Surprising announcement opens door slightly for accountability in police HQ saga

Early Monday afternoon, it looked as if former Mayor Sam Katz, former chief administrative officer Phil Sheegl and contractor Armik Babakhanians were going to finally and successfully escape the long arm of the law for their roles in the Winnipeg Police Service headquarters scandal.

Monday was the day the final report of the commission of inquiry into the WPS project was going to be made public. Not surprisingly, commissioner Garth Smorang did not recommend charges against any of the principal characters; the commission’s mandate precluded recommending the laying of criminal charges.

It seemed as if Manitobans were going to be once again reminded that nobody was going to be held truly and fully accountable for one of the worst scandals involving taxpayer money in Manitoba history.

And then, the script flipped.

Just moments before Smorang was scheduled to face reporters and review his findings, the Manitoba Prosecution Service made the stunning announcement it was taking a third look at the case.

“Additional information and evidence came to light through the public inquiry,” the statement read. “As a result, in July 2026, MPS commenced a further review to determine whether new evidence is available and admissible that would affect the previous assessment of potential criminal charges in this matter. We are now in possession of the material presented at the inquiry.”

You may remember that the prosecutions branch declined to press charges in 2019 despite a recommendation from the RCMP to do just that. It continued to stick to its position even after explicit evidence uncovered by the RCMP became public through a civil lawsuit that found Sheegl accepted a $327,000 bribe to ensure Babakhanians got the WPS headquarters contract, and that he shared the money with Katz.

Questions about why criminal charges were not laid continued, prompting MPS to ask an independent prosecutor in 2025 to review the case again. The prosecutions service said the outside review confirmed “the Crown would be unable to obtain a criminal conviction beyond a reasonable doubt.”

That suggested the case against Katz, Sheegl, Babakhanians and a half-dozen others who fraudulently inflated bills, misappropriated funds and paid kickbacks to public officials was dead and buried.

Apparently not.

In Monday’s news conference, Smorang clarified that because witnesses were compelled by subpoena to testify at the inquiry, by law none of their testimony can be used as the basis for criminal charges. Documents, he noted, are another matter.

It seems remote but possible that the inquiry uncovered correspondence, phone records, financial records, invoices or even hand-written notes that escaped the original RCMP investigation and the civil lawsuit against Sheegl.

At this point, it is impossible to determine exactly which documents fall into the category of “new,” although we might surmise they do not necessarily reveal new misdeeds. Rather, they could serve as additional and possibly definitive evidence of criminal acts the Crown previously concluded it could not prosecute beyond a reasonable doubt.

The prospect of new evidence of criminal acts is not the only reason why this inquiry was a triumph.

The prospect of new evidence of criminal acts is not the only reason why this inquiry was a triumph. We can also credit Smorang for writing the clearest and most compelling narrative to date, a report he entitled A Sad Tale of Mismanagement, Misconduct and Misrepresentations.

The final report is a painstakingly detailed account of moral, ethical, contractual and legal transgressions by the elected officials and senior public officials overseeing the $214-million retrofit of the former Canada Post building downtown so that it could be used as headquarters for the WPS.

Originally pegged at $135 million in 2009, the project to establish the new HQ was beset by delays and cost overruns. By the time it was completed in 2016, the price had soared to $214 million.

The job done by Smorang cannot be overstated.

He was asked to dig into a story where so many of the painful details of this project have been made public. They included the way Katz, Sheegl and Babakhanians exchanged cheques worth hundreds of thousands of dollars for purported business deals, despite little or no evidence the deals were in place at the time the money was paid.

Smorang observed that Katz, Sheegl and Babakhanians essentially became ensnared in cage built on repeated lies.

The three men denied that bribes had been paid and argued the money they were exchanging was for a real estate deal in Arizona. At the same time, Smorang noted Katz and Sheegl clearly helped Babakhanians get more money for the WPS contract he wasn’t entitled to, without ever disclosing it as a clear conflict of interest.

The commissioner wrote that setting aside the issue of the purported bribe, Katz and Sheegl were guilty of “blatant,” “insidious,” “gross” and “obvious” conflicts of interest that “violated the public trust.”

Where do things go from here?

Even though it has reviewed the case twice before, including once by an outside prosecutor, few people believed the claims by the MPS that the case could not be successfully prosecuted.

Now, suddenly and rather shockingly, the window has opened once again for prosecutors to take a fresh look at the case.

That is very good news for MPS, and very bad news for all the others involved in this debacle.

dan.lett@winnipegfreepress.com