Winnipeg city council approves $21.5M deal to end police HQ lawsuits

Winnipeg city council has approved a deal to settle fraud and deficiencies lawsuits against dozens of people and companies involved in the procurement and construction of Winnipeg police headquarters on Graham Avenue.

Council voted 14-2 on Thursday to cease legal action against police-headquarters contractor Caspian Construction, its owner, Armik Babakhanians, and dozens of other defendants in exchange for a payment of no less than $21.5 million.

The settlement does not include former Winnipeg chief administrative officer Phil Sheegl and several other defendants in a legal action that was severed from the city's original lawsuit. 

A court ruled last year that Sheegl accepted a $327,200 bribe from Babakhanians. Sheegl asked the Manitoba Court of Appeal to overturn that ruling, and a decision is expected later this year.

Couns. Russ Wyatt (Transcona) and Matt Allard (St. Boniface) voted against the settlement.

Wyatt says he wants to see a written copy of the legal terms between the city and the defendants, but the city's legal staff would not comply. The councillor did not attend the first of two council seminars about the settlement and walked out of the second one within minutes because he said his assistant was not permitted to remain in the meeting.

Wyatt also tried to persuade his colleagues to send the settlement to another set of lawyers for review, but his motion was defeated 13-3.

According to a report authored by city solicitor Harold Dick, the settlement calls for the city to recoup $21.5 million if the money is paid within a year of council approval. The settlement would rise to $22.5 million if the cash is received within two years and $23.5 million if the payment is made within three years.

If full payment is not made within three years, the city would receive $28 million.

Council approved a Wyatt amendment to require city staff to report back about the status of the repayment.

The police headquarters opened in 2016 after the city spent $214 million buying Canada Post's former office tower and warehouse complex on Graham Avenue and converted it into a new home for the Winnipeg Police Service.

City council originally approved the project in 2009 at a total cost of $135 million for both the purchase and construction. The construction component alone ballooned to $137.1 million by 2011 and then eventually to $156.4 million, not including additional work outside the scope of the core contract, now described by the city as "soft costs." 

The construction component of the project was the subject of a city-commissioned external audit in 2014 and a five-year RCMP investigation that concluded in 2019 without any charges.

The city then launched a civil action against dozens of people and companies, initially for deficiencies in the building and later for fraud related to the project. The case against former CAO Sheegl was then severed from the suits against other defendants.