Contractor overcharged city more than $40M during police HQ construction, inquiry commissioner concludes in final report

In a final public inquiry report, it has been determined that the Winnipeg Police Service headquarters construction was marred by misconduct and inflated costs. The project, initially expected to cost $135 million, ended up at $214 million, with additional expenses related to flood damage and security upgrades. An external audit found the project to be severely mismanaged, with an external forensic accountant estimating $45 million to $50 million in excess claims filed.

The inquiry commissioner, Garth Smorang, accepts this estimate, finding "fictional" invoices that prove Armik Babakhanians, the project's contractor, inflated Caspian Projects' costs at the city's expense. The report concludes that the city overpaid by approximately $43.3 million, with $42 million going directly to Babakhanians.

Smorang also questions the legitimacy of payments made to former chief administrative officer Phil Sheegl and former Winnipeg mayor Sam Katz, which he believes were made to buy land in Arizona. He finds this to be a "gross and obvious conflict of interest." The inquiry was set up to address construction project issues but does not consider witness testimony as evidence for future criminal or civil cases.

The report offers 25 recommendations to improve future large-scale construction projects, including the use of independent quantity surveyors, conflict-of-interest declarations for councillors on selection panels, and setting a five-year term for the city's integrity commissioner.