Manitoba

Sam Katz says it 'would have been smarter' not to make land deal with police HQ contractor

Former Winnipeg mayor Sam Katz says he "probably should not have" engaged in a real-estate deal with the owner of Caspian Construction while that firm was hired to work on the city's police headquarters.

'In retrospect, I probably should not have allowed the sale to take place,' former Winnipeg mayor says

Former mayor Sam Katz says it probably would have been smarter, in retrospect, not to have engaged in a real estate transaction with Winnipeg's police-HQ contractor. (Trevor Brine/CBC)

Former Winnipeg mayor Sam Katz says he "probably should not have" engaged in a real estate deal with the owner of Caspian Construction while that firm was hired to work on the city's police headquarters.

In his first direct comments regarding an Arizona land transaction involving Caspian owner Armik Babakhanians, Katz said he had no direct involvement in the transaction but suggested it would have been wise not to have been involved at all.

"In retrospect, I probably should not have allowed the sale to take place," Katz told reporters on Thursday outside Shaw Park. "There's no question about that. That would have been a smarter thing to do, but I wasn't directly involved in the real estate. I was an investor. So, you go with the punches."

In 2012, Katz received a $127,200 cheque from Babakhanians and gave half the proceeds to then-Winnipeg chief administrative officer Phil Sheegl, Katz's lawyer Robert Tapper confirmed in February.

Sam Katz says it 'would have been smarter' not to make land deal with police HQ contractor

CBC News Manitoba

4 years ago
1:54
Former Winnipeg mayor Sam Katz says he "probably should not have" engaged in a real estate deal with the owner of Caspian Construction while that firm was hired to work on the city's police headquarters. 1:54

Tapper provided details of the transaction in an effort to discount an RCMP allegation that Babakhanians paid a $200,000 secret commission to Sheegl. The allegation was made in documents police presented to a judge in June 2016 in order to get permission to search Sheegl and Katz's bank accounts.

No charges have been laid in relation to the allegations, which have not been proven in court. Katz was not suspected of a criminal offence in any of the documents obtained by CBC News. 

According to a document provided by Tapper dated May 1, 2012, Babakhanians agreed to pay $327,000 Cdn for a partial interest in a piece of Arizona land.

One of Sheegl's companies, Winnix Properties Corp., holds the interest in trust for himself and partners such as Sam Katz, according to an email from Tapper earlier this year. Tapper said his clients made the deal verbally with Babakhanians in 2011, but only got around to putting it on paper the following year.

Caspian was awarded the $50,000 first phase of the police headquarters contract on Feb. 10, 2011. That involved pre-construction services. The firm was awarded the $137-million second phase of the contract on Nov. 18, 2011.

In documents provided to a judge, the RCMP alleged a Sheegl-controlled company received $200,000 from a Babakhanians-controlled company on July 22, 2011. Tapper described this as a down payment on the $327,000 deal.

The $200,000 payment to Sheegl came days after city council gave the former top bureaucrat power to award contracts for the police headquarters project. Sheegl then wrote a cheque for $100,000 to Katz marked "loan."

Katz said Thursday he had no business involvement with Babakhanians. The $127,000 he received from the contractor was "basically returning of equity," Katz said.

"Basically [I] had an investment in some property which was sold and that's really the end of that," Katz said. "I was an investor in some property that we sold and I'll just leave it at that for the time being."

Sam Katz, right, stood alongside Mayor Brian Bowman at a street renaming on Thursday. The current mayor wants the province to call an inquiry into events that transpired during the former mayor's time in office. (Trevor Brine/CBC)
Katz made his comments after he and Mayor Brian Bowman unveiled an honorary renaming of Portage Avenue East. It will be called Winnipeg Goldeyes Way for five years, in honour of Katz's ball club, which has won two straight championships.

In a scrum with reporters, Bowman repeated his desire for provincial government to call an inquiry into several Winnipeg real estate transactions and capital projects completed during Katz's time in office. Those projects include the police headquarters, which remains under RCMP investigation.

Katz said he takes no issue with Bowman's desire for an inquiry.

"The current mayor has to make his decision and council will do what council has to do. I don't have any problem with that," Katz said.

Brian Pallister's Progressive Conservative government has not expressed support for an inquiry. 

ABOUT THE AUTHOR

Bartley Kives

Reporter, CBC Manitoba

Reporter Bartley Kives joined CBC Manitoba in 2016. Prior to that, he spent three years at the Winnipeg Sun and 18 at the Winnipeg Free Press, writing about politics, music, food and outdoor recreation. He's the author of the Canadian bestseller A Daytripper's Guide to Manitoba: Exploring Canada's Undiscovered Province and co-author of both Stuck in the Middle: Dissenting Views of Winnipeg and Stuck In The Middle 2: Defining Views of Manitoba. His work has also appeared in publications such as the Guardian and Explore magazine.

With files from Caroline Barghout and Joanne Levasseur

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