Ex-B.C. Lottery CEO’s new role raises conflict of interest concerns

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The former president of the B.C. Lottery Corp. has joined a firm that wants to build a $535-million 'urban resort' next to B.C. Place that would include a casino overseen by the BCLC , prompting questions about a potential conflict of interest between his old job and new position.

In his role as president of BCLC, Michael Graydon headed the Crown corporation that manages gambling in the province. BCLC sets and oversees operating standards for casinos and monitors private-sector companies that run day-to-day operations. He left there last month to become president of PV Hospitality, a new partnership between Paragon Gaming and 360 Vox. Paragon is a Las Vegas-based gambling company whose operations include Vancouver's Edgewater Casino while 360 Vox is listed on the Toronto Stock Exchange. Paragon and 360 Vox teamed up last year to develop the site next to B.C. Place.

As president of PV Hospitality, Mr. Graydon will be responsible for developing destination resorts for PV Hospitality, with his "first priorty" the site next to B.C. Place. The casino portion of his work there would be overseen by his former colleagues.

"Michael Graydon is jumping right into a role where his inside knowledge could provide a huge benefit for a private company," NDP MLA and gaming critic Shane Simpson said Friday in a statement. "Also this is a new casino proposal that presumably BCLC has helped negotiate the terms for. The optics are terrible."

Mr. Graydon, who will start his new job next week, is traveling with his family and not immediately available for an interview, Paragon spokeswoman Tamara Hicks said in an email.

In response to a question about a potential conflict of interest, she noted that BCLC does not regulate casinos.

"In the interim, in light of the questions being raised, it is important for people to know that the regulation of gambling in British Columbia falls under the Province's Gaming Policy Enforcement Branch, not BCLC," she said in the email.

"This is a highly regulated industry, both by provincial and federal regulators. Michael's record of integrity and leadership is well known in the industry, and we are very excited to welcome him to our team."

Under B.C.'s gambling model, BCLC manages gambling facilities while the Gaming and Enforcement Branch is the regulator that takes care of things such as auditing for compliance with provincial requirements and investigating allegations of wrongdoing.

According to BCLC ethical business conduct guidelines, which are posted online and include an introductory letter from Mr. Graydon, BCLC employees "must avoid any situation or decision-making in which there is a real or apparent conflict of interest or an apprehension of bias."

An apparent conflict of interest exists "when there is a reasonable apprehension, which reasonable well-informed persons could properly have, that a conflict of interest exists. This applies even when no conflict is found to actually exist," the guidelines state.

In an emailed response attributed to BCLC board chair Bud Smith, BCLC said, "BCLC does not have restrictions in place for post-BCLC employment. All BCLC employees sign confidentiality agreements about BCLC information. These agreements remain in effect for life."

In addition, "There are no provisions in public sector employment legislation or Mr. Graydon's employment contract that would preclude him from working for PV Hospitality," the statement said.

Mr. Graydon joined BCLC in 2008 and presided over expansion that has pushed gambling revenues to more than $1-billion a year.

He was head of BCLC when Paragon was pushing a proposal to relocate the Edgewater casino from its current location to the site next to B.C. Place and expand operations to include 1,500 slot machines and 150 gaming tables. Rental income from the casino was to have helped pay for the renovation of B.C. Place.

The current Edgewater operation includes 600 slot machines and 75 gaming tables.

In 2011, after a wave of public concern over the expanded casino, Vancouver City Council approved the relocation of the casino but rejected the proposed expansion of gambling facilities.

Last year, Paragon came back to the table with a revamped proposal for an "urban resort" that would include two hotels, a casino and commercial space.

In December, council approved that proposal, which includes 600 slot machines and 75 gaming tables.

Vancouver Not Vegas, a group that has lobbied against the casino, has raised concerns about the potential for future gambling expansion in the project.