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The construction contract awarded to Caspian in 2011 was called a "guaranteed maximum price" contract.

Katz tells the inquiry he knows what that means because he had one when the ballpark was built for the Winnipeg Goldeyes baseball team, which he owns.

He then recalls a 2013 meeting with Caspian’s Babakhanians, Winnipeg chief financial officer Mike Ruta and police HQ project director Ossama AbouZeid about continuing cost overruns at the project.

Katz says the meeting was called to find solutions to the "disappearing" budget contingency and says solutions were not found.

Leonoff then asks about July 2011, when the police headquarters project budget went up $59 million, from $135 million to $194 million.

City council gave CAO Sheegl the authority that month to award the police HQ construction contract that was awarded to Caspian in November 2011.

Katz told the inquiry he was aware he, Sheegl and Caspian’s Babakhanians were co-investors in Tartesso, Ariz.

Leonoff asks about the Tartesso, Ariz., land again.

Katz says he was a silent investor and says he believed there were three investors, including Phill Sheegl’s Winnix Group.

Katz says he decided to sell his stake for about $160,000 and invest that money elsewhere.

Leonoff shows Katz a July 30, 2011, cheque for $100,000 from Phil Sheegl marked as "loan."

Katz says it was not a loan but payment for the Tartesso land.

Leonoff also asks Katz about an Aug. 16, 2012, TD Canada Trust bank deposit his company Samuel Michaels Properties received for $127,200 from "Babakhanians."

Katz said his company no longer exists and he does not have tax records for it any more.

Katz said he was not aware of a handwritten trust agreement between Sheegl’s Winnix Group and Armik Babakhanians.

Leonoff asks if Katz was aware of the requests for proposals that were sent out to companies interested in providing construction management services for the police headquarters project.

She also presents an email from Babakhanians about the construction contract in February 2011. Katz said he had no conversations about that.

Katz acknowledged he knew both Babakhanians and a principal from Akman Construction, who were initially awarded the first phase of the work in February 2011. 

Akman departed the joint venture in June 2011 and Katz said he wasn’t aware of the discussions about this.

Caspian was awarded a $137-million construction contract in November 2011.

A 2014 project audit noted Caspian alone was awarded a contract for which it alone did not submit a proposal.

Leonoff asks Katz if he knew Armik Babakhanians in 2010.

Katz said he knew him from golfing occasionally at Glendale in Winnipeg.

Leonoff then asks Katz about a meeting scheduled by Katz assistant Jeannine Stotski for Sheegl, Katz and Babakhanians at the restaurant 529 Wellington in September in 2010.

Katz said he’s not sure that meeting took place and has no memory of it.

Leonoff asks about the site for the police HQ. Katz says the Canada Post site was the best location.

She then asks about the Shindico Realty-led study of the feasibility of converting the Canada Post complex into a police headquarters. This had a rough estimate of $100 million for the work.

Katz said he was not aware of it at the time and "learned the hard way" later about initial construction estimates.

She has not asked about a study by the cost estimator Hanscomb that found it would be almost as inexpensive to convert the former Public Safety Building and the former Civic Centre Parkade into a police HQ as it would be to renovate the Canada Post complex. This study was never presented to council — I had to file a freedom of information request and a complaint in order to obtain it when I worked for the Winnipeg Free Press.

Counsel inquiry Leonoff says she asked the city for records of the hiring process for Sheegl, but the city did not hold on to those records.

She says it’s a good thing Katz has a good memory.

"Good thing you got me now, not later," Katz quips.

Inquiry counsel Heather Leonoff begins by asking Katz about major projects that were completed when he was mayor.

She quickly moves to the police HQ project and then asks Katz about his relationship with Sheegl and their co-investment in land in Tartesso, Ariz. 

Katz says he and Sheegl were co-investors in three properties.

Leonoff also asks about Katz's former shell company, Duddy Enterprises, which the former mayor once traded back and forth with Sheegl.

Sam Katz is in the hearing room. He smiled as he walked in and took a minute to say hello to reporters. 

His voice is a little more gruff than when he was mayor and his hair is a little more white. But he still has a sense of humour. When Steve Lambert from The Canadian Press asked Katz if he will speak to reporters during a break, the former mayor said he is always up for a good scrum.

In February 2008, the Winnipeg Police Service confirmed it was looking at moving into a former Canada Post warehouse and office tower complex south of Graham Avenue. City council approved the purchase of the buildings and a renovation project valued at a combined $135 million in 2009. 

The cost of the project rose several times until it was officially listed at $209 million. Post-construction work took the tab up to $214 million.

Cost overruns are only one issue.

The project has also been the subject of a 2014 project audit that found the construction contract was awarded to a company that did not submit a proposal for the work and a 2014 real estate audit that found the city did not look at any other place to house the new police HQ.

A five-year RCMP investigation into fraud, forgery and secret commissions concluded in 2019 without charges.

Then came two civil lawsuits from the city. One against contractor Caspian Construction was settled for a maximum of $28 million. The second, against former CAO Sheegl, resulted in the Court of King’s Bench’s determination Sheegl accepted a bribe from Babakhanians of Caspian.

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