Mayor's office threatened Melnyk over LeBreton withdrawal, suit claims

Ottawa Senators owner Eugene Melnykalleges in a lawsuit filed Friday that Ottawa Mayor Jim Watson's office responded with "threats and intimidation" to news that the LeBretonFlats redevelopment projectwas in peril, just weeks before the recent municipal election.

Melnyk's firm, Capital Sports Management Inc. (CSMI), is suing his partners in theproject for $700 million.

According to the statement of claim, which hasn't been tested in court, CSMIwrote to Watson on Sept. 17 to askfor help with the project.

In the letter, CSMI informed the mayor thatthe company no longer believedthe LeBreton project was financially viable in its current structure, and that CSMIand Trinity remained unable to overcome a disagreement over financing.

"The mayor's office responded with threats and intimidation," the claim states.

'A direct attack'

Itclaims the mayor's chief of staff, SergeArpin, told CSMI'schief operating officer at a meeting on Sept. 20 that "any attempt to withdraw from theLeBretonProject during the current election cycle would be viewed as a direct attack on the mayor's political career and re-election effort."

It also claimsArpinthreatened to sever the relationship between Watson andMelnykif CSMIwithdrew.

The Senatorsorganization "interpreted this as a thinly veiled threat" that Watson would withdraw support for a new arena, and any other project proposed byMelnykorCSMI.

"CSMIwas not wrong to take this threat seriously, asMayor Watson hadpreviously favoured local developers overCSMIon at least two other occasions," according to the claim.

Arpin had 'inside knowledge,' suit claims

The lawsuit also alleges Arpinhad"demonstrated inside knowledge of confidential information" that could only have come from Trinity Development, CSMI'spartner in the LeBretonbid and a defendant named in its lawsuit.

In an emailed statement, Arpinsaid he would not be able to comment on the matter as it will be before the courts.

Watson, who announced on Twitter Friday morning that he's taking three days off, is also unable to comment, his office said.

In the detailed statement of claim,CSMIalleges "the joint venture failed because of an egregious conflict of interest on the part of Trinity and its principal, John Ruddy."

In particular CSMIargues that Trinity is in conflict because it moved forward with plans to build three high rises at900 Albert St. "in direct competition" with the LeBretonproject.

In a statement released Friday evening, Ruddy said that "Trinity strongly denies the allegation in CSMI's lawsuit and intends to vigorously defend the claim."