EXCLUSIVE: VIP linked to top Chinese officials, real estate, corruption allegations, gambled with $490k at B.C. casino

Click to play video: 'VIP linked to top Chinese officials, real estate, corruption allegations, gambling'
VIP linked to top Chinese officials, real estate, corruption allegations, gambling
WATCH: A River Rock Casino VIP with links to high-ranking officials in China has been linked to suspicious activity. Sam Cooper reports. – May 30, 2018

A River Rock Casino VIP with links to high-ranking officials in China gambled with about $490,000 received in a suspicious transaction in a River Rock hotel room, confidential documents obtained by Global News show.

Although the VIP could be what is considered an associate of a “politically exposed person” in international anti-money laundering practice — meaning a client at risk of laundering corruption money — B.C. Lottery Corp.’s chosen course of action was to require the gambler to verify his source of funds for future transactions, documents show, rather than cancelling his account.

LISTEN: A VIP gambler and suspicious sources of cash

The circumstances of the case highlight a difference between casinos and other financial institutions in Canada’s anti-money laundering system. Banks, for example, face new and tighter restrictions when it comes to doing business with high-risk clients connected to foreign states.
Story continues below advertisement

Casinos, however, don’t.

The case of the unidentified gambler, who is linked to allegations of corruption and suspicious land deals in Australia, is revealed in an April 2016 email from Lottery Corp. vice-president of corporate security and compliance Robert Kroeker, titled “Strictly confidential RRCR player review.”

It is one of a number of Lottery Corp. emails regarding money laundering compliance at River Rock, the Richmond casino operated by Great Canadian Gaming, disclosed to Global News in a Freedom of Information request.

The emails appear to shed new light on the circumstances that caused B.C. Attorney General David Eby, in September 2017, to launch an independent review into allegations of transnational money laundering in Metro Vancouver casinos.

Eby appointed reviewer Peter German, a former high-ranking RCMP officer, based on the release of an audit that focused on River Rock Casino. The audit, and a number of government documents obtained by Global News, alleged that Chinese VIPs had bought casino chips with tens of millions of suspected drug-dealer cash.

Eby said the review has confirmed hundreds of millions in suspicious transactions flowed through B.C. casinos. And his office is currently reviewing 48 recommendations filed by German, to combat money laundering in B.C. casinos.

Story continues below advertisement

In the April 2016 “confidential RRCR player review case” an unidentified VIP “bought in earlier in the week with $350k in RRCR $5k chips and also with $140k in a mix of $20 and $100’s,” Kroeker’s memo to Great Canadian managers says. “All funds appear to have involved transfers within the RRCR Hotel.”

The player’s background was reviewed through Lottery Corp. anti-money laundering analysis, and investigators identified “links to high ranking officials” in China, according to the heavily redacted memo, and a source with knowledge of the file. The memo says the player “has multiple business interests” and was allegedly “involved in corruption as well as suspicious property deals in Sydney, Australia.”

The player was well-known to Australian police, a source said.

Based on these facts, a player interview was conducted by B.C. Lottery Corp. investigations, Kroeker’s memo says. But the player failed to disclose some information. What this information was has been redacted in order to protect police investigations.

“There is no doubt (player identity redacted) has access to significant wealth,” Kroeker’s memo says. “The player will be placed on proven sourced methods of buy-ins only.  I think the circumstances and rationale are self-evident.”

Breaking news from Canada and around the world sent to your email, as it happens.

The Lottery Corp., in such cases, can require gamblers to provide bank slips to verify that the cash they present comes from their own bank account.

Story continues below advertisement

Kroeker’s redacted memo doesn’t indicate whether the Lottery Corp. determined if this VIP was a politically exposed person or an associate of a politically exposed person. According to guidance from Fintrac, Canada’s anti-money laundering agency, an associate of high-ranking officials in a country such as China, would be considered a risk.

Following recommendations from the Financial Action Task Force, an international watchdog, Canada has implemented new anti-money laundering laws for “politically exposed persons.”

In its 2016 report on Canada’s money laundering vulnerabilities, the task force said “the real estate business is exposed to high risk clients, including politically exposed persons … there are cases of Chinese officials laundering proceeds of crime through the real estate sector, particularly in Vancouver.”

Fintrac’s guidance says that when an account is opened, financial institutions including banks, securities dealers, and money services businesses must determine whether a client is considered politically exposed or is an associate of a politically exposed person. All clients determined to be foreign politically exposed persons or their associates are automatically considered high-risk, Fintrac says. And in these cases, staff must receive approval from a senior manager to keep the account open.

But in Canada’s system, this is not yet required of government-run casinos.

“Monitoring of ‘politically exposed persons’ is not a specific requirement for the casino sector in Canada,” Lottery Corp. spokeswoman Lara Gerrits said.

Story continues below advertisement

“However, BCLC takes a proactive approach to conduct due diligence in this area, including with background checks and source of funds interviews.”

The April 2016 player interview and background check outlined in Kroeker’s memo is the first alleged case found by Global News of suspicious transactions in River Rock hotel rooms. A source with knowledge of the case said it could point to concerns that Lottery Corp. investigators have limited access to casino hotel rooms.

Great Canadian did not provide Patrick Ennis, the company’s vice president of corporate security and compliance, for a requested interview on this story.

“Regarding hotel rooms … it would be inappropriate for any hotel operator to install video surveillance cameras in guest bedrooms,” a statement attributed to Great Canadian chief operating officer Terrance Doyle said. “Beyond our surveillance cameras, 50 full-time surveillance personnel are employed at River Rock, more than any other casino in B.C., in addition to more than 75 security employees on the premises.”

Suspicious transactions and player interviews persist

Security at the River Rock casino. Global News

VIP player interviews are conducted at River Rock when B.C. Lottery Corp. investigators are concerned about suspicious transactions. Internal Lottery Corp. documents from late 2014, obtained by Global News, help to explain the circumstances of the suspicious hotel room transaction outlined in the April 2016 “Strictly confidential RRCR player review.”

Story continues below advertisement

In October 2014, Lottery Corp. investigators noticed a flood of suspicious transactions at River Rock, with millions in cash deliveries facilitated by a network of alleged transnational money launderers in Metro Vancouver. Documents point to a list of the top-10 suspected criminal lenders, and say “the majority (were) devoted to River Rock patrons.”

A large number of $5,000 casino chips were leaving River Rock and entering a black market connected to this network of lenders in Richmond, government documents say. A number of VIPs were able to complete massive buy-ins by using “unsourced” casino chips and cash, provided by these lenders. The VIPs, including a Chinese high-roller who used unsourced chips and also bought chips with $645,105 in small bills, were sometimes approached by Lottery Corp. investigators, documents say.

Internal records say that Great Canadian’s Patrick Ennis requested a meeting with Lottery Corp. because River Rock managers were concerned the manner in which Lottery Corp. interviewers approached some VIPs, “was viewed as problematic.”

“An agreement was made to have BCLC investigators contact River Rock managers when they wished to interview a VIP,” the internal documents say. “The meeting summarized with River Rock managers and BCLC both agreeing that this issue is a serious one and that a combined effort between the parties was required to stop the cash deliveries, (and) excessive cash buy-ins.”

And yet the issues continued to plague River Rock Casino in the following years. Investigators identified a surge in suspected drug-dealer cash entering River Rock in July 2015 through VIP buy-ins, including about $14 million in $20 bills, government documents indicate.

Story continues below advertisement

According to records, the Great Canadian executives that attended the late 2014 Lottery Corp. meetings about excessive cash buy-ins, unsourced casino chips, suspected criminal lenders and VIPs included Ennis and Robert Kroeker, who at that time was Great Canadian’s director of corporate security and compliance.

In August 2015, Kroeker didn’t publicly convey serious concerns about excessive cash buy-ins, according to a Business in Vancouver article.

The article noted that critics were sounding the alarm about money laundering risk in B.C., given that B.C. Lottery Corp. allowed $100,000 high-limit bets, and that River Rock management was “courting high rollers from China, and offering them special VIP rooms with high table limits … to raise revenue.”

“Money laundering, however, does not happen at Great Canadian Gaming’s facilities, according to GCG vice-president of corporate security and compliance Robert Kroeker,” the article stated.

Later in 2015, Kroeker left Great Canadian to become manager of corporate security and compliance for the Lottery Corp. And Ennis filled his position at Great Canadian, meaning that Kroeker was in the position of monitoring the compliance of his former colleagues.

Global asked the Lottery Corp. whether Kroeker could be in a conflicted position in monitoring the compliance of his former colleagues, given that he had already concluded that money laundering does not occur at River Rock Casino, reportedly.

Story continues below advertisement

“Neither BCLC nor Mr. Kroeker is a regulator,” the Lottery Corp. stated. “BCLC conducts and manages gambling on behalf of the province; the Gaming Policy and Enforcement Branch is the regulator.”

The Lottery Corp. said it will not comment on perceptions of an employee.

“All employees and contractors are required to disclose any actual or perceived conflicts of interest — including any previous or current involvement in the gaming industry,” the Lottery Corp. responded in a statement.

The River Rock Casino money laundering compliance documents disclosed to Global News also show that in 2017, Patrick Ennis, Great Canadian’s director of corporate security and compliance, complained to the Lottery Corp. about the conclusions of an independent review of River Rock’s high-limit table games.

A June 2017 letter from Kroeker to Ennis, regarding the “Baccarat Review” says, “With respect to the comment in the Baccarat Evaluation you have highlighted, we agree that it is unfortunate that the consultant chose to use what appears to be an overly broad characterization without citing detailed and specific support for that conclusion in the report … the consultant was engaged on an independent basis … As such, BCLC is not in a position to direct the writer to change his findings or opinions, absent clear and unequivocal factual error.”

Other emails exchanged between Kroeker and River Rock managers in February 2017 refer to a “request” for 2017 from RCMP’s federal and serious organized crime unit. The content of the message is completely redacted, to protect police investigations.

Story continues below advertisement

Also, in April 2017, there was a scheduled meeting involving the Lottery Corp.’s Kroeker, as well as Doyle and Ennis from Great Canadian, “to discuss about RRCR large cash transaction compliance,” a Lottery Corp. email says. Further information has been redacted to protect police investigations.

In a prepared response to Global’s questions for this story, Doyle said “As we have consistently stated, Great Canadian Gaming Corp. operates in strict compliance with all laws and regulations that apply to our industry, and follows all procedures that are required of us by BCLC, and all of our regulators.”

Sponsored content