During a public inquiry into the $70 million cost overrun of Winnipeg's new police headquarters, developer Armik Babakhanians faced scrutiny regarding financial transactions to city officials. He testified that the $327,000 he paid to former mayor Sam Katz and former chief administrative officer Phil Sheegl was for an unrelated real estate deal in Arizona, not as a bribe for the lucrative construction contract awarded to his company, Caspian Projects. This inquiry follows a civil court ruling that found Sheegl guilty of accepting a bribe from Babakhanians regarding the project.

The inquiry focuses on allegations of corruption linked to the police headquarters project that was completed in 2016 but far exceeded its original $135 million budget. The judge's characterization of the financial dealings as ''fictional'' puts the spotlight on the credibility of testimonies provided by Katz and Sheegl regarding the nature of the transactions and challenges the integrity of the procurement process for municipal contracts. Babakhanians' reputation as a developer has already been tainted by these revelations, impacting how future contracts might be overseen.

As the inquiry continues, it raises broader implications for transparency and accountability in municipal governance. The city of Winnipeg, already grappling with budget overruns, needs to restore public confidence in its handling of public projects. This case underscores the importance of clearer regulations and oversight measures to prevent potential corruption in future contracts, ensuring that taxpayer money is safeguarded against unethical practices.