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HomeBusinessExclusive: As B.C. awaits report into crime at casinos, Eby gives Lottery Corp honchos a vote of confidence

Exclusive: As B.C. awaits report into crime at casinos, Eby gives Lottery Corp honchos a vote of confidence

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Bob Mackin 

The much-anticipated expert report into money laundering at Lower Mainland casinos may not be published until the end of May. 

So said Attorney General David Eby in an April 20 interview with theBreaker.

Eby received University of British Columbia law professor Peter German’s 250-page, 48-recommendation document at the end of March, which he called a “comprehensive report about the history of the issue in British Columbia casinos.”

“I’m hopeful to have it out by the end of the [spring] session; we’re doing some due diligence to make sure we’re not going to interfere with any law enforcement investigations by publicly releasing it and that we’re not unintentionally releasing anyone’s private information,” Eby said. “The goal is to get it out to the public as quickly as possible because that’s why we commissioned the report in the first place.”

B.C. Attorney General Eby in Ottawa, March 27. (ParlVu)

The spring session of the Legislature is scheduled to end May 31.

Eby appointed German late last September after releasing a 2016 consultant’s report that had been suppressed by the previous BC Liberal government. The MNP report said gamblers from China used underground banks to bring large volumes of potentially dirty money to play at River Rock Casino Resort in Richmond, the flagship of Great Canadian Gaming Corp.

theBreaker was first to report that criminology professor John Langdale warned an Australian police intelligence conference last November about the “Vancouver model” of money laundering. Langdale told the conference that the “Vancouver model” involved transnational drug trafficking and capital flight from China that led to investment in Canadian real estate. Key to the scheme are B.C.’s Chinese sister province Guangdong, financial centre Hong Kong and gambling haven Macau.

River Rock and all other casinos in B.C. are operated in partnership with B.C. Lottery Corporation. Eby told theBreaker that the Crown corporation’s top officials have his vote of confidence.  

“If I had any reason to believe that someone had acted unlawfully or inappropriately to the extent that it compromised their ability to do their job, certainly those individuals would be removed,” Eby said. “Currently, I have total confidence in the ability of the BCLC executive to work with government in implementing the recommendations of the German report.”

BCLC CEO Jim Lightbody was the Crown corporation’s vice-president in charge of casinos from 2011 until 2014 when he was promoted to replace Mike Graydon, who quit to work for the company behind the Parq Casino beside B.C. Place Stadium. Brad Desmarais, a former senior police officer with the RCMP and Vancouver Police, joined BCLC in early 2013 as vice-president of corporate security and compliance. He took over the casino division in mid-2015. 

In the BCLC service plan released the same day as the BC Liberal government’s 2015 provincial budget, Lightbody reported: “The fastest growing segment of our revenue – high-limit table games in casinos – is heavily dependent on an international player base and is largely tied to the health of the tourism industry. The recent slowdown of international economies and currency restrictions presents risks for the growth of business.”

Great Canadian Gaming reported a 30% year-over-year increase in net revenue from table games during Chinese New Year in 2014.

theBreaker asked Eby specifically to comment on whether the jobs of Lightbody and Desmarais are safe.

Said Eby: “I’ve been working closely with the executive at BCLC throughout the German review and will continue to work closely with them as we work to implement the recommendations that he has put forward. Mr. German’s report will speak for itself, in terms of what exactly the issues were he identified in his review, and I look forward to releasing it as quickly as possible.” 

BCLC’s Jim Lightbody (left) and Brad Desmarais (LinkedIn)

According to the 2017-released compensation report, BCLC paid Lightbody $415,060 in pay and perks, while Desmarais’s package was $269,551. 

In 2007, BCLC’s board fired CEO Vic Poleschuk after a damning report by Ombudsperson Kim Carter into the unusually high rate of big lottery wins by retailers and retail employees. Carter found major gaps in BCLC prize payout procedures, lax enforcement and poor protection of consumers.

Poleschuk left with a $735,000 severance and became a consultant to Great Canadian Gaming, which hired him to run its Eastern Canada operations in 2010. Lightbody was BCLC’s vice-president of lotteries under Poleschuk. 

The BCLC board is down to four directors after the Dec. 31, 2017 expiry of appointments for BC Liberal-aligned auto dealer Moray Keith and tech entrepreneur Matthew Watson.

Chair Bud Smith, the former Social Credit attorney general, continues to serve with tech consultant Andrew Brown, ex-KPMG partner Robert Holden and hotelier Wendy Lisogar-Cocchia. Lisogar-Cocchia’s chain of Absolute Spas counts a location at River Rock. 

Eby said he asked German to make recommendations about changes to BCLC’s corporate structure, which could apply to the board. 

“I didn’t want to appoint any new board members until I had a sense about what was coming down the pipe. Now that I have an idea, we’re currently doing the work around identifying appropriate new board members who will assist us in any transition that we need to do,” Eby said. 

“My goal is to have some overlap between the current board members and incoming board members so that they can have a little bit of background about the organization and come up to speed on the current challenges at BCLC and any opportunities as well.” 

BCLC’s latest annual service plan contemplates a $55 million drop in net income for the casino division, partly due to the crackdown on casino money laundering. BCLC counted $1.34 billion in profits in fiscal 2016-2017. 

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