Court documents unsealed Monday have raised questions about the relationship between former mayor Sam Katz and Caspian Construction owner Armik Babakhanians, and how involved Katz was in the construction of the new police headquarters.

In an information to obtain a search warrant for the Caspian offices in December 2014, an RCMP officer says a former Caspian employee claimed Katz and Babakhanians were friends and office staff talked about how they would go to concerts together.

"Katz and Babakhanians are friends," a former employee of Caspian told investigators in the search warrant court documents.

In court documents, the former employee described how an office manager would talk about "going to concerts with Armik [Babakhanians] and [Sam] Katz."

Katz calls Caspian Construction owner Armik Babakhanians an acquaintance, one of thousands of people for whom he has acquired concert and hockey tickets over the last 30 years.

Architect 'let go' after calls to Katz, documents allege

The former employee also told police a colleague told her Babakhanians "did not get along with the City of Winnipeg architect or project manager responsible for approving the invoices and progress reports," according to court documents.

"Armik Babakhanians spoke to Sam Katz, the mayor, to have the architect from the city let go." Babakhanians then "brought in a friend" to "approve billings that would be submitted to the Winnipeg police headquarters," court papers said. That friend was flown in from out of town and those costs were billed to the police headquarters project.

Katz was asked Tuesday about the allegation he was involved in letting the city architect go. He declined a full interview but provided this comment. 

"I have no idea where that came from. It's total craziness. End of story. I can assure you that nothing like that ever happened."

The former Caspian employee also believed the former mayor and contractor were business partners, an allegation flatly denied by Katz who did admit to arranging for concert tickets and box seats at the MTS Centre for Babakhanians.

"I don't really associate or hang out with people, I don't do that, I don't have time. I am either at the office or at home with the family," said Katz in an interview with CBC News on Monday. "When people say friends? Do I know a lot of people? Absolutely, I still get people from all over the place when there is an event saying: 'listen Sam, there is a concert coming. Can you get me some tickets?' I put it on my credit card and they pay me back. It is not that complicated, end of story."

An estimated 10 to 12 cheques, including a cheque for approximately $30,000, were issued by Caspian to Katz around 2013, according to an affidavit filed by RCMP Const. Marc Allard and based on statements from company employees.

"I don't share a box but I have put together a scenario for Jets tickets every year," said Katz adding Babakhanians did  buy a portion of the box at one point. He estimated the total value of the box to be $220,000.  

Conflict of interest questions

"I don't think that Sam Katz understands the optics and conflict of interest," said Coun. Ross Eadie.

"You got a big construction firm doing business with Winnipeg and your tickets are moving around. We [councillors] are questioned when we get a gift over $150."

Paul Thomas, professor emeritus at the University of Manitoba, said Sam Katz should be entitled to privacy and the benefit of the doubt but he acknowledges the public is less tolerant than it used to be.

"We now hold people to higher standard in which there must not only be real conflicts, but also perceived conflicts, or potentially perceived conflicts of interest," said Thomas.  

"The idea is when you combine your friendships and connections with people with the performance of public duties, it warps your judgment you don't make judgment in the public interest, you make judgments in the private interest of yourself or your friends." 

Eadie said the upcoming appointment of a City of Winnipeg ethics commissioner and lobbyist registry may not be enough to clear the air in the city. 

"Maybe there is a need to do a judicial inquiry so individuals can speak out while the RCMP do their work," Eadie said.

Caspian work for city

The former employee described why invoices for other jobs were being put through to the police project." At Winnipeg police headquarters, it was not an issue because Caspian had a person in place to approve invoices."

A different employee told police the architect has to approve expenses before they are submitted to the city for reimbursement.

During Sam Katz' tenure as mayor, Babakhanians' Caspian Projects was hired for several city contracts:

  • Winnipeg police headquarters, phase 1 — $50,000 on Feb 10, 2011.
  • Winnipeg police headquarters, phase 2 — $137.1 million on Nov 17, 2011.
  • Winnipeg Police Service K-9 Unit Headquarters, $1.2 million on March 16, 2012.
  • Winnipeg Transit garage, $20.6 million on May 3, 2012.

When contacted by CBC News, Babakhanians declined to comment and referred questions to his lawyer. The lawyer, Patrick Riley, has not responded to requests for comment.

An RCMP spokesperson told CBC News charges have not been laid in the case and the investigation is ongoing.

None of the allegations have been proven in court.

with files from Caroline Barghout and Sean Kavanagh