Manitoba

Former Winnipeg CAO Phil Sheegl won't get to question Mounties who alleged he took a bribe

The lawyer for Phil Sheegl, Winnipeg’s former chief administrative officer, has lost his bid to question two RCMP officers who investigated allegations of fraud and bribery in the Winnipeg Police Services Headquarters construction project. 

Judge denies motion seeking access to notes, documents, bid for cross-examination

Phil Sheegl's lawyer says RCMP officers knew his client didn't take a bribe but alleged he did anyway in sworn affidavits to the court during a five-year investigation into the Winnipeg police headquarters construction project. (CBC)

The lawyer for Phil Sheegl, Winnipeg's former chief administrative officer, has lost his bid to question two RCMP officers who investigated allegations of fraud and bribery in the Winnipeg Police Services Headquarters construction project. 

Robert Tapper filed the motion in Manitoba's Court of Queen's Bench in November requesting permission to examine Sgt. Breanne Chanel and Const. Stephane Theoret, two officers who made allegations about Sheegl in affidavits filed during the RCMP investigation.

Tapper accused the Mounties of knowingly misrepresenting information about Sheegl in sworn statements in order to obtain production orders on his bank accounts.

Sheegl and dozens of others — including the main contractor, Caspian Construction — are being sued by the city for their involvement in the construction of the police HQ. The city's lawsuit, which was filed in January 2020, alleges they inflated the cost of the construction through secret commissions and fraudulent paperwork. 

The lawsuit was filed after a five-year RCMP investigation ended in December 2019 with no charges laid. 

Robert Tapper, Phil Sheegl's lawyer, filed a motion in Manitoba's Court of Queen's Bench in November requesting to cross-examine RCMP officers who investigated his client. (Tapper Cuddy LLP)

As part of the police probe, the Mounties were granted production orders on a number of bank accounts, including Sheegl's.

In a June 2016 affidavit, Sgt. Breanne Chanel alleged Caspian's owner, Armik Babakhanians, paid Sheegl a $200,000 bribe, which Sheegl split with former Winnipeg mayor Sam Katz. 

"This payment occurs less than two weeks after Sheegl, as CAO, is delegated authority to award (unlimited and unspecified) contracts for the WPS HQ project, a project for which Caspian is later awarded a contract in excess of $100 million," Sgt Chanel wrote in a sworn affidavit provided to a judge in June 2016.

Tapper says the RCMP knew the money exchange was part of a real estate deal in Arizona, and even said so in 2017.

In 2017, RCMP affidavits revealed it was investigating Tapper's claim that the money was for a land deal when it filed a production order seeking Babakhanians's banking records. 

But between 2016 and 2017, the RCMP changed the details of Sheegl's alleged breach of trust. 

In 2016 the allegation was for "accepting $200,000 for showing favour to Armik Babakhanians with relation to the Winnipeg Police Service Headquarters construction project " 

In 2017, the RCMP alleged Sheel "did commit a breach of trust in connection with the duties of his office, by while having involvement in the WPS HQ Construction Project, engaging in business and financial activities with Armik Babakhanians, from which he received a significant personal benefit." in 2017. 

Tapper says the city's lawsuit against Sheegl is based entirely on Sgt. Chanel's 2016 allegations, and does not take into account the RCMP changed its position regarding Sheegl in the 2017 affidavit.

"Sergeant Breanne Chanel has completely changed her theory respecting Phil Sheegl. The bribe has come off the table," Tapper said in a 2020 motion brief.

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Manitoba Court of Queen's Bench Justice Glenn Joyal dismissed Tapper's motion after finding that how RCMP conducted their investigation was not relevant to the city's lawsuit. 

"Put simply, Sgt. Chanel's opinions in the June 2016 ITO [information to obtain], right or wrong, including her grounds to believe an offence had been committed, are not at issue in this action," Joyal wrote in his March 24 decision.

Joyal says while he understands why Tapper had questions of the RCMP, he found his motion did not meet the threshold required to cross-examine a non-party to a civil lawsuit.

"The RCMP's theories as to probable guilt of a suspect, based on the facts known to them at a particular point in time, whether accurate, inaccurate, or as suggested, dishonest, are not material issues in this civil proceeding," Joyal wrote.

He said the city doesn't intend to rely on the opinions or conclusions of the RCMP affidavits at trial, and therefore there isn't a good enough reason to allow Tapper to cross examine the two officers.

"Such discovery risks becoming a potential sideshow in the broader proceedings, which must, under the oversight of case management, remain focused and as much as possible, proportionate and efficient," Joyal wrote.

RCMP affidavits filed in 2017 alleged former Winnipeg CAO Phil Sheegl (left) took a $200,000 bribe from the owner of Caspian Construction in 2011, and gave half the money to the city's former mayor Sam Katz (right). (CBC News)

Tapper's motion also sought an order compelling Chanel and Theoret to produce all documents, their notebooks, and all records of communications with certain individuals in the case.

In the decision Joyal said Tapper emphasized the RCMP's conduct was at issue and included excerpts of communication sent by Tapper to the Mounties during several months of back and forth between the two parties.

"… you are ignoring that I have had a deep suspicion and mistrust about the RCMP in this matter from day one … my client was put through hell and your client was largely responsible for that," according to the decision.

Joyal says Tapper had argued cross-examination of the RCMP was crucial to his client's case, and to getting it dropped.

"All that remains for the removal of Mr. Sheegl and his companies from this litigation is the examination of the RCMP officers to provide the final nail in the coffin of this case,"  said the decision.

The raw desert land owned by Phil Sheegl, Sam Katz and their co-investors is south of the partially constructed community of Tartesso. Armik Babakhanians bought an interest in about one acre in 2011. (CBC News)

Tapper declined a request for an interview, but in December 2019 he told CBC News the RCMP knew Sheegl didn't take a bribe but never bothered to correct the public record. 

"I am disgusted with the RCMP to have sat on this for five years, when they knew at the get-go what this was … a commercial transaction. They had the documents," Tapper said in a December 2019 interview with CBC News.

"The ethics were questionable. [If] you've got something that smells, you have to look into it — but once you know what it is, you have to say to yourself, 'Oh my, the investigation isn't going to produce anything.'

"There's a point where you look in the mirror and say 'Oops,'" Tapper said at the time.

Joyal says the city's contract approval process, Sheegl's disclosures to the city and whether or not he took a bribe might be relevant to the lawsuit, and could be obtained from the city, Sheegl and Babakhanians. 

"Not only is much of this information within the knowledge of Sheegl and available from the City, it would also be available from at least one defendant," Joyal wrote.

ABOUT THE AUTHOR

Caroline Barghout

Investigative Reporter, CBC Manitoba I-Team

Caroline began her career co-hosting an internet radio talk show in Toronto and then worked at various stations in Oshawa, Sudbury and Toronto before landing in Winnipeg in 2007. Since joining CBC Manitoba as a reporter in 2013, she has won an award for her work on crowded jails and her investigation into Tina Fontaine's death led to changes in the child welfare system. Email: caroline.barghout@cbc.ca

With files from Vera-Lynn Kubinec

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