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At a news conference last November, the week after he had been suspended for misconduct and escorted from the Legislature, Clerk Craig James feigned ignorance, claimed he did no wrong and demanded his job back.

“I have established processes in the Legislative Assembly that are essentially bulletproof,” James boasted to reporters, while seated near his Peak Communicators public relations advisor, Alyn Edwards, and one of his two Fasken lawyers, Gavin Cameron. Gary Lenz, the suspended sergeant-at-arms, was seated at the same table.

Fast forward to mid-May. Two weeks after the retired Chief Justice of the Supreme Court of Canada, Beverley McLachlin, found James committed misconduct. On the eve of James’s certain firing by vote of the Legislature, the 32-year public employee negotiated his retirement. Taxpayers won’t be made whole, but justice could still be served. A police investigation into waste and corruption at the Legislature continues.

McLachlin (left) and Cullen

On this edition, hear how it went down in the Legislature on May 16 and hear the reaction of Speaker Darryl Plecas, who blew the whistle on James and Lenz. Plus host Bob Mackin’s interview with Plecas’s chief of staff, Alan Mullen.

“It has taken a tremendous amount of work and energy to reach this milestone, but we have a ways to go,” Mullen said. “We can only control what we’re doing and what we’re looking at. The police investigation, obviously we will continue to assist them in that investigation.

“We need to make sure whistleblowers are properly heard, and give them time and take them seriously. Since this McLachlin report has come out, there are more people coming out of the woodwork saying ‘oh yeah, I was waiting for this, I’ve got something to say too’.” 

The latest milestone in the scandal at the Legislature came the day after Premier John Horgan finally gave thumbs up to a public inquiry into money laundering.

The last straw was the report a week earlier by former deputy minister Maureen Maloney that estimated $7.4 billion had been laundered in B.C. in 2018, including $5 billion through real estate. B.C. Supreme Court Justice Austin Cullen has a two-year mandate from the Horgan cabinet, and broad powers to order testimony under oath and provision of evidence, so he can get to the bottom of who distorted B.C.’s economy and who left many British Columbians to suffer. Cullen could even call former cabinet members to the stand.

“Some individuals have refused to participate in our reviews voluntarily,” said Attorney General David Eby. “We are done with asking nicely.” 

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theBreaker.news Podcast: Judging B.C.'s Legislature scandal and money laundering plague
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At a news conference last November, the

Bob Mackin

What it was

The “Report on the Special Investigation Into Allegations Against the Clerk and the Sergeant-at-Arms of the Legislative Assembly of British Columbia” was officially a confidential fact-finding process to determine whether the suspended-with-pay-since Nov. 20 Clerk of the Legislature Craig James or Sergeant-at-Arms Gary Lenz engaged in misconduct in the course of their employment as permanent officers of the Legislative Assembly. Independent of, and unrelated to, any police investigation.

What it wasn’t

Not a legal investigation, nor was it to draw legal conclusions or to provide legal opinions.

Beverley McLachlin (Jean-Marc Carisse)

Who is Beverley McLachlin

McLachlin retired in December 2017 from the Supreme Court, where she had been chief justice since January 2000. The first woman to hold the position.

The former associate professor of law at the University of B.C. began her career as a bencher in 1981, first with the Vancouver County Court and then with the B.C. Supreme Court, where she became chief justice in September 1988. McLachlin joined the highest court in the land in April 1989.

In 2018, she became a non-permanent member of the Court of Final Appeal in Hong Kong. She is also a member arbitrator with the Arbitration Place, which offers arbitrators and venues in Toronto and Ottawa for arbitration, mediation and out-of-court examination.

Process

McLachlin was appointed by the Legislature on March 7, with a May 3 deadline for her report. She submitted it a day early.

After their closed-door testimony, transcripts were provided to James and Lenz so that they could challenge any statements with which they took issue. McLachlin also interviewed current and former employees and officers of the Legislative Assembly and members of the house. None were named. She also interviewed Speaker Darryl Plecas, who blew the whistle on corruption and waste in the B.C. Legislature.

The report was redacted. The Legislature voted May 16 to protect the transcripts and identity of witnesses under parliamentary privilege.

Gary Lenz (left), ex-speaker Linda Reid and Craig James (Commonwealth Parliamentary Association)

McLachlin compared each of the dozen questioned activities of James and Lenz, organized in five categories, with the applicable rule, practice or policy, and she considered whether it been consistently applied.

Ultimately, she sought to answer whether the questioned activity constituted a breach of the applicable rule, practice or policy — if one existed. Based on the evidence before her, she ruled that James committed misconduct in four of the five categories, while Lenz was cleared of misconduct. 

Lame committee

Before she got to the heart of the matter, McLachlin had harsh words for the Legislative Assembly, not dissimilar to Auditor General John Doyle’s conclusions in 2012.

She cited “weaknesses in the administrative structure,” where the speaker and LAMC historically allowed the clerk to bear responsibility for stewardship of Legislature finances.

“The Legislative Assembly Management Committee met infrequently during the period in question, particularly during the 180 days each year that the House was in recess. The lines of authority between the LAMC and the speaker, and between the speaker and the clerk and sergeant at arms, appear to have been unclear in many people’s minds, including their own.”

McLachlin criticized Plecas for viewing matters that concerned him “through the lens of a police investigation and criminal prosecution, rather than the lens of an administrator.”

Speaker Darryl Plecas (left) and chief of staff Alan Mullen (Mackin)

In a scrum with the media, Plecas, a nationally renowned criminology professor, was unapologetic. Those that confronted James and Lenz before him failed in correcting their behaviour.

In several cases, those that questioned James and Lenz’s authority were targeted by James, Lenz or their allies. Within a year of Doyle’s scathing report, for instance, his tenure was shortened by the BC Liberal government and ultimately ended.

“The events leading up to Nov. 20, 2018 and the subsequent release of the January Report [by Plecas] reflect the weaknesses in the reporting structure of the Legislative Assembly. When there this a lack of clarity about who is in charge of what, power seeps through the cracks and vigilant oversight is compromised.”

Suits and cases

The first misconduct was relatively easy for McLachlin. She concluded that the suits and luggage James bought were for personal use and James broke rules by being reimbursed.

James spent $2,150 on suits during separate trips to tailor Ede and Ravenscroft in London. James also spent $2,135.87 on various pieces of luggage.

“Mr. James provided no explanation for why, if the suits were required for Legislative Assembly business, suitable suits could not have been purchased in Canada at a lower price.”

The suits that James bought were not identical and were basic business suits. One of the suits was navy and the other was grey or charcoal, neither would be appropriate to wear under the black gowns in the House.

Stuffing pockets

James crafted a retirement allowance program in February 2012 and essentially paid himself $257,988. McLachlin could not accept James’s explanation and called the significant personal benefit a “mystery” and “without any evidenced justification.”

“On the evidence before me, I conclude that the payment of $257,988 to Mr. James in February 2012 lacks any legal basis.”

Exclusive London tailor shop preferred by James and Lenz.

“Whether by participating in the decision to award payments to individuals, including himself, without proper justification, or by deliberately standing at arm’s length and turning a blind eye toward whether Legislative Assembly funds were managed appropriately.”

James sought to enrich himself even more, through an insurance scheme that Plecas rejected.

“Mr. James’s primary focus was not the appropriate management of Legislative Assembly resources, but his personal desire for life insurance paid for by the Assembly.”

James concocted a scheme whereby he would receive $370,315 during the 12 months after his resignation, when that time would come.

McLachlin found James attempted, with an April 9, 2018 letter, to “secure a lucrative benefit outside of proper channels and inconsistent with established practice. I conclude that this constitutes misconduct.”

James also wanted the Legislature to pay his estate three times his annual salary, in the event that he died while clerk. The life insurance scheme would have paid his family $900,000.

“Mr. James did not turn his mind to what is best for the Legislative Assembly, as he was duty bound to do. As soon as he began to draft the letter, he had an obligation to assess the validity of the plan critically with an eye to the effective management of the Legislative Assembly. Mr. James did not consult with others, and he provided to another example of efforts he took to assess the plan. Therefore, his conduct fell well short of his admitted responsibilities as clerk.”

Booze for Barisoff

The truckload of beer, wine and spirits that James delivered to ex-speaker Bill Barisoff, and collected only $370 in return, was another misconduct.

James knowingly removed a significant quantity of alcohol from the Legislative precinct, without accounting for what he took or providing verifiable payment for it.

Split decision

McLachlin didn’t find the purchase of the infamous $13,000 wood splitter and trailer combo as misconduct, but what happened after it was bought was misconduct. Or, as she put it, the improper removal and use of the asset.

“Notwithstanding email communications provided to me that confirm that Mr. James played a role in actually choosing the specific piece of equipment in question once the request was approved, there is insufficient evidence to conclude that Mr. James engineered the purchase for a personal purpose.”

“Mr. James kept the wood splitter and trailer in his custody until November 2018, almost a year after he brought them home. The critical question is: why?

The wood splitter trailer at Craig James’s house in Saanich (Speaker’s Office)

“Mr. James says he kept the wood splitter and trailer because there was no suitable place to store them on the Legislative precinct. I reject this explanation; indeed it borders on nonsensical.”

McLachlin saved her choicest words for James’s misconduct on the wood splitter. James said he used it maybe three times and a broken mirror found in the trailer was from his house, after renovations in a main floor bathroom.

“As has been sensibly observed by others, why would Mr. James have endorsed the purchase of this equipment if there was not room on the Legislative precinct to store it? Had the anticipated emergency occurred, the equipment would have been useless unless stored at the Legislative precinct.”

“It is hard to understand what was going through Mr. James’s mind. Was he generously protecting Legislative Assembly property at his own expense, or did he somehow think he was entitled to retain the equipment?” she wrote. “The first is neither cohesive nor credible enough to stand against the array of contrary evidence. The second explanation is clearly inappropriate.”

“I conclude that Mr. James retention and use of the wood splitter and trailer violated Legislative Assembly policy and constituted misconduct.”

Plot twist

An 11th hour settlement was negotiated between James’s lawyers at Fasken and labour lawyer Marcia McNeil, representing the Legislative Assembly. James suddenly retired, months after claiming he did no wrong and that he wanted his job back. “I have had enough,” according to a prepared James statement released after Government house leader Mike Farnworth tabled the report. “My family has been deeply hurt and continues to suffer humiliation.” 

theBreaker.news was first to report that the agreement contains a non-disparaging clause and a non-financial clause. James’s salary is ended, and he won’t be asked to repay the treasury for the cost of all the misconduct found by McLachlin.

Craig James’s words of May 16 were in stark contrast with those he spoke at the Nov. 26 news conference.

“The healing can only begin with my return to work… I can think of nothing that I have done that would disqualify me from carrying on with my office while this investigation is completed.”

CTV reporter St. John Alexander asked: “What do you think it could have been [that sparked the suspension]?”

“I have no idea,” James said. 

Asked Alexander: “There was no money moved that shouldn’t have been moved?”

“None at all,” James replied. “I have established processes in the Legislative Assembly that are essentially bulletproof.”

What’s next

The Auditor General continues her work and a workplace review is coming.

The RCMP investigation, which involves special prosecutors David Butcher and Brock Martland, is ongoing.

Click here to read the McLachlin report.

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Bob Mackin What it was The "Report on the

Bob Mackin

VICTORIA: The clerk of the British Columbia Legislature, who was suspended with pay and benefits and escorted off the precinct last November, quit the night before the Legislature was going to vote on his firing, theBreaker.news has exclusively learned.

In the Legislature on May 16, after Question Period, Government House leader Mike Farnworth said Beverley McLachlin, the retired Supreme Court of Canada Chief Justice, found Craig James committed four types of misconduct. McLachlin ruled that Sergeant-at-Arms Gary Lenz committed no misconduct, so the Legislature voted to continue Lenz’s suspension, with pay and benefits. 

At the 11th hour, James negotiated his retirement from the Legislative Assembly, almost two weeks after McLachlin submitted her report to the the Legislature’s three house leaders. James’s agreement includes a non-monetary settlement and a non-disparaging clause. The former is significant, because it means that the province will take no action to recover the money James misspent since the BC Liberals installed him to become clerk in 2011.

B.C. Legislature clerk Craig James from Instagram family photographs at Windsor Castle (left, 2016) and Buckingham Palace (2015)

McLachlin was hired in early March to review the suspensions of James and Lenz, as well as the investigation by Speaker Darryl Plecas that found waste and corruption. Plecas went to police a year ago. The RCMP began investigating last summer and two special prosecutors were appointed early last fall. None of that was known publicly until Nov. 20, when the Legislature voted unanimously to put James and Lenz on indefinite paid leave.

McLachlin’s 55-page “Report on the Special Investigation into Allegations Against the Clerk and Sergeant-at-Arms of the Legislative Assembly of British Columbia” found four instances of James’s misconduct:

  • Expensing of two suits, three purchases of luggage and private insurance premiums to the Legislature;
  • Creation of retirement allowance in 2012 and a resignation benefit in 2018;
  • Removal of alcohol from the Legislature without accounting for it;
  • and, keeping a wood splitter and trailer purchased with Legislature funds at his house for almost a year.

Farnworth would not comment on the costs of the McLachlin report or the costs of James and Lenz’s defence lawyers and public relations firm He was also cagey about the details of the settlement. “There is a non-financial settlement in place and a long with that is a standard employment release that applies to both the legislature and Mr. James, that is what I  am able to tell you, it is a non-financial settlement.”

Speaker Darryl Plecas (left) and chief of staff Alan Mullen (Mackin)

Farnworth did say that the Legislature relied on legal advice from Victoria employment lawyer Marcia McNeil and that the house leaders of the Greens, Sonia Furstenau, and BC Liberals, Mary Polak, agreed with him on McLachlin’s findings and the settlement with James.

James remained defiant in a prepared statement, that said he chose to retire because he “had enough” and that his family “has been deeply hurt and continues to suffer humiliation.”

That statement seemed to contradict what James said last Nov. 26 when he held a news conference in Vancouver with Lenz. They both said they did no wrong, wanted their jobs back and would cooperate with the investigation.

“I have established processes in the Legislative Assembly that are essentially bulletproof,” James boasted. 

Lenz, meanwhile, hosted a news conference with reporters in the backyard of his North Saanich home on May 16. “The fact that my reputation has suffered immeasurable harm is concerning. However, there continues to be an opportunity to move in a positive direction and I look forward to resuming my services to the people of B.C. at the earliest convenience.”

When, or if, that may ever happen is anyone’s guess, because Lenz is, like James, still the subject of an RCMP investigation. 

Plecas was not excused from McLachlin’s criticism. She found he took on the role of a police investigator instead of an administrator. Plecas was unapologetic, because others had failed to bring transparency and accountability to the Legislature, which operates beyond the reach of the province’s freedom of information laws.

“I’m not the first person who has raised concerns, previous auditors generals sought an administrative approach, whistleblowers sought an administrative approach, that didn’t seem to work very well,” Plecas told reporters. ” Some of the other misconduct revealed by Justice McLachlin happened before my time, all I did was bring it to light. Could I have gone another route? That’s a very complicated situation.”

Since being suspended, James collected $180,000 in paycheques, hired the law and public relations firms and held a news conference, with Lenz, to claim he did no wrong. Yet, the night before his fate was to be decided in the Legislature, he quit. Plecas had little to say about that. 

“All I can say is that it is every single employee’s right to retire, that’s a matter which we would have no control over, so it is what it is.”

Green house leader Sonia Furstenau (left), NDP’s Mike Farnworth and BC Liberals’ Mary Polak (Mackin)

In January, Plecas released a report through the Legislative Assembly Management Committee, which he chairs, that described a history of millions of dollars of flagrant spending under James and Lenz. Plecas found waste and corruption, including unnecessary overseas trips, purchases of watches and gifts, failure to report and pay duties to Canada customs, the purchase of a wood splitter kept at James’s house and the $257,000 retirement allowance James decided to give himself in 2012. 

James came to Victoria from Saskatchewan in 1987 as a committee clerk. He succeeded 50-year veteran clerk George MacMinn in a June 2011 vote by the BC Liberals, after returning to the Legislature from a temporary role as the head of Elections BC. The NDP opposed the appointment, because it was made by the governing party rather than through the LAMC.

Plecas is a criminology professor who was elected as a BC Liberal in Abbotsford South in 2013 and 2017. His threat to quit the party over Christy Clark’s leadership after the NDP came to power in July 2017 at a Penticton caucus retreat forced Clark’s departure. Later that summer, Plecas left the BC Liberals and became the speaker, the first time that an independent MLA had occupied the position in B.C.

Plecas’s move gave the Green-supported NDP minority government a two-seat edge over the BC Liberals. It also led to the end of James’s controversial tenure and his retirement-in-disgrace. 

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Bob Mackin VICTORIA: The clerk of the British

Bob Mackin

VICTORIA: The Cullen Inquiry is on.

After months of public pressure and speculation, B.C. Supreme Court Justice Austin Cullen was appointed by Premier John Horgan and the NDP cabinet May 15 to conduct a public inquiry into money laundering in B.C.

Cullen will have broad power to order testimony and documents, with an interim report expected in 18 months and a final report by May 2021.

Justice Austin Cullen

“There is nobody in British Columbia that is not potentially compellable,” Attorney General David Eby told reporters in Victoria.

“It’s in the commissioner’s hands who the commissioner calls to testify.”

The next provincial election is scheduled for October 2021 and the inquiry will cast light in various areas, including the previous BC Liberal government which lasted from 2001 to 2017.

“Perhaps other governments were intoxicated by the revenues that kept coming in, there’s certainly evidence of that, we’ll see if the commissioner finds that,” Horgan said. “The revenues that come and go are a key part of delivering services, without any doubt, but I think all British Columbians want those revenues to arrive in a legitimate way, not at the expense of families who lose precious loved ones to an opioid crisis that is being fuelled by organized crime.”

The announcement comes the week after the release of a study led by a former deputy minister, Maureen Maloney, that estimated $7.4 billion was laundered in the B.C. economy last year. Maloney’s panel estimated $5 billion was in real estate. Two reports by the money laundering expert and former RCMP head for Western Canada, Peter German, studied the issue and found links between high-stakes casino gambling, the real estate market and the illicit drug trade in the province.

David Eby (left), John Horgan and Carole James, May 15 in Victoria (Mackin)

Horgan said that the work of German and Maloney set the stage for Cullen to begin his work at an advanced stage, but Horgan did not announce a budget for the inquiry.

“We will not constrain the commissioner by putting a tag line on it for the cost,” Horgan said.

“We know that the value for money of making sure the public has a good understanding of how we got here, and more importantly how we can stifle this activity and eradicate it at all possible.”

Eby said the inquiry will seek answers “about who knew what, when and who is profiting from money laundering in our province.”

Horgan called money laundering “a national problem,” but B.C. is ahead of other jurisdictions.

Eby said B.C. has had discussions with federal authorities, but conceded that similar discussions have not been held with municipal governments in B.C., whose jurisdictions have control over land use.

The cabinet order authorizing Cullen’s appointment gave him broad terms of reference. He could go back to the 1990s and look at decisions made by the previous NDP governments, which opened the door to casinos in the province, as well as the impacts of a federal Liberal decision to shut down the Ports Canada Police on the West Coast.

Cullen was appointed to the B.C. Supreme Court in 2001. He was associate chief justice from 2011 to 2017. Cullen’s inquiry will probe the growth, evolution and methods of money laundering in gambling, real estate, financial services, corporations, luxury goods and professional services, including legal and accounting.

The announcement comes just over two years since Eby and a federal NDP Member of Parliament, Don Davies, commissioned an English translation of the third volume of a Quebec report into public and private-sector construction corruption.

The Charbonneau Commission, formally titled the Commission of Inquiry on the Awarding and Management of Public Contracts in the Construction Industry, held 261 days of hearings beginning in 2011 and released its final report in late November 2015. That inquiry cost more than $40 million and considered a 15-year period, from 1996 to 2011. Almost 300 witnesses testified and the commission reviewed 3,600 documents.

It resulted in charges and convictions of several businesspeople and politicians in Quebec, as well as campaign finance reforms and an anti-corruption policing squad.

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Bob Mackin VICTORIA: The Cullen Inquiry is on.

Bob Mackin

Exactly 24 hours before Mike de Jong supporters gathered at a Richmond casino’s dinner theatre to celebrate the BC Liberal’s two decades in the Legislature, someone may have tried to launder $60,000 at River Rock Casino Resort.

The Abbotsford MLA was responsible for gambling regulation during his 2012 to 2017 tenure as finance minister. On Jan. 14, 2015, he was the marquee attraction at the “20th Anniversary in the Legislature Roast.” The organizer was former de Jong aide Dave Cyr, who had registered two months earlier to lobby de Jong on behalf of River Rock parent, Great Canadian Gaming. The roast raised $5,000 for the Abbotsford Hospice Society. As theBreaker.news reported last year, River Rock waived its venue fee, but charged standard food and beverage rates.

Clark appeared at de Jong’s roast in River Rock.

Documents obtained by theBreaker.news under the freedom of information laws show a large, suspicious cash transaction took place at 8 p.m. on Jan. 13, 2015 in River Rock.

“[Censored] bought in $60,000 in two separate buy-ins using 1,500 x $20 on each occasion for a total of 3,000 x $20,” said the report.

Canadian $20 bills are the currency of choice for money launderers. Police were not called, but a form was filed with the Gaming Policy and Enforcement Branch under section 86 of the Gaming Control Act.

Just six months later, River Rock took-in a whopping $13.5 million in $20 bills, according to a 2016 report by MNP for GPEB. The BC Liberals suppressed the MNP report, but the NDP made it public in September 2017, triggering a chain of events that included the damning money laundering studies by ex-senior RCMP officer Peter German and a panel led by ex-deputy minister Maureen Maloney.

German’s June 2018-released report linked casino money laundering with the real estate industry and the illicit drug trade. Last week, Maloney’s panel estimated $7.4 billion was laundered in the B.C. economy in 2018.

The NDP cabinet is expected to endorse a public inquiry into money laundering at its May 15 meeting.

Marquee promoting the de Jong roast (Markus Delves/Twitter)

At 9:15 p.m. and 9:20 p.m. on the night of the de Jong roast, two persons, whose names were also withheld by the government, were asked to leave the casino because they were on B.C. Lottery Corporation’s list of banned gamblers.

Early on the same day, at 1:50 a.m., “Three unknown [censored] males was [sic] filming in the high limit room. Cash cage areas.”

The night before de Jong’s roast, at 8:42 p.m. on Jan. 13, 2015, a report said a person passed approximately $10,000 in gambling chips to another person.

Just before 3 a.m. that day, a person assaulted a security guard after being asked to leave due to intoxication and attempting to drive. Police were not called.

The de Jong roast included appearances by Premier Christy Clark, press gallery veterans Vaughn Palmer and Mike Smyth (who performed a Coach’s Corner-inspired skit), and NDP house leader Mike Farnworth. 

In an early 2018 interview, Dermod Travis, of government accountability watchdog IntegrityBC, said a charity roast involving politicians is appropriate if all the funds raised in excess of the cost go to the charity. “It becomes an issue when you do it in a facility that you have regulatory oversight for,” Travis said. 

Travis wondered why de Jong’s roast didn’t happen closer to his Abbotsford riding, in a venue without a casino.

Between April 2015 and May 2017, Great Canadian donated more than $120,000 to the BC Liberals. 

A May 2011 B.C. government news release heralded a $3.5 million taxpayer grant towards the hospice society’s $7.5 million fundraising goal for the two-storey, 28,500 square foot hospice. In March 2015, a news release announced another $2.5 million grant and said the society had raised $10 million. It also said construction started in 2013 and the 10-bed, 30,000 square foot hospice would open in 2015. 

The hospice finally opened in April 2016.

Justin Fung of HALT with the trophy given to BC Liberal $5,000 donor Ethan Sun in 2016 (Mackin)

Coincidentally, the Abbotsford Hospice Society’s audited financial report for 2015 said that it agreed, on the same day as the de Jong roast, to a $4.3 million B.C. Housing loan at an RBC prime minus 1.75% interest rate. The minister responsible for B.C. Housing was Rich Coleman.

Coleman shut down an RCMP squad in 2009 after it warned organized crime had infiltrated B.C. casinos. In 2016, de Jong announced the formation of the Joint Illegal Gaming Investigation Team. New, NDP-mandated rules aimed at determining the source of gamblers’ funds led to a 16% decline in table drop at Great Canadian’s B.C. casinos last year. 

The de Jong roast wasn’t the only major BC Liberal event at River Rock.

In November 2016, Clark and Richmond MLA Teresa Wat, the BC Liberal international trade minister, held a fundraiser at the casino. It was the same week that Poly Culture, a company related to China’s People’s Liberation Army, opened an art gallery in downtown Vancouver.

Trophy given to BC Liberal $5,000 donor Ethan Sun in 2016 (Mackin)

Activist Justin Fung, of the Housing Action for Local Taxpayers (HALT) group, has the ultimate souvenir from Wat’s November 2016 River Rock fundraiser. Fung snagged a trophy with the “Today’s BC Liberals” logo that was presented to Chinese entrepreneur Yi An “Ethan” Sun of bankrupt tech startup Istuary Innovation Group.

Fung won the trinket on an eBay auction with a US$102.50 bid. The trophy names “Istuary Group Holdings Ltd.” and is inscribed as follows: “In Recognition of your support for Premier Christy Clark, the Honourable Teresa Wat, and the Richmond Centre BC Liberals Winter Celebration and Fundraising Gala, Nov. 26, 2016.”

The Elections BC database shows a $5,000 Sun donation to the BC Liberals, dated Nov. 30, 2016. He also donated $1,756 in 2015 and 2017.

The event grossed $169,800 and netted $124,450.42. The Elections BC filing shows 205 individuals and 157 corporations bought tickets for $388 or $500.

“It almost feels a little bit dirty to have it in my possession, the kinds of things it represents, pretty appalling,” Fung said. “I’d happily donate that to a  museum if that was an exhibit they wanted to put on. The offer is out there.”

Istuary was lured by HQ Vancouver (whose head was future Trudeau-appointed senator Yuen Pau Woo) and given tax credits through the controversial Advantage BC scheme. A lawsuit alleges that Sun fled to China, Istuary investors lost $18 million and that the company was really a front for immigration fraud. 

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Bob Mackin Exactly 24 hours before Mike de

The first annual white collar crime week in British Columbia?

It ought to be, after the NDP B.C. government released long-awaited reports into money laundering in real estate and luxury cars, and a top executive of China’s biggest multinational company made another court appearance in Vancouver.

Meng Wanzhou was allowed by a B.C. Supreme Court judge on May 8 to move from her $5 million Dunbar house to her $13.3 million Shaughnessy mansion. The Huawei chief financial officer, charged by the U.S. with fraud, will return to court Sept. 23, for a hearing on evidence gathered about her Dec. 1 arrest at Vancouver International Airport. Still no date for the extradition hearing. Her four lawyers say she is innocent and the victim of abuse of process.   

Coming sooner, however, is a decision by the NDP cabinet on whether to hold a public inquiry into money laundering in B.C. In an interview on this edition of theBreaker.news Podcast, Attorney General David Eby says that could come as soon as the May 15 cabinet meeting.

“I know it’s a very important decision for many British Columbians, there is a lot of people that want us to make a decision one way or another and move on, and so certainly my colleagues understand that very clearly, as do I.”

Eby released money laundering expert Peter German’s findings on luxury cars and real estate on May 7 and 9, respectively.

German found a thriving underground market for luxury car exports to China, which exploded by more than 4,000% in the last five years. Exporters even benefitted from provincial sales tax rebates. German also found young supercar buyers had brought bags of cash into dealerships. Unlike casinos, there is no requirement for dealers to report the large cash transactions to federal authorities.

German’s investigation of money laundering in real estate was released the same day as an expert panel on money laundering in housing. Former senior bureaucrat Maureen Maloney’s report estimated $7.4 billion was laundered in the B.C. economy last year, with $5 billion of that in real estate.

Eby told host Bob Mackin that he is also looking at establishing an anti-corruption policing and prosecution squad similar to Quebec’s, but continues to point to federal authorities not keeping up with white collar crime. For more than two decades, B.C. has not had a dedicated police force in the ports of Vancouver, Surrey and Prince Rupert. 

“It’s hard to imagine that we’re not putting a focus on what’s coming in and going out of our ports with a dedicated police team,” Eby said.

Plus commentaries and Pacific Rim and Pacific Northwest headlines.

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theBreaker.news Podcast: B.C.'s money laundering shock and awe
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The first annual white collar crime week

Bob Mackin

Want to become the next-door neighbour of the world’s most-famous telecom executive?

The 16,350 square foot lot at 1625 Matthews Avenue in Vancouver’s luxurious First Shaughnessy can be all yours. Time is running out to cut a deal and move in before Huawei Technologies chief financial officer Meng Wanzhou finally calls 1603 Matthews her home this weekend.

Property neighbouring Meng Wanzhou’s Shaughnessy mansion is for sale (Mackin)

But don’t despair. Whenever you arrive, the daughter of the billionaire founder of China’s biggest state-approved multinational might offer you a free pizza. Heck, she could be there for years, living on an 11 p.m. to 6 a.m. curfew, as her lawyers try to keep her out of the United States, where federal authorities want to try her on fraud charges.

There are a couple of catches.

The real estate agent is now asking $12.38 million for the property, which was assessed for $9.44 million last year.

Chin up, it is now a buyer’s market.

The existing two-storey, five-bedroom white mansion with an indoor pool is boarded up and a burgundy Toyota Corolla VE without licence plates is parked on the unkept lawn. You could always pitch a tent for the time being or build a shelter from a pile of wood.

“Already have building plans for a 9,000 sq. foot home,” describes Royal Pacific real estate agent Winnie Chung’s website. “Still waiting for development permit approval. The property will be sold as is, where is.”

Since May 9, 2016, the example of mid-1970s faux Roman architecture has been in the name of self-described homemaker Jing Zhao.

A homemaker? Fancy that!

Peter German’s new Dirty Money investigation report on money laundering in B.C. real estate, released May 9, said that 3% of B.C. titles are held by persons whose occupation is listed as student, homemaker or unemployed.

“These tend to be expensive houses, with 88 houses over $10 million that are apparently owned by nominees,” German wrote. The coming beneficial ownership registry is supposed to unmask owners who would rather stay anonymous. 

Last-minute work to Meng Wanzhou’s Shaughnessy mansion on May 9 (Mackin)

The month of Jing Zhao’s transaction was also the month that Meng’s husband, the self-described investor and marketing developer Xiaozong Liu, bought 1603 Matthews. Meng’s name was not reported to the land title office. The property was mortgaged with HSBC, the same bank that the U.S. now accuses Meng of defrauding to overcome trade sanctions with Iran.

Meng — who also goes by Sabrina or Cathy — came to Vancouver 16 years ago and has a 10-year-old daughter with Liu. Documents submitted to a B.C. Supreme Court judge a day earlier, on May 8, said Meng is expected to move in to the Matthews mansion on May 11.

The chief executive of Lions Gate Risk Management, the security company appointed by the court to ensure Meng does not flee Canada, swore an April 29 affidavit in support of the move.

“Following our site visit, we have identified certain modifications to the Matthews Property that will facilitate meeting our duty to the court,” said Scot Filer’s sworn statement. “All these modifications can be completed by May 11, 2019, which we understand to be the proposed implementation date for Ms. Meng’s move to the Matthews property.”

Filer’s sworn statement said that there will be less disruption for neighbours of the gated $13.3 million Shaughnessy mansion than the $5 million house in Dunbar, owned in Liu’s name since October 2009.

The Dunbar house is on the northwest corner of Crown and 28th, exposed on three sides, with no gate or large trees. The backyard is fenced, however. On Matthews, “there are gates which will better enable Lions Gate to control access onto the property and egress from it,” Filer swore.

Meng Wanzhou leaves her Dunbar house on May 8.

“The Matthews property, unlike the 28th Avenue West property, has a clear distinction between public space and private space. Security staff inside the Matthews Property line will be away from direct contact with and questions from the public thereby improving their ability to do their jobs.”

Filer’s affidavit said that Meng has “strictly complied” with her bail conditions, including compliance with directions from Lions Gate employees.

Three years after buying, a move under unforeseen circumstances

Associate Chief Justice Heather Holmes’s bail variance sparked a flurry of activity the next day. The signs for Trasolini Construction and J&R Katz Design and Architecture remain near the sidewalk, but an I Move You company van was parked nearby. A handwritten note taped to the front door told contractors to enter through a side door. Workers could be seen inside the windows on the ground floor. A crew from G.K. Roofing arrived. Their names were checked against a list on a clipboard by a plainclothes security guard.

Three empty black SUVs for hire were parked in a row on the opposite side of the street to the west. The drivers talked amongst themselves around the corner. One of them took a break from their chat and was allowed to use the Sunrise Washroom Rental cart at the far end of Meng and Liu’s driveway.

Two other black Chevrolet SUVs came and went from the mansion. They briefly parked and five plainclothes security guards huddled, shook hands and moved items from one trunk to another. Two of them looked as if they were not pleased to see a photographer on the sidewalk across the street, but they otherwise went about their business.

Filer’s affidavit makes no mention of the media, but some reporters from Bloomberg and South China Morning Post have complained in print of intimidation by his staff. Security officers in B.C. must be provincially licensed and are regulated by provincial law.

While Meng was not seen during the time theBreaker.news observed, Meng’s husband, Liu, did come and go in a silver Lexus GX460. 

A May 11 moving day would mark five months to the day since she was freed on $10 million bail after her Dec. 1, 2018 arrest at Vancouver International Airport on a stop between Hong Kong and Mexico. She spent a week-and-a-half in a women’s jail in Maple Ridge.

Meng wears a GPS monitor on her left ankle and is restricted to traveling within City of Vancouver and parts of Richmond and the North Shore. She cannot go near the airport. She is under 24-hour watch of Lions Gate and her next court date is Sept. 23 for a hearing where her four lawyers and one for the Attorney General of Canada will argue over evidence disclosure. No date has been set for the actual extradition hearing, but her lawyers want the extradition case stayed before it can be heard. They accuse Canadian police and border guards and President Donald Trump of abuse of process. 

May 11 is also five months since the world learned about the arrest of Michael Kovrig, a Canadian diplomat on leave. Chinese police nabbed Kovrig a day earlier in Beijing, in a move widely seen as retaliation for Canada’s arrest of Meng. Another Canadian Michael, businessman Spavor, was also arrested. While Meng is free to go shopping or a walk in a park, neither Spavor nor Kovrig have been allowed to see relatives, cannot turn off the lights at night or see sunshine in daytime and are subject to hours of daily interrogation.

If you have more than $12 million to become their next-door neighbour, do introduce yourself to the folks in the mansion near the east end of the block. Maybe they would even invite you to their 4th of July Party.

The former William Shelly mansion is the official residence of the United States Consul General since 1946. The distance between the two properties is roughly half the length of a football field, an unofficial American form of measurement.

When theBreaker.news sought the official reaction of Consul Gen. Katherine Dhanani to Uncle Sam’s intriguing new neighbour, public affairs advisor Glenda Wallace Ainsworth said the consulate had no comment.

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Bob Mackin Want to become the next-door neighbour

Bob Mackin

A new report to the B.C. NDP government estimates that $5.3 billion was laundered in real estate last year.

Combatting Money Laundering in B.C. Real Estate estimated that $47 billion was laundered in Canada last year, of which $7.4 billion of the dirty money was in B.C.

The best estimate of the expert panel that authored the report is that money laundering makes house prices 3.7% to 7.5% higher in B.C.

Mansions in West Vancouver owned by a former Chinese government official and his daughter (Mackin)

“If money laundering investment is distributed throughout B.C. based on property values, then 83% would be in residential properties and 17% in identified non-residential property types,” the panel, led by former B.C. government bureaucrat Maureen Maloney, said in the May 9-released report. “At 4.5% of the volume of transactions for each property type, that would imply amounts of $4.6 billion for residential property and $0.7 billion for non-residential property.”

Maloney’s report made 29 recommendations. In a nutshell, the report concluded: “More agencies, regulatory improvements, new tools, better information, more investigation, enhanced coordination lead to less money laundering.”

The report emphasized the need for a beneficial ownership registry, which the NDP government has already adopted and is developing. However, Maloney made special mention of ease and economy of access to ensure transparency.

“Our work to date has indicated that the disclosure of the beneficial ownership of real estate is one of the most important measures of a regulator nature that can be taken to combat money laundering in real estate,” said a January letter from the panel to Minister of Finance Carole James. “Such disclosure is also important to combat tax avoidance and evasion. Without it, the actual ownership can be easily and effectively obscured by using a corporation and trust.”

Citing the Tax Justice Network, the panel supports a public registry, in open data format, and available for free or at a minimal cost.

The government has already decided that the Land Titles and Survey Authority of B.C. will handle the beneficial ownership registry, but has not made a regulation on the costs or which sectors will be exempt, other than government and law enforcement. LTSA handles the existing land titles database, which costs roughly $10 per property search. Last year, LTSA stopped providing the first owner name on title for free, a practice that had lasted for decades.

The report estimated $4.9 billion of dirty money in 2015 came to Canada from the United States and $3.5 billion from Europe and only $750 million from Eastern Asia. The authors admitted the latter figures may not be reliable.

“The result for Eastern Asia seems surprisingly low given the perception in B.C. that a lot of dirty money in the province flows from China. As suggested earlier in relation to limitations of the gravity model, if the incidence of crime in China is under reported even after the data is adjusted by the United Nations, then inflows from China to Canada will be underestimated. As B.C. has particularly close ties to China as a result of long-term migration flows, this will disproportionately affect the B.C. money laundering estimate.” 

More than 3,400 individuals bought more than three properties in less than two years, according to Peter German’s second Dirty Money report, released May 9.

“Approximately 42% of the properties acquired through buying sprees are condominiums. Most of the remainder are single-family detached and semi-detached homes. Many of these prolific buyers acquire multiple units within the same building. There are 46 individuals who own eight or more units in a single development.”

From the Maloney report (BC Gov)

The report gave three examples:

A student in 2001, with a service address at a rented office outside B.C., bought more than 15 properties in the same Vancouver condo for $2.9 million. The properties are now worth $11 million;

A self-described homemaker went on two buying sprees, buying more than a dozen downtown row houses for $4.1 million; they are now worth $15 million.

Between 2014 and 2017, another homemaker bought fie luxury homes for $21 million, but only one is mortgaged. Her husband is believed to be the guarantor.

German’s report said that the use of nominees or straw buyers is common and is exploited by beneficial owners, including money launderers.

“Three per cent of B.C. titles (33,292 in 20 years) are held by persons whose occupation is listed as student, homemaker, or unemployed and approximately 25% of them had clear title. These tend to be expensive houses, with 88 houses over $10 million that are apparently owned by nominees.”

More than $16 billion of residential properties — almost 14,000 — are owned by persons with service addresses outside Canada, one in five are in high-risk money laundering jurisdictions. Twenty properties registered in the British Virgin Islands are owned by shell companies, that shield the names of directors, shareholders and beneficial owners.

German found more than 3,100 residential properties whose owners have a service address in one of 87 high-risk jurisdictions. Hong Kong (1,345) and China (774) are the two most common.

“Breaking down that total by property type, we see that the majority are condominiums, followed by single-family detached homes. A small number of agricultural properties and multi-family apartment buildings are owned by titleholders in high-risk jurisdictions.”

German pointed to weaknesses in data collection by the LTSA database, where there are buyers who have described themselves as “superdad,” “funemployed,”  “wanna be ski bum,” “domestic diva,” “trophy wife,” and even “launderer.”

More to come…

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Bob Mackin A new report to the B.C.

Bob Mackin

Let the NDP belly-aching and navel-gazing begin, after Jagmeet Singh’s party lost its seat in the Nanaimo-Ladysmith by-election.

Quite simply, the Greens had the right candidate for the right party at the right time in the form of Paul Manly, a local multimedia producer whose father is a former NDP MP.

The NDP blew it when they chose North Vancouver’s Bob Chamberlin and voters agreed. Chamberlin finished a distant third, almost 6,000 votes behind Manly and 700 behind runner-up John Hirst of the Conservatives.   

It may have been because of his scant ties to Nanaimo (he went to high school there) or because theBreaker.news revealed that he financially supported the unpopular prime minister late last year.

Chamberlin donated $1,390.25 to attend a cash for access cocktail party to help fund Prime Minister Justin Trudeau’s re-election campaign with 75 others at the Gleneagles golf course clubhouse last Nov. 1 in West Vancouver. The number of people outside protesting Trudeau’s approval of the Woodfibre LNG plant near Squamish rivalled the number on the guest list.

Liberal donors in 2018, NDP supporters in 2019: Bob Chamberlin (left) and Melissa Louie. (Twitter)

Chamberlin, a vice-president of the Union of B.C. Indian Chiefs, did not respond to email or phone messages last November, when the Liberal Party published the list and theBreaker.news wanted to know why he attended.

On March 24, while running for the nomination, Chamberlin Tweeted that he went “to support my friend [West Vancouver Liberal MP] Pam Goldsmith-Jones, we were friends before she became an MP and we remain friends to this day.”

There are other ways and other days on which to support a friend. At least two come to mind and the occasions are annual. Namely, birthday and Christmas. Both are truly non-partisan occasions. 

Chamberlin denied he was endorsing the Liberal Party. But it certainly looked like he was. Despite previously protesting against the Trans Mountain Pipeline (that Trudeau bought with our money), Chamberlin did not explicitly criticize the Liberal Party until an April 2 Tweet in support of ex-Attorney General Jody Wilson-Raybould: “Honesty and integrity are unwelcome in the Liberal Gov.” 

But it is still a puzzle why Chamberlin waited until he threw his hat in the ring to explain to a reporter (albeit publicly) why he shelled out cash to hang out with Trudeau. His partner, Melissa Louie, made matters worse when she Tweeted on March 25 that “nobody is actually accountable to, or owes anything to, a newspaper.”

It is no wonder that Louie eventually locked her Twitter account from public view to prevent another bozo eruption after wantonly disparaging the media while Chamberlin was running for office. 

Louie is a lawyer at Morgan and Associates in West Vancouver. She is also listed in the Elections Canada database, and on the Liberal Party website, as an attendee and donor of $1,390.25 to the same Nov. 1 event. Louie provided her law office address, rather than her residential address, to the Liberal Party and, in turn, Elections Canada.

In an email, Louie said that her law firm has nothing to do with her personal life. “It’s just a place where I work. I filled out with my work address because I have a long standing practice of receiving mail and packages at my work because I spend so much time there.”

Elections Canada spokeswoman Natasha Gauthier said the federal campaign finance law states that the contributor’s home address must be recorded, for any contribution over $200.

The by-election was called after the NDP’s Sheila Malcolmson quit to successfully run to replace Leonard Krog as the area MLA, after Krog won Nanaimo’s mayoralty and quit the Legislature.

No word yet whether Chamberlin will try again on Oct. 21 or if the NDP will find a Nanaimoan to challenge Manly. 

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Bob Mackin Let the NDP belly-aching and navel-gazing

Bob Mackin

British Columbia is home to a thriving underground market for luxury vehicle exports to China that provides a “wonderful opportunity for large-scale money laundering with very little chance of detection,” wrote Peter German in his report released May 7.

One of several Burrard Street supercar stores (Mackin)

According to German, the money laundering expert and former senior Mountie hired by Attorney General David Eby, there were less than 100 luxury vehicles exported to China from B.C. in 2013. By 2018, that number had exploded to more than 4,400, according to Ministry of Finance data.

These vehicles are purchased for domestic use by straw buyers, working for a fee or commission on behalf of exporters, who then rapidly ship the vehicles overseas where international price differentials ensure huge profits,” German wrote. “B.C.’s unique geographic location and ethnography make it an incredibly attractive venue for this activity.”

German, who was assisted by former Vancouver Police Deputy Chief Doug LePard, found that exporters will work with a network of family, friends and sometimes people who are recruited online or word of mouth. The straw buyers will sign paperwork at dealerships, buy cars and drop them off to be exported. They receive a small commission, from a few thousand dollars to less than 5% of a vehicle’s value.

German found that during the 2016-2017 fiscal year, one straw buyer made in excess of 25 purchases, 1,000 straw buyers were apparently linked to one exporter and, in many cases, the identification provided by the straw purchaser is a People’s Republic of China passport, not a B.C. driver’s licence. Straw buyers had an incentive to flip the cars quickly to exporters. If resold within seven days of purchase, the provincial government refunds the provincial sales tax. There were refunds of at least $55 million on nearly 8,000 vehicles sold that year, with a total purchase value of $555 million. 

theBreaker.news was first to report about the outcomes of two sensational disputes before the B.C. Supreme Court. They were both cases of luxury car exports to China gone awry. 

A Lower Mainland real estate investor, whose company supplied steel to the Beijing 2008 Olympics, failed to convince a judge last year who was responsible for losing the BMW she bought and sent to China. In April, a judge awarded a former University of British Columbia student $329,000 after the BMW supercar that his mother bought him went missing in China.

In his verdict on the former case, Justice Christopher Grauer wrote that since 2010, only Chinese government representatives, high-level personnel and specially invited experts have been allowed to import cars into China.

German wrote that certain resellers have sullied the reputation of resellers in general, because of their willingness to deal with nefarious characters. Identities of cash providers are not recorded and underground banks are often used. One dealer, whose name was not published, said customers use the Chinese WeChat Pay and UnionPay systems. Another said large cash transactions happen monthly and even recalled how a young person brought $200,000 in cash to buy a car. 

Said another: “About 10 times a month we’ll get a foreign student with zero credit, zero job income, but proof of income through incoming wire transfers and the bank will provide financing because they are accepting the wire transfers and bank statements as proof of income. It’s unequivocally money laundering. People who are not employed, don’t pay tax, showing bank statements with large sums being wired frequently into their accounts…”

Peter German’s original Dirty Money report was released June 27, 2018 (Mackin)

German wrote that certain high-end, luxury vehicle dealers are known to police, including for serious drug and other offences. But the absence of mandatory financial reporting to [federal financial intelligence agency] FinTRAC is a serious impediment with respect to resellers as it is with new car dealers.

Another problem is the lack of dedicated police officers in the ports of Vancouver, Surrey and Prince Rupert.

There aren’t any.

The federal Liberal government shut down the Ports Canada Police in 1997 in a controversial move spearheaded by then-Fisheries and Oceans Minister David Anderson. That left municipal police to monitor the waterfront in their jurisdiction.

“The comparison to Seattle is stark, where the Port of Seattle Police Department has 150 staff to police SeaTac Airport and the seaport, including numerous specialized units,” German wrote. “In addition, U.S. federal authorities are present at the ports, including border patrol, customs officers, and others.”

Presently there is a “huge gap” which allows the grey market to operate, but German said the problem could be solved by a requirement of luxury car dealers to report to FinTRAC.

German’s report said the province should consider preventing dealers from accepting deposits or payments on vehicles of more than $10,000, and it should consider allowing the Vehicle Sales Authority to suspend resellers and require the principals to undergo criminal record and background checks.

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Bob Mackin British Columbia is home to a