Katz contrite about buying company from city CAO

Winnipeg Mayor Sam Katz maintains he did nothing wrongin purchasing a "shell company" from the city's chief administrative officer but concedes it could be viewed unfavourably by some.

And on Wednesday,he saidperception is key andin retrospect he should have just created and registered his own company and paid the fees to do it.

'In retrospect, it would have been better for the mayor to set up his own new company.' Phil Sheegl

"When you are in the world of politics, the sad statement is reality doesn't count,OK? As you heard the expression: perception is reality," he said.

"So should one exercise more caution. If I had to do this again I would have paid the $3,000, $4,000, found a lawyer, and boom, done that. No doubt about that, that is a very valuable lesson learned."

CBC News first reported on Tuesdaythat Katz had purchased Arizona-based Duddy Enterprises LLC from the city's top bureaucrat, Phil Sheegl, in March.

KatzinsistsDuddy is a "shell company" that currently transacts no business, but he has said he mightuse it in the future.

He said he paid Sheegl $1 for it.

Late on Wednesday, Sheegl issued a short statement regarding his role in the sale of Duddy Enterprises to Katz.

"The company was dormant and I no longer required it. In retrospect, it would have been better for the mayor to set up his own new company," the statement reads in part.

"As I have said before, the mayor and I are not partners in any of my businesses.

Deal comes under fire

The transaction does not appear on the mayor's statement of assets and interests that is required to be filed under Manitoba's Municipal Council Conflict of Interest Act.

'There is a lot of people that are very concerned that the city's getting ripped off.' Coun. Ross Eadie

Under the act, council members must disclose the name of every corporation worth more than $500 in which they hold over five per cent of the value.

Katz said the city clerk ruled he didn't have to disclose the company transfer.

However, the arrangementhas come under scrutinyafter becoming public.

Brian Kelcey, whoworked in the mayor's office and now teaches municipal government at the University of Winnipeg, said it's inappropriate for the two men to be doing this kind of deal and for it not to be disclosed on the public record.

"Let's remember that Mayor Sam Katz is Phil Sheegl's direct day-to-day superior and insofar as Phil reports to council, the mayor is one of his indirect superiors," Kelcey said.

Mynarski Coun. Ross Eadie is calling on Sheegl to resign, citing the Duddy Enterprises transaction as well as acontroversial land swapinvolving fire halls.

"The perception is very poor. It wasn't a good decision," Eadie said.

"When I'm out on the streets, talking to people who live in my ward, there is a lot of people that are very concerned that the city's getting ripped off."

Katz has said no decision has been made on who is responsible for mistakes in the land swap controversy.

A financial review is expected in less than two weeks.