Developer faces questions at public inquiry about money given to Winnipeg officials

WINNIPEG – A developer rejected suggestions Thursday that money he gave to two Winnipeg city officials was a thank you for getting a contract for the city’s new police headquarters.

Armik Babakhanians testified at the public inquiry into the project, which ran more than $70 million over its initial $135-million budget when it was completed in 2016. 

A judge in a civil court case, launched by the city, found in 2022 that Phil Sheegl, the city’s former chief administrative officer, accepted a bribe from Babakhanians, owner of Caspian Projects, the company that ended up with the major contract on the project.

Sheegl and Sam Katz, the city’s mayor when the contract was awarded, have both told the inquiry they received a combined $327,000 from Babakhanians for an unrelated real estate transaction in Arizona. The two have long said they sold Babakhanians an interest in property that they owned along with other investors — a deal the judge said was fictional.

Katz testified last week at the inquiry and said the real estate transaction was real. Katz was not accused of wrongdoing and was not a defendant in the city’s legal action.

Babakhanians was asked by the lawyer leading the inquiry, Heather Leonoff, whether the money — which started with a $200,000 cheque to a company controlled by Sheegl, marked as being for “consultant fees” — was a gift.

“I’m going to put to you, sir, that you sent the first $200,000 to Mr. Sheegl as a thank-you gift for the work he’d done in helping you get this project going. Would you accept that or reject that?” Leonoff said.

“I categorically reject that,” Babakhanians replied.

As for the “consultant fees” note on the cheque, Babakhanians said it was not uncommon for him to use such terms on cheques for different transactions.

The number 2 was also pointed out by Leonoff in an email Babakhanians had sent himself as a memo in February 2011 as negotiations with the city on the project were underway. In the memo, Babakhanians wrote that he had run into Sheegl on the way to a parking lot, discussed the project and “I think he wanted 2 + 2 for Sam and Phil and the rest for us.”

Babakhanians told the inquiry Sheegl didn’t specifically mention himself and Katz — that he himself added the names in the memo — and the meaning of “2 + 2” was unclear. Still, he said, the numbers bothered him and he discussed it with a family member who is also involved in his business. The two decided to ignore the matter.

“We (did) nothing. Business as usual,” Babakhanians said.

Sheegl told the inquiry earlier in the week he did not remember any discussion with Babakhanians involving the number 2, and said he never asked for, nor received, any share of money from Babakhanians’ contract with the city.

RCMP investigated the police headquarters project but no charges were laid. The Manitoba government agreed last year to a request from city council to call the inquiry.

Sheegl appealed the civil court ruling and lost. The Manitoba Court of Appeal said his actions amounted to “disgraceful, unethical behaviour by a public servant.” 

Sheegl repaid the city $1.1 million last year.

He told the inquiry Thursday he takes great offence to accusations he accepted a bribe, and worked hard to make Winnipeg a better place. He said the years since the controversy came to light have been hard on himself and his family.

“I’m social enemy No. 1, at least that’s how I feel.”

This report by The Canadian Press was first published Feb. 19, 2026.