Winnipeg mayor Sam Katz continued to face criticism over the course of the past week pertaining to his business dealings with Winnipeg’s chief administrative officer, and personal friend, Phil Sheegl, over an American “shell-company.”
On Oct. 18, Katz announced that he had sold the Arizona-based Duddy Enterprises back to Sheegl in an attempt to end criticisms leveled against him that the original sale was unethical.
“I can tell you that as per my conversation with the [city] clerk, we are totally abiding by the rules and regulations under the provincial legislation,” Katz was quoted as saying in a CBC article, released Sept. 11, that reported the original sale.
Following the second transaction, Katz said to reporters, “Who needs this grief and aggravation [ . . . ] maybe there’ll be less to talk about [and] maybe we can talk about city issues.”
Katz had originally bought the company from Sheegl, an employee of the city of Winnipeg, for $1 on March 29 of this year. Widespread controversy began after the release of the Sept. 11 CBC story.
Multiple elements of the deal have drawn the ire of observers.
Many consider it inappropriate for Katz to have engaged in private business transactions with a top city employee. It has been thought that such a relationship may potentially blur the line between Katz’s duties as mayor and his private business interests.
Furthermore, Katz’s ownership of the property was not disclosed on a “statement of assets and interests,” that city councilors are expected to keep up-to-date under the Municipal Council Conflict of Interest Act.
Katz claims the city clerk advised him that he did not need to declare his acquisition of Duddy Enterprises because the company was not actively doing business at the time of sale.
A shell-company, such as Duddy Enterprises, is one that has no assets and engages in no real operations – in other words, a dormant company. A report published in the Winnipeg Free Press, citing the Arizona Corporation Commission, explains that Duddy Enterprises was formerly listed as an investor in the WinWin company until its dissolution earlier this year. The WinWin company is one of many Arizona-based companies also owned by Sheegl.
The accusations of unethical business practices leveled against the mayor come at a time when he is facing questions regarding his other private activities in Arizona.
Katz recently bought a house in Scottsdale, Arizona from Teri Nordstrom. Nordstrom is the sister-in-law of Shindico Realty CEO Sandy Shindleman, a stockowner of the Winnipeg Goldeyes baseball team, of which Katz is president. Katz insists he paid the proper value of the home, although local real-estate records do not disclose the price at which the property was purchased.
Shindico, in turn, has raised eyebrows for the disproportionate share of city work for which it receives contracts.
Controversy recently arose when Shindico was involved in a deal with the city in which two unused fire stations and a plot of vacant land were to be traded to the company in exchange for a piece of land on Taylor avenue. That deal angered both Winnipeg residents and city councilors.
In response to suspect real-estate dealings tied to city hall, some, such as city councilor Jenny Gerbasi (Fort Garry), are calling for an ethics commissioner position to be established.
“Everybody is thinking ‘This doesn’t seem right.’ But to diagnose what’s wrong or get to the bottom of what’s wrong would require a pretty thorough investigation by someone like an ethics commissioner, which we don’t actually have,” Gerbasi told the National Post.
Gerbasi, who has been openly critical of Katz’s business methods, had also been advocating for an external audit to examine city hall’s real estate deals dating back a minimum of five years. In September, city councilors voted to approve an external review into the city’s real estate division.