The city is going to court after a Winnipeg construction company missed a deadline to pay millions in a settlement for fraud and construction deficiencies connected to the Winnipeg Police Service headquarters project.
Mayor Scott Gillingham said the deadline for Caspian Construction to pay the $23-million settlement was Monday at 4:30 p.m., but up until then, the city had received only $500,000 of the payment.
“The city’s legal team will take immediate action to move for a $28-million judgment as the settlement deadline was not met,” Gillingham said in a statement Tuesday.
RUTH BONNEVILLE / FREE PRESS FILES
Caspian Construction owner Armik Babakhanians said he agreed to pay the city $23 million for both personal and business reasons.
“We will take every reasonable step to recover this money on behalf of Winnipeg taxpayers.”
City spokesman David Driedger said no further information can be released on the matter because “it relates to the assets over which the city has security.”
During a public inquiry into the construction project Monday, Caspian Projects owner Armik Babakhanians testified he had signed documents to make sure the city received the payment, but lawyers were still finalizing the transfer of money earlier that day.
Babakhanians said he agreed to pay the city $23 million for both personal and business reasons.
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“It was a commercial decision, but also it… just tore our family (apart). I just couldn’t see the pain (anymore).”
The inquiry was called by the province to look into problems with the construction of the police headquarters.
An external audit said the project, which was originally budgeted at $135 million but jumped to $214 million before it was completed, was severely mismanaged.
City council voted to approve the settlement and the timeline in March 2023. Under its terms, the city was to get paid around $23 million, if transferred over within three years, but if the deadline was missed, the city would ask the Court of King’s Bench to order the company to pay $28 million.
kevin.rollason@freepress.mb.ca
Kevin Rollason is a general assignment reporter at the Free Press. He graduated from Western University with a Masters of Journalism in 1985 and worked at the Winnipeg Sun until 1988, when he joined the Free Press. He has served as the Free Press’s city hall and law courts reporter and has won several awards, including a National Newspaper Award. Read more about Kevin.
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