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Caspian Construction principal Armik Babakhanians faced a barrage of questions at the Winnipeg police headquarters inquiry Friday about an Arizona land deal a Manitoba court described as a concoction to explain away a bribe.
City of Winnipeg lawyer Michael Finlayson asked Babakhanians during cross-examination if he was aware there was “not a single document that refers to this so-called investment” in Tartesso, Ariz., submitted during disclosure in a lawsuit related to the headquarters project.
“It was a handshake deal,” Babakhanians told the inquiry. “There wasn’t much documents.”
Finlayson also asked Babakhanians about an examination for discovery in the lawsuit, where he said Babakhanians didn’t know the name of the area where the land was located or what it was worth.
That exchange Friday came after a judge ruled in 2022 that former Winnipeg chief administrative officer Phil Sheegl accepted a $327,200 bribe from Babakhanians, whose company was awarded the contract for the headquarters project.
The inquiry previously heard Sheegl was with the city from 2008 to 2013. His time there included the period when the city planned and started renovating the former downtown Canada Post complex into a new headquarters for the Winnipeg Police Service.
Sheegl, Babakhanians and former mayor Sam Katz all told the inquiry there was no bribe and said the money from Babakhanians was part of the Arizona land transaction.
The police headquarters project had an initial budget of $135 million. (CBC)
Court of King’s Bench Chief Justice Glenn Joyal’s 2022 decision said the Tartesso deal “was a concocted story” made up in 2017 after an RCMP investigation uncovered the payment from Babakhanians.
That decision, which ordered Sheegl to pay the city roughly $1.1 million, was upheld by the Manitoba Court of Appeal the next year. Babakhanians and others have settled a separate lawsuit for as much as $28 million.
The Appeal Court decision said whether the Tartesso deal was real or fabricated to cover up a bribe “is immaterial in law” and that in either scenario,” the Sheegl defendants are liable for civil bribery.”
In addition to two City of Winnipeg lawsuits, the police headquarters project ended up being subject to delays, cost overruns, audits and an RCMP investigation that resulted in no charges.
City lawyer Finlayson asked Babakhanians Friday whether he agreed that Sheegl interceded on Caspian’s behalf to reduce construction bonding requirements in the headquarters project — money construction companies have to put up in case they don’t finish the work — so Caspian could qualify for the job. Babakhanians told the inquiry Caspian would have qualified regardless.
Babakhanians to continue testifying
The inquiry was previously shown evidence of two payments Babakhanians made: one to Sheegl for $200,000 in 2011 and another to Katz for $127,200 in 2012.
It previously heard the $200,000 cheque to a Sheegl-controlled company from a Babakhanians-controlled company came on July 22, 2011 — two days after city council granted Sheegl the authority to award the police headquarters construction contract.
Inquiry counsel Heather Leonoff questioned Babakhanians at length about the Tartesso deal during his first day of testimony Thursday, asking why he didn’t have documentation for the land he said he bought.
Babakhanians told Leonoff he couldn’t remember when he first saw the handwritten agreement about that deal, which was submitted as an inquiry exhibit, and that he still wasn’t sure which of his companies owned the land.
City council approved the purchase and renovation project for the new police headquarters, with a budget of $135 million, in 2009. By the time the police service moved into the building in 2016, the cost had ballooned to $214 million because of construction delays, change orders and flood damage.
The inquiry at the downtown Winnipeg offices of the Public Utilities Board began earlier this month. It is scheduled to hear from more than 30 witnesses and is set to continue until June.
Babakhanians is expected to continue being cross-examined later Friday.
