questioning by his lawyer Danny Gunn, at the end of the third day of what’s scheduled to be a months-long inquiry.

Katz was Winnipeg’s mayor from 2004 to 2014, which included the period when the city planned and started renovating a former downtown Canada Post complex into a new headquarters for the Winnipeg Police Service. 

The project was subject to delays, cost overruns, audits, an RCMP investigation that resulted in no charges, and two lawsuits from the city — including one that determined former Winnipeg chief administrative officer Phil Sheegl accepted a $327,200 bribe in 2011 from Armik Babakhanians of Caspian Construction, the contractor on the project.

That 2022 decision from Manitoba Court of King’s Bench Chief Justice Glenn Joyal said he found on the facts of the case that a land deal in Tartesso, Ariz., involving Sheegl, Babakhanians and Katz “was a concocted story, one that was made up in 2017 after the RCMP investigation uncovered the $327,200 payment."

The following year, Manitoba Court of Appeal Justice Christopher Mainella said "by his own admission, due to the payments from Armik, Sheegl received an almost 700 per cent return on the investment in Tartesso in less than seven years despite the Arizona real estate market crashing in 2007-08.”

"Also pertinent to the large capital gain he enjoyed as per his narrative is, despite being a trustee, he didn’t tell all of the beneficiaries in the Winnipeg consortium of the transaction or that he split the large profits realized with only one of them — Katz."

Sheegl has paid the city $1.15 million in damages. Babakhanians has settled a separate lawsuit and has paid $500,000 toward a settlement that could total $28 million.

The inquiry was told how a Sheegl-controlled company received $200,000 from a Babakhanians-controlled company on July 22, 2011, two days after city council granted Sheegl the authority to award a police-headquarters construction contract.

Sheegl’s company paid Katz $100,000, the inquiry was told. These payments were initially disclosed by the RCMP in sworn affidavits in 2016 and later included in civil court documents.

Katz told the police-HQ inquiry Thursday he was “extremely disappointed and offended” that anybody would think that deal “would be anything but what it was — a sale of an interest in a piece of property.”

During cross-examination, City of Winnipeg lawyer Michael Finlayson asked Katz if he ever told Sheegl to disclose the payment from Babakhanians for what Katz said was a land deal — though Finlayson noted the city doesn’t believe that deal was real. Katz said it didn’t cross his mind at the time to do that.

The former mayor’s comments mark the first time he’s spoken publicly about the headquarters project since the court decisions linked to Sheegl were released.