The Black Rod

The origin of the Usher of the Black Rod goes back to early fourteenth century England . Today, with no royal duties to perform, the Usher knocks on the doors of the House of Commons with the Black Rod at the start of Parliament to summon the members. The rod is a symbol for the authority of debate in the upper house. We of The Black Rod have since 2005, adopted the symbol to knock some sense and the right questions into the heads of Legislators, pundits, and other opinion makers.

Location: Winnipeg, Manitoba, Canada

We are citizen journalists in Winnipeg. When not breaking exclusive stories, we analyze news coverage by the mainstream media and highlight bias, ignorance, incompetence, flawed logic, missed angles and, where warranted, good work. We serve as the only overall news monitors in the province of Manitoba. We do the same with politicians (who require even more monitoring.) EMAIL:

Tuesday, October 29, 2013

The Winnipeg Firehalls Fiasco: Only one man can get answers under oath. Guess who?

Let's sum up the reaction to the Winnipeg Firehalls audit:

*  Calls for a police investigation. The Taxpayers Federation has suggested the Winnipeg police or RCMP be involved.  The union that represents Winnipeg police added its voice to the idea, but says the RCMP should do it to avoid any hint of political interference.

*  Outside lawyers being brought in to take a second look at whether the audit indicates any illegal activity beyond the unethical preferential treatment that was uncovered. “I think that there (are) lingering questions that need to be answered,” said Coun. Scott Fielding, the chairman of the city's standing policy committee on protection and community services.

*  Renewed calls for the creation of an Ethics Commissioner for Winnipeg

*  Calls from other councillors -- and thousands of Winnipeggers -- for Mayor Sam Katz to quit

*  A plea from one city councillor, at least, for the province to intervene.

And that's on top of thousands of private conversations on how to fire the Mayor. Would a petition signed by tens of thousands do it? Can the Premier step in and dismiss a mayor? Is there any way to impeach him? (No...ed.)

The furor centers around three people. 

There's obviously Mayor Sam Katz. 

There's Sandy Shindleman, a friend of the mayor's who once proudly described himself as a founding partner in the Winnipeg Goldeyes Baseball Club’s Shaw Park in Winnipeg and who sat (and may still sit) as a director of Katz's Winnipeg Goldeyes Baseball Club Inc.  His company Shindico does a lot of business with the city. 

And, completing the circle, is Katz's best friend Phil Sheegl who was hired as the city's Chief Administrative Officer on the mayor's recommendation and personal endsement.

The audit found that Katz's best friend Sheegl secretly gave preferential treatment to Katz's business partner Shindleman's development company Shindico on the $15 million project to build four new fire stations. Sam Katz then did all he could to cover up Sheegl's actions and hide them from the public.

An observer might describe the trio as a cabal, which is defined as "a group of people united in some close design together, usually to promote their private views or interests...often by intrigue."

But certainly these three would be high up on a list of people who would be investigated by the aforementioned police and legal beagle reviews of the audit. You could add to that list the current Chief Operating Officer Deepak Joshi, CFO Mike Ruta, and Properties Manager Barry Thorgrimson, all of whom had a part in the secretive awarding of sole-sourced firehall contracts to Shindico.

You might even call the collection of names a shit list, which is defined ( as slang for a number of people or things regarded with contempt, distaste, disfavor, distrust, etc.: somewhat vulgar.  Distrust? Check. Disfavor? Check. Distaste. Check. Contempt? Maybe.

Is this beginning to sound familiar?

Last September, Gordon Warren, a frustrated citizen, put up posters around the city decrying alleged corruption at City Hall.  There's little difference between what he wrote on his posters and what police, politicians, and the people are saying today:

"Since Mayor Sam Katz was elected to office in 2004, hundreds of millions of dollars have been funneled from City Hall into the pockets of the following people, primarily through untendered contracts and shady land deals."

This is followed by a list of  13 names that Warren said he culled from news stories.

"The gross misconduct of the Mayor's office & City Hall has gone on for too long. Firegate is the final straw that will break their backs.

"Once the harsh lights of scrutiny of the Auditor General and the RCMP are turned towards City Hall, Sam Katz will be facing hard time at Stony Mountain and his cabal of cockroaches will be clutching their dirty money and running for cover."

Katz's defenders went ballistic. They ripped the posters down. They screamed anti-semitism. When it was pointed out that the names on the list were not all Jewish, they screeched that it didn't matter, all lists alleging corruption containing the names of Jews were anti-semitic. They demanded Warren be arrested.

When police announced the posters were not anti-semitic, millionaire Sandy Shindleman sued unemployed Gordon Warren for libel to silence him forever.

Well, it certainly looks like "Firegate is the final straw". Even before the Firehalls audit was released, Sheegl quit before he could be fired. Sam Katz's mayorality is on life support, at least until the next audit into the past five years of city real estate deals, comes out (and we've heard that it's going to be even worse than Firegate.) Leaving only Sandy Shindleman standing.

And, believe it or not, even  the Shindleman worm has turned.

While politicians and citizens run around trying to find someone to investigate deeper into the favoritism at City Hall, the ONLY person in Manitoba who can legally question Katz, Sheegl and Shindleman is --- wait for it ---- Gordon Warren.

As part of the lawsuit he can question them in the court discovery process. He can put them under oath. He can ask about those untendered firehall contracts, who knew what when, who made what decisions, who told the Mayor, or not.

The only hurdle is that Schindleman is a millionaire who can hire high-priced lawyers and Warren isn't and can't.

But ... what if authorities like, say, the city auditor or outside auditors Ernst and Young wanted answers, on the record, under threat of perjury.  They could cough up the money for an aggressive lawyer to question potential witnesses during discovery.

And everybody wins.

The Shindleman-Warren lawsuit is scheduled to start in late March.

Labels: , , , , , ,

Monday, October 28, 2013

About that million dollar house you bought for $10, Mr.Mayor.

Almost a year ago, Winnipeg Mayor Sam Katz was cocky, cold, and curt when the press discovered that he bought a house in a suburb of Phoenix,  Arizona, from Winnipeg developer Sandy Shindleman's sister-in-law.

The sparse and only record of the sale states that Katz paid $10 for the house valued at almost a million dollars. Terri Nordstrom, sister of Shindleman's wife, filed a "special warranty deed" in Colorado, where she lives, giving the price, and the Maricopa County Assessor's Office in Arizona provided an assessed value of the property.

(The Maricopa County Treasurer's office currently shows Katz hasn't paid his 2013 taxes, $7509 owed, which were due Oct. 1, 2013.)

Katz refused to answer questions about the house, other than to repeat like a broken record that he had paid "fair market value". It was a private matter and nobody's business how he knew Terri Nordstrom, when he paid for the house, and why tax bills were sent to his home in Winnipeg instead of Terri's home in either Scottsdale, Arizona, or Colorado. And why did she buy a $1.5 million house - - for cash, yet -- in Scottsdale, when she lives in Colorado, and then sell it four years later for $10?

Katz would only say that he was so filthy rich that he could drop a reported million cash on the Scottsdale house if he wanted to.  Being mayor must be lucrative because when he bought a house in Arizona in 2004, before becoming Mayor in a by-election, he had to take on a $749,000 mortgage. In 2012, cash was no object. the ensuing year and a bit, things have changed.  A lot.  Now, the purchase of that house is our business. It has become our business. And the mayor MUST cough up some answers.

Everything changed with the recent Firehall audit. 

The auditors determined that Winnipeg's top administrator, Phil Sheegl, gave preferential treatment to Shindico, the development company owned by Sandy Shindleman, in handing out a contract worth well over $15 million to build four new firehalls. He then hid the information from city council and the public. You'll find details of how Sam Katz worked hard to further the cover-up of Sheegl's finagling here:

Katz is inextricably tied to Sheegl's transgressions. Each is the other's alter ego. When promoting his best friend to the job of Chief Administrative Officer, Katz got ugly and personal at Councillor Jenny Gerbasi who argued Sheegl wasn' qualified for the job.

"When it comes to ability, intelligence and integrity, Coun. Gerbasi wouldn't even qualify to be in the same building, let alone the same room, as Phil Sheegl." declared the Mayor.

With that, Katz personally vouched for Phil Sheegl and his integrity. When Sheegl was forced out of City Hall under a cloud, that cloud covered Sam Katz as well. And since the Mayor represents Winnipeg wherever he goes, any taint affecting him affects everyone.

And that means revisiting the questions about that house purchase. Winnipeg must be the only city in North America where the mayor can buy a house for either a pittance or a huge sum in cash---with only the barest paperwork -- from a relative of the wife of arguably the city's best known 
developer, and it's greeted as business as normal.

The purchase was coincidentally concluded only days before the Mayor announced that his best friend Phil Sheegl would join the city's Chief Financial Officer to review his own decision to give Katz's other friend and business partner the job of building four new fire halls. The duo prepared a report which was never issued because the city auditor refused to endorse it.

That refusal led to the audit that forced Sheegl's departure from City employment. In the interests of full disclosure, Katz should immediately release that Sheegl-Ruta review report so the public can see how Sheegl intended to justify the process of giving Shindico sole-sourced contracts worth millions.

Then he should give a full and open account of his purchase of that house in Scottsdale. Including the release of bank statements showing what he paid, when he paid and to whom he paid. He could also pay his back taxes to Mariposa County while he's at it.

Labels: , , , ,

Friday, October 25, 2013

The Firehalls Scandal: It ain't the crime, it's the cover-up that gets you.

A majority of Winnipeg city councillors decided Wednesday that the way to recapture the public's trust was to appoint as the city's top administrator a man who deserves to be fired for his role in the gross mismanagement and blatant favoritism that characterizes the Firehalls Scandal that's consuming City Hall.
Way to go, team.

Eleven councillors voted to appoint Deepak Joshi, the current Chief Operating Officer, as acting Chief Administrative Officer (CAO) to replace his mentor, Phil Sheegl, whose disastrous term ended last week when he quit just days before he would have gotten the axe.

It's okay, they said, because Joshi will only be in charge of the city for a few months until a permanent CAO is picked.  And who wants to dwell on the past, when we can look forward to building a better city, blah blah blah.

Well, to quote Shakespeare, what's past is prologue. An audit into the disastrous project of building four new fire stations for Winnipeg found that Joshi was involved up to his neck in the lies and deception fostered by Sheegl.

One developer that never won a single tender got the job to build all four firehalls with a nod and a wink from former CAO Phil Sheegl.  Joshi was keep abreast of every major step of the process and helped keep the deals with developer Shindico secret from city council despite a clear directive from council to be informed of who got the contracts for the job.

Now he's being rewarded with the top job though he's barely less guilty of deceiving council than his predecessor.  And his role in the cover-up is just as great.

Ahh, the cover-up.  It's been all but glossed over in the reaction to the audit's findings. 

But the perpetrators deserve to be named and shamed and held accountable.  Here goes...
*  The Firehalls Scandal was almost uncovered first in July, 2012, by St. James councillor Scott Fielding.

One of the four new firehalls, Station No. 11, was being built in his ward and residents were upset at the loss of greenspace in the area.  City officials suggested a proposed shift in location of the station would "reduce the overall footprint of the station by about 600 square feet," to quote the only newspaper account in Canstar's The Metro weekly.

Fielding sat on Assiniboia community committee which had to approve the location change. The newspaper said he "noted a letter sent by the hotel (the Viscount Gort...ed) to the community about the hearing misled residents into believing the station was expanding in size and taking up more greenspace inside the cloverleaf when the opposite was true."

The Firehalls audit offers this information: " The original RFP specified a station of approximately 10,000 sq. ft. To meet the specification requested in the original RFP, Shindico’s response included a station design that was 11,564 sq. ft. The final design for Portage - Station #11 was 14,459 sq. ft."

In other words, the letter circulated by the Viscount Gort was accurate. The fire hall was significantly larger than local residents were told it would be.  Fielding was completely wrong when he accused them of misleading the public.

Wednesday, Fielding claimed he had been misled by city officials on the size of the station.  The cover-up had started.

Fielding was not interviewed by the auditors.  They spoke only to one councillor, Paula Havixbeck, the former chair of the protection committee, and only because she approached them.  Fielding never informed the auditors of being lied to by city officials and never identified who they were. He's still keeping that information to himself.

Had he pursued the information given to him by area whistleblowers, he could have stumbled onto part of the secret that Sheegl, Joshi and others were hiding from the public.

*  Instead, that distinction goes to CBC reporter Sean Kavanagh.  In August, 2012, he broke a story that developer Shindico was advertising to lease an abandoned firehall. The problem was that the land were the firehall sat had never been declared surplus by the city.

This looked like an interesting story because this was not the first time that Shindico had offered land that hadn't yet been designated surplus. It looked like the developer was getting tips from inside City Hall.  CBC didn't yet know how big the story was or would be.

But within days, it snowballed.

*  Barry Thorgrimson, the city's director of property, planning and development, revealed that the fire department had itself arranged a "land swap" with Shindico, and he had been left out of the negotiations. But, he said, "...the property was declared surplus and we are in a position to transfer titles over."


City sources quickly pointed out that the land had never officially been declared surplus. How could the director of property get it wrong?

*  A few days later, Mayor Sam Katz stepped in to explain, and further the cover-up.

It was no big deal, he said. "Everybody" knew the land Shindico was advertising was or soon would be surplus.  After all, it had been stated three years earlier in the city decision to start the process of upgrading fire stations that the cost would be partially offset by selling the land where the old stations stood. "Everybody" knew that, he said.

But "everybody", especially city councillors, sensed there was something odd and wrong about the land swap, and kept asking questions. A couple of days later, ‎Barry Thorgrimson, Director of Planning, Property and Development for the City of Winnipeg, popped up again, in the company of Fire Chief Reid Douglas.

"City Officials Insist Land Swap Above Board" read the headline in the Winnipeg Free Press.

"The two directors say the land swap originated in 2009 when the city issued a request for qualifications for companies capable of building four new fire-paramedic stations in Charleswood, Sage Creek, St. James and River Heights. Nine firms responded and seven were deemed to be qualified, Thorgrimson and Douglas said.
"The city sent those seven firms a request for proposals to build the fire halls, stipulating the successful bidder must propose sites for the relocations. There were specific geographic requirements to ensure emergency response times would be under six minutes, Douglas said."

"Of those companies, only Shindico responded and thus won the bid to build the new fire halls, Thorgrimson said."

Only that was false. Shindico didn't win a bid to build the new fire halls. Its bid was rejected along with the others. CAO Phil Sheegl personally made the decision to sole source the fire halls with Shindico.
Thorgrimson wasn't telling that story.

*  The very next day, the conspirators must have realized their version of the truth wasn't convincing anyone.
So they went for broke.

Phil Sheegl convened an unprecedented collection of city officials for a controlled news conference with one goal---to convince the select invited reporters that enough was enough, that "(T)here's nothing that's been done that's untoward."

Present were CAO Sheegl, Fire Chief Reid Douglas, COO Deepak Joshi, Property director Barry Thorgrimson, city solicitor Michael Jack, Materials Manager Barb D'Avignon, and Chief Financial Officer Mike Ruta. 

Here was a conglomeration of the most powerful civil servants working for the city. Would they lie to you?

"I think we followed all the procedures and policies we have," said Sheegl, and they nodded their heads.

"...they all stood beside Sheegl when he sounded the all-clear and said nothing to reporters from the Free Press and CBC Manitoba," wrote Free Press reporter Barley Kives, who was one of two journalists invited, in an angry column Tuesday. "All, in effect if not intent, lied to the public."

Perhaps the most egregious silence was from Barb D'Avignon, who had probably the lowest profile of all the faces around the table. Former Fire Chief Douglas told the auditors that the reason city council was never informed of who got the $15 million contract to build four new firehalls was because she advised him that it was "normal practice and acceptable" to split the project into four separate jobs to keep the budget of each under $10 million, the threshhold at which council had to be notified. This is why nobody knew Sheegl had given the job to Shindico.

It quickly became apparent the full court press had not worked. It was time for a new tack.

*  Four days later, a conciliatory Mayor announced he intended to clear the air over the firehalls land swap controversy. He was, he said, appointing CFO Mike Ruta to review the firehalls project and to determine if the city got value for its money. Assisting him would be CAO Phil Sheegl.

Somebody is stealing chickens from the hen house. I've appointed Mr. Weasel and Mr. Fox to investigate and get to the bottom of it.

Katz said he was against examining the processes that led to the land swap; he wanted a financial assessment first.

The Sheegl-Ruta report was ready by Sept. 21, waiting only for the signature of city auditor Brian Whiteside before it could be presented to the Mayor.

But Whiteside refused to sign on. There were still too many unanswered questions. Katz, who was in New York on city business, had to rush back. His carefully orchestrated whitewash report had been derailed.

*  A few days later, the Mayor had changed his mind again. He was now ordering the city auditor to launch an audit of the firehalls program, exactly what he had refused to do a few weeks earlier.
Katz may have known how that would turn out. The cover-up entered a vicious phase, where the best defence would be an offence. No more Mr.Nice Guy. He would lash out at anybody who challenged him, and he soon got his chance.

*  Rookie councillor Paula Havixbeck had become chair of the Protection Committee and had a seat at the table of Executive Policy Committee.  She was getting frustrated at the lack of answers she was getting regarding the escalating costs of the last of the four firehalls to be built. She did the unthinkable. She ordered Phil Sheegl and Deepak Joshi to appear before her committee.

Ordered. Nobody orders  Sheegl to do anything. And here was this rookie councillor ordering him to show up and answer her questions.

He showed up but he didn't answer much. Neither did his sidekick, Joshi. He did afterward declare to reporters, though, "For me as the CAO and the head of the administration, I have the support of Deepak Joshi and the CFO, my directors and my chiefs, who I believe have 110 per cent confidence in my leadership, as do I have 110 per cent confidence in their abilities."
* Sheegl's best friend, Mayor Sam Katz, was livid. How dare she not show the proper deference to Phil Sheegl.  Who did she think she was? He struck back immediately. Only 3 days later he removed Havixbeck from her post as head of the Protection Committee.

And two months later -- he kicked her off EPC.
It wasn't retaliation, he insisted.

It was the last gasp of the cover-up.  
Sure, Sheegl fired the fire chief after he got a preview of the audit and what the fire chief said about him. But his power to do much more was gone. 
He strong-armed a severance package and jumped out the window before he could be pushed, leaving Sam Katz to handle what was left of the cover-up. 

Joshi, and his 110 per cent confidence in Sheegl's leadership, is Katz's best shot.

He couldn`t even stop the vote to get outside legal advice into whether the audit uncovered criminal or unethical activity that should be brought to the attention of authorities.  Does aiding and abetting a cover-up fall under that direction?

Labels: , , , , , , , ,

Thursday, October 24, 2013

Fire Hall fix was in. Ex-Fire Chief says Sheegl told him: "I want Shindico..."

The fix was in right from the start.

The external auditors who dissected the corpse of the Winnipeg Firehalls Fiasco looked for evidence of whether Shindico, the construction company owned by Mayor Sam Katz's friend and business partner, received special treatment when it got the nod to build four new fire stations.

Their audit, released to the public Monday, reveals that favoritism for Shindico permeated the whole project like stink on a skunk.

But the smoking gun doesn't appear until the end of Appendix G---three maps, one letter and two emails from the back cover.

It's a revelation by former Fire Chief Reid Douglas of a conversation he had with Phil Sheegl, who was then the Director of the Planning, Property and Development Department and Deputy CAO. Douglas, at the time, was the Deputy Fire Chief. Sheegl wasn't yet his boss; Sheegl wouldn't be confirmed as the city's Chief Administrative Officer, the most powerful man in Winnipeg, for another two years.

But both men were working together on the firehalls project. Sheegl's boss, the CAO who he eventually replaced, had given him the job of assuming "oversight of the project," as the audit put it. Douglas was ordered by his boss to "take (the) lead role on behalf" of the Firefighter and Paramedic Service.

The City had issued an RFQ---a request for qualifications -- to developers to narrow down the pool of those who were interested and able to do the job. Prospects were asked if they could design, build, finance and maintain four new fire-and-paramedic stations in Charleswood, St. James, River Heights and Sage Creek.

It was April 20, 2009. Douglas told the auditors that they were in the CAO's office when the RFQ was put out and Sheegl told him flat out, "I want Shindico to build these firehalls."

Bada bing, bada boom.

Reid Douglas, who's been painted as the ringmaster of the firehalls scandal ever since the story broke 14 months ago, told the auditors he responded,"Then, let's hope they're the low bidder, then."  What a rube.

The alleged Sheegl declaration puts a whole new perspective on what happened next.

Six developers were informed they had made the cut, including, obviously, Shindico.

A month later, Sheegl, Douglas and a firefighters union rep were sent to London, Ontario to suss out firehall designs which could be used as a template for the four new stations in Winnipeg. They found one.

Early in the new year, 2010, the City issued a Request for Proposal to the six developers that had been identified. The terms of the RFP kept changing, and by the deadline only one bid had been received---from Shindico.  It was for way more than the city intended to spend, $18 million for the four stations instead of the city budgeted $15 million.

Too rich for our blood, said city officials.

But by the end of June, 2010, it was a done deal---Shindico was the favoured developer on "the project."  There was never another moment when anyone else was even in the running.  Sheegl's alleged wish had come true. Here's how...

*  Despite having its bid rejected, Shindico was given the nod from the Fire Department and the city's Material Management division to design the new St. James fire station, even though one email discovered by the auditors warned:

"We discussed the risks of direct negotiation with Shindico. Other builders could
complain that the City did not provide an opportunity to compete in a bid build

*  In August, reps from Shindico and Pre-Con Builders, the construction firm they would use to build all four stations, were traveling with city officials back to London, Ontario to discuss design elements.

* On Sept. 23, 2010, the city received an official construction estimate for a fire station in Sage Creek based on the London, Ontario design. It said costs would be higher than the $3 million the city budget called for.  File this information away for a second.

By this time, Sheegl was the man in charge of the city.  His boss, Glen Laubenstein, had resigned as of Sept. 14, 2010.  But Sheegl had been calling the shots for a lot longer, as you can see from four paragraphs up.

*  On Jan. 14, 2011, the city issued a Request for Proposals for Sage Creek, based on the London, Ontario design.  Remember, they had already been told it could not be built for the money the city had allotted.
Shindico informed the city auditors that a never identified mystery man from the city asked them for an alternate design for the new Winnipeg fire stations. Shindico was also the only developer who was allegedly encouraged to submit an alternate design in their bid.

* When the tender closed a month later they had eight bids in hand. All the bids were rejected. Seven because they were too high and Shindico's because it wasn't based on the London, Ontario design.

"The Bidders, other than Shindico, were not aware of the City’s $3 million budget nor were they aware of the alternate design possibility, both of which had been discussed with Shindico." states the audit report.

In short, Shindico knew the fire hall couldn't be built on the Ontario design at the price the city wanted to pay. So they didn't bother bidding, they just put in their own design to get the jump on the competition.  It worked.

Don't gloss over what happened.

City officials knew in late Sept. 2010 that the Ontario design was too expensive for the Winnipeg budget. BUT they still issued an RFP for Sage Creek based on the Ontario design in January, 2011. The only conclusion is that the tender was a deliberate ploy to eliminate non-favoured developers. Anyone following instructions was sure to produce a bid that was unacceptable.  And that's precisely what happened.
Only one failed to follow the rules and that developer, Shindico, was rewarded---by Phil Sheegl.

On March 10, 2011, CAO Phil Sheegl informed Reid Douglas that Shindico, once again the company that didn't win the tender, was getting the job.

"As soon as we commit to the alternate plan with them I’m sure we can conclude Taylor. WE ARE DOING THE ALTERNATE PLAN WE HAVE NO CHOICE otherwise all bets are off and we have no Sage Creek station and 20 firefighters for that non station approved in the 2011 operating budget."
And one, two, three, four.  Like that. Shindico got each and every job to build Winnipeg's new fire stations. Never once did they win a tender bid. But they had a friend on the inside. Right from the start.

Labels: , , , ,

Friday, October 18, 2013

A primer on the scandal that ends Sam Katz's political career

That's some audit you've got there, Mr. Whiteside.

It hasn't been released to the public yet and already the city's Fire Chief has been fired and Winnipeg's most powerful administrator has resigned, the mayor's re-election chances have evaporated, and reporters are circling like buzzards over a dying donkey in anticipation of what's between the pages.

On Monday, City auditor Brian Whiteside will give a committee of city council the first look at his audit (conducted by an out-of-Winnipeg firm on his behalf) of the convoluted, controversial and extremely fishy deals behind the construction of four new firehalls for Winnipeg.

Former Fire Chief Reid Douglas and former Chief Administrative Officer Phil Sheegl got their own peeks at what the audit said about their roles in the scandal, and both are now gone.

Coincidence,shouts Sheegl's close friend, Mayor Sam Katz. Neither man's departure had anything to do with the audit, insists Katz to derisive hoots from public and press alike.

But what else can he say? Katz still leads the cover-up of the scandal, which involves his business partner Sandy Shindleman's construction company, Shindico, as well as his longtime friend and confidant Sheegl.  Although, to save his own hide, Katz now claims he barely knows either man and rarely sees either socially. Cue the derisive hooting.

Its been a year since the firehall audit was ordered.  Memories have faded over what its all about. Here, then, is a primer we wrote on the scandal just under a year ago with all the details you need to know. Print and save to read along with the audit on Monday.

Tuesday, November 06, 2012

The Winnipeg Firehalls Scandal by the numbers

The last time we looked at the Winnipeg Firehalls Scandal we demonstrated how the project degenerated progressively so that it went from a one million dollar surplus on the first new fire station, to a pair of big deficits on the next two, to a fourth and final station being built by a process that's completely out of control with no tender, no contract, no fixed budget, no timeline and no oversight.

Now for the bad news.

To justify city council approval to cover a cost overrun of at least $2.2 million on the firehall currently being built in St. James, the last of the quartet okayed by council in 2009, the fire department submitted a "report".  In it was a financial accounting of the project so far--- what was spent on which firehall and how it compared to the original budget.

We spent a week pouring over the numbers.   Here, for the first time ever, is a detailed report of how the new firehalls were built. If you thought you knew how city administrators spent your money, you're in for a big surprise.

The overall budget for the four new fire stations was $15.3 million.  The city would borrow roughly $9.7 million from a federal stimulus/infrastructure program to add to approximately $5.3 million that had been (or would be) squirreled away from the 2006, 2008 and 2010 city budgets.

The money would be used to build four new replacement firehalls---Station 27 (Sage Creek), Station 18 (Charleswood), Station 12 (River Heights) and Station 11 (St. James.)

Money was allocated to each new firehall project to cover construction, land, and "other" (presumably soft costs like lawyers, architects, etc.).  The budget allocation for Sage Creek was $5 million;  Charleswood, $3 million; River Heights, $3.17 millon; and St. James, $4.17 million.

The land where the old fire stations stood in River Heights and St. James was to be declared surplus and sold.  They budgeted $340,500 in revenue from those parcels of land to be applied to the overall budget ($170,000 for the new firehalls in River Heights and St. James respectively).

Note: it was belatedly revealed in August that Fire Chief Reid Douglas made a secret and verbal deal for a land swap with Shindico, the developer building all the new firehalls.  The swap was to include the St. James and River Heights parcels plus land on Mulvey Avenue, in exchange for the land owned by Shindico on which the new River Heights station was built.  The city later put a caveat on the River Heights station that required the city to pay $960,000 for the Shindico land in case there was no swap. That means the city values the Mulvey land to be swapped at $620,000.
Construction of the Sage Creek firehall started in mid-July, 2011 and the station was opened in January, 2012. Time: six months.

They spent a shade more than $3 million on construction, meaning that after approved adjustments to the budget they saved $652,000. They also saved $358,000 on other expenses.  All told they saved $1 milliion on the Sage Creek station.

Note:  This is important.  Reid Douglas said he treated the firehalls project as four smaller and separate projects because each had its own unique elements.  This let him avoid telling city council who the builder was because he only needed to inform council what he was doing if the budget of a project exceeds $10 million.


       The Sage Creek station had a surplus of one million dollars. This money had to go back to general revenues.  It was not money that Douglas could use as a slush fund. And, seeing as how he was treating each firehall as a separate project, it could not be used on any of the other firehalls without city council approval.  That wasn't how he saw it, though.

The Charleswood and River Heights stations were built concurrently. They started in September, 2011 and finished at the end of March, 2012 (the deadline to qualify for stimulus money). Time: six months.

The bid for the Charleswood station came in more than half a million above the expected price. Plus they got hit by higher expenses (at least half to cover working over the winter).  The bottom line was a budget shortfall of $661,000.

 The construction of the River Heights station also cost more than expected ($245,000). That, plus the added costs of working over the winter, and the loss of $170,000 which was to come from the sale of surplus firehall land resulted in a budget shortfall of $614,000.

Together, the two firehalls cost  $1.2 million more than budgeted. Now, remember, all four new fire stations were separate projects. That means that the fire department should have gone to city council and asked separately for $661,000 to cover the shortfall on the Charleswood station and $614,000 to cover the shortfall on the River Heights station.  Instead, Reid Douglas applied the million dollar surplus on the Sage Creek station to the cost overruns on the other two suburban stations and in his report to the city's protection committee claimed a shortfall of only $264,000 on all three.

So when he needed to, to cover up that Shindico was the sole contractor, he claimed the budget for each project was under $10 million and he didn't have to notify city council. But when it was convenient, he treated the projects as one so he could move money from whichever was in surplus to the others that were showing overruns.
If this happened on an Indian Reserve, the Taxpayers Federation would be up in arms and screaming for somebody to resign.  But apparently, this is business as usual within the City of Winnipeg.  Remember that the city's top administrators, including Chief Financial Officer Mike Ruta, Chief Operating Officer Deepak Joshi, and Chief Administrative Officer Phil Sheegl have all declared publicly that Reid Douglas followed all the proper procedures and did everything by the book---their book.
This brings us to the fourth and last firehall project---the ultimate boondoggle, also approved by the city's top administrators.

Bear with us. We'll try to make sense out of this, although nobody is giving a straight story about anything to do with this project. And when they claim they are, they just raise more questions.

The contractor on the St. James station is Shindico. Only there is no contract. It seems that Reid Douglas just gave the project to Shindico without putting it out to tender or seeking other bids.  Add that to how hard he worked to keep Shindico's name away from city council and you've got a really, really big question that starts with the word favoritism and leads to cover-up.  Not to mention that Winnipeg's top administrators see nothing wrong with an untendered contract worth millions going to a company owned by a close friend of the mayor, especially the administrator who is also a close friend of the mayor.  Nope, nothing to see here.

Shindico got a permit from the city in March, 2012 to start pouring the foundation for Station 11.   Then, get this, four months later, in July, Fire Chief Reid Douglas "and Winnipeg Fire Paramedic Service project manager Christine Friesen" appeared before Assiniboia community committee asking for approval to move the proposed fire station closer to Portage Avenue.
[ ED. NOTE : Christine Friesen is actually Krisine Friesen.  We found her actual designation on this official city document:

City of Winnipeg : NEW No. 27 STATION PROJECT
Deputy Fire Chief : Mr. Reid Douglas Tel : 204-986-3555
Project Design Coordinator : Ms Kristine Friesen Tel : 204 391-2722 ]

FOUR MONTHS LATER? The other firehalls were built in six months.  What was going on here?  Douglas, and apparently "project manager" Christine Friesen, had been dicking around for four months after getting a permit to start pouring the foundation?  Do you think they could have negotiated a contract in those four months?

A contact with a time deadline? And a price? And, maybe, an idea of what they were building?  Because, as it turns out, nobody can give a simple answer as to what they're building.   A fire station with a museum? Without a museum? With a hazmat unit from St. Boniface?  No, not from St. Boniface.  A hazmat unit from the Maples? Uh, maybe. Or maybe just a training facility.   Isn't this the sort of thing you sort out BEFORE you start construction?

Just as you might want to know how big a building you're building.  Reid Douglas says now that it was always going to be 14,000 square feet.  Except that the Winnipeg Free Press says documentation shows it started as a 10,000 sq.ft. project. And every print story we can find says it was going to be 12,000 sq. ft. and not one says 14,000 sq. ft.

So we have a project for a fire station and nobody knows for sure how big it's going to be, what's going to be in it, or when its supposed to be finished.

Douglas told the Assiniboia community committee that moving the fire station closer to Portage Avenue would " increase visibility of the station, improve traffic sight lines and reduce the overall footprint of the station by about 600 square feet."  Apparently during the two-hour meeting, there was no discussion that the station had grown to 14,000 square feet.

We do now know that one month later, on Aug. 9, 2012, Shindico informed Douglas that the estimated cost of the new Fire Station 11 had ballooned and could be as much as $2.3 million more than initially budgeted.  Douglas says he told Ruta, who told him to go to city hall to get the extra money.  Apparently Ruta wasn't the least big curious about why the cost was now 56 percent higher than predicted a year earlier. Or how the other projects were doing. On budget? Not on budget?  Isn't the financial officer in charge of how your money is spent? In this case he apparently couldn't care less about an overrun of greater than $2 million.

Something else of interest happened in August, 2012.  Shindico put the former St. James fire station land up for lease.  Shindico did not own the land.  It was part of the secret land swap Douglas had negotiated,though.  Coincidence?  Yeah, that's it. Coincidence.

But that coincidence was spotted by CBC which reported Shindico's odd listing. And though Shindico pulled it immediately, it opened the door on the Scandal that's sweeping the city.

While reporters were scrambling to report the Shindico old firehall land-lease story, the company was apparently hard at work on the new St.James station.  Because, according to the report submitted to the city,  by Sept. 9, 2012 the fire department had spent $858,000 on its new firehall.  That's out of a budget of $4.1 million.
It looks like they poured the foundation at last.

But here's where the story get even more queer.  Shindico was saying the project would now cost $6.5 million or $2.2 million more than the initial budget.  Douglas dutifully went to Protection Committee seeking that extra money.  He intimated, and Mayor Sam Katz echoed, the suggestion that Shindico was finishing the work at its own expense while waiting to be repaid by the city.

Katz said he has no issue with construction taking place without a contract.

"I think the private sector is certainly putting their faith in city hall," the mayor said. "My understanding is they had a contract award for the foundation and now they're acting in good faith."

Except that there should be $3.1 million in the kitty waiting to be spent.  Why would anybody say Shindico is working for free with the expectation of being repaid later? They are being paid by city taxpayers and won't need that additonal $2.2 million for a while yet.  Unless, ha ha, that $3 million has been spent somewhere and nobody is telling. Ha ha.

Katz wants the $2.2 million fast-tracked to Shindico.  He says that would keep the budget from ballooning even further with winter costs.  How's that?  It took six months to build each of the other fire station.  That means construction on the St. James station will carry on all winter in any event.

And costs will increase accordingly.

Contract?  We don't need no steenking contract?

Labels: , , , , , , , ,