Commissioner Austin Cullen listens to introductions before opening statements at the Cullen Commission of Inquiry into Money Laundering in British Columbia, in Vancouver, Feb. 24, 2020.DARRYL DYCK/The Canadian Press
The CEO and the former head of compliance at B.C.'s casino regulator both used their opening statements at a public inquiry into money laundering to attack former Mountie Peter German’s explosive report on the gambling sector.
Lawyers for British Columbia Lottery Corp. chief executive officer Jim Lightbody and Robert Kroeker, who left the Crown agency last summer after four years as head of security and compliance, told the Cullen Commission on Tuesday that Dr. German’s 2018 Dirty Money report did not adequately represent the solid work the agency undertook to combat money laundering in its casinos.
“The commission is tasked with reviewing and taking into consideration Dr. German’s reports among others. It is imperative that mischaracterizations and errors in these reports be addressed publicly and corrected,” Mr. Kroeker’s lawyer, Christine Mainville, told the hearing at a Vancouver Federal Court.
Mr. Kroeker took action to stop money being washed through casinos during his tenure as head of compliance at Great Canadian Gaming Corp., which runs Richmond’s River Rock casino, and later in that same capacity with the BCLC from 2015-19, Ms. Mainville said. She added that Dr. German’s analysis of her client’s agency lacked inside information because it did not include more comprehensive talks with top BCLC brass.
“Dr. German never met with Mr. Kroeker individually or sought out Mr. Kroeker’s detailed knowledge of BCLC,” Ms. Mainville told the hearing. “His only interaction with Mr. Kroeker on money laundering controls during his review was a single hour-and-a-half group meeting.”
Mr. Lightbody’s lawyer stated that his client, as the leader of the BCLC, cracked down on money laundering and that Mr. Lightbody looks forward to addressing the commission.
“Mr. Lightbody has identified a number of inaccuracies in the report and frailties of [Dr. German’s] underlying methodology,” Robin McFee said.
Dr. German, who was given the task of investigating money laundering in casinos by B.C. Attorney-General David Eby, told The Globe and Mail that his “report is what it is, it speaks for itself." He declined to immediately respond to the allegations made by the BCLC executives.
“I did not hear the presentations today, I have not had an opportunity to review them and I look forward to that opportunity before commenting," Dr. German said.
Dr. German’s 2018 report found criminal organizations linked to China, Colombia, Mexico and elsewhere had been using Vancouver-area casinos as “laundromats” for illicit money, exploiting gaps left wide open as different agencies responsible for gambling and regulation waged “internecine” turf wars.
The province asked for his independent review after a report was released saying Richmond’s River Rock casino had accepted $13.5-million in $20 bills within one month, which police said could be proceeds of crime.
B.C.’s regulatory model was unique: The Crown-owned BCLC is responsible for maintaining and building the business of gambling, while the regulatory oversight is provided by the Gaming Policy and Enforcement Branch. Dr. German said the two arms of government have been locked in conflict for years, leaving frustrated casino operators caught in the middle as the agencies expended “mental energy crapping on each other.”
Last December, the B.C. government announced it was amending the provincial gambling law to create a new, more independent regulator of the sector by spring of next year.
On Monday, William Smart, a lawyer for the BCLC, underscored that the Crown agency is responsible for identifying and reporting suspicious activity in casinos, but it has never been responsible for enforcing the money laundering laws in the province.
“We suggest caution should be exercised by the commission whether you assess past events and past response to money laundering through the lens of what we know today about money laundering," Mr. Smart told the commission. "As is often said, hindsight is 20/20.”
Opening statements from those stakeholders given special status are set to conclude Wednesday, with the commission reconvening in May to begin interviewing experts and trying to quantify the extent of B.C.'s money laundering problems.
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Mike Hager