Winnipeg police HQ contractor loses appeal for documents seized during fraud investigation

The contractors behind the Winnipeg police headquarters construction project will not get back boxes of documents and data seized by the RCMP until the conclusion of a civil lawsuit, Manitoba's Court of Appeal judge has ruled.

The April 7 appeal court decision is the latest in a long legal battle over the construction project, and in the fight over documents seized as part of an RCMP investigation that began more than six years ago.

In December 2014, RCMP executed a search warrant on the offices of Caspian Construction as part of an investigation into alleged fraud and forgery connected with the downtown police headquarters project.

Over the course of three days, police seized 46 boxes of documents. The Mounties also got a production order for Caspian's backup computer data.

In late 2019, the province announced that the RCMP's investigation was over and no charges would be laid.

Within weeks, the City of Winnipeg sued Caspian and dozens of others involved in the construction project for allegedly defrauding taxpayers of more than $24 million through fraudulent paperwork and secret kickbacks. At the time, the city also asked courts for access to seized material in the RCMP's possession.

Manitoba Court of Queen's Bench Justice Glenn Joyal sided with the city and ordered RCMP to hand over the documents, which they did.

In September, some of the defendants — including Caspian Projects Inc., Caspian Construction Inc., Caspian owner Armik Babakhanians, his wife, Jenik Babakhanians, his son Shaun Andre Babakhanians, and Caspian's office manager, Pamela Anderson — appealed that decision. 

They argued that since the RCMP investigation was over, the Mounties were no longer lawfully in possession of the documents and should return them. 

This week's Manitoba Court of Appeal decision found Joyal did not err in his ruling.

"The decision in question was a matter wholly within the discretion of the case management judge who was in the best position to determine such issues. We were not persuaded that he misdirected himself or that his decision amounted to an injustice," said the Manitoba Court of Appeal's written decision.

Last Month, Winnipeg's former chief administrative officer lost his bid to question two RCMP officers who investigated the allegations of fraud and bribery in the police HQ construction project. 

Phil Sheegl's lawyer had accused the Mounties of knowingly misrepresenting information about the former CAO in sworn statements in order to obtain production orders on his bank accounts.

Sheegl is one of the people being sued by the city in the police headquarters lawsuit. Last June, Justice Joyal granted an application to split Sheegl's case from the rest of the defendants.

His lawyer successfully argued that Sheegl's case should be dealt with separately "because 99 per cent of the city's case doesn't involve him."