Manitoba

Former Winnipeg CAO argued he should only be on the hook for half of $327K bribe if he loses appeal

Former City of Winnipeg chief administrative officer Phil Sheegl says not all of the money a judge ruled he owes the city for damages belongs to him. A judge did not agree.

Judge ordered Phil Sheegl to pay the full amount as part of $1.1M package of payments to the city

In March, Manitoba Court of Queen's Bench Chief Justice Glenn Joyal found former City of Winnipeg chief administrative officer Phil Sheegl took a $327,200 bribe in 2011, during the construction of the Winnipeg Police Service Headquarters project. (CBC)

Winnipeg's former chief administrative officer tried to argue not all of the money a judge ruled he owes the city for damages belongs to him.

That's because some of the money involved in the dispute actually went to the city's former mayor.

But the Manitoba judge nonetheless ordered former CAO Phil Sheegl to pay all the money back.

In March, Court of Queen's Bench Chief Justice Glenn Joyal found Sheegl breached his duty as a senior city official when he accepted a bribe from the contractor hired by the city to build the Winnipeg Police Service headquarters.

The $327,200 payment to Sheegl from contractor Armik Babakhanians of Caspian Construction constituted a civil bribe, Joyal ruled.

"Any portion of that tainted money paid to Sheegl cannot be permitted to remain with Sheegl," he wrote in a decision issued in March.

In a subsequent decision last month, Joyal ruled the amount should be treated as damages for breach of trust, and is now payable to the city.

Sheegl's lawyer Robert Tapper said his client plans to appeal that ruling.

That appeal has not yet been filed, but a late March court filing from Sheegl in reply to Joyal's decision states half of the money he got "was paid to a person other than Sheegl."

Though that filing does not name that person, previous court documents have said that the money Sheegl was paid by Babakhanians was split with Katz.

Katz was not a defendant in the lawsuit, and there is no reference to Katz owing money to the city in Joyal's decision. 

In a judgment dated May 4, Joyal ordered Sheegl to pay the full amount as part of $1.1 million package of payments to the city.

Joyal ordered Sheegl to pay the city $200,000 in Canadian funds, plus nearly $32,000 in interest for part of the $327,000 worth of damages.

He was also ordered to pay $127,200 in U.S. funds, plus just over $18,000 in interest for the rest of the damages.

In addition, Joyal ordered Sheegl to return his $250,000 severance payment to the city, plus nearly $32,000 in interest, along with $100,000 in punitive damages and almost $333,000 worth of costs incurred by the city while it pursued the court case.

Sam Katz, Sheegl and Caspian Construction owner Armik Babakhanians say they engaged in a real estate deal while Katz was Winnipeg's mayor and Sheegl was the city's CAO. (CBC, dreammakerauction.ca)

In January 2020, the city filed a lawsuit against Sheegl, Babakhanians, Caspian Construction and numerous others who worked on the police headquarters project. The city claimed they conspired to defraud it of millions of dollars in the construction of the downtown building.

Sheegl maintained the money is part of a real-estate deal he and Katz did with Babakhanians in Arizona. He claims in 2011, Babakhanians purchased an interest in land he and Katz owned with other investors. 

A handwritten note outlined the real estate transaction. But the court heard the only other documentation to demonstrate it took place was what the city, in its court filings, described as a self-serving email dated January 2017 in which Sheegl described the Arizona land to his counsel.

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

Sheegl's March reply to the judgment said there are two problems with the court's ruling that he owes $327,200 to the city. 

Babakhanians maintains he has an interest in the Arizona land, and if the Caspian owner comes after Sheegl for the money, it will need to be paid, according to Sheegl's recently filed court document. 

"Sheegl must pay [Babakhanians] out without the benefit of the funds paid for the interest [in the land]," the document stated.

Sheegl said the second problem is the money was paid in U.S. dollars, at a time when the dollar rate was essentially the same as the Canadian dollar. 

"And thus it is respectfully submitted, should the ruling be upheld, that that sum be paid in Canadian funds," said the March 28 court filing.

Joyal's April decision on the payment of damages indicates he disagreed with that argument.

"The City is correct in maintaining that there is no reason why the Sheegl defendants should receive any advantage in respect to current currency calculations of the value of funds or exchange rates," Joyal wrote.

Katz did not immediately respond to a request for comment. 

Former Winnipeg CAO argued he should only be on the hook for half of $327K bribe if he loses appeal

1 month ago
Duration 1:09
Former City of Winnipeg Chief Administrative Officer Phil Sheegl says he plans to appeal the court ruling that orders him to pay back what is described as a bribe. A new court document also says Sheegl has only half the money he's been told he has to pay back to the city.

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

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