RCMP investigate offer of secret commission to Winnipeg police HQ project director

The RCMP investigation into Winnipeg's police headquarters has expanded into allegations of a plan to offer a $600,000secret commission to the project directorresponsible for looking after the city's interests in the construction project.

In information presented to a judge inorder to obtain financial records, the Mounties elaborate upon invoice-padding allegations against Caspian Construction owner Armik Babakhanians, the primary contractor for Winnipeg's police headquarters project, which council approved at a price of $135 millionin 2009 but has cost $214 million to date.

"To date, police have identified that Armik[Babakhanians] used inflated and altered subtrade invoices and quotes to defraud the city of millions of dollars for work that was done at costs less than his fraudulent submitted costs. In addition to these frauds, police are investigating the use of a secret commission for the hiring of key project personnel," RCMP Const. Christopher Haskinssays in an affidavit submitted to a judge in February in order to obtain bank records.

Before police are allowed to search financial records, they are required to present evidence to support their allegations. The Mounties have not disclosed whether they obtained anything of interest through theirrequest for banking information.

The order is part of ofwhat the RCMP call Project Dalton,the criminal investigation into Winnipeg's police headquarters project, which involved purchase and renovation of Canada Post's former downtown complex.

• RCMP launch criminal probe into Winnipeg police HQ project
• RCMP raided Winnipeg police HQ last June in Caspian investigation
• Fraud, fake documents alleged in Winnipeg police HQ investigation, say court documents

Theproject was completedfour years late this Juneat$79 million over budget. It has also been subject to two external audits as well as an RCMP investigation.

Thatinvestigation intensified in December 2014, when Mounties executed a search warrant at Caspian's McGillivray Boulevard headquarters. At the time, the Mounties were looking into fraud and forgery allegations pertaining to the construction of the downtown Winnipeg police headquarters.

According to Haskins' affidavit as part of the RCMP request to search bank documents, evidence collected during that initial raid paints a picture of a plan to replace key police HQ personnel and companies with officials and firms more friendly to Caspian Construction, creating what RCMP describe as "an opportunistic environment to facilitate fraudulent activities."

• Police HQ contractor sent Sam Katz thousands of dollars in personal cheques: court documents
• Sam Katz 'friends' with police HQ contractor, say court documents

Haskins allegesBabakhaniansinfluenced thecity's decision to replace Winnipeg's initial police HQ project manager, Winnipeg Police Service employee Abdul Aziz, with external project director Ossama AbouZeid, without disclosing a prior working relationship with the latter, according to the RCMP request.

Emails obtained by the RCMPshow Babakhanians described AbouZeid as a "poppet" who could be influenced to do Caspian's bidding. In June 2011, the city awarded AbouZeid's Dunmore Corporation a $263,000 sole-sourced contract to direct the police HQ project.

"I have Ossama there because he brings no other value than agreeing to anything alsohe is on that board of some city related issues," Babakhanians states in an email included with the court documents.

In therequest for banking information, the RCMPallege Babakhanians helped AbouZeid convince the City of Winnipeg to remove the original consulting firm hired by the city to design the police HQ job, AECOM, which had won a$5.3-million tendered contract, with a firm with ties to Caspian.

'[Caspian] has to be in charge of the design team and cost control'

"One major caveat must be [Caspian] has to be in charge of the design team, and cost control," Babakhaniansemailed AbouZeid and former Winnipeg chief administrative officer Phil Sheeglon May 26,2011, according to the RCMP. This was one week before AbouZeid became the police HQ project director.

"Areyou insinuating we should replace the design team?" AbouZeid responded, according to the court documents.

In an October 2011 email, Babakhanianstold AbouZeid he had spoken to Ottawa engineeringfirm Adjeleian Allen Rubeli and GRC Architects about the project, according to the RCMP document.

"They both have agreed to come on board, We both know there is a process in placebut also know we have to pick [the] right group," Babakhanians said, according to the court documents.

Weeks later, Babakhanians asked AbouZeid how much money was availablein the city budget for the new firms and then instructed AbouZeid to switch to text messaging because their emails would be monitored, according to the court documents.

In his affidavit, Const. Haskins states it's inappropriate for a general contractor to get involved in negotiations to replace a professional engineering consulting firm, which is expected"to independently protect and represent the interests of the city."

In 2012, AECOM was replaced with Adjeleian Allen Rubeli, also known as AAR, which was awarded sole-sourced contracts totalling $4.8 million to complete the job. That firm, in turn, subcontracted GRC Architects to supply architectural services.

The RCMP allege Caspian's Babakhanians, AARprincipal Peter Chang and GRC senior associate Pat Dubuc conspired to offerAbouZeid $600,000, using a shell company called Triple D Consulting Services, which the RCMP allege was formed by Chang, Dubuc, Babakhanians and Caspian employee Pam Anderson.

In the affidavit, Haskins says he believes Triple D was set up in part to create a kitty to eventually pay what the court documents describe as a $600,000"Ossama special" a secret commission to the project director, afterthe police HQ project was complete.

"I believe money was incorporated into this contract to provide a source of funds for a secret commission to Ossama AbouZeid (agent) of the City of Winnipeg (principal) for the benefit of Chang, Dubuc and Armik [Babakhanians]," Haskins states in his affidavit, citing a fee schedule he alleges Chang sent to Babakhanians that includes payment to AbouZeid.

"While both AbouZeid and AAR are paid by the city, I believe there is no legitimate reason to factor in any money to AbouZeid within the AAR contract."

As of February 2016, Haskinsdid not believe the secret commission had been paid.

AbouZeid said he never asked for one, was never offered one and he never received one.

"In all my working life I have never asked for monies outside my contractual entitlements,"AbouZeidsaid in a statement.

In the request to obtain bank records,Haskins states emailsbetween all fourindicate they "have close personal associations that go beyond normal business relationships. I believeArmik[Babakhanians] used these connections to create an environment for their personal financial benefit through his criminal activities."

For example, in one 2012email cited by Haskins,Chang tells Babakhanians, "You truly are the brother that I never had and I love you dearly."

In another 2012email, from Babakhaniansto his son Shaun, the elder contractor claimshe dismissed AECOM because they challenged Caspian, replacing city project director Aziz with Caspian "poppet" AbouZeid and bringing in AAR's Chang.

"He has one precious gift for us, tht's his unconditional love and loyaltywhich can nobe ignored or questionedhe will dnanything or me," Babakhanians said in reference to Chang, according to the request for banking information.

'Essentially paying themselves for services'

AAR paid an initial $1.3 million over three years to Triple D, which in turn paid funds to companies formed by Chang and Dubuc, Haskins states in his affidavit.He alleges thisallowed the latter two mento receive money outside their respective firms' contracts, "essentially paying themselves for services that have not been confirmed to have been rendered."

He addsthe Mounties could not confirm whether Triple D or the companies formed by Chang and Dubucrendered any actual services.

"I believe they conspired to include fees for Triple D as part of [a] contract between AAR and the city as a method to personally financially benefit outside their original contract with the city, as well as provide a source of funds for a secret commission," Haskins states in the request for banking records.

"This provided a source of funds available to Armik[Babakhanians] in order to influence AbouZeid in hiring his close associates from AAR/GRC to the project."

The RCMP are also investigating a $100,000 payment to AbouZeidfrom Caspian weeks before AbouZeid became the police HQ project director.

RCMP investigation into Winnipeg's police headquarters has expanded into allegations of a plan to offer a $600,000 secret commission

8 years ago

Duration 1:10

The RCMP investigation into Winnipeg's police headquarters has expanded into allegations of a plan to offer a $600,000 secret commission to the project director responsible for looking after the city's interests in the construction project.

• RCMP investigation of Winnipeg police HQ remains active

• Permanent protection for police HQ remains 2 years away

The Mounties allege in their request for bank documents that Babakhanians asked AbouZeid for a$100,000 invoice on May 2, 2011, instructing him to say it was for consulting services. Babakhanians then asked the Caspian controller to transfer $100,000 to a numbered company operating asMountain Construction. (This numbered companyhasnorelation to Mountain Construction Inc.)

"The purpose of this transaction is not known and requires clarification," Haskinssays in his affidavit.

Haskins also cited several emails where AbouZeid expressed concern Babakhanians was getting involved in the hiring of Adeleian Allen Rubeli.

"I find it increasingly difficult to continue in my role," AbouZeid wroteBabakhanians in November 2011, according to the RCMPrequest for bank records."Asking you to facilitate a connection does not mean to get involved in negotiation, specially [when]we are suffering from credibility and trust."

AbouZeid said he received $100,000because Caspian owed him money, explaining he had a20 per cent interest in a building he sold to Caspian several years earlier.

"I was adamant to reach a solution before I embarked on a public project," he said.

'I will pretend that I know you'

The RCMP documents include emails where Babakhanians asksAbouZeid for help in securing the police-headquarters construction contract. In one email exchange, AbouZeid tells Babakhanians he did not disclose a meeting between the two to Abdul Aziz, the city's former project manager.

"Good," Babakhanians replied. "I will pretend that I know you because I used to work for you when I came to Canada. If you likeI will not say anythinghowever."

At the time of the RCMP request for bankrecords, the Mounties had not spoken to Babakhanians, Chang or Dubuc. The RCMP made contact with AbouZeidbut had not interviewed him.

The allegations have not been proven in court and no charges have been laid.

Babakhaniansdid not respond to CBC requests for comment. Dubuc declined to comment. Chang said he's co-operating with the police.

In hisstatement, AbouZeid said he is angered by the RCMPallegations, which he described as outrageous, slanderousand damaging to hisreputation and integrity.

"Any help I provided Caspian in early 2011 regarding this contract never exceeded providing professional references of their strength based on my previous experience," he added."My perceived ability to influence the award of a city contract is absurd."

AbouZeidsaid he was involved in the award of the contract to Adjeleian Allen Rubeli"to ensure the amount and the scope were in line with the public tender ofAECOM."

AbouZeidsaid every city payment to Caspian and every request for additional money was subject to his scrutiny, as well asthat ofthe city staff, the police service andAdjeleian Allen Rubeli.

The RCMP have not said anything about their investigation into the police headquarters, other than it remains active.