An open letter to Attorney General David Eby and investigator Peter German on B.C.'s Dirty Money report
I would like to ask the following questions of B.C.’s attorney general, David Eby, and his investigator, Peter German, who wrote about casino money laundering in the province.
The Dirty Money report alleges that mostly Chinese gangs and gamblers, helped by a dysfunctional Canadian regulatory system, are engaged in “large-scale” transnational laundering of dirty money through Metro Vancouver’s casinos.
According to Mr. Eby, their criminal activities have simultaneously caused Vancouver’s housing bubble, fentanyl crisis, and gangland activities. Mr. German states that the “Vancouver Model” has laundered in excess of $100 million over a decade. This works out to an average of more than $10 million a year.
1. Mr. Eby and the media have been describing an alarming scenario of Vancouver being enveloped by an out-of-control money-laundering crisis. To put this $10-million sum in perspective, BC’s cannabis market—legal and illegal—is estimated to be worth between $2 and $7 billion a year. How does $10 million a year fit with Mr. Eby’s description of this as a “mind-blowing” and “large-scale” crisis?
2. Should Mr. German investigate the cannabis industry for possible money laundering and gangland connections? As this industry has been in existence for much longer than the Chinese gamblers at River Rock Casino, its “practitioners” have a far better established network and business model. How did so many cannabis shops proliferate throughout Metro Vancouver in such a short time? Who is financing them, and would Mr. German investigate if criminal money is being laundered through these operations?
3. The Dirty Money report makes little mention of motorcycle gangs and criminal organizations in laundering money and buying real estate. Why is that? Organized crime has always been known to own real estate. This has been happening in Metro Vancouver for decades, long before the arrival of wealthy Chinese. Will Mr. Eby look into Vancouver’s own homegrown gangs and their money-laundering activities and real-estate dealings?
4. According to the B.C. Real Estate Association, the total value of homes sold in Metro Vancouver last year was $48.9 billion. In 2016, it was $53.3 billion. The $10 million in laundered money represents equal or less than 0.02 percent of both amounts. Mr. Eby has repeatedly claimed that laundered money has fuelled Vancouver’s “housing crisis”. Can he explain how $10 million is able to move a market 5,000 times as large?
5. Would Mr. Eby like to share Mr. German’s economic modelling to prove that casino money laundering caused Vancouver’s housing bubble?
6. Why has Mr. Eby not considered other factors responsible for Vancouver’s housing price surge over the past decade? He has demonstrated little interest in discussing the impact of prolonged low interest rates, municipal and provincial government regulations, strong domestic demand, B.C.’s strong economy, the intergenerational transfer of wealth, and a host of other factors. Are these forces irrelevant to the housing market in Metro Vancouver?
7. Why has Mr. Eby not made any reference to the numerous expert studies by housing economists at the Canada Mortgage and Housing Corporation, think tanks, and universities showing the role played by the complex mix of factors in our high housing prices? Is he dismissing their expertise? Why the obsession with Chinese offshore demand as the main cause of our housing problems?
8. The focus of the report together with Mr. Eby’s public pronouncements on Chinese money laundering has cast a shadow over Metro Vancouver’s Chinese community as potential conduits of dirty money. In its July 1 story on the Dirty Money report, the South China Morning Post made an incriminating and unnecessary mention of British Columbia as being “home to more than 400,000 people of Chinese descent”. The inference is that the province’s Chinese are also the target of Mr. German’s report, and that the entire community is somehow linked to casino money laundering. Is this the intention of the Dirty Money report?
9. The Globe and Mail also conveyed Mr. Eby’s line of thinking: “The dirty cash coming in mostly from mainland China is also tied to B.C.’s deadly opioid crisis and the rise in real estate prices in Metro Vancouver.” The Globe’s headline, “B.C. became a gangster’s paradise”, suggests that the province only recently became corrupted. Is it true that B.C. was an innocent, crime-free province before the arrival of Chinese money? Was B.C. without gangs, money laundering and drug trafficking before the arrival of River Rock Casino and Chinese gamblers?
10. Have Mr. Eby and Mr. German legitimized the blaming of Metro Vancouver’s Chinese for the region’s myriad of socio-economic problems?
11. Is Mr. Eby concerned that the region’s Chinese community is being targeted, as indicated by the SCMP and Globe and Mail commentaries? The forum discussions following the numerous stories in the other media suggests that many readers are making that conclusion about the Chinese community. Would Mr. Eby clarify his position?
12. On June 27, the CBC published its investigations into how more than half-million prescription drugs, mostly opioids, are stolen from pharmacies each year. On June 28, the U.S. Department of Justice announced it had arrested and charged more than 600 people, including 71 doctors, for their role in the country’s opioid crisis. Mr. German’s Dirty Money report makes no mention of the role of pharmacies or medical personnel in Vancouver’s opioid crisis. Yet, Mr. Eby keeps insisting that Vancouver’s opioid crisis is a made-in-China problem tied to casino money laundering. While China’s factories manufacture the base compounds, there is clearly a deep and sophisticated supply chain operating inside Canada that is trafficking these drugs to domestic consumers. Will Mr. Eby follow up on the CBC story, and the example set by the U.S. Department of Justice, to order a full investigation into how pharmacies and medical professionals are involved in the opioid crisis?
13. Mr. Eby said he will appoint Mr. German to undertake the second part of the report linking money laundering and Vancouver’s housing market. The intent appears to be to prove that money laundering has been fuelling Vancouver’s housing bubble. Is Mr. German a housing expert in addition to being an expert on crime?
14. The Dirty Money report mentioned July 2015 as the peak of the laundered money flows, with a total of $13.5 million detected. This is a tiny sum in the context of our $50-billion-a-year housing market. Nevertheless, the laundered amount fell after July 2015. What caused this decline? Was it due to better detection and enforcement?
15. If so, may I conclude that B.C.’s anti-money laundering system has been shown to work? Of course it can be improved, but should we not take heart that the Gaming Policy Enforcement Branch, B.C. Lottery Corporation, RCMP, and other state agencies have largely succeeded in detecting and reducing money-laundering activities? The video footage of the alleged criminals laundering cash in the casinos actually affirms confidence in the regulatory process. As Mr. German observed on page 22: “B.C. has a proud history of an exceptionally well managed gaming industry.” Does Mr. Eby not agree?
16. How much did the AG’s office pay Peter German to undertake this study?
17. Why no prosecution? In fact, why no finger-pointing? Mr. Eby declared that the study was not to find fault. If so, what was the point of the study?
18. Why undertake such a costly report that is causing so much alarm about “mind-blowing” money laundering and not act against the offenders and officials who failed to protect the public?
19. Ultimately, is this an academic paper? If so, shouldn’t it have been undertaken by the UBC, SFU, or another one of Canada’s universities?
20. How much will Mr. German be paid for the second report?
21. Will the AG’s office consider hiring me to study the impact of quantitative easing (QE) and the alternative mortgage lenders on the Vancouver housing market? I’m proposing this study as QE was responsible for unleashing trillions of dollars into the global economy, with some of that flowing into Vancouver’s real estate. B.C.’s housing experts and economists have yet to investigate this subject. I’ve made mention of QE’s massive impact on Vancouver’s housing market in my first research article in October 2015, and in the Globe and Mail in March 2018. I believe QE has had a much more substantive impact on Vancouver’s housing market than laundered money or legitimate foreign demand. I look forward to being awarded this study project.
Ng Weng HoongMore