Handout/ The Globe and Mail
Lotteries minister Rich Coleman has no qualms over the performance of the B.C. Lottery Corporation, despite the high-profile breakdown of its new online casino gaming service and more than $650,000 in fines levied against it by a federal agency that tracks money laundering.
"We have a very well-run company here. They're doing a good job," Mr. Coleman said on Wednesday. "Nobody's done anything wrong. … Frankly, I still have confidence in [Michael Graydon]as CEO."
The minister dismissed the huge fines as arising from nothing more serious than two-year-old administrative errors.
But an official with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) said fines are levied only after a "persistent, chronic" failure to comply with requirements to report large money transactions.
Blaine Harvey, director of communications for FINTRAC, stressed that all matters concerning the fines against the B.C. Lottery Corporation remain confidential because they are being appealed.
However, in general, he said that smaller organizations are often assessed minimal fines of perhaps $1,000 for making "garden variety mistakes because they don't understand [how to make their reports]"
"But you get up in the $500,000 range at sizable organizations when, despite our regional offices and compliance people working with them month after month, they just don't get it," Mr. Harvey explained.
"Fines happen when we see a persistent, chronic failure to comply with the law [to report]"
Told of Mr. Harvey's comments, Mr. Coleman replied: "I know they say that, and that's why we are appealing the fines. We don't agree there's been a persistent failure."
Federal regulations aimed at controlling money laundering require all suspicious cash transactions, including those at casinos sanctioned by the BCLC, to be reported to the agency in a timely manner. The benchmark for attracting attention is about $10,000.
Mr. Harvey said FINTRAC acquired the authority to levy fines last year.
"We had visited and talked to and helped all the key agencies dealing with these compliance issues to the point where, if they still weren't complying, we needed a stick," he said. "So we developed a program of fines."
Asked if a first offence was likely to escape a financial penalty, Mr. Harvey said: "You're absolutely right."
But Mr. Coleman, who is Housing and Social Development Minister and assumed cabinet responsibility for gaming last year, said he wasn't overly perturbed by the fines, blaming most of the 1,020 files in question on reports that were either submitted late or filled out with incorrect information.
"These files are a couple of years old, to be honest with you, and since then, we've put in place a new system to deal with things like that. … The lottery corporation's socks were starting to be pulled up on the FINTRAC thing long before this became public."
Nor was Mr. Coleman concerned about the embarrassing, high-profile system failure that has kept the province's new online casino shut down since shortly after it opened last Thursday.
According to BCLC officials, an unexpected flood of users overwhelmed the system, causing a "data crossover" that allowed some players to bet with other players' money, and disclosed personal information about at least a dozen onsite gamblers.
Mr. Coleman rejected criticism of the lottery corporation for waiting five days before releasing the information and leaving the public with the impression that the only problem was too much traffic on the untried system.
"It's uncomfortable, no doubt about it, but they've done what they should have. They kept me informed and taken advice from the privacy commissioner. And it was actually the truth that the site was shut down because of the volume. That's what caused the cross-contamination."
It would have been improper to release information on the privacy breach before all the details were determined and affected users were told of the gaffe, he said.
Mr. Coleman said such an incident had never happened before to any of the many sites built by those hired by the lottery corporation to get the online casino up and running. "So this was new to everybody."
There's no need for heads to roll at BCLC, he added.
"That seems to be public life. You have a program, you make the investment, the thing doesn't work, and people say: 'Who's head do we want because it doesn't work?' I'm really impatient with people who say that the answer is just to take somebody's head.
"Mike Graydon has been straight up front with the media all the way through this. The reality is, you're there to manage in the good times and you're there to manage in the bad times."