City of Winnipeg hasn't collected any money it's owed in police-HQ settlement, puts $28M mortage on properties

The City of Winnipeg has collected zero dollarsof the millionsit's owed as a result ofcivil litigation against the contractor of the Winnipeg Police Service headquarters and the former city chief administrative officer who was found to have accepted a bribe from the builder.

The city quietly placed a $28-million mortgage on at least five properties associated with police headquarters contractor Caspian Construction this pastApril.

The move cameone year after city council voted tosettlewiththe so-called Caspian defendants over lawsuits alleging fraud, secret commissions and construction deficienciesin theprocurement and building of the headquarters downtown on Graham Avenue.

The city hasnot seen a penny of the $21.5-million and growingsettlement it entered into with Caspian, company principal Armik Babakhanians, his wife and son, and several associated companies.

"We have property now that's secured as to ensure we are paid back the monies owed," Coun. JeffBrowaty, who chairs the city's finance committee,said on Friday.

The amount owing increases as time goes on.Caspian has already missed the first deadlineto pay $21.5 million, which means it owes $22.5 millionif it paysby March 2025, $23.5 million if paymentis made the following year, and $28 million if full payment is not made by March 2026.

Browaty saidappraisershave been sent out to estimate the value of Caspian's assets.

"If they were to default," Browaty said, "certain properties were guaranteed to the city if they should not pay."

According to property records, the city has placed the$28-millionmortgage on at least five Caspian-associated properties, including:

• 611 Academy Rd.,which is assessed at $4.8 million.
• 621 Academy Rd., which is assessed at $3.5million.
• 2245 McGillivrayBlvd., which is assessed at $1.8 million.
• 2233 McGillivray Blvd., which is assessed at $5 million.
• 1225 PlessisRd., which is assessed at $3.9 million.

Other properties may have been secured by the city, but when asked for a list, city spokesperson David Driedger told CBC News he's not able to share any more details.

"The city continues to take steps to ensure that both the court-awarded damages as well as the terms of settlement approved by council are completed," Driedger wrote in an email.

No payment from Sheegl

Driedger said the city has not received payment from former CAO Phil Sheegl, either.

Sheegl was initially named in the city's case against Caspian, but he fought and won the right to have hiscase heard separately.

He faced allegations that he received a secret commission.

Manitoba Court of King's BenchChief Justice Glenn Joyalfound that Sheegl accepted a$327,000 bribe from Armik Babakhanians.

It's an "irrebuttable presumption" thatBabakhanians intended to influence Sheegl by the payment, and Sheegl was influenced by that payment and the city suffered damage, Joyal wrote in hisMarch 2022 decision.

Joyal ordered Sheegl and his companies to pay back the bribe,his $250,000 severance package from the city, plus court costs, damages and interest, for a total of about $1.1million.

The lawyers representing the Caspian defendants and Sheegl did not immediately respond to CBC's requests for comment.