Inquiry finds former mayor Sam Katz and ex-CAO Phil Sheegl breached trust in police HQ project

Commissioner Garth Smorang’s 193-page report on the Winnipeg police headquarters scandal sharply rebuked former mayor Sam Katz and former chief administrative officer Phil Sheegl for undisclosed financial dealings with contractor Armik Babakhanians. The inquiry found that Babakhanians paid $327,200, which was divided equally between Katz and Sheegl, and that the contractor inflated project costs by $42 million. It also highlighted procedural breaches, such as changing bonding requirements to allow Babakhanians to bid and awarding a $137-million contract without competitive bidding.

The $209 million project was completed two years late and $74 million over budget, prompting multiple audits, a five-year RCMP investigation, and lawsuits that recovered over $29 million for the city. Smorang issued 25 recommendations to improve procurement oversight, strengthen the integrity commissioner’s powers, and amend provincial subpoena laws. He praised several city officials for their efforts to protect municipal interests amid the controversy.