Attorney General David Eby told a public inquiry Monday that around the time the problem in the Lower Mainland peaked, he encountered a “significant,” confusing disconnect among B.C. gaming officials on the issue of money laundering.
After taking over the gaming portfolio in 2017, Eby said he didn’t know who to trust because the B.C. Lottery Corporation (BCLC) and its regulator told him such different stories.
“Either we had a FINTRAC-recognized, leading anti-money laundering program or we had a profound and ongoing money laundering problem in our casinos,” Eby told the Cullen Commission during his testimony, referring to the Financial Transactions and Reports Analysis Centre of Canada, which is Canada’s anti-money laundering agency.
This month, Eby became the latest senior B.C. politician to testify before the Cullen inquiry, which is looking at the scope and influence of money laundering in the province over the past decade and a half.
When he was an Opposition critic, the minister first became concerned about a money laundering problem. After seeing media reports of patrons going into casinos with large sums of cash, not necessarily betting, and leaving with a cheque, he wrote a letter imploring then-minister responsible Mike de Jong to act.
Profoundly different’ perspectives
After he was sworn in as minister in the summer of 2017, Eby said he was briefed by both the BCLC, which regulates casinos, and the Gaming Policy and Enforcement Branch, which regulates gaming.
He said their stories were “profoundly different.”
Officials from the BCLC told him that their anti-money-laundering program was good and industry-leading, but GPEB staff were “deeply concerned” that there was a serious ongoing problem. To drive their point home, Eby said the regulator showed him footage of patrons carrying hundreds of thousands of dollars in $20 bills into casinos.
Eby said that “I left the briefing saying, ‘Oh, my gosh, I need to talk to my deputy attorney general. I need to get some advice about how best to move forward here, because the correct route is not clear to me. GPEB felt that their concerns about … the potential of money laundering in casinos were not being adequately heard by the B.C. Lottery Corporation and that they were at odds about what type of action was necessary. The core of it being that GPEB wanted more severe restrictions and B.C. Lottery Corporation did not.”
In 2017, Eby brought in Peter German, a retired lawyer and RCMP deputy commissioner, to conduct an independent review into the extent of suspicious money and its links to organized crime.
The Dirty Money report was ultimately released in 2018 by German. Over a decade, at least $100 million was laundered in B.C. casinos, according to the lengthy review. It also detailed gaps in oversight created by systemic infighting and dysfunction between BCLC and GPEB.
Eby defends ‘blind eye’ allegations
After the report came out, Eby condemned the previous Liberal government for turning a “blind eye” to the problem. He stood by the comments during his testimony Monday after a tense exchange.
Bill Smart, the lawyer representing BCLC said that “Those are very serious allegations to make about politicians you sat in the legislature with.”
Eby replied that “Yes, but with respect, Mr. Smart, you need to understand I was the [Opposition] critic for years …. I wrote to the minister responsible [then Mike de Jong] and said, ‘It looks like there’s a serious issue here,’ and I got back a letter that said, ‘No, there’s not,’ and when I asked about it in question period, I got the same response. I make no bones about the fact I would have handled this issue differently than the previous administration did.”
De Jong said during his own testimony Friday that the Liberal government made “serious attempts” to recognize and address the issue of money laundering and disputed “frustrating” claims that someone deliberately ignored the problem. Christy Clark, the former premier, told the inquiry that no one in her government had warned her about the issue until a spike in suspicious cash transactions in 2015.
Eby accepted that a new BCLC requirement that certain casino patrons identify the source of their money, which went into effect in 2015, resulted in fewer suspicious cash transactions. Cash buy-ins at B.C. casinos dropped from $38 million in July 2015 to $6.6 million in September, according to Smart.
After reports revealed that B.C.’s gaming, real estate, and luxury vehicle sectors were being used to launder proceeds of crime, the NDP government called the Cullen inquiry.
On Wednesday, former Liberal solicitor general Rich Coleman will testify. Coleman has previously denied allegations that he did not act on money laundering allegations because he was more concerned with protecting gaming revenue.