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

Phil Sheegl is testifying 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, earlier found that Sheegl accepted a bribe from Armik Babakhanians, the owner of a construction company that ended up with the major contract on the project.

Sheegl has maintained the money was for an interest in a property he and other investors owned in Arizona — a deal the civil judge said was fictional.

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

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In questioning Sheegl, Finlayson suggests the money from the contractor was in exchange for help in securing the project — an assertion that Sheegl says is false.

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“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.

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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.

Sheegl told the inquiry Tuesday 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.

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.

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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.” And Sheegl repaid the city $1.1 million.

Babakhanians is scheduled to testify later this week.

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