Winnipeg police HQ contractor testifies about 'handshake' Arizona land deal during inquiry

Caspian Construction principal Armik Babakhanians faced a barrage of questions at the Winnipeg police headquarters inquiry Friday about an Arizona land deal a Manitoba court described as a concoction to explain away a bribe.

That included a lengthy cross-examination from City of Winnipeg lawyer Michael Finlayson, who asked Babakhanians if he was aware "not a single document that refers to this so-called investment" in Tartesso, Ariz., was submitted during disclosure in a lawsuit related to the headquarters project.

"The deal is a handshake deal. I don't know how to emphasize that. I do that all the time," Babakhanians told the inquiry. "Whether there was email confirmation or not makes no difference for me."

Finlayson also asked Babakhanians about an examination for discovery in the lawsuit, where he said Babakhanians didn't know the name of the area where the land was located or what it was worth.

That exchange Friday came after a judge ruled in 2022 that former Winnipeg chief administrative officer Phil Sheegl accepted a $327,200 bribe from Babakhanians, whose company was awarded the contract for the headquarters project.

The inquiry previously heard Sheegl was with the city from 2008 to 2013. His time there included the period when the city planned and started renovating the former downtown Canada Post complex into a new headquarters for the Winnipeg Police Service.

Sheegl, Babakhanians and former mayor Sam Katz all told the inquiry there was no bribe and said the money from Babakhanians was part of the Arizona land transaction between the three of them.

Court of King's Bench Chief Justice Glenn Joyal's 2022 decision said the Tartesso deal "was a concocted story" made up in 2017 after an RCMP investigation uncovered the payment from Babakhanians.

That decision, which ordered Sheegl to pay the city roughly $1.1 million, was upheld by the Manitoba Court of Appeal the next year. Babakhanians and others have settled a separate lawsuit for as much as $28 million. 

The appeal court decision said whether the Tartesso deal was real or fabricated to cover up a bribe "is immaterial in law" and that in either scenario, "the Sheegl defendants are liable for civil bribery."

In addition to two City of Winnipeg lawsuits, the police headquarters project ended up being subject to delays, cost overruns, audits and an RCMP investigation that resulted in no charges.

City lawyer Finlayson asked Babakhanians Friday whether he agreed that Sheegl interceded on Caspian's behalf to reduce construction bonding requirements in the headquarters project — money construction companies have to put up in case they don't finish the work — so Caspian could qualify for the job.

Babakhanians told the inquiry Caspian would have qualified regardless.

Babakhanians said while he's proud of the police headquarters his company helped create, the project itself and its aftermath have "become a nightmare," affecting his business and his family.