Former Winnipeg bureaucrat questioned at inquiry on money from contractor

WINNIPEG — A former chief administrative officer with the City of Winnipeg faced more questions Wednesday about money he received from a contractor who was doing business with the city on a major capital project.

Phil Sheegl testified at a public inquiry into the development of the Winnipeg Police Service headquarters building — a project that ran more than $70 million over budget by the time it was completed in 2016.

A judge in a civil court case, launched by the city, found in 2022 that Sheegl accepted a bribe from Armik Babakhanians, owner of Caspian Construction, the company that ended up with the major contract on the project.

Sheegl has maintained the $327,000 was for an interest in a property he and other investors owned in Arizona — a deal the civil judge said was fictional. The first instalment of the money came in 2011, two days after Sheegl was granted authority by the city to award contracts on the headquarters project.

A lawyer for the city, Michael Finlayson, told the inquiry there was almost no documentation about the Arizona property transaction, except for a handwritten trust agreement Sheegl drew up after.

In questioning Sheegl, Finlayson suggested there was no real estate transaction — an assertion that Sheegl said was false.

“The payment of $327,200 had nothing whatever to do with property in Arizona … it was money which was an incentive to you … to help Mr. Babakhanians on the Winnipeg police headquarters project,” Finlayson put to Sheegl on Wednesday.

“You’re totally incorrect,” Sheegl said.

Finlayson pointed to other issues that he said indicated the property deal was fictional. There were dozens of emails between Babakhanians and Sheegl at the time focusing on the headquarters project. No emails, not even ones from Sheegl’s personal email account, mention any property transaction.

Other co-investors in the Arizona property were not told of any sale to Babakhanians at the time, except for former mayor Sam Katz, who also received money from Babakhanians.

“It was because there was no such deal,” Finlayson said.

“That is completely false,” Sheegl responded.

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.

On Tuesday, Sheegl told the inquiry that he now realizes he was in a conflict of interest by selling a property interest to Babakhanians at the same time Babakhanians was working on a major city contract.

Babakhanians is scheduled to testify later this week.

RCMP investigated the 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 Sheegl’s actions amounted to “disgraceful, unethical behaviour by a public servant.”

Sheegl repaid the city $1.1 million last year. The inquiry was told Wednesday that the city successfully applied to an Arizona court to recoup the equivalent in U.S. funds because Sheegl didn’t have assets in Manitoba.

“And you contested that. There was a contest about whether the City of Winnipeg should be allowed to have a judgment against you in Arizona. Correct?” Finlayson asked.

“Correct,” Sheegl replied.

This report by The Canadian Press was first published Feb. 18, 2026.

Steve Lambert, The Canadian Press