Lottery controversy shows weakness of B.C. conflict-of-interest rules, critics charge

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Provincial conflict-of interest rules, which bar heads of Crown corporations from immediately taking similar employment in the private sector, exist elsewhere in Canada – but not in British Columbia.

Critics point to Michael Graydon, former head of the BC Lottery Corp., as an example of the weak regulations in the province.

Mr. Graydon started work as president of PV Hospitality ULC, a partnership formed by Paragon Gaming Inc. and 360 VOX Corporation, on Feb. 11.

That was just one week after his last day as president and CEO of the BCLC, the agency that delivers gambling activities in the province. Gambling in the province is regulated by a branch of the Ministry of Finance.

Some worry that his knowledge will be used toward an expansion of the Edgewater Casino, which is part of a $535-million "urban resort" being planned by Paragon Gaming.

When Mr. Graydon left the corporation, he signed an acknowledgment that, for a three-month period commencing Feb. 4, he would not directly engage in any dealings with the corporation.

He is also bound by a confidentiality agreement restricting him from using information that belongs to the corporation. But the BCLC has "no restrictions in place for post-BCLC employment," a spokesperson for the corporation said in an e-mail.

In B.C., there are post-employment restrictions for senior management in public service that include one-year "cooling-off" periods.

However, these rules apply only to MLAs, including cabinet ministers, and parliamentary secretaries.

They do not apply to unelected public office holders, such as the heads of Crown corporations.

In comparison: A top executive in Ontario public services – including Crown corporations such as the Ontario Lottery and Gaming Corporation (OLG) – is prohibited for one year from going to a private company that could benefit from the knowledge that person would bring from his or her former job, said Tony Bitonti, a spokesman for the OLG. This is in accordance with the Public Service of Ontario Act.

Similarly, the president and CEO of the Alberta Gaming and Liquor Commission is considered a senior government official and would, upon leaving that position, have to refrain from accepting similar employment in the same industry for six months under the Public Service Act, said AGLC spokeswoman Jody Korchinski.

In Manitoba, a senior public servant can immediately accept employment with a private company in the same industry, but for one year cannot directly engage in any dealings with the corporation.

Post-employment rules in Quebec are similar to those in B.C.; a top official leaving a Crown corporation, such as Loto-Québec, can immediately join a gaming-related company. "However, in such a case, the person could not be involved with Loto-Québec nor use any confidential information acquired while working for Loto-Québec," said company spokesman Jean-Pierre Roy.

Last spring, a legislative committee considered whether to extend B.C.'s Members' Conflict of Interest Act to heads of Crown corporations as they are "privy to confidential information and may potentially exert influence over policy decisions and legislative initiatives."

However, it ultimately decided to encourage the government "to work with such boards to review the adequacy of existing guidelines."

Richard Leblanc, an associate professor of law, governance and ethics at York University, called both the government and BCLC rules "deficient."

"The government is deficient for not having a [conflict-of-interest] statement prohibiting employment with a private-sector employer until after a cooling-off period, which should be greater than a year for gaming, and subject to further conditions, prospectively," said Dr. Leblanc, who has advised both the Alcohol and Gaming Commission and the Financial Institutions Commission on governance issues.

"The board of BCLC is deficient in absence of the regulation for not negotiating a mutually agreed to restrictive covenant with the departing CEO, at the time of hiring, covering time, geography and industry."

Sandy Garossino, spokeswoman for the gaming watchdog group Vancouver Not Vegas, said she feels there is "clearly an ethical issue" in Mr. Graydon's appointment at PV Hospitality.

"It's not just about what he does now; it's what he was doing before, when he may have had an expectation that he would like to take a role as a head of [PV Hospitality]," she said.

Rod Phillips, former CEO of the OLG, said Mr. Graydon was instrumental in the creation and execution of policies on the use of private-sector gaming operators in British Columbia.

"He's a leader in the Canadian lottery and gaming business and certainly well connected," Mr. Phillips said.

A request for comment from Mr. Graydon was not returned.

With a report from Karen Howlett in Toronto

Editor's note: This is a corrected version of the story that previously stated that the BCLC regulates gambling in the province. Gambling is regulated by a branch of the Ministry of Finance.