In a previous blog your faithful and diligent blogger had opined about the state of white collar crime in this country and the obvious and pressing need to “follow the money”. Naturally, there seemed to be an obligation to follow the formal start of the Cullen Commission on Money Laundering in British Columbia. It will be one of the few government proceedings, where in essence, following the money will be the primary and necessary investigative step of the inquiry.

So for two and a half days this blogger watched the live streaming of the Commission, which began on February 24th, 2020, held in the bland and austere government appointed room at 701 West Georgia St. in Vancouver.

The pursuit of winding trails of money is almost always fascinating, although admittedly it is often easy to drown in the details. Understanding has to start with the basic but safe assumption that in our current society, that if there is money to be gained, and if you follow that money to the end, someone will have found either a legal or illegal advantage. Many, will be found to have tried walking that often moving line between fraud and simply taking advantage of ill-written policies, regulations, and lacklustre enforcement.

This commission is about to go down some roads built by political entities who were lured by the pursuit of unencumbered government revenues emanating from the vices generated by greed. The road will wind through the corridors of power once enjoyed by the Provincial Liberals, but likely will veer past the current governing New Democratic Party. The out-stretched political hands of British Columbia in recent years are to be sure a little dirty, stained possibly by a willingness to look the other way.

There is an old maxim that justice delayed is justice denied. This is rarely heeded by the variety of Commissions, Inquiries or government projects and this Commission will not be the exception. Headed by Judge Austin Cullen it is mandated to prepare a preliminary report in 18 months and a final report in two years. By the time this commission releases its preliminary report we may be in the middle of the next election in 2021. A report that has the real possibility of pointing a finger at the former Christy Clark Liberals will be just in time for the next election. Coincidence or good planning depends on your level of cynicism.

In their defence the terms of reference for this Commission are very broad; everything from gaming, horse racing, real estate, financial institutions, money services, luxury goods, and the legal and accounting communities will be examined.

Clearly, three days in, it is far too early to come to any conclusion on the possible findings by this Commission. But, what did become clearer, even at this early stage, was where the guns were soon to be pointing. Listening to the early proceedings was like being able to look through the sights of a long rifle, the targets evident, but somewhat blurry in the distance.

It was equally clear that those wearing the dark target circles on their chests know who they are. They have been preparing their defences and strategies for some time, having already hired their own hired guns. These are the ones that have applied and received “standing”.

You couldn’t swing a three ring binder in the somewhat austere courtroom without hitting a lawyer. The Cullen Commission itself has a total of nine lawyers, and there are twenty-four lawyers representing the eighteen parties who have been granted that “ standing “. Thirty-three lawyers and we are just getting started. The Commission is expected to incur costs of $15 million, with little doubt that the majority of the funds will be going to lawyer fees, as there is not much chance of anyone doing pro bono work here.

Charles Dickens said that “if there were no bad people there would no good lawyers”.

The British Columbia Lottery Corporation has already paid (up to March 2019), a total of $1.637 million to one of the Vancouver downtown firms: Hunter Litigation Chambers Law Corporation. This is for the services of high profile lawyer William Smart QC and Shannon P. Ramsay.

The fired, or let-go (depending on which version of the story you want to hear) former BCLC Vice- President Robert Kroeker has hired the high profile lawyer Marie Henein—who has been written about before by this blogger and her representation of Jian Gomeshi and Admiral Norman .

The current CEO of BCLC, James Lightbody, felt the need to hire his own personal lawyer; not satisfied with just the lawyers hired for his employer and instead has obtained Robin McFee QC and Jessie Meikle-Kahs of Sudden, McFee and Roes LLP. Mr. Lightbody is apparently currently away on medical leave.

These initial three days consisted of the respective lawyers for those with standing, making and reading scripted presentations. All, as expected, were self-serving documents defending of their own personal predicaments. The reading into the record, with an occasional question by Cullen was at times slow, tedious, and nuanced. But, there were some interesting takes and tidbits of truth buried under mounds of legalese and acronyms.

James Lightbody, ably represented by Robert McFee, began by outlining all the myriad duties and responsibilities his job entailed, and pointed out that he was always guided by the Board of Directors in terms of strategy and annual plans. He proclaimed that he was a stalwart defender of the “vision, mission and values” of the organization and that he had worked diligently to help fulfill “social responsibility”. That he shares the public concern and always recognized the threat brought on by money laundering.

It will be remembered that previously unnamed sources have alleged that senior management at BCLC had turned a blind eye to what was going on. Lightbody argued that the evidence will show otherwise, that he made “active efforts” and that he brought in greater co-ordination with law enforcement.

The lawyer was also quick to point out that the role of BCLC was one of “Detecting, reporting and supporting” the enforcement and regulatory government branches and added that he had been pressing for more resources since 2011. He said that through him BCLC had initiated a sharing agreement with RCMP in 2014 and that JIGET (Joint Intelligence Gaming Enforcement Team) was supported and partially funded by BCLC.

Then there was the statement of Robert Kroeker, who was represented by Christine Mainville of the firm headed by Heinen. Kroeker was the former head of Security and Compliance for almost four years, but left suddenly in July 2019. He was the fourth high level executive to suddenly leave the Corporation within a year. The others being Bohm, Delinski, and Hobson. All four were earning over $240,000 per year. There was no confirmation of their having been fired, but all this occurred after Peter German’s report in 2018. Kroeker was replaced by the Vice-President of Casinos Brad Desmarais.

As an aside. If these names seem familiar; Kroeker was a former RCMP officer and was the head of Security for Great Canadian Gaming Corporation which includes the highly profiled River Rock casino, before joining BCLC. Prior to that he was a former director of BC Civil Forfeiture office. Brad Desmarais was also a former RCMP and Vancouver City Police officer and and had overseen the bungled rollout of the anti-money laundering software in 2013. Kroeker had also been appointed to a chair at the Justice Institute from which he eventually resigned under pressure after the German report.

Former Mounties have their fingerprints everywhere. Kevin deBruyckere, also a former Mountie, who at one time headed up Commercial Crime and then went to HSBC, is now the the Director of Anti-Money Laundering and Investigations at BCLC.

It seems that BCLC became a second lucrative home to many of the executives of the RCMP. Even potential witnesses Fred Pinnock and Joe Schalk are former Mounties. Peter German of course is a former Mountie. And it is rumoured that former Liberal Cabinet member Rich Coleman is going to end up being the focus from the former Liberals. He too is a former Mountie. It all seems rather incestuous.

In any event, Kroeker his lawyer said, looks forward to testifying and also defending the various “false” assertions against him. Mainville indicated rather forcefully that her client will testify under oath.

She went on to outline how Kroecker was in charge of regulatory affairs from 2006-2012 and had worked “extensively” with police and that during his time the Director of Civil Forfeiture had recovered $30 million.

He claims to have called for a tracking and monitoring of STRs (suspicious transactions reports) and it was also his understanding that after the review by FINTRAC that all activities had been cleared of wrong doing. He pointed out more than once that all information was passed on to the “authorities.”

Kroecker said that he “tried” to get the police and the regulator to investigate through 2013 and onward. That he “urged” investigations and was told by “Senior RCMP management” that all things inside BCLC and the Casinos were fine —that they were doing their part in the battle of money laundering.

In June 2014 Kroecker said that under his direction an information sharing agreement with the police was constructed. That BCLC had been led to believe that the police would investigate and that they continually raised alarms. But that subsequently there was no evidence of police investigation, nor were any investigative steps being taken. Officers with police powers were needed, he underlined, to get involved— and they weren’t. Calls for investigation were repeatedly “ignored” according to Kroecker.

In one interesting side-bar, Kroecker indicated that he tried to implement a “chip replacement” program to counter the constant holding and misuse of casino chips. It needed to be done with some stealth but that the program was delayed by GPEB (Gaming Policy and Enforcement Branch) thus allowing some of the nefarious actors to get rid of the suspect chips.

Anon and malicious claims that he allowed “dirty money” to flow into casinos were patently wrong he said and that he has been cleared of this false allegation by GPEB. GPEB determined them to be “unfounded” and the “matter was now closed”. He expressed frustration that he had not been interviewed for the German report, which at first glance does appear to be a rather curious. An administrative fine against BCLC in 2010 was explained away as resulting from “technical deficiencies between FINTRAC and BCLC. He pointed out that the fine was eventually set aside.

There were other presenters.

Members of the Notaries Public appeared, clearly worried as to the allegations of impropriety in real estate transactions that have been alleged. Predictably they too claimed that they have been doing due diligence all along. They went further in saying that currently legal investigations and regulatory bodies are fundamentally “broken”. That through no fault of their own, money laundering convictions are rare. They said that the sharing of information with them was rare and would have gone a long way to make a dent in what was going on.

They mentioned being part of Project Athena, but this project got side-tracked when it took 11 months for the RCMP to get information from FINTRAC. They even implied that maybe the Stinchcombe decision on disclosure was hurting investigations.

The notaries expressed surprise that the Financial institutions were absent from the Commission. They opined that they needed and should be present and agreed with the Kroeker lawyer that money that was being laundered may be being done through banking institutions. They lamented that the financial sector have almost been ignored and may in fact be needed to help explain the problem of money laundering.

BMW was also granted standing and made a presentation that spoke about the “grey market” in high end luxury cars and the use of “straw buyers”. Money launderers were buying vehicles for shipping out of the country and then went on to describe a loophole allowing the funnelling of monies through these purchases and their subsequent applications for Provincial tax refunds. They stated that they too had passed on information to the authorities.

The Great Canadian Casino Corporation counsel also appeared. Part of its conglomerate is the River Rock Casino. They described a highly regulated industry that was at times audited by FINTRAC. They too spoke of the fact that they were not investigators, they had a duty to report, which they insisted they did profusely.

Of course the Provincial Government and the Federal Government were also present. Their presentations were guarded and as one listened you were left to wonder if there ever was a problem. All, according to these two presenters were functioning as designed and GPEB and FINTRAC were guarding our interests with diligence and concern. Acronyms and current bureaucratic buzzwords bounced off the walls with abandon, “best practises”, “working with stake holders”, and the “regime” of regulation and investigation. Of course there are the Committees, the many Committees, all designed to “educate” and involved in “intelligence gathering” and “sharing”.

The Feds did outline the vagaries of FINTRAC and outlined how a mind warping 2400 agencies and service providers reported to them. But then they reminded the Commission that they are about regulations and oversight and all criminal activities would be pointed to the Police and Crown.

At the end of the three days, where does all this predictable posturing leave the taxpaying public?

You are left with the impression that there are three spinning tops— three divided layers, none of whom seem to be interacting in anything approaching cohesion. The Federal government spins in their isolation, the Province is eager to point at the previous administration; and at the ground level are the Casinos, the racetracks, the car dealerships and the housing industry. Most will clearly point at the Police, FINTRAC and any one else charged with enforcement.

What is curious is that the RCMP did not ask for standing with the Commission.

This could either be explained by: their hope to hide behind the camouflage and obfuscation of the Federal bureaucracy, a common default position, or, that they are in denial of this Commission doing them any harm. Unfortunately, they may find there is little defence for dereliction of duty. Hopefully, they are now at least paying attention.

Photo courtesy of Images Money via Flickr Commons – Some rights reserved