“Double dipping” for China?

Posted on by Pete Cross

There has been a new case surface in the last week or two, which caught the attention of these tired old eyes. It was when the RCMP made a grand national pronouncement that they had arrested and charged an ex-Mountie; William “Bill” Majcher , with two counts under Sections 22 and 23 of the little used Security of Information Act.

The story caught my attention on a number of fronts. First, I knew of Mr. Majcher, but only in passing; secondly, the investigation was done by the Integrated National Security Enforcement Team (INSET), and it was the INSET unit in Quebec, even though it very much sounded like the offences occurred in British Columbia. That seemed a little unusual and could only mean that there were others involved and there was a trust issue. For those that needed to be reminded, INSET is the RCMP agency which is the direct liaison with CSIS (Canada’s spy agency). Therefore one must always be aware that CSIS and thus INSET often work on “political targets”, and therefore their mandate is often at the direction of the government or with the approval of government. There is little to no police independence when talking about either of those entities. So we should also keep in mind that old adage that “one mans terrorist is another mans freedom fighter.”

With this in mind, China and its alleged political interference in recent Canadian elections has been a dominant story and pre-occupation for the last few months in Canada’s mainstream media. The Liberals have been under a great deal of political fire for their handling of the information surrounding the election interference, and their lack of investigation of it. So it seemed slightly more than coincidental that this case against Majcher was brought to the forefront in terms of its timing, and the obvious question as to whether it was being done to ease the pressure on the Liberals. Adding to the suspicion, is that these cases were historical, in that they occurred sometime during the years from 2014-2019. They also had said that this particular investigation had nothing to do with the alleged election interference. INSET says that their investigation surfaced as a result of a “complaint” in 2021, and now in 2023 they were bringing forth charges.

The accused, Mr. Majcher, was a Mountie from 1985 to 2007, some twenty-two years, and “retired” from the Inspector rank from the now defunct Integrated Market and Enforcement Team (IMET); an investigative group which had been mandated to investigate criminal activity in the Vancouver stock exchange and other financial markets. I met Mr. Majcher when he was the Inspector in charge, and we met out of necessity as he was the overseeing officer for an internal investigation that I completed on a Vancouver Police Department matter. He didn’t really pay much attention to the details of my report and signed off the investigation with little to no question. My first impressions of Mr. Majcher stand out now– and have been echoed by many people who knew him during his career. He began by showing me around his rather sumptuous office down on the Vancouver harbour front, and it was impressive from any government employee perspective, with its two storey high windows and its unhindered view of the moneyed yachts. It all turned out to be part of his pitch to me to come to their section, as they were looking for an experienced team leader/primary file investigator at the time.

He was a pretty impressive salesman about the job, but he was an obvious salesman, in that stock broker, car salesman kind of way. I later found out that before joining the RCMP he had in fact been a Eurobond trader. (Eurobonds by the way were one of the first tools developed and marketed to aid in the hiding of funds offshore) He was also clearly intelligent, but his flaw may have been in believing that he was always the smartest person in the room. He was always talking, but not overly concerned with listening. I considered the job at the time because of my interest in economic crime (much cleaner than homicide), but then turned it down after researching it a bit, and learning that the section was having trouble getting their feet off the ground, due to a variety of reasons and legal complications.

As it turned out, Mr. Majcher later got himself in some hot water while with IMET, and he became the subject of an internal investigation in 2005. I was told at the time, that it had something to do with his continuing involvement in the stock market, but I never heard the full story. In the end, presumably rather than face further investigation he “retired”– the always tried and true option the Mounties go to when handling troublesome employees. The public material says that Mr. Majcher in 2006, had already moved to Hong Kong– clearly never one to let the grass grow under his feet.

Like every ex-Mountie who is looking for a double-dipping job, and populate LinkedIn, Mr. Majcher talked up his previous investigational work experience and touted himself as an extraordinary undercover officer who continually risked life and limb in pursuit of the bad guy. His resumé was clearly bloated, but Mr. Majcher in fact did do a good job as an undercover operator on a couple of investigations. In the roles he played he was always portraying “the money guy” — always the salesman. His most famous case was that of the case against Vancouver lawyer Martin Chambers in the late 1990’s. Mr. Chambers during his hey-day was a prominent Vancouver lawyer who was suspected of large scale money laundering for the Russians and the Hells Angels. During a staged video-taped meeting in Florida with Mr. Majcher playing his role of financial underworld figure, Mr. Chambers took possession of $700,000 cash, and provided offers to handle millions of dollars. Mr. Majcher was the primary undercover officer and had led Chambers to believe that he monies were coming from the Columbian cartels at the time. It was a joint FBI-RCMP sting, and it was successful, and Mr. Chambers was sentenced to 15 years and 8 months which he served in an Arkansas jail.

The Chambers case would be the case that Mr. Majcher seems to have used as his plank to build a spring-board into a position in Hong Kong. He described himself as a “risk assessment officer” for the investment banking community, and that he had moved there to “establish an international banking platform on behalf of Hong Kong merchant bank, representing a number of Chinese state owned and non-state owned enterprise clients engaged in overseas capital world activities”. Not only would he bring to the table his extensive investigational expertise, but they would be able to employ “military grade cyber technology” in the pursuit for their clients.

He later formed the company EMIDR in 2016, a “Hong Kong based cyber-security company”. In a video he described himself as “a hired gun to help either large corporations or governments to get back what is rightfully theirs”.

Now most of us can see the salesman oozing out of these marketing pronouncements. But, despite the clear aggrandizement of his capabilities and the obvious exaggeration as to what they could bring to the world of money laundering, nevertheless, Mr. Majcher was indeed tapping into or at the very least trying to tap into a potential gold mine.

And this is where it all gets rather complicated.

It gets complicated in terms of the story line, and it gets complicated in the list of characters who may be playing in the game. First and foremost, this story is about money laundering, at least on the surface. But it is also about the many layers and degrees of inherent corruption. It is a fact that mainland China has had numerous individuals remove monies from their country, contrary to their own laws, as well as ill gotten gains that were taken out of the country from illegal activities. By any measure it is estimated that they have lost billions of dollars over the last number of years. And as you guessed, there have been a few select countries which these suspect individuals have turned to in order to facilitate the laundering of those funds. One of course, high on the list, is Canada, and specifically Vancouver. (do you remember the Cullen Commission?) Another area was along the “Gold coast” of Australia and the city of Melbourne. Their were other locations of interest to these monies seeking a home and the luxury of anonymity such as New York and Chicago. Hong Kong which was a city designated as a special administrative region of China, was heavily involved in the movement of those monies wanting to escape from China, due to its geographic proximity and the lack of foreign exchange controls.

The people who have orchestrated these money movements are now considered by the Chinese government to be criminals. As a result China started two projects; Sky Net in 2015 and Project Dragon in 2019, to track down and try and get back those monies. The latter project focused on the gold coast of Australia and those funds that were being used to purchase real estate. China of course, as Majcher himself stated in an interview, needs to “walk a very fine line”, as to the perception of anyone working for a foreign government. So China smartly formed public/ private partnerships with various firms, who would assist them in tracking down individuals and finding the monies. As expected they went to those with knowledge of the host countries who advertised themselves as having “expertise” in that country along with their “investigative resources”. Enter Majcher and other similar firms, especially those firms staffed by ex-police officers. Mr. Majcher openly said during a television interview that “I have a commercial relationship with entities that are in themselves associated in some form or another with policing authorities in China”.

Of course, most of these ex police officers who have entered this private field, have little or minimal hands on experience, they are primarily being hired because of their “contacts” in policing. Mr. Majcher is not a cyber expert, smashing the keyboard, hacking the demographic data sites to find someone; he is likely just picking up the phone and calling persons in the policing world who do have that information at their finger tips, and are willing to assist them in finding people. Mr. Majcher worked for the most part in British Columbia, ergo his contacts will be in British Columbia and in particular Vancouver, this hot bed for Chinese money laundering in Canada.

Two ex-Aussi police officers, Jason McFetridge and Austin Whittaker, in the Melbourne Australia area who had a similar firm to Mr. Majcher were interviewed about how the plan to recover the funds would come about and how it would be executed. Both maintain that it was a completely legitimate pursuit to get their client’s money back. It was a simple plan, but one that bordered on extortion. They would identify the people with the apparent illicit funds, confront them, tell them they are on to them, and that they needed to sign over their properties to the ex-police officer company. They in turn would then sell the company and send the monies back to China for a fat commission. The obvious inference, should the accused not “voluntarily” sign over the money, was that there would be repercussions for their families back in China, or telling them they face jail time if they ever return to China etc.

Does China have a right to pursue criminals and money launderers? It would seem legally justifiable, but what becomes questionable is of course how they go about it. Do they have the right to have hired personnel threaten people and insinuate sinister repercussions–that strains legality. It would have to be at the very least an inference and not a direct threat. The Skynet project apparently identified over 3,000 people that the Chinese government felt had broken their laws.

It would be easy to say the Chinese are wrong, and this is a step gone too far. And of course, what if the people they are pursuing are not criminals?

Historically Canada, and in particular Vancouver, has a very murky bordering on sinister relationship with communist China.

In 2015 China tried to sign agreements with the CBSA and the RCMP to assist them in pursuing their people of interest. In the late 1990’s Lai Changxing was considered “China’s most wanted fugitive”, a man who had been implicated in several corruption scandals in China involving a large smuggling ring. He evaded arrest and settled in Vancouver, where he was arrested by Canadian authorities, went through a long extradition battle but eventually was sent back to China in 2011, where he was given a life sentence. So at one time, the Canadian government was participating in the very same thing.

There is the Meng Wanzhou matter where a high ranking member of the Chinese establishment and the Chief Financial officer for Huawei was arrested in Vancouver, on behalf of the Americans and was facing extradition. China retaliated by arresting two innocent Canadians as “spies”, Michael Spavor and Michael Kovrig. Meng eventually reached a “deferred prosecution agreement” with the Americans, the charges were dropped, and she was returned to China after having been under house arrest for close to three years. During this time she was given VIP protection to and from court by the Lions Gate Risk Management group, a group also filled with many ex-police officers who also advertise their specialities in “Money laundering and Asset tracing”. Mr. Majcher during this time admits to also being contacted by China looking for some help and monitoring of the case against Meng.

And let us not forget the matter of the ex-Mountie, Ben Chang, who during the Wanzhou hearings refused to testify about his role in the arrest of Meng Wanzhou while an RCMP officer. Since the arrest time, Mr. Chang had turned his old foreign liaison posting with the RCMP in Hong Kong into a retirement job as a senior security officer in the resort casino Galaxy Macau. His last minute refusal cast doubt on the credibility of the government lawyers who maintained that the RCMP did not share any information on Ms. Weng’s computers and mobile phones. Somewhat mysteriously, the prosecutors did not subpoena Mr. Chang. The Galaxy group as it turned out is owned by Lui Che Woo, a Hong Kong businessman who served on the standing committee of an advisory group to Bejing. Mr. Majcher it has been reported to have been at one time Mr. Chang’s supervisor.

INSET has hinted that they are looking at other officers involved in Mr. Majcher’s case. One of the names surfacing is Ken “Kim” Marsh, another ex-RCMP officer, who has written a book about his exploits entitled “Cunning Edge”. Mr. Marsh who has been named as a co-conspirator with Mr. Majcher, but not yet charged, once cooperated with Majcher on cases; and Marsh identifies himself as his “Mountie friend”. In his book Marsh talks about being “hooked up” with Russian millionaire Vladimir Antonov for a “due diligence report” that he charged Antonov $500,000 to prepare. Antonov would later be charged with embezzling “hundreds of millions of dollars from a bank in Lithuania”. Marsh is now seemingly perplexed by his naming in this most recent Majcher investigation. As he says in the introduction to his book, “he gave decades of his life to his work, all in the pursuit of bringing bad guys to justice…for his clients…and society at large”. He doesn’t mention that it was also primarily to make money.

So what are the charges specifically? Section 22 is labelled “preparatory acts” and states in essence that anyone who enters Canada,… or retains or gains access to any information… for the benefit of a foreign entity, a terrorist group, or an economic entity… and then communicates that information to them is guilty of an offence. This section refers back to Section 16, 17, 19 and 20 which get more specific as to whether the information is designed to “harm Canadian interests…or is reckless with that information”. Section 20 deals with using the information in association with a “foreign entity” to “induce, by threat, accusation, menace or violence, any person to do anything or cause anything to be done”. Section 23 is just the “conspiracy” section saying that one can not conspire to do any of the above.

So there is three elements to these offences that need to be proven. Was Majcher working for a foreign entity? Did they obtain information that was being guarded by the government, and finally did they threaten anybody or coerce anybody to take some action on behalf of the foreign entity? In terms of the press briefing by Inspector David Beaudoin they say that the charges surround “preparatory acts for the benefit of a foreign entity and conspiracy”. As stated previously, they began their investigation in the fall of 2021, and it was for the time period of 2014-2019. There are going to be some significant legal hurdles. Does the government of China have the right to pursue persons they consider thieves and money launderers? Are private investigators, indirectly working for the foreign government allowed to make inquiries as to money laundering and attempt to find those persons? America, Britain, Australia and even Canada using various investigational instruments make inquiries constantly for this same purpose. The RCMP and Canada have directly participated in doing the very same thing, but of course they will argue that they and only they are the safe-guarders of that information.

If one is interested in this kind of thing and would like a full view of the extent of the problem, I recommend the book “Moneyland” which the Economist magazine called the “book of the year”, written by British journalist Oliver Bullough. It is a deep dive into money laundering and the people behind it, including the lawyers, bankers and governments that both front face the problem and are part of the problem. The city of Vancouver is featured as a sought after refuge for the kleptocrats from China, Russia, and south Asia and he outlines the number of groups trying to track them down, often frustrated by the lack of government action on the issue. It is such a broad and expansive problem that he argues that it is under cutting the pillars of western democracy.

There is one other aspect of this story that is intriguing. That is the media coverage of this story led by journalists like Sam Cooper changes the motivation behind China. Cooper who is never shy in trumpeting his investigative journalism skills on the subject of money laundering in Vancouver. As it turns out he has admittedly conferred in the past with Kim Marsh on stories such as the Cameron Ortis story; and it would be a pretty easy assumption that he has RCMP sources feeding him information. The interesting part is that his take, and therefore the apparent take of the RCMP is that China is “not interested in getting back their money…only interested in controlling the people in the country”. In other words it is all part of a conspiracy to control the Canadian government through spies and agents.

It is an interesting postulation, but there is little to no evidence to support it. There is no doubt that China has for decades searched out persons and politicians who would speak positively about China and possibly try to influence legislation. While in Security Service in the 1980’s and early 1990’s we were already watching the Chinese operatives in Canada trying to influence politicians. The problem is one of definition. In the U.S. for example, they simply call them “lobbyists”. Here, in this country there is not even a foreign registry set up, so how concerned or worried about it is the Canadian government? In Mr. Majcher’s case, there is much more evidence that China is going after the money, they have always been aggressive industrialists, and there is an abundance of evidence that there that there is a treasure trove of ex- Mounties who are willing to set their flexible ethics aside and give them a hand.

There is politics wrapped around politics in this investigation, and the timing is highly suspicious and of major interest will be who initiated the original complaint. In this new age of ingrained disinformation and when our media seems to have an agenda, it is increasingly necessary to question sources. But, when it comes to unravelling the mysteries of China and its cultural layers, one needs to be very careful indeed. The only aspect of this story that seems to bear out consistently, is that there are apparently plenty of of ex-cops willing to help– for a fee of course.

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

Reflections from a distance

Posted on by Pete Cross

Recently, this blogger had the opportunity to leave this country for a couple of weeks. For me, usually a time to re-generate one’s faith in the greater good, to re-gain some perspective on the news items of the day, to adjust one’s vision on Canada and where it fits into the world. It is somewhat naive in this day and age to think that one can totally escape from the digital blather, there is no real way to hide the constant onslaught and the insistent reminders from “back home”.

So as I found myself maneuvering through the various airport security systems, my ArriveCan app firmly embedded in my phone, there continued the never-ending notifications on flights and flight times, the constant beep of information headlines coming from my pocket wanting to make sure you haven’t missed a minute of the breaking news that was washing over this country, as if I was of some importance, and the need for me to have the information vital to my survival. The first headline was the airport itself.

As I stood in the never-ending line of wannabe “check-in” passengers, I was increasingly thankful that I was not flying through Toronto, where Pearson International has apparently turned into a rugby scrum played in the middle of thousands of un-claimed Samsonites. Canada now stands proudly number one in the world in something– cancelled flights and late arrivals.

The “at least” three hour check-in times are of course ridiculous, but the airline industry has for a number of years put passengers at the lowest end of the priority scale. They have made it seem that the client relationship had been inverted. We were there to please them our job was to be thankful that they are taking us anywhere. They have expanded the numbers of seats but in ever-increasingly small planes and the joy and excitement of flying has now officially been replaced by a feeling of herded cattle being moved through the gates of the abattoir.

Then of course there is the fact that the Federal government group who was responsible for security screening at Canada’s airports had not “anticipated” that a shortage of staff and a pent up demand for travel could result in a strain on the system. Maybe working from home made them numb to the exertions of the general working public. In any event, I dutifully strapped on the mask for a number of hours, as the tv monitors in the airport displayed the twice infected Trudeau on his private plane, skipping through Europe with Melanie Joly and Anita Anand into the latest NATO meetings.

I did not of course have the luxury of travelling with the entourage of the Governor General, who although she does not speak both official languages, is clearly well versed in the language of Federal government largesse. She apparently served up three dinners, breakfasts, lunches and snacks while en route to Kuwait to electrify the troops with her presence. I had a bottle of water and some cheese and crackers.

The next breaking news item concerned the beleaguered and battered Commissioner of the RCMP, who seems to trip every time she goes public. Commissioner Lucki is truly turning into an embarrassment, possibly only outdone by Minister Bill Blair the senior party member in that Cabinet of high schoolers that Trudeau has brought together. She and Blair continue their Abbott and Costello routine of who’s on first –in terms of who is telling the truth and who is lying. Clearly they are both lying.

Does anyone in the country believe that Supt. Campbell made up the notes? It would be a weird thing to make up, whereas it would not be hard to believe that Lucki was given orders to release some information on the investigation that would assist the government in their proposed gun legislation. The timing was perfect after all; a perfectly timed mass shooting had the government salivating over how to score some political points; a chance to illustrate how dedicated the government is in protecting us from ourselves.

Clearly, the need to please her Liberal masters was front and centre in Lucki’s less than savvy mind. A clear feat of insensitivity considering the subject matter of the meeting. The fact that Campbell’s notes were not in the first disclosure package to the Commission, and then were found in a second package will bring out all the conspiracy theorists. One will need to tune in next month’s public hearing where one will be able to watch Lucki try to dance on the head of a pin. Expect riveting well coached explanations such as “It was a tense discussion..my need for information should have been weighed against the seriousness of the circumstances”.

Politics of course often gets pulled in and over an investigation in the policing world, the more high profile the investigation the more the pull for politicians. I experienced it on a couple of files, as did many of my colleagues. One has to be strong to withstand what is sometimes incredible pressure. She is clearly not strong. So the revelation that she was trying to score some points for the Liberals, should not be surprising, she simply just got caught at it. It needs to be admitted that the RCMP Commissioner role is by its very nature, half politician and half police officer. It is a fine line that needs to be walked if one is to enjoy any level of success. Strong principles are paramount to that success. She is not principled.

This incident has put on full display he one dimensional style of leadership and underlined her lack of credibility with the RCMP membership. It is a glaring illustration of how she managed to get to the highest job in the Mounties and how she got there with little understanding of an investigation or the characteristics of an investigation. If the foot soldiers in the Mounties had felt any kind of loyalty to her, that has now been washed away, gone forever. She has become a caricature.

The other story albeit a little less dramatic, which captured my attention was the release of the Cullen Commission. 133 days of hearings, 199 witnesses, thousands of investigative hours, resulted in an 1800 page report. 600 pages more than Tolstoy’s “War and Peace”. (I often wonder if Judges, like typists, get paid by the word.)

The conclusion of this massive multi-million dollar legal effort were the more than obvious conclusions that FINTRAC had failed and Civil forfeiture provisions need to change. That’s it. There was no evidence uncovered of parties having been “motivated by corruption”, but plenty of evidence of bureaucrats and all those involved in the industry doing nothing– despite knowing about and observing the clear violations.The farthest Judge Cullen would go out on the judicial limb was by saying “They should have to explain why they didn’t take the steps to combat money laundering”. In the end though nobody loses their job for not doing their job, and the clear moral of the story for bureaucrats if observing criminal behaviour– look the other way.

Mr. Cullen recommended that there be more “education” for lawyers, accountants, and mortgage brokers. This seems to be based on the somewhat naive thought that they were unaware of what was going on. Is it not more more likely that they were gaming the system, knowing full well that nobody was investigating them? He did say that a lot of the problems in what went on have been addressed and possibly rectified after the earlier Peter German report; which only makes me want to conclude that this Commission was a redundancy.

My travels went well despite my futile attempts to keep myself in some form of isolation from Canadian news. I firmly believe that everyone should leave this country and look back, it changes the perspective and alters your tools of measurement. There is no denying that this is a country of benefits and resources. At the same time, there is clearly a particular North American culture and society, subtly different, but indeed different from Europe. Different mores and aspirations. A culture where we seem keen to imitate the U.S. Their problems and their solutions are our problems and our solutions.

This led to some minute observations as I walked through the aging and historic cities. Cities which presumably are not immune to the same world problems we all share. There was a different atmosphere, difficult to identify, but it gradually became clearer. There was no blatant pan-handling, no mentally disturbed persons yelling and swearing at the heavens, the streets and public washrooms were cleaner and there were no multiple reports of people being randomly accosted on the streets. How was this possible? There were less sirens and air horns, no observable road rage, less eyes-down purposeful walking, a place where people seemed to work only to live. The police seemed more approachable, more one with the public, less robotic, less military. There seemed to be a greater element of trust of the people.

Has age and history simply made them more mature, more prone to pay attention to the history.

It is always good to get home and we do have a good country, but it is a young country. Maybe like teenagers we think we know everything and maybe know nothing. There was a lingering gnawing sense that maybe, just maybe, we have taken a wrong turn somewhere along our path.

Photo courtesy of Flickr Commons by Nicholas Doumani – Some Rights Reserved

Royal Flush

Posted on by Pete Cross

Transparency in and around the policing world, is like that old Chinese proverb about interesting times; it is both a curse and a blessing.

It is argued by some that the police being allowed to play out of view, operationally speaking, is a good thing. Others theorize that being hidden from public scrutiny allows the incompetent and mediocre to flourish and opens up the possibilities of fraud, corruption and even criminality. Large government regulatory operations often swell into multi-level layers of authority and can become by their very size –opaque.  

Commissions of Inquiry are one of the few times where the policing world and regulatory  arms of government are forced out of the shadows. The Cullen Commission into money laundering in this Province is proving no exception.

There are three main agencies being talked about: the BC Lottery Corporation (BCLC), the government Gaming Policy and Enforcement Branch (GPEB), and the RCMP section— the Integrated Illegal Gaming Enforcement Team (IIGET). What is somewhat unusual in this inquiry is that all three of these agencies, the ones being called forward to present evidence, are staffed either by cops or ex-cops.  

Even more interesting, is that all the personalities are often pointing accusingly at the others. Their probity on full display, but describe having been burdened by their very own agencies and thwarted in their efforts. 

This Commission is also exposing the raw politics of our duly-elected —and their often limp efforts to expose wrong-doing. 

It is putting on full display inter-agency rivalries, conflicting mandates, and bureaucratic duplication. It is shining a light directly at the upper level managers in the RCMP in British Columbia— who it would appear felt that the subject of criminal activity in gaming was very far down the priority list. One could term this Commission as just another chapter in the lack of effort against white collar crime in this country.

The implementation of legalized gambling in British Columbia a number of years ago was met by public concern. Criminality, it has been well documented, often follows the introduction of gambling. British Columbia with its then well established large underground drug industry was a natural fit, ants to a picnic. Despite this obvious corollary, apparently, some under-estimated its eventual massive economic ripple effect. Was this a general lack of effort, or was it something more sinister? That is the root question facing Mr. Cullen. 

It should be said that the vast majority of the ex-cops testifying are shining examples of former police officers. Old school, still able to recognize right from wrong. It is becoming evident as this commission progresses that it was primarily politics and policy which subsumed any effort to thwart organized crime– not the personalities involved. 

At the same time, one could not help be struck by the level of cronyism which affects these regulatory bodies. Find one Mountie and swing a bag of rocks and you will hit another one, pulled up by their brother and sister officers into these Provincial post-retirement jobs. Those that testified, who may have been armed with the best intentions may have been guilty of having on occasion remained silent in the face of obvious wrong-doing. Content to stay within their assigned mandate. 

Gord Friesen and John Karlovec testified on behalf of the BCLC. Mr Friesen gave an overall picture of the workings and mandate of BCLC and this was echoed by Mr. Karlovec.

They described BCLC as being governed by a mandate which was often termed– to “observe and report”. They provided their information to the police through forms called Itrack (ph)reports to: GPEB,  FINTRAC (Financial Transactions and Reports Analysis Centre), CFSEU (Combined Forces Special Enforcement Unit), and to IPOC (Integrated Proceeds of Crime) group. BCLC devised the rules and conducted oversight, but they believed that they were not responsible for the enforcement. 

During this time both Karlovec and Friesen stated that the alternate Provincial agency, GPEB, was always insistent that it was they who were the primary “investigators”. When Friesen was asked about any feedback they would receive from GPEB, the answer was “no feedback….none”. This defies common sense. No information was being forwarded as to any criminal elements that would have been frequenting the establishments that BCLC investigators were in turn governing. 

At GPEB was Larry Vander Graff and Joe Schalk (also both former Mounties). Vander Graff was the Director and Schalk his deputy. Both of these individuals also enjoyed good reputations as police officers prior to leaving the RCMP. 

Peter German (former Mountie) who wrote the initial report gives credit to Schalk for having “nailed it” referring to his understanding of the money laundering problem. However, despite the possibility of GPEB playing a leading role, Schalk on more than one occasion is called out by the others as being a little over bearing in his demand to be seen as the single, go-to investigational authority, and the relationship between GPEB and BCLC floundered. 

In fact, the Ministry of Finance in April 2014 in a management audit, stated that the relationship between the two agencies was “so adversarial it has resulted in dysfunction in several levels within the division of BCLC.”. Years earlier, in 2007 during an Assessment Review by Katherine Tait, GPEB had been called “largely ineffective”. (It was also noted that during this time BCLC won a series of ministerial workplace “awards”)

Meanwhile at GPEB Schalk and the team members were pushing hard for greater funding from government, and becoming quite noisy in pushing back at their governmental masters, asking and possibly demanding  policy and practise changes. They were not so subtly inferring that they could not keep up with the job.  

For their apparent efforts both Vander Graff and Schalk were terminated without cause in 2014. 

There should be no mistake however that despite the individual mandates of BCLC and GPEB, everyone was still pointing at the Mounties as being primarily responsible for overall “criminal” investigation. They were the only ones with peace officer status and the much needed resources. That part was true in theory but in reality it was far different. 

Mounties during this time had become smitten with the term “integrated”. “Integration” had become the poster child, the marketed symbol of cohesion and effectiveness. Along came the Integrated Market Enforcement Team, the fore-mentioned Integrated Illegal Gambling Enforcement Team, the Integrated Homicide Investigation Team, and the Integrated Border Enforcement Team to name a few. 

Over time this exercise has met with very mixed results, some have even been disbanded with some not achieving actual “integration”. The media never caught on, all believing and still believing, that the very title implied a dedication to exceptional effort, co-ordination and unlimited manpower. They could not have been more wrong, especially when referring to the IIGET. 

The sum total of manpower after the formation of IIGET, to deal with the often financially complicated and intricate cases of money laundering— came to a grand total of twelve, with one assigned analyst. None of the personnel had any experience in gaming, but if they were lucky they were sent to Ontario to attend a two week training session. 

S/Sgt Tom Robertson headed this unit and readily admitted in testimony that he had no personal background in gaming, that none of his unit were properly trained, and that the team was spread out over four offices. Realizing quickly that they were severely undermanned and under qualified to take on the more serious money laundering cases, he re-aligned the group to focus on the use of illegal video lottery terminals, illegal bingos, raffles and common gaming houses. 

He underlined the need for political results and to undertake the cases they considered “High” level would risk them getting “tied up” despite that the more serious issues were part of their dictated mandate. During his short stint of about a year, Robertson said there were no prosecutions involving legal casinos other than the identifying of one loan shark who was brought to their attention by the casino security staff. There were no charges even in that single case. 

Robertson at one point talked about the fact that Larry Vander Graff, head of GPEB was worried about “infuriating” casinos and didn’t really want to ruffle any feathers. S/Sgt Robertson after a year, retired himself, and then also became an investigator for GPEB in the Kelowna area, where he stayed for the next nine years. 

Robertson after leaving had turned over the reins of IIGET to the newly assigned S/Sgt Fred Pinnock. Mr. Pinnock during the last few months has loomed large in the media. He has publicly expounded on the lack of effort by all levels in the gaming industry. In fact he asked for but was refused “standing” by the Cullen Commission. His time at IIGET and the build up of frustrations led to him leave the RCMP for medical reasons he testified.  

Mr. Pinnock who is now retired, did not waste his time on the stand and provided some very personal opinions about all that was ailing both in his own unit, IIGIT, and the personalities that made up the other agencies. 

He even outed the inside source who had been feeding the reporter Sam Cooper (now working for Global) who had been doing a series of stories on the money laundering issues in Vancouver. The source was Ross Alderson who was employed by BCLC, left the agency in 2017, and according to Pinnock surreptitiously took most of the in-house BCLC files with him.

Pinnock described having written two separate business case plans, trying to expand his new unit with more manpower and resources, and both were denied, or more accurately ignored.  

He spoke about the fact that IIGET was part of a Consultative Board who were supposedly overseeing all the groups which met twice a year. This group was made up of the CO of E Division, the CEO of BCLC, the Director of GPEB, and Kevin Begg, then the Director of Police Services. He opined that this group was no more than window dressing, a “charade” in his words.

He described issues over mandates between GPEB and IIGET, which became so tainted that he made an application to move their entire unit from the shared office space, which was eventually granted. There were verbal arguments between he and Joe Shalk of GPEB on particular roles which resulted in a “significant enforcement gap”.  He claimed that GPEB never sent any information with regard to loan sharking or money laundering to them or reports of large money transactions. 

Pinnock describes dealing with the upper levels of the RCMP; Supt. Dick Bent, Supt Ward Clapham, Inspector Wayne Hulan and Supt Russ Nash. His immediate boss was Don Adam in the Major Crime Area, but this was during the time of the Pickton investigation which Adam became fully engrossed and therefore Pinnock claims, Adams had little time or interest in the other side of the house and IIGET. 

In another twist, Pinnock who seemed to be talking to anyone who would listen to his plight, was then dating MLA Naomi Yamamoto, who was in 2015 appointed as Minister of State for Emergency Preparedness. It was through her, that Pinnock requested a meeting with Rich Coleman, who was then Minister of Public Safety and Solicitor General. That specific meeting never took place, although Pinnock, again through his now-wife met Coleman on some later casual occasions.

Larry Vander Graff the Executive Director of GPEB, testified that he too brought up the problem directly to Rich Coleman. When describing $10,000 wrapped in elastic and $20 denominations, Vander Graff says that  Coleman’s disingenuous response was that he knows lots of people with that amount of money in their pockets. Vander Graff also talked about reporting to another integrated unit, IPOC(Integrated Proceeds of Crime unit), but that too was disbanded in 2013.

Mr. Pinnock talked about his relationship with Kash Heed, someone he considered a “friend”, who in the Fall of 2009 was involved in the government. Heed besides being a former Superintendent with the VPD and West Vancouver Chief of Police was then an MLA. In 2010 he would go on to briefly become the Solicitor General, but later  had to resign. Mr. Heed’s career, his often outspoken nature and his willingness to get on the soap box has often led him into the firing line. 

In a meeting with Pinnock in the Fall of 2009, Heed said that any increased enforcement efforts in the gaming end of things fell to Rich Coleman. In Pinnock’s recollection of the conversation, he said that Heed told him that Coleman was “all about the money”. The inference being obvious. He went further in this private conversation with Pinnock wherein Pinnock claims that Heed named three RCMP executives who he thought were “complicit”. Pinnock named them as; C/Supt Dick Bent, Al McIntyre and Gary Bass. He said that Heed called them “puppets” for Rich Coleman. Pinnock says he kept no notes about this meeting and during cross-examination he faltered a bit on whether these were the actual words at the time. 

In 2018 Pinnock was apparently convinced that with the German report upcoming, that he may have to play a role in any inquiries into gambling,  Pinnock had a phone conversation with Heed in 2018 and in that conversation Pinnock hoped to have Heed repeat what he said in 2009. This time Pinnock surreptitiously recorded Heed. Legal, yes. Ethical, maybe not.

Pinnock has now turned over three transcripts to the Commission of his conversations with Heed, which are being redacted and people named have been given the opportunity to respond or make an appearance before the Commission. 

During questioning by the other participants, Pinnock said that he was never contacted by Peter German during his inquiry. He admitted to being “disappointed” that he was not called. In viewing and listening to Mr. Pinnock one does get a sense of him enjoying the cloak of a white knight and often his evidence seems slightly tainted by personal animus. His conversations with Heed with regard to Coleman make for headlines, but they are of course nothing more than political gossip. There is no smoking gun, no direct evidence of anything.

The Commission is proving to be a frustrating exercise for any outside observer. British Columbia is emblematic of the rest of Canada where governments at three levels have become enamoured with increased legalized gambling revenues. Not so dutiful to regulation and enforcement. 

The abilities of governments to pass laws, set up committees, regulatory bodies, or “consultative” boards is their strength. Coffee, bottled water, and chicken wraps flow through the various government committee and board rooms of Federal and Provincial ever growing bureaucracies. The laws and the regulations are often drawn up with little regard for enforcement or oversight. When confronted with the need for action these government groups often flail about drowning in a sea of jurisdictions, interpretations, mandates, and the large bureaucratic structures become a hindrance unto themselves. 

In this case, three regulatory bodies were joined —supposedly in the fight against money laundering. 

BCLC has 900 employees in this Province, in 2013 there were the equivalent of 3600 full time equivalent jobs at GPEB.  IIGET, the agency responsible for the criminal aspect, was allocated by senior management in the RCMP a whopping 12 untrained officers. In addition the three groups didn’t get along and literally stopped talking to each other. The lack of operational results was maddeningly predictable.

As of November 2020, Ken Ackles (also a former RCMP officer), who headed GPEB in 2013, testified that he did not know of any single conviction for money laundering to date.

Clearly there are a few people who gained during this mayhem. Organized crime of course; ex-cops looking for a somewhat lucrative 2nd income, and now the more then 41 lawyers sitting on this Commission. 

Government revenues have exceeded $3.1 billion.

Somewhere, therein lies both the question and the answer. 

Photo courtesy of www.davidbaxendale.com via Flickr Commons – Some Rights Reserved

Editorial Note: At the time of this report, Kash Heed has yet to appear to defend himself, nor has Rich Coleman, or the RCMP named managers.

Is the Cullen Commission about to steamroll the Mounties?

Posted on by Pete Cross

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