Judge grants City of Winnipeg access to documents seized by RCMP during police HQ investigation

A judge has ruled the City of Winnipeg can access documents seized by the RCMP during its investigation into the construction of Winnipeg police headquarters, as part of the city's civil lawsuit over the project.

In an 84-page ruling released Friday, Manitoba Court of Queen's Bench Chief Judge Glenn Joyal said the documents were crucial to the city's case.

"Without those seized RCMP documents, the city will have no alternative but to accept whatever denials or explanations the defendants provide," Joyal wrote.

"The city has a very real and not a mere conjectural concern that if returned to the defendants, the documents currently in the possession of the RCMP will never 'in their entirety' be provided as required or alternatively, they will be produced selectively based upon … the defendants' discretion and interest."

Manitoba RCMP conducted a five-year criminal investigation into the construction of the Winnipeg Police Service HQ. The investigation, titled Project Dalton, closed in December and no charges were laid.

The city argued that the documents still in RCMP possession are critical to its civil case against 27 individuals and companies involved in the construction of WPS HQ, which alleges they conspired to defraud taxpayers through kickbacks and fraudulent invoices.

Among the defendants in the city's case are contractor Caspian Projects and Phil Sheegl, former City of Winnipeg chief administrative officer. The City of Winnipeg believes Caspian bribed Sheegl with secret commissions and benefits in order to win the construction contract.

The city also alleges that all defendants defrauded the city by altering or creating invoices that misrepresented the actual costs of construction. Those invoices were submitted to and paid by the City of Winnipeg.

None of the allegations have been proven in court. But the city will now have access to documents such as design development submissions, invoices and accounting practices, correspondences and meeting minutes to build its case.

The significance of the invoices appeared to be a factor in Joyal's decision. According to the court document, the city learned in June that it paid more than $24 million to Caspian through invoices from another company, Fabca Projects Ltd., over the course of construction.

The invoices were for demolition and asbestos remediation, among other matters not listed in Joyal's decision. But none of the work was done by Fabca.

"It would appear that none of the $24 million was ultimately paid to Fabca. Fabca did not subcontract any of the work to anyone," said Joyal, who referenced the amount several times throughout his decision.

Invoices, and at times money, also travelled between Caspian, Fabca and a handful of other companies: a numbered company operating as Mountain Construction, JAGS Development Ltd., JAW Enterprises Inc. and Logistic Holdings Inc. 

The city claims some of those transactions "were completely phony," the court document said.

"Mountain, for example, had no employees, a fact which suggests it could have performed no work on the WPSHQ Project," Joyal wrote.

Access guarantees entire paper, electronic trail 

Caspian Projects, its owners, employees and family members challenged the city's request for the documents in RCMP possession, saying the request was unnecessary because they would eventually be produced through the "ordinary discovery process" of civil proceedings.

But the City of Winnipeg did not trust that the entire paper and electronic trail would be produced, and neither did Joyal.

He pointed to evidence regarding the alleged fraud "and the evidence that suggests that some of the defendants have already attempted to dispose of what the city identifies as 'incriminating evidence,'" as signs that all the documents might not be produced if left to the defendants.

Joyal also shared the city's doubt that the defendants would produce the documents without delay or unnecessary challenges.

Part of Joyal's concern stemmed from the fact that some of the defendants seem to believe they are blameless, but are obliged to defend themselves.

"While such a position is perfectly legitimate for a party … procedural delays and potential unfairness to the city's action that flow from that approach and posture cannot be reflexively and rhetorically justified," Joyal wrote, citing the "unchallenged" fraudulent invoices from Fabca.

Seized records relevant, says Joyal

The documents the city now has access to include paper and computer files that RCMP obtained from Caspian during a police raid in December 2014, the bank records of 11 individuals and companies, and documents voluntarily given to police by subcontractors.

Caspian had argued that the city should not be granted access to all of those because it doesn't know what's relevant to its case.

Joyal said the documents do in fact meet the threshold for relevancy, because they could contain information that allows the city to advance its case, or damage the opponent's case.

Even if the City of Winnipeg's allegations are groundless, the court can't determine that beyond a reasonable doubt without access to all invoices and quotes, and examining the defendants without the documents would be useless, Joyal said.

The judge, again citing the Fabca invoices totalling $24 million, said if the city doesn't have possession of those invoices, "the defendants can simply deny that the invoices in the city's possession have been altered or are fraudulent."

The same could be said about whether anyone received kickbacks, Joyal added.

Without banking and financial records, he said, "the city's examination of the defendants would consist of but one question: Did you ever receive kickbacks?"