Winnipeg Mayor Sam Katz has purchased an Arizona-based company from the city's top bureaucrat, chief administrative officer Phil Sheegl, CBC News has learned.

Duddy Enterprises LLC, based in Scottsdale, Arizona, changed hands on March 29, 2012.

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Winnipeg Mayor Sam Katz tells CBC News he is 'totally abiding by the rules and regulations' under the Municipal Council Conflict of Interest Act. (CBC)

Katz says the company is currently not an active business, but he may use it in the future.

"If I wish to acquire an investment in land, that's probably the company that I would be using," Katz said in an interview.

This transaction does not appear on the mayor's statement of assets and interests that is required to be filed under Manitoba's Municipal Council Conflict of Interest Act.

Under the act, council members must disclose the name of every corporation worth more than $500 in which they hold over five per cent of the value.

All council members, including the mayor, have 30 days after buying or selling an asset to declare it.

100% ownership

In this case, Katz owns 100 per cent of Duddy Enterprises, but he says he did not need to declare it.

"As per the provincial legislation, you know, if there's potential land to be owned outside the province, you do not list it," he said.

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Phil Sheegl speaks to reporters following a council vote last year that confirmed his appointment as Winnipeg's chief administrative officer. (CBC)

Katz added, "I can tell you that as per my conversation with the [city]

clerk, we are totally abiding by the rules and regulations under the provincial legislation."

When CBC News requested an interview with city clerk Richard Kachur, his spokesperson responded by email, "The city clerk doesn't provide interpretations of provincial laws."

Bob Adkins, who lectures on municipal law at the University of Manitoba, would not comment on the specifics of this issue but he did explain what is required of councillors under the law.

"If you're going to establish a shell corporation, that sort of stuff, I think technically that that is something that effectively should be disclosed," he said.

"If you own five per cent interest in a company — even if it is inactive and not doing business — you make that disclosure."

Paid $1 for company, Katz says

There are exemptions to disclosure under the Municipal Council Conflict of Interest Act. For example, a council member does not need to disclose assets or interests worth less than $500.

Katz did not refer to this exemption in his interview with CBC News, and he also wouldn't say if the company owned any property or assets.

But in a follow-up email, Katz said he paid $1 for Duddy Enterprises.

Companies linked to Phil Sheegl:

  • Winnix Properties Corp.
  • Phyvee Holdings LLC
  • Winstar Pro LLC
  • Wingfive Company LLC
  • Wingold LLC
  • Winjet Holdings LLC
  • Valley Land Investors LLC
  • 2005 R.E. Investments II LLC

Former companies linked to Phil Sheegl:

  • Wingtwo Company LLC (dissolved July 2008)
  • Winwin Company LLC (dissolved March 2012)
  • Kyote McDowell Investors LLC (dissolved June 2001)
  • Duddy Enterprises (sold to Samuel M. Katz March 2012)

(Source: Arizona Corporations Commission)

Sheegl declined an interview this week, but through an email sent by a city spokesman, he indicated that Duddy Enterprises is a company that sat dormant.

Sheegl told CBC News last week that he does not currently have any business dealings with Katz.

Arizona Corporations Commission records reveal some of Duddy Enterprises' history: it was started in 2002 by Sheegl. He and one of his Winnipeg-based companies are listed as owners at the time.

Duddy Enterprises became part-owner of a separate entity called Winwin Company LLC in September 2003, along with another Sheegl-owned company called Winnix Properties Corp.

Shenkarow Investments was the third co-owner. Shenkarow Investments is listed at a Winnipeg address in Tuxedo.

Winwin was dissolved around the same time as when Duddy Enterprises was sold to Sam Katz.

Around the time that Sheegl was recruited for the city's top bureaucratic job, Katz said he and Sheegl were good friends. Katz endorsed Sheegl's hiring in a city council vote last year.

Paul Thomas, professor emeritus of political science at the University of Manitoba, says people in public office are held to a higher ethical standard, and that's why transparency and mandatory disclosure rules are becoming more stringent.

Thomas said business deals between the mayor and the chief administrative officer can be problematic.

"You run the risk of blending your public and private interests together, and we don't know how indirectly this may affect their decision-making," he said.