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.
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.