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 adopted the symbol to knock some sense and the right questions into the heads of Legislators, pundits, and other opinion makers.

Name:
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: black_rod_usher@yahoo.com

Wednesday, February 01, 2017

Katz and Sheegl. Forensic Files: Winnipeg Style.


What a week!  
There were so many stories breaking last week that we could hardly sit down to write about one when another came whizzing up.  We were so exhausted trying to keep up that we had to take the weekend off in Costa Rica to catch our breaths.  We were working 90 percent of the time, honest.
Without further ado, let's try to catch up...starting with Forensic Files: Winnipeg Style.
Can you believe it?  The former Mayor of Winnipeg and his best friend, once the most powerful civil servant in the city, have lawyered up and are waiting to be charged by the RCMP with taking kickbacks.  The pool on the day of the perp walk starts now. We've got March 31.
Details of the building case against ex-mayor Sam Katz and his pal Phil Sheegl are contained in applications for RCMP search warrants, which have been widely reported.  Robert Tapper, Katz's and Sheegl's mouthpiece, has added additional incriminating information, without knowing it.
In a nutshell, the RCMP say that Katz and Sheegl did favours for Caspian Construction in Winnipeg and in return Caspian paid a kickback in Arizona, laundered through companies owned by Caspian boss Armik Babakhanians and Phil Sheegl. Or, as Tapper put it to the CBC, "They're saying they took a bribe."
The RCMP say they followed the money---$200,000 from Caspian to Sheegl and half of that from Sheegl to Katz. Tapper says that Babakhanians was just coincidentally doing business with Sheegl and Katz in Arizona at the same time as he was getting contracts in Winnipeg from Sheegl to redevelop the downtown post office into a headquarters for the police department. The 200 grand was his share of a land deal involving all three (and maybe other members of a golf and country club), according to Tapper.
The money to Katz may have been described as a loan, but who can remember why after all this time, said Tapper. That could interest investigators from the tax department. but that's another story.
There's lots of numbers and dates flying around, but it's only when you put them into context that you experience an  "ah ha" moment.  So, follow us into the rabbit hole...
Winnipeg was faced with a dilemma when it learned that the post office was closing its massive downtown operation and moving to the airport.  The city could do nothing, and run the danger of having the giant building sit empty and deteriorate for years, if not decades, adding to the blight of the downtown. Or it could act.
City officials decided, on the advice of a consultant--- Shindico--- that the Canada Post complex would make a perfect new headquarters for the police department.  (What? You thought there could be a story about Sheegl and Katz with no mention of money flowing to Shindico?)
Throughout much of 2010 the city engaged in a series of false starts and u-turns over how to oversee such a massive project. The RCMP say that on Oct. 1, 2010, Sheegl met with Babakhanians at a restaurant that's so swanky its known by a number not a name. Babakhanians brought his son; Sheegl brought confidential emails about the post office project.
Tapper said that might have been unethical, but it wasn't criminal for him to do that.
By the time for after-supper drinks, Babakhanians had been recruited for the job of construction manager. There was one problem to overcome. His company was too small to qualify for the proper bonding. The solution---change the bonding requirement to a lower amount. The change was authorized by Phil Sheegl, who was the acting Chief Administrative Officer following the former CAO's resignation a month earlier.
A report later submitted to city council declared: ""The city, in consultation with various surety companies and at the urging of the Surety Association of Canada, determined that lowering the bonding requirements on the headquarters project could provide a broader base of potential bidders and potentially provide savings on the project cost."
When questioned by the Winnipeg Free Press years afterward, the president of the Surety Association of Canada, exploded. "Bulls**t. That's absolute hooey. "No one from this organization ever encouraged any such action by the City of Winnipeg at all. It begs the question of who is saying we did."
The City decided that the way to go was to hire a project manager, not a project coordinator (like we know the difference). "The benefit of this delivery approach was that it provided real world construction expertise to the project which could be incorporated into the design to help reduce costs," said a report to city council at a later date.
In order to qualify, Caspian partnered with Akman Construction in a bid under the name of CAJV, Caspian-Akman-Joint-Venture, get it?. The RCMP says that in his communications with city officials, Babakhanians dropped a lot of hints that Sheegl was best friends with Danny Akman, brother of president Robert Akman.
CAJV was one of four companies that bid on the first phase of the post office construction job. It was worth a paltry $50,000 but, said the RCMP,  "the City retained its right to award the Construction Phase Services for the Project at a later date."

Bids closed on Jan. 18, 2011. Three days later, Sheegl contacted Babakhanians's son to share some more confidential information---the identities of the other bidders (and presumably, their bids.)
In mid-February, Caspian "amended" their bid for the construction management job. Higher. $2.5 million higher ($70,000 a month over 3 years), but still lower than the next lowest bid.
The next day, it was announced that CAJV was the winner of Phase One---at the higher price.
The RCMP say they discovered an email written by Armik Babakhanians on Feb. 17, 2011, where he looks ahead to the final contract. According to the search warrant documents, that email read, in part:
"Phil said he will get approval for $126m however I think he wanted 2+2 for sam and phil but the rest for us... This will remain confidential for ever."

On May 19, 2011, Phil Sheegl formally assumed the duties of the city's CAO. (Here's where things get interesting.)  He wasn't officially hired until city council met May 25.
On June 4, Akman Construction pulled out of its partnership with Caspian, leaving Caspian alone and in line for the lucrative post office job.
Katz and Sheegl lawyer Robert Tapper dropped a bombshell when answering questions posed to him by reporters for the CBC. 
"Tapper said the property transaction was a handshake deal reached in May or June 2011 that Sheegl and Katz got around to putting on paper in May 2012."  is the way the CBC story eventually recounted it.
And the $200,000? The RCMP say the money didn't start flowing to Sheegl until after July 25, and to Katz on Aug. 2, 2011.   Tapper said the money was only a "down payment" on a deal involving property in a suburb of Phoenix, Arizona.


By the time the cheque was written, Sheegl had been granted the authority by city council to sole source a contract for the post office construction job. That contract eventually went to, wait for it, Caspian, under a much-ballyhooed and totally phony guaranteed maximum price.
More coincidences abound. It was around this very time that Sheegl also authorized a sole source contract to Shindico to build a fire station on Taylor Avenue, on land owned by Shindico.  And Sam Katz was getting tax bills sent to his home in Winnipeg on a house in Scottsdale, Arizona, a house owned by the sister of Shindico's chief financial officer. Katz eventually bought the million-dollar house the following year for $10 and "other considerations."  He's said he paid fair-market value for the house, but refuses to say what he paid.
As for Babakhanians, Katz has strenuously denied any friendship or business relationship with the man, despite what a former Caspian employee told RCMP as cited in an application for a search warrant.
"There is no relationship," said Katz, flatly when he was still talking to reporters one year ago. He did concede he sold Babakhians a portion of his box seats at the MTS Centre for Jets games. That prompted councillor Ross Eadie to say "I don't think that Sam Katz understands the optics and conflict of interest".

Katz's vision has improved one year later.

"The optics are terrible" said Tapper of the $200,000 traced to Sheegl, half of which went to Katz.

Labels: , , ,

Links to this post:

Create a Link

<< Home