BC Liberals delayed ‘costly’ money laundering task force, inquiry hears
BC Liberal interim leader Shirley Bond told the Commission of Inquiry into Money Laundering in B.C. her government was responsive to concerns from casino investigators, despite delaying – for close to five years – a key recommendation made in 2011 to establish a police-involved task force.
Bond was the Minister of Public Safety and Solicitor General between March 2011 and February 2012. She received a report in August 2011 from then director of civil forfeiture Robert Kroeker recommending a task force to address casino investigators’ reports of suspected organized criminals laundering bags of six-figures worth of $20 bills at cash cages.
The failure of the provincial government to augment these money-laundering concerns to the RCMP, combined with the federal Conservative government’s decision to scale back its financial crime sector in 2012, meant police were not directly involved with Gaming Policy and Enforcement Branch (GPEB) casino investigators until near the end of 2014 – when an RCMP investigation was finally launched into a transnational criminal network suspected of laundering hundreds of millions of dollars of illicit drug proceeds via underground banks connected to China.
Bond explained her government was going to wait to see how the other recommendations, such as digital gambling accounts, would play out before creating the task force.
“I agreed this recommendation was important …it was part of the ongoing work,” Bond told commission counsel Patrick McGowan.
But McGowan showed Bond a ministry briefing note stating the task force “can be complex and costly.”
It took until April 2016 to announce the BC RCMP’s Joint Illegal Gaming Investigation Team (JIGIT).
JIGIT was analogous to the Integrated Gaming Enforcement Team, which was cancelled in 2010 by Bond’s predecessor Rich Coleman, who would once again take control of casinos manager B.C. Lottery Corp. (BCLC) from Bond in 2012. Bond deferred questions as to the subsequent progress of the task force recommendation to Coleman, who will testify April 28.
Bond, an MLA for over 20 years, said in her 11 months on the gambling file, she was never briefed on money laundering by BCLC CEO Michael Grayson. Grayson has told the commission the Christy Clark government set a new “tone” to collect revenue, resulting in a pointed email to his executive staff in 2011 that bonuses would not be paid if revenue targets were not met.
Bond confirmed she never directed Grayson in such a manner.
On Tuesday Clark, B.C.’s premier from 2011 to 2017, deferred much of her knowledge and responsibilities on BCLC anti-money laundering policies to her ministers in charge of the Crown corporation, such as Bond.
Christy Clark proactively told of how her government prioritized cost cutting measures, not necessarily revenue. As like any commission witness, Clark would not have been able to watch prior commission testimony but could read media reports on it, including testimony from government officials, such as lower level casino investigators who claimed government revenue considerations played a role in the apparent poor response to the bags of cash.
McGowan also asked Bond if money laundering had ever been raised in cabinet meetings.
“I have no specific recollection of that,” said Bond.
Despite McGowan’s question commission counsel confirmed with Glacier Media it has "obtained relevant cabinet documents from both the current and former administration."
It was Coleman who ordered the ‘Kroeker Report’ following media reports of rising suspicious transactions, particularly at Richmond’s River Rock Casino and Resort.
The commission has heard of how Coleman was made aware of the growing problem.
But prior to Bond’s testimony, Lori Wanamaker, current Deputy Minister to the Premier, and former Deputy Minister of Public Safety and Solicitor General during Coleman’s first stint controlling BCLC and GPEB, somewhat disputed controversial claims by GPEB investigations manager Larry Vander Graaf of a December 2010 meeting between them and Coleman.
Vander Graaf had written in an affidavit that he warned Coleman of the suspected drug cash. He claimed Wanamaker said, “Rich, we need to do something about this.”
This was after Vander Graaf told Coleman about the $20 bills and Coleman apparently replied, “I have lots of friends that carry $10,000 in their pocket.”
But Wanamaker said she couldn’t recall the conversation and added she would never call a minister by their given name.
Wanamaker also said she received no briefings on money laundering from Grayson before the Kroeker Report was ordered.
Wanamaker couldn’t recall many things around this time raised by McGowan.
After the Kroeker Report, BCLC cited the need for an AML action plan for 2012-13 – the first time BCLC specifically mentioned money laundering in its annual letter of expectations.
Both Wanamaker and Bond said they initially learned about money laundering concerns from 2010 media reports.
The commission is trying to drill down on chains of command and communication to determine how such a problem persisted for so long. Deputy ministers are key go-betweens for elected officials and lower level deputies in charge of investigations.
Clark and B.C. Liberals got donations in funds with money from defrauded Chinese investors, hearing told
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Listen to Sam Cooper detail the story of Paul Oei and his alleged dealings in the B.C.
A B.C. Securities Commission panel has heard that then-premier Christy Clark and her B.C. Liberals received $37,888 in political donations that came from investor funds for Cascade, the failed recycling scheme of prominent party supporter Paul Oei.
Postmedia has reported previously on the case of Oei, who is accused of bilking investors of $6.9 million in an immigration-investment scam surrounding Cascade, a proposed Port Coquitlam recycling plant. Among the allegations are that he wooed Chinese investors with pictures of Clark and claimed that she had promoted the plant on a trade mission to China.
In testimony from the final witness in the case, Clark and her party were connected to Cascade investor funds.
Canadian Manu accountant Ellen Sun was questioned about Cascade’s expense records and money flows.
Oei’s lawyer, Teresa Tomchak, pointed to accounting of a Dec. 1, 2011, transaction for $480, which was recorded in Sun’s books with the memo line, for “Premier Christy Clarke (sic) dinner to VIP.” Tomchak said there was also another cheque recorded as a donation to the B.C. Liberals, with the same memo line.
“And how do you know that this relates to Cascade?” Tomchak asked Sun, according to hearing transcripts.
“Mr. Oei told me that,” she replied.
In cross-examination, Commission lawyer Nicholas Isaac questioned Sun about records that showed Cascade investor funds paid for $37,888 in political donations for the B.C. Liberal party.
“So these were all receipts for individual donations by Mr. Oei to the Liberal party, right?” Sun was asked.
“Correct … he told me it was intended for Cascade.”
“Did he tell you what that meant, intended for Cascade?” Isaac asked.
“Well, I know that he, you know, he knows people, in the Liberal party, so I guess it’s party’s promotions,” Sun said. “He did tell me, he mentioned that it is for Cascade, for Cascade, for promotion.”
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Oei told investors they could immigrate to B.C. through a government program if they invested in Cascade, the panel had previously heard.
“(Oei) said this project received strong support from the provincial government, and he showed us a lot of photos with the lady premier,” Chinese investor Wei Chen told the hearing. “He said the B.C. government would use this project to go to China to attract immigrants.”
The B.C. Liberal party did not return requests for Clark or others to comment on the latest donation allegations.
B.C. Election records show that from November 2011 to November 2015, Paul Oei donated $55,787 to the B.C. Liberals. His wife, Loretta Lai, donated $13,565 to the party from April 2012 to May 2016. Canadian Manu Immigration and Financial Services Inc. and Organic Eco-Centre Corp., both named in the Security Commission fraud allegations, donated $1,080 to the B.C. Liberals from 2014 to 2015. Oei and Lai have also donated $8,477 to the federal Liberal party since 2014. Also, through Organic Eco-Centre Corp., Oei sponsored a July 2015 Richmond Chamber of Commerce lunch featuring federal Liberal leader Justin Trudeau.
One Cascade investor, a “Ms. U Po Chu” of Hong Kong, provided almost $7 million to Oei “in addition to the Cascade investment” the panel heard.
Sun said that her accounting showed Cascade’s investor repayments for “U Po Chu” were made in the names of other people, at the request of U Po Chu, and the payments were made to Las Vegas casinos.
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“These were money that was paid to Las Vegas,” Sun said. “It was upon U Po Chu’s request, because she goes down to Las Vegas quite often, and she wanted the money to go back to Hong Kong. So, she asked Mr. Oei to transfer the money and paid it to the Las Vegas.”
Records showed that in total for U Po Chu, there was $288,291 in payments made to the casinos “the Wynn, the Bellagio, the Mirage, and the MGM International,” including payments made to cage depositories, Isaac told Sun.
“Does that, as an accountant, when you’re going through this, does it raise any red flags for you to, where you see hundreds of thousands of dollars being paid, personal payments to Las Vegas casinos purportedly to repay investors but not recorded anywhere in a general ledger or even in an expense report,” Isaac asked.
“Well, I do think about it, but I just left it in Mr. Oei’s hands,” Sun answered.
The panel has heard that Oei instilled confidence in the investors — many of whom did not speak English or understand Canadian investment laws — by having them transfer funds into the legal trust of Peschisolido & Company.
The firm was directed by Richmond federal Liberal MP Joe Peschisolido at the time.
Sun, the Canadian Manu accountant, testified about transactions between Oei and the legal trust of Peschisolido and Co., in relation to Cascade investors.
In one instance related to Cascade funds that was recorded under legal fees by Sun, Peschisolido & Company received a bank draft of $110,000 from Oei, and Oei received $110,000 from Canadian Manu in return.
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“My question was I was trying to understand the connection between the bank draft to Peschisolido & Company in the amount of $110,000, and the bank draft from the Canadian Manu account to Mr. Oei for $110,000 on that same day,” Oei’s lawyer Tomchak asked Sun, in the hearing.
“We issued the bank draft on that day, and at the same time reimbursed back to Mr. Oei,” Sun answered.
“And what was Canadian Manu reimbursing Mr. Oei for?”
“For the charges to Peschisolido,” Sun said.
In another instance, Sun acknowledged that records showed a payment of $100,000 from the trust fund of Peschisolido & Company as going to the company Cascade. But actually, a cashed cheque showed that the payment went to Oei’s company, Canadian Manu.
Isaac, the Commission lawyer, questioned some of Sun’s records that showed Oei repaid investors through payments to Peschisolido and Co.
“It does appear as though some monies were paid to Mr. Peschisolido that may be these amounts, but I wasn’t able to find any evidence of any actual money flowing to (one investor Sasan Katal); and you haven’t seen any, have you?” Isaac asked.
“No,” Sun answered.
The panel is awaiting final oral and written submissions from Oei’s lawyer and the Commission’s lawyers before a decision is rendered. Oei denies wrongdoing, and none of the allegations has been proven.
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