Is the Cullen Commission about to steamroll the Mounties?

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

“Follow the Money”

I have a clear mental picture of on more than one occasion, sitting around a conference room table, a new homicide case fresh in hand, and debating the merits of one course of action over another. Discussions would eventually come around to one of the items that needed proving; namely, motive.

When the motive was not clear, a reliable side-kick would invariably jump up and holler: “Follow the money!” We would all laugh both because of the manner of the exclamation which had been said with such ferocity, but also because of the obvious nature of what was being proclaimed.

If you want to find crime in this country, this Province, or in your towns and cities, truer words were never spoken. You only need to “follow the money”. This would seem patently obvious to almost everyone who is paying attention. What is less obvious maybe, is whether or not in this country, we actually care. And by “we” I mean Canadians in general, and the police in particular.

Having never seen polling with regard to the views of the general population in terms of their level of concern it is hard to make some definitive statement about the views held by the country as a whole. So this is more of a question than an answer.

However, when it comes to the police the preponderance of the evidence suggests that in fact the police don’t care, or if one was more generous, have chosen to make commercial crime the lowest rung on the ladder of operational policing.

From the police officer trying to avoid the call for a “fraud cheque” or the misuse of a credit card, to the upper management of the municipal, Provincial, and Federal forces who demonstrate an innate ability to ignore the economic crime swirling around them. Their internal view seems to be that since the public is not complaining, why worry, after all it doesn’t “trend” and paper cuts do not make as good a television snippet as assaults and car crashes.

To be sure, the problem of economic crime is complicated. White collar crime in Canada like other countries includes a broad range of offences which can and do include: fraud, bribery, Ponzi schemes, insider trading, embezzlement, cyber-crime, money-laundering, identity theft and forgery.

White collar crime is itinerant, moving easily across boundaries, from city to city, Province to Province, so it becomes necessary to co-ordinate multiple agencies and their variety of investigative groups. The investigations themselves become entangled in this web of jurisdictions and interests. Each agency have different levels of priority, different levels of expertise, different Crown counsels, and different levels of financial support. Stymied in most cases by their own current policing structures.

There are many levels to this blanketing economic cloud– ranging from large national in scope cases, such as SNC-Lavalin or the Bre-X mining scandal of 1997; to the more common such as identity theft and forgery. In between are layers of administrative, political, and government fraud in the millions of dollars.

If one just considers the world of the “scam“, the number of ways the public is being fleeced is only limited to one’s imagination: on-line purchase scams, wire fraud, romance scams, employment scams, crypto-currency scams, shady contractors, and fake invoices. And if you think that these are small problems, they estimate that $19 million was taken in, just in romance scams.

The RCMP and the Financial Crime Unit according to their own web site tells us that we should rest assured as the RCMP is mandated and “contributes to the security of the Canadian economy and seeks to protect Canadians”( take note of the terminology in that they are only “seek”ing and “contributing”). 

The RCMP themselves are also quick to point out that the primary responsibility for things such as fraud, rest with other jurisdictions and they in effect often become an “assistance” agency.

The RCMP have three parts in their weak arsenal aimed at combatting this “growing” problem; the Commercial Crime Branch, the Proceeds of Crime Branch, and the aggressive sounding Financial Action Task Force.

This latter Task Force is actually a policy-making group, Canada being one of a total of 37 other countries. They are there “to set standards and promote effective implementation of legal, regulatory, and operational measures…”. They are apparently geared to “generating the necessary political will to bring about national legislative and regulatory reforms..”. One of the areas often referred to is the need to disrupt money laundering around the world. Suffice to say that in that world, they are not doing a great job in Canada at the moment.

So while this Task Force is circling the globe attending meetings, that leaves us with the Commercial Crime Branch, and the Proceeds of Crime Branch.

Commercial Crime again according to the RCMP web site maintain 27 offices throughout the country. In terms of the work being generated it seems to often mention the need to build “awareness” and develop “strategic partnerships”. This is government language code found throughout the bureaucracies for not doing much at all. They boast of their “many successful public awareness and enforcement initiatives. ” They claim to have 450 officers in those various offices and their site features a photo of a business suited offender wearing handcuffs. But, trying to find actual examples of their “enforcement initiatives” is more difficult.

In 2019 a business and accounting firm, MNP LLP released a “Fraud Aware” study where they reviewed some 200 criminal fraud cases throughout all of Canada, in Ontario, Quebec and British Columbia. BC had the highest loss levels with a total of $14.3 million. What is noteworthy in this figure, and keep in mind that we are only looking at fraud charges, is not the amount of loss, but how little that their efforts amounted to. In the recent study into money-laundering in B.C alone, regulators are now estimating that $1.7 billion went through B.C. Lottery Corporation accounts with large amounts funded by loan sharks and criminal bank drafts.

Fifteen Ponzi schemes in this country amounted to losses of $549 million. Two cases of stock manipulation by themselves amounted to $87 million in losses.

The scarier figure is that they estimate that less than 5% of the fraud was reported in this country. They also indicated that civil procedures were “often timelier and routinely more effective” than reporting the matter as a a criminal offence. This is combined with lenient sentencing in Canada, unlike China where there is a possible death penalty, or even the United States where in 2002 they passed Sarbanes-Oxley act, and punishments were increased in light of the Enron scandal.

In the above studied cases, it should be added, 70 percent of the convictions asked for restitution, but the recovery rate was a mere 29%.

Many financial and legal experts that have for decades been outraged by the lack of effort in this country to combat “white collar crime”.

Spencer Lanthier, in receiving an award as a Corporate Director of some note, said in his remarks, “this city, this Province (referring to Toronto, Ontario) this country has a reputation of being the best location to carry out white collar crime, corporate fraud in the industrialized world”.

In a report on investment fraud in 2014, the Canadian Foundation for the Advancement of Investor rights reached some damning conclusions. They alleged that little data is kept on either fraudsters or their victims, enforcement agencies were not talking to each other, and that the public’s reporting rate was “extremely low”.

The police are now often seen as leaning towards giving up and spend more time trying to get out of these cumbersome, lengthy, and tedious investigations. Some argue the laws are insufficient and the burden of proof too steep. (In Ontario, the police were reportedly telling business people who had been victimized by fraud that they should investigate it themselves and that they were not interested in any event unless the fraud was over a $1million)

You need only to scratch the surface in this country to find the seedlings of suspicion.

If there is any activity involving millions of dollars, or even billions, that is where you will find the criminal and corrupt lurking. Let’s take a few of the bigger possibilities; the marihuana industry, the construction industry, or in large pipeline and hydro projects. Let’s also glance into the government funding behind large infrastructure projects, the millions being given to the indigenous, or lotteries and gaming. It seems that if there is a pot of money there will also be those willing to stick their hands in regardless of entitlement.

And in speaking of gaming, in British Columbia, we may finally be given a chance to look into gaming in this Province and the subsequent laundering of monies. It has been a long time coming, but great hope is being put into the upcoming inquiry by Justice Cullen. This writer is hopeful, but not entirely optimistic.

Cullen has a good reputation, but one must remember that he was formerly a Regional Crown and Assistant Deputy Attorney General when the NDP was in power from 1991 to 2001 before being named Judge.

He is a friend of the NDP, so count on them going after former Liberals, but not so sure the NDP themselves or their friendly compatriots will come under any pressure. Cullen, was a prosecutor for 20 years so we will have to wait and see if he thinks there is criticism needed from the effort or lack of effort put in by the police. Nevertheless, it is one of the few inquiries in recent memory where the “white collars” may be on the run.

Peter German in an interview described money laundering as the “back office for organized crime”. Will they go there? How far will Justice Cullen dig? Only time will tell.

Another group, Transparency International reported on how financial disclosures rules in this country allow “opaque corporate and land registries”. They reviewed ownership of the top 100 residences in Vancouver with an asset value of close to a billion dollars and found that over half had “murky ownership”. Their report was titled “No Reason to Hide” and concluded that Canada has become “a destination of choice for white collar criminals”.

It is bit of an understatement to say that the enormity of the problem in Canada is staggering. We point out countries like Mexico or the Congo as countries of extreme corruption. One wonders if the only difference is that we are just a little better at keeping it under cover.

The citizens of this country seem to see “white collar” criminal acts as less than other crimes. Sociologist Edwin Sutherland, in 1939, defined “white collar crime”as a crime “committed by a person of respectability and of high social status in the course of his occupation”. Maybe our complacency comes from the fact that we see it as partially victimless and partly as smart people “outsmarting the system”. After all we still applaud the person who avoids paying their fair share of their income taxes.

In a recent report, the Conservative MP Peter Kent launched a public complaint against the RCMP for their clear lack of effort in pursuing the fact that Liberal PM Justin Trudeau had been the beneficiary of three private family trips to visit the Aga Khan, the billionaire philanthropist. Trudeau had already been found in breach of four sections of the Conflict of Interest Act, yet this was not enough to prompt a criminal inquiry apparently.

Commissioner Lucki reached new heights in obfuscation when she stated that the RCMP could not “productively pursue an investigation” (my italics).

The Aga Khan Foundation Canada by the way has received over $330 million over the years of Federal support.

Economic crime is insidious and slowly eating out the inner core of this country. The levels of distrust and the growing narrative is that every public and private entity may be corrupted, and it is causing everyone to question some of the fundamental precepts of a functioning democracy.

The U.S. is already beginning to crumble. Trump is proving to be a threat to the very foundations of the U.S. constitution, not because of what he says or what policies he enacts, but because of the the level of corruption which he is fomenting. The stink of corruption is leaking into the Department of Justice and the Federal Bureau of Investigation, and has led to misuse of Congressional funds and the firing of bureaucrats who refused to be corrupted. (In another aside, there is really no Whistleblower protection in this country)

Canada may be even in a worse position with its lack of interest. A massive wake up call is needed and enormous monies and resources are needed to be spent to correct the decades long complacency in this country.

So far, there does not appear to be any political appetite from any party to begin to address this growing pandemic which is built on a belief that we are somewhat immune, somewhat removed from corruption. We follow the plane returning Canadians from China like the press helicopter following the Bronco driven by O.J. but show little interest is what is going on right in front of us.

As this blogger writes the Ottawa Citizen is reporting on former Commissioner Bob Paulson and some questionable billing for his services. It seems that Mr. Paulson’s firm, the lofty sounding Independent Investigation and Review Services billed $116,286.95 for three months work; roughly $1933.00 per day, for him and two others to “review material”, to “develop an interview plan”, conduct interviews, and of course “parking” and “mileage.”

Was this a major significant inquiry, well no, it was to do with a City counsellor for Ottawa and his inappropriate behaviour to some employees. Normally that would type of investigation would fall to a person in the Human Resources Department.

As was said earlier, scratch the surface, and just “follow the money”.

Photo courtesy of 401(K)2012 via Flickr Commons – Some rights reserved

Alas, the Emperor has no Clothes…

In British Columbia, or E Division (just for this blog we will let the E stand for Emperor) there has been one area of investigation where the RCMP has been woefully inadequate, for at least a couple of decades, whether one wants to measure it statistically or in terms of impactful effort.

In the last couple of weeks, that weakness has been revealed and underscored once again, this time by the NDP government and former RCMP Peter German, in a report on money laundering, a significant sub-set in the general category of financial crime.

Inside the police community it has been well known for quite some time, that the RCMP has ignored “white collar crime”, both in term of the allocation of funds or personnel. An often quoted inside joke amongst members in talking about job transfers, was throughout their career how they had ducked and avoided being assigned to the the “fraud” section. A small reflection perhaps, but this attitude of avoiding the financial investigative groups in terms of a possible career, is not a phenomena of the last couple of years.

The growth of internet crime in the 1990’s has thrown fuel on to this constantly burning flame and left Canada with a reputation of being a safe harbour for the financial criminal. This type of crime has often been portrayed as the “victimless” crime, after all the only ones being hurt were those cold-hearted bastions of industry– the banks. The police held this view for the longest time, equally guilty of looking the other way, the problem not worthy of serious examination or study. Even today, in terms of “strategic priorities” you will find it listed fifth, right after “youth” and the “indigenous”.

This lack of a concentrated effort has now been exposed once again, this time spurred on by a new found public and media interest who have taken to conflating money laundering with inflated real estate prices. Of course, there are many fundamental economic issues causing high prices in Vancouver but the one that seems to grate on the middle affluent is the thought of illegal monies from mainland China driving up the price in real estate or on luxury cars. Of course, there are also direct links to drug dealing and therefore the opioid crisis, the other hot button issue. The monies have been traveling through the only pipeline they seem to be able to build in this Province, the one of elastic bound $20 dollar bills pushed through the conduits provided by the casinos.

In the lastest instalment BC Attorney General David Eby called a press conference to discuss a finding of Peter German in his 2nd report on the subject in this Province. Eby claimed to have been so shocked by an early edition of these latest findings that he felt it necessary to go to the public now, not waiting for the entire 2nd report.

So what was the shocking revelation for the NDP?

Well, Peter German being the intrepid former RCMP officer that he was, decided to ask how many officers were actually on the job in terms of investigating money laundering?

The answer: Zero.

Now, one would think that this information would have been known before this time, as it seems like an obvious avenue of inquiry, even for us lesser informed. At the beginning of this inquiry it would have seemed logical to search out who the investigative experts were in the field? Apparently not.

The original answer of course was not zero.

We would not be able to identify the RCMP involvement, if they did not, at the very least try to cover or fudge the actual numbers, hoping of course that there was only the one question; no follow up, no probing allowed.

The RCMP answer to German was that there was 26 “positions” .

German knows the code of when the answer is “positions” and knew enough to then ask, well how many were actually filling those 26 positions?

Answer 11.

German decided to dig further and asked of those 11 how many were actually on the job?

Answer 5.

And those 5 that were actually showing up to work, he persisted, what were they doing?

Well, long pause, they are just packaging and referring all files to the Provincial Civil Forfeiture group.

Thus the secret was out of the bag. Afterword, if you had listened closely and put your ear to the ground outside Green Timbers, you would have heard the sound of bodies scrambling in and out of conference rooms, frantic terse phone calls, the bumping together of the police and political brains entrusted with these matters — stumbling and mumbling on how could they justify such an apparent illustration of lack of operational effort.

Even for those adroit at media manipulation in the “Strategic Communications unit” must have been struggling, proposing spins that at the very least would have been difficult to say with a straight face.

Bill Blair (who had apparently been warned by Eby and given an early copy of the report) started off by admitting that indeed there had been “significant cuts” in some of the Federal units. Then his political survival senses kicked in, and the Liberal godfather of pot began his spin: “We have made very significant announcement in Budget 2019, restoring the RCMP capacity and making significant new investments in intelligence gathering and furthering steps that will facilitate investigation and the prosecution of money laundering offences”. So in translation this means; yup, we haven’t been doing anything so far, but look out now, we are coming with guns blazing.

Assistant Commissioner Kevin Hackett who is becoming remarkably proficient with this kind of yarn spinning, no doubt through un-wanted practise, came up with a buzz worthy comment calling the report and the findings only a “snapshot in time”. If it was indeed a snapshot it must have been taken on a Polaroid One Step.

But like Blair, Hackett when prompted feels the need to beef up his response. He said that the report “didn’t capture all personnel who are involved in cases where money laundering is a component”. He goes on to say that there are over 40 prioritized “projects” underway, and guess what, they found out that “8 of them involve money laundering.” One wonders what standard may be in play here. For instance, a drug dealer being investigated who has a house or a car, could be referred to as being a possible “money laundering” case, using this criteria.

We should also point out that it would be somewhat negligent to not understand a bit of Peter German’s former history with the RCMP. Just six years ago, German was a high ranking officer in the RCMP, the Deputy Commissioner in fact, and as such was at one time technically overseeing financial investigations throughout Canada. He was in charge during the time of the Integrated Marketing Enforcement Teams. Remember them? They were “equipped to respond swiftly to major capital market fraud”. It was by any measure a total flop with three cases brought to court during their first nine years in existence. In essence these positions have been now rolled into the BC Securities Commission, but the RCMP still have a difficult time in providing an adequate minor level of trained officers.

In his 31 years with the RCMP, German did use his time wisely, earning an MA in Public Policy and a Phd in Law from the University of London. He apparently transitioned into an expert in the area of money laundering, wrote a book on it in fact. So someone at the 2nd highest rank in the RCMP (and was rumoured to be in contention for the Commissioner ) and was responsible for areas such as money laundering, did not make a dent in this problem or more importantly did not at least become vocal about the issue while in a policing position. But now, retired and running his own consulting business he has been hired to write a report on the problem of money laundering and throw dirt at the Mounties for their lack of effort. This is not to day say that this makes his report of little value, Mr. German is a well respected learned fellow, so quite the contrary, but one has to appreciate the irony.

Those of course are just the Federal job positions. What has the Province been doing? Well the Liberals being the party in power for most of this time in question have many questions that need to be answered, and the NDP is for the most part still able to feign ignorance.

Ex-RCMP and whistle blower Joe Schalk was the Senior Director of Investigations for BC’s Gaming and Enforcement Branch and was reporting this issue for many years, as early as 2012.

This branch at the time reported to the B.C. Lottery Corporation who would have received many of the reports issued pointing out the problem. They apparently didn’t like the attention it was getting and inevitably the relationship between the two groups began to deteriorate.

In April 2014, the Ministry of Finance conducted a review of BCLC and concluded that the two groups had become dysfunctional and “adversarial”. They recommended a full review of the entire Corporation. Meanwhile, in 2014 Schalk was fired for his efforts, a victim of the old management game very prevalent in this Province, that if you don’t like the message shoot the messenger.

Even with this kind of attention and concern, BCLC, according to German, was still accepting government awards for their exemplary performance.

Schalk was finally exonerated in German’s report for “nailing the issue” and continues to speak openly about the issue, even calling for a full public inquiry. The NDP are still holding back on such an inquiry, no doubt worried that if they let “it” hit the proverbial fan, how much is going to blow back on them.

As said earlier, this is all just one component of a much larger problem in this Province and in this country which has taken root and many can share in the blame; besides the police, Federal and Provincial governments, Crown Counsel offices.

In a recent poll, 36% of Canadian organizations say they have been victimized by white collar crime.

There is the fallacy that most of this crime is too sophisticated to detect, when in fact 61 % of that crime is done by a perpetrator inside the organization. The cost for this; 1 in 10 organizational victims are in excess of $5 million.

According to Criminal Intelligence Service Canada, organized financial crime, including debit and credit card fraud, totals over $5 billion per year. That works out to a cost of roughly $600 per family in Canada.

Canada has produced some famous fraudsters in the past; Harold Ballard the now deceased but former owner of the Toronto Maple Leafs, who was convicted of 47 counts of tax evasion, Alan Eagleson the hockey agent, and Conrad Black who in 2007 was convicted of using $60 million in company funds. Mr. Black, now apparently reformed, writes a column for the National Post.

Among the 35 member countries of the OECD (Organization for Economic Cooperation and Development) bid rigging, cartels, and collusion are estimated to add 20% in costs to any government procurement initiative around the world.

Suffice to say, it is fair comment that there are some financial crime issues in Canada, not just British Columbia.

The RCMP web sites are misleading and have not been updated if one was ever trying to untangle and look behind this bureaucratic veil of secrecy. There are still references to IPOC (Integrated Proceeds of Crime) who on their site point to successes in 2006 and 2009. They are references to IMET (Integrated Market Enforcement Team) which have virtually disappeared, many members re-assigned, some others melding into the BC Securities Commission. IPOC was reviewed back in 2010 by Public Safety Canada and described their operations being severely impacted by “partners leaving…vacancy…staff turnovers..and recruitment issues..are all contributing to less than optimal performance” . It wasn’t working even then.

The RCMP still list having 27 Commercial Crime Sections across the country. They don’t really.

Re-organization in the RCMP has become a dogma, which has been combining and mutating with aggressive promotions and the push to specialization. It has been in full swing over the last number of years and German even makes reference to 2013 as being one of the recent turning points in this current system.

To understand the depth of the problem, one has to understand the depth of the re-organization, and the vast number of personnel involved.

There are four groups of agencies involved with the potential to be involved in money laundering and other associated financial crimes. The RCMP, CFSEU-BC, OCABC, and JIGIT. (Never doubt for a moment the policing ability to come up with acronyms- JIGIT being a personal favourite)

The RCMP has a Federal group named the Federal Serious and Organized Crime Unit (FSOC). It is in this group that you will find a series of Teams and officers (a team usually being about eight). It was about 2013 that various separate departments, drug sections, commercial crime sections etc. got rolled under this Federally controlled apparatus. Operational direction and the assigning of priorities began coming from Ottawa, national priorities were going to outweigh local or Provincial authorities.

Two of the teams in this FSOC deal now with Financial crimes and supposedly have some expertise in the money laundering field. Of course this is the group that German was told had 26 positions, but there were only 5 actually working, and those 5 were simply bundling up investigations and passing the information to BC Civil Forfeiture (yes, another group).

Sources estimate that there is about a 30% vacancy rate Canada wide in the Federal positions being overseen by Ottawa, and this staffing problem is clearly causing major disruptions in any consistent effort in any of these specialized fields.

Besides FSOC and the RCMP, then there is the CSFEU-BC (Combined Forces Special Enforcement unit) whose primary mandate is gangs and gang activity. In addition there is OCABC (Organized Crime Agency of BC), a Provincial organization which is the new iteration of the old CLEU (Combined Law Enforcement Unit). Confused yet.

Wait, there is still JIGIT which is the Joint Illegal Gaming Investigation Team. This was formed in April 2016 and consists of 36 police officers and over 200 civilian personnel. They claim to have 8 active investigations. At first glance, no matter what file/member ratio you may employ, this seems pretty light.

CSFEU-BC and OCA-BC are both managed by a Deputy Commissioner of the RCMP; in this case, Mr. Hackett. So you can see why he feels the need to defend. In his defence he very cleverly talks about the investigations inside CFSEU (40 ongoing investigations) thus avoiding outing the Feds.

The Senior Management team has representatives from all of the agencies, OCA, RCMP and CFSEU.

CFSEU and OCABC has over 400 officers and civilians.

When you consider the number of personnel involved in all these groups combined, it would seem difficult to argue that the number of officers is insufficient.

What may be the crux of the problem, what the issue at its core may be more simple at least in broad terms.

The RCMP has a now ingrained inability to be forthright; the inability to say things were tried and didn’t work, the inability to speak to their political masters and say there is not enough resources to be all things to all people. The no job too small or “doing more with less” is a never ending conundrum that leads nowhere.

Like all government groups, failure is not and can not be an admitted option. Everything is always a success, no matter how dismal the effort or how big the lie. Honesty about their lack or strength of effort has been side-lined and obfuscation is the media tool.

They just can not bring themselves to admit that they can not do it all. They are no longer capable of being a one stop shop on the Federal or Provincial level. When you combine this with low priority being given to financial crime, with the concurrent need for highly specialized academic personnel, what results is a smorgasbord of uncoordinated piece meal investigational files on all levels. Any substantial efforts are being frustrated from the very start and often met with failure. (You will note that we haven’t mentioned the most recent abject recent failure in the Silver International Investments case, which deserves attention on its own)

Throw in governments always in flux who are continually altering the political priorities, a dis-connected Ottawa, insufficient funding in both the needed technology and personnel and a recalcitrant justice system and you end up with zero prosecutions.

The same number now apparently working on money laundering.

Christine Duhaime, an financial crime and money laundering specialist with Duhaime Law said “It’s pretty serious, it’s saying there is no oversight and no real enforcement in this area for the whole province–it’s a little bit crazy”.

A telling snapshot for sure, let’s hope that someone, sometime, takes a look at the issue with a little longer lens.

Photo via Flickr Commons by Andrew Kuchling – Some Rights Reserved