Official hired to protect city's interests in Winnipeg police HQ project got $105K 'kickback': lawsuit
In another new allegation, city also claims subcontractor received $1M in 'project profits'
The City of Winnipeg alleges the director of its downtown police headquarters project — an official hired to look after the city's interests — received a $105,000 "kickback" from the main contractor on the job, according to a recent court filing.
That allegation is part of a notice of motion filed May 4 as part of the city's ongoing lawsuit against contractor Armik Babakhanians, his company Caspian and dozens of other defendants.
The city claims police headquarters project director Ossama AbouZeid and his company Dunmore received $105,000 from Mountain Construction, a Babakhanians-controlled company.
In a civil judgment, Manitoba Court of Queen's Bench has already ruled that former Winnipeg chief administrative officer Phil Sheegl received a bribe when he accepted a $327,200 payment from Mountain Construction.
Sheegl, who was ordered to pay the city $1.1 million in damages, plans to appeal that decision, his lawyer Robert Tapper has said.
The city launched its lawsuit in January 2020, alleging more than two dozen defendants were involved in a "scheme" of fraud, embezzlement and kickbacks related to the construction project.
The latest court filing seeks to amend the city's claim by adding more allegations, people and companies to the lawsuit, which contends the defendants conspired to inflate and overcharge for work on the $214-million project.
In the new filing, the city claims Mountain transferred the funds to AbouZeid and Dunmore in April 2011.
That was one month before Dunmore's contract with the city started, and several months before Caspian was awarded a $137-million contract to renovate a former Canada Post warehouse building into the new Winnipeg Police Service headquarters.
The city claims in the filing the money was transferred "with the knowledge that Dunmore and/or AbouZeid were agents of the city" in a business relationship with other defendants "at the time the kickbacks were issued, in order to influence them to procure one or more of the defendants other unfair procurement advantages."
In earlier court filings, the city called AbouZeid and Dunmore "co-conspirators" with Sheegl and Babakhanians. Those documents allege Sheegl helped ensure a Winnipeg Police Service employee was removed as a project manager on the police HQ project and AbouZeid was hired as project director.
The city's court filings include excerpts from email exchanges between Babakhanians and Peter Chang, an official who worked for the structural engineering firm Adjeleian Allen Rubeli.
Chang is also being sued by the city.
Chang wrote to Babakhanians to vent his frustrations with the project in 2012, according to the court filings.
Babakhanians wrote back to Chang, saying "I have Ossama there because he brings no other value than agreeing to anything also he is on that board of some city related issues," according to the court filing.
"Unfortunately he became a toy in the hand of cops," he wrote. "So guys I have many projects lined up just do me proud let's get this crap out of way."
AbouZeid's legal counsel declined to address the kickback allegations.
"We have no comment regarding the proposed pleading amendments. We will respond in court," Jamie Kagan said in a statement.
"Our client denies any and all wrongdoing and quite frankly is not the focus of the litigation."
Subcontractor got $1M in 'project profits': city
In another new allegation in the May court filing, current Winnipeg chief administrative officer Michael Jack claims Peter Giannuzzi, Jr. — a police HQ subcontractor already named in the city's lawsuit — received two $500,000 payments from Mountain Construction, the Babakhanians-controlled company.
Jack says in the filing that the city obtained an email exchange between Giannuzzi Jr. and Armik Babakhanians' son Shaun Babakhanians, whom the city is also suing. A spreadsheet was attached to that correspondence.
In that spreadsheet, Giannuzzi referred to, among other things, "minor home improvements [being] written off on projects" and "project profits" of approximately $12.5 million related to the police headquarters project, Jack says in the filing.
The spreadsheet calculates Gianuzzi's "total anticipated compensation" at just over $1.6 million, the filing says.
The city also has a copy of a January 2014 invoice submitted by a Giannuzzi Jr. company — 6820540 Manitoba Ltd. — to Caspian for "Consulting & Quantity Services, Multiple Projects," Jack says in the court document.
The filing also seeks to add Giannuzzi's father, Peter (Pietro) Giannuzzi, Sr., of the firm G&G Interiors Ltd., to the list of defendants.
Forensic accountant's audit
The city hired forensic accountant Victor Neufeld to do an audit of police HQ records.
Neufeld said he found Caspian claimed nearly $8 million for G&G invoices related to drywall work on the police HQ, according to a May 4 affidavit.
However, Caspian payments to G&G totalled less than $6 million, Neufeld's affidavit says.
"[Caspian] apparently claimed more than $2 million above its total identified payments to G&G in respect of its drywall work," Neufeld wrote.
The city's previous court filings say Peter Giannuzzi Jr. and his numbered company were shareholders in yet another company named in the lawsuit, Fabca-PMG Projects Ltd.
It was incorporated in July 2013, during the construction of the police HQ.
That was months after Caspian had already submitted the last known Fabca invoice to the city, according to a January 2020 Neufeld affidavit.
Giannuzzi Jr. was also a Caspian employee and on-site project manager, according to a Caspian organization chart included in the court documents.
Neufeld's 2020 affidavit alleged that Caspian billed the city for $20.7 million worth of work it said Fabca companies conducted on the police HQ.
"It is unclear how Fabca could perform, without assistance from or involvement of other parties, the volume of Fabca-invoiced work given that Fabca had only 4 persons security-cleared to do project work," the court document stated.
The Giannuzzis and Babakhanians did not comment to CBC News.
The city's lawsuit remains before the Court of Queen's Bench.
Prior to the civil lawsuit, the police headquarters project was the subject of two external audits and an RCMP fraud and forgery investigation.
That investigation, which spanned five years, ended in 2019 with no charges laid.