Documents were shredded, property values were altered and a city worker was pressured into claiming different parcels of land were equal in value.
These are some of the findings of an initial RCMP investigation into the construction of four fire-paramedic stations in Winnipeg, as well as 33 major city real estate transactions.
Documents obtained by CBC News through access to information legislation paint a picture of what the Mounties learned in 2014 and 2015 through Project Dioxide, one of two investigations into the capital construction and real estate scandals that afflicted city hall a decade ago.
The investigation did not result in any charges. But the Mounties didn’t close the door on the possibility of future criminal charges related to the real estate transactions.
“Should a whistleblower/informant come forward with information, this matter could be reviewed for further action,” RCMP Cpl. Breanne Chanel stated in a May 2015 document.
A separate investigation, Project Dalton, resulted in a five-year criminal investigation into the procurement and construction of Winnipeg’s downtown police headquarters. While Mounties forwarded what they learned to Crown attorneys, Dalton also wrapped up without any charges laid.
The police headquarters, the fire-paramedic stations and the real estate transactions were the subject of scathing, city-commissioned audits published in 2013 and 2014.
In August 2014, the province asked the RCMP to review those city-commissioned audits, in order to “determine if any criminality has taken place,” the RCMP said in an investigative report, created in 2014 and recently obtained by CBC News through access to information legislation.
The large volume of material in the audits required the creation of the Dalton and Dioxide teams.
The Project Dioxide investigators looked at city policies and procedures, secret commissions and the procurement process. They also examined whether any evidence supported undisclosed conflicts of interest or whether anyone derived benefits from the transactions.
While the documents CBC obtained are heavily redacted and don’t contain names of people police suspected of wrongdoing, they do note police interviewed a number of people.
The names of interviewees were also withheld, but meeting logs and investigation reports laid out what the Mounties learned from interviews.
Possible charges considered by police included breach of trust by a public officer, municipal corruption, fraud over $5,000 and the payment of secret commissions.
3-for-1 land swap
The most dramatic revelations in the RCMP documents pertain to Winnipeg’s fire-paramedic station replacement program, which saw the city build new halls in River Heights, Sage Creek, St. James and Charleswood.
That program was afflicted by cost overruns and erupted into a scandal at city hall in 2012, when CBC News reported then fire-paramedic chief Reid Douglas helped negotiate a three-for-one land swap with Winnipeg real estate firm Shindico Realty.
Former Winnipeg fire-paramedic chief Reid Douglas said he helped arrange the land swap deal that city council later nixed. (CBC)
Shindico owned a parcel of Taylor Avenue property that’s now the site of fire-paramedic station No. 12. The proposed land swap would have seen the city acquire that land in exchange for city-owned properties on Grosvenor Avenue, Berry Street and Mulvey Avenue East.
Once the plan was made public in 2012, city council cancelled the three-for-one deal. That forced the city to expropriate the Taylor Avenue land from Shindico in April 2014.
Since then, the two sides have disagreed over the compensation the city owes Shindico for the Station No. 12 land. A court date to resolve the matter is expected during the first half of 2023, Shindico legal counsel Justin Zarnowski said in a statement on Friday.
In their documents, the RCMP said they were looking at the actions of City of Winnipeg “employees in various positions” who worked on the fire-paramedic station project.
An audit of the project, completed by Ernst & Young in 2013, had already identified problems with appraisals of the properties slated to be swapped, noting they were conducted after the deal was put together.
The Mounties followed up on those findings.
Swap ‘a foregone conclusion’: report
In February 2015, RCMP interviewed an unnamed city employee who said that if the city required a real estate deal, Winnipeg’s real estate division would handle the transaction. A city appraiser would also conduct an assessment.
“Based on the assessed value, if the department had sufficient funds in their budget, they would move forward to get approval and authority for the real estate division to negotiate the purchase of the desired land. In the case of the fire halls, this process was not followed,” according to a January 2015 investigation report.
The report stated the fire-paramedic chief had negotiated a deal for the Sage Creek station land and that the purchase agreement was already signed, before an unnamed city employee was assigned to the file.
That person’s role was to facilitate the acquisition, which the RCMP described as unusual considering the land had already been purchased.
“Advances were paid which should not have been paid without approval from council … [and] it was a foregone conclusion at that point that the land swap was going to happen,” said the report.
Appraisals changed, shredded
Appraisals had not been conducted on the Mulvey, Grosvenor or Berry parcels, which were to be swapped for the Taylor land.
The appraisals determined that the proposed land swap was not equitable for the city and Shindico, the RCMP noted, echoing earlier city reports as well as the Ernst & Young audit.
“Appraised values started changing at that point and the original appraisals went missing from the file,” the report says.
They were “replaced with a new appraisal showing a different value that in the communication sent out previously by [redacted,] the fire department and [redacted]. The transaction was not equitable and the city was building on land it did not own.”
Mounties interviewed another person who stated “all appraisals were shredded.”
That’s a concern, Winnipeg Mayor Scott Gillingham said Friday in an interview.
Mayor Scott Gillingham, shown in a file photo, has said that he supports a provincial inquiry into Winnipeg’s real estate and construction scandals. (Randall McKenzie/CBC)
In 2017, as the council representative for St. James, Gillingham voted in favour of a request for a provincial inquiry into Winnipeg’s capital procurement and construction scandals.
“What we need to do … for the sake of the people of Winnipeg, is get to the truth of matters, change what needs to be changed, recoup what can be recouped for the taxpayers,” Gillingham said Friday.
Both Premier Heather Stefanson and her predecessor, Brian Pallister, have rejected that call, citing an ongoing civil lawsuit the city is involved in against construction companies involved in the city’s police headquarters project.
An inquiry “could put in jeopardy” civil litigation underway, a Justice Minister Kelvin Goertzen said in an emailed statement, but the Progessive Conservative government “will monitor any new information going forward and react accordingly.”
Employee ordered to declare land swap equal
RCMP investigators interviewed an unnamed city employee in February 2015, who said she was told in 2008 to begin working on the fire-paramedic station project.
She told police a bid for one of the stations came in at $3 million and described that as “out of the ordinary because it was exactly on budget, despite the budget not being publicly disclosed.”
This employee also advised against city officials travelling to London, Ont. — along with a representative of a firm bidding on the work — to look at a prospective design for a fire-paramedic station.
She advised against that “as it could be perceived as providing an advantage to one bidder over the others,” she told investigators.
Another employee told police she overheard someone directing a city employee to write a report indicating the appraisals of parcels of land involved in the Shindico land swap deal were of equal value.
That person refused to write the report, she said, but it was written regardless.
In a March 2015 meeting, RCMP said they took statements from people who were involved in the deal from the onset. Those people walked police through how the process worked.
They stated Shindico was selected for the land swap because it owned available property and the city could not afford to purchase land.
“Then it was decided Shindico is favoured in this deal,” an unnamed city employee told police.
Another meeting log stated police learned two appraisals were conducted on the Grosvenor land, with the land valued at 50 per cent less.
No crime committed
Investigators found that the property appraisals were done quickly and, in some cases, not thoroughly — both with respect to the fire-paramedic station program and the Parker land swap, one of the transactions examined in the city real estate audit.
The RCMP documents stated full disclosure of actions taken during the fire-paramedic station program was not always made to council, which echoed the findings of the Ernst & Young audit. They also echoed the audit in noting there was not a competitive procurement process for certain transactions.
Police nonetheless said the actions taken by city officials did not rise to the level of criminality.
“Investigators concluded that poor business practice is not sufficient to support that a crime occurred,” the investigation report said.
“There was no evidence to support that policies were intentionally circumvented or that the key decision makers in the project … derived any benefit as a result of their actions.”
The swap of unserviced Parker lands, now slated to become a development called Fulton Grove, for serviced city lands at the former Fort Rouge Yards was also examined by a city real estate audit and reviewed by the RCMP. (CBC News Graphics)
Police also said they collected information suggesting an unnamed city employee participated in business ventures outside of the scope of his employment with the city during the relevant time period.
“Though his business ventures may be perceived as a conflict of interest, and contrary with City of Winnipeg ethics/code of conduct policy, the information identified did not support that a criminal offence had occurred.”
Police said they consulted with the Crown and charges were not supported, either regarding the fire-paramedic stations or the city real estate transactions.
“Evidence required to support the offences for consideration, if it exists, would likely be found in private sector business and banking records, or in personal/business electronic devices (phones/computers),” the Mounties wrote in reference to the real estate transactions.
The report said those sources “require judicial authorizations to search and at this point, grounds do not exist to obtain those authorizations.”
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