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RUTH BONNEVILLE \/ FREE PRESS FILES<\/p>\n
Armik Babakhanians with his lawyer, George Orle. Babakhanians says he will pay a $23-million settlement to the City of Winnipeg. <\/p>\n
\u201cWe modified it,\u201d Babakhanians answered.<\/p>\n
Leonoff noted the inquiry has heard Caspian, and other companies it controls, exchanged a series of cheques with matching amounts with some subcontractors, as part of a \u201cflow-through\u201d arrangement.<\/p>\n
She suggested to Babakhanians that \u201cmaking up the documents was a big job, wasn\u2019t it?\u201d<\/p>\n
\u201cYes, I would say it was,\u201d he answered.<\/p>\n
The contractor also admitted to handing in some invoices that attribute construction work to companies that did not actually perform the work and claiming different amounts to the city than what his company actually paid some subtrades.<\/p>\n
Babakhanians denied an allegation that he billed the WPS headquarters for work on other construction projects.<\/p>\n
The city was plagued by problems related to the headquarters at 245 Smith St. for several years. An external audit concluded the project had been severely mismanaged. First expected to cost $135 million, the price soared to $214 million, when late flood damage and security upgrades are included.<\/p>\n
The provincial inquiry heard from a forensic accountant earlier this month, who estimated $45 million to $50 million in excess claims were filed for the project. However, Babakhanians strongly denied allegations that Caspian overcharged the city to receive that amount.<\/p>\n
\u201cWhere is that money? I could use it right now \u2026 If there is such money there, I just can\u2019t understand it,\u201d he said.<\/p>\n
\u201cWe did that so we can get paid.\u201d<\/p>\n
The contractor said he was frustrated by being asked repeatedly to submit invoices and backup financial documents to the city, which he believes his contract with the city did not require.<\/p>\n
\u201cWe did that so we can get paid,\u201d he said.<\/p>\n
On Monday, Babakhanians told the inquiry the invoices he submitted for the project aimed to match its guaranteed maximum price and cover his expected profit of $13 million to $15 million.<\/p>\n
Lawyer George Orle, who represents Caspian at the inquiry, asked his client if he would ever enter a contract with the City of Winnipeg on the same terms again.<\/p>\n
\u201cI\u2019m going to say categorically, hell no!\u201d responded Babakhanians, loudly exclaiming the final two words.<\/p>\n
Babakhanians also told the inquiry he was working to pay a $23-million legal settlement linked to the project as soon as possible.<\/p>\n
In March 2023, city council voted to approve a settlement of fraud and construction deficiency lawsuits linked to the headquarters, with the final amount based on when payment is made. That called for the city to receive around $23 million, if paid within three years, with that previously expected to kick in Tuesday. If that is missed, the city would ask the Court of King\u2019s Bench to order that it be paid $28 million.<\/p>\n
He said he\u2019s signed documents and taken all steps he could to ensure the city receives that money, though lawyers were still finalizing the payment Monday morning.<\/p>\n
Winnipeg Mayor Scott Gillingham said he believes the option to pay $23 million was actually set to expire at 4:30 p.m. Monday.<\/p>\n
Gillingham said the city would take immediate legal action to pursue the $28-million payment, if needed.<\/p>\n
\u201cThis is about recovering as much money for taxpayers as possible. I believe our staff is fully prepared to take the next steps immediately,\u201d he said.<\/p>\n
The city has received only $500,000 of the payment.<\/p>\n
\u201cWe have made significant changes in the way we operate at the City of Winnipeg to prevent this from happening again.\u201d<\/p>\n
Gillingham stressed the city has made many changes since the WPS headquarters project was built, including adding steps to procure contracts and manage real estate, as well as hiring a chief construction officer to add oversight.<\/p>\n
\u201cWe have made significant changes in the way we operate at the City of Winnipeg to prevent this from happening again,\u201d he said.<\/p>\n
Babakhanians said he agreed to the settlement for business and personal reasons.<\/p>\n
\u201cIt was a commercial decision but also it \u2026 just tore our family (apart). I just couldn\u2019t see the pain (anymore),\u201d he said.<\/p>\n
Babakhanians said he still feels the city got great value for its investment in the project.<\/p>\n
\n\t\tWinnipeg Free Press | Newsletter\n\t<\/p>\n
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\u201cThe city got more than they could ever dream of for value,\u201d he said.<\/p>\n
The contractor estimates he has faced about $5 million in legal costs to address allegations related to the project. He claims Caspian is still owed about $1 million from the city.<\/p>\n
The inquiry will continue on Tuesday.<\/p>\n
joyanne.pursaga@freepress.mb.ca<\/p>\n
X: @joyanne_pursaga<\/p>\n
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Joyanne Pursaga Joyanne is city hall reporter for the Winnipeg Free Press. A reporter since 2004, she began covering politics exclusively in 2012, writing on city hall and the Manitoba Legislature for the Winnipeg Sun before joining the Free Press in early 2020. Read more about Joyanne<\/a>.<\/p>\n Every piece of reporting Joyanne produces is reviewed by an editing team before it is posted online or published in print \u2014 part of the Free Press\u2018s tradition, since 1872, of producing reliable independent journalism. Read more about Free Press\u2019s history and mandate<\/a>, and learn how our newsroom operates<\/a>.<\/p>\n
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