June 5, 2018 4:30 am
Updated: June 5, 2018 11:26 pm

Calls mount for probe of Wynne government casino contracts that ‘smelled of backroom deals’

NDP leader Andrea Horwath says she would investigate government casino contracts that likely included both Liberal and Conservative insiders in a "privatization scheme."

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As Ontario’s election approaches there are increasing calls for investigations into lucrative Greater Toronto Area casino contracts awarded by Ontario’s lottery corporation last year to a British Columbia-based company.

In the fall of 2017, Ontario’s Progressive Conservative party urged the provincial government to freeze the deals, after it was revealed Great Canadian Gaming was at the centre of casino money-laundering probes.

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But now, an investigation by Global News shows that a Toronto hedge fund that is connected to PC candidate Caroline Mulroney — and held a massive stake in the B.C. casino company — repeatedly lobbied the PCs in late 2017 to stop criticizing Great Canadian.

In an abrupt shift, the PCs muted their public attacks on the controversial Toronto casino deals.

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

But since Great Canadian has taken over the casinos — there’s new criticism from financial experts who say the public assets were sold much too cheaply.

Furthermore, a Toronto investment fund has told Global News that it has asked the Ontario and British Columbia stock market regulators to investigate the circumstances surrounding the Toronto-area casino deals. An individual investor has also told Global News that he has asked the Ontario regulator to look into the matter. Neither regulator would confirm or deny receipt of the complaints.

WATCH: Calls for inquiry into Ontario casino contract

In an interview, Ajax Mayor Steve Parish — who claims that his municipality lost its successful casino to a new Great Canadian location in a process that “smelled of backroom deals” — said he hopes complaints to market regulators will re-open and “invalidate” the Toronto-area casino deals.

“This should be scrutinized by the regulators for the stock exchanges, by the Ontario legislature, by everyone with oversight for gaming,” Parish said. “There needs to be a thorough investigation. If there is nothing to hide, just show us.”

PC Emails

And it was brought up in the Ontario legislature — twice.

Internal party emails examined in Global’s investigation show that after the PCs attacked the Toronto casino deals in October 2017, the party was lobbied, and discussed “pulling back” finance critic Victor Fedeli rather than continuing to hammer Wynne’s government for an alleged “corrupt gaming strategy.”

READ MORE: Ontario PCs want casino deal with gaming company nixed amid money laundering claims in B.C.

The emails, and extensive interviews with a number of party insiders, show that BloombergSen — the Toronto hedge fund that was seen as “pro-Great Canadian” according to PC emails — repeatedly contacted the Tories seeking to stop questioning of Great Canadian.

BloombergSen and some of its board of directors, including Sanjay Sen and Jonathan Bloomberg, are significant donors to both the Ontario Liberal and Tory parties.

Party emails show the PCs, under former leader Patrick Brown, originally decided to attack the Toronto casino deals after B.C. Attorney General David Eby in September 2017 launched an independent review into allegations of transnational money laundering in Metro Vancouver casinos. Eby said the review was needed because an audit of Great Canadian’s River Rock Casino, in Richmond, revealed tens of millions in suspicious cash transactions.

WATCH: 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

More inspectors at some casinos and tighter checks on gamblers with deep pockets have been ordered by the British Columbia government as it aims to prevent money laundering. Attorney General David Eby speaks to media during a press conference at Legislature in Victoria on Thursday, November 23, 2017.

THE CANADIAN PRESS/Chad Hipolito

On Oct. 21, former PC party president Rick Dykstra sent out emails titled “Corrupt gaming strategy” and citing the money laundering probe in B.C.

“We should be going after these guys in the house,” Dykstra wrote, to Patrick Brown. “We show their process is corrupt and we can call their whole strategy into question. Just spoke with Duncan Brown, former head of the OLGC. He said based on this, he would toss Great Canadian Gaming.”

OLG executives declined to be interviewed for this story. In a prepared response spokesman Tony Bitonti wrote, “OLG has confirmed with B.C. and Ontario officials that Great Canadian is not under criminal investigation for illegal activity involving money laundering.”

On Oct. 30 in Queen’s Park, PC finance critic Victor Fedeli came out swinging.

“Internal government documents reveal a $500-million money-laundering investigation in B.C.,” Fedeli said. “We read about ‘suspicions of ‘terrorist financing,’’ possible organized crime connections, hockey bags full of cash — tens of millions of dollars in $20 bills. The RCMP investigation goes back to 2015. To the finance minister (Charles Sousa): What did he know and when did he know it?”

And Fedeli pointed directly at Sousa.

“Did the minister know his hand-picked casino operator is linked to a money-laundering investigation?”

Sousa, in response to Fedeli’s attacks, insisted the OLG contract process was fair, transparent, and not politically influenced in any way.

LISTEN: (Oct. 30, 2017) PC Finance Critic Vic Fedeli joins AM640’s The John Oakley Show.

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But the casino questions from Fedeli lasted for just one more session in Queen’s Park. After Nov. 2, records show, the Great Canadian contracts have not been questioned in Ontario’s legislature.

“We were happy that Vic (Fedeli) was pushing really hard in question period, because it felt like there was the tip of an iceberg there,” said one party insider, who could only speak on the condition of anonymity. “But it did peter out. I don’t really know why, we just left it.”

New party leader Doug Ford would not comment for this story, his campaign said. The campaign also would not provide candidate Caroline Mulroney, who was beaten by Ford in the party’s leadership contest, for comment.

On Tuesday, after this story was published, Global News asked Ford to respond. Ford stopped short of promising an investigation into the Toronto casino deals, but pledged to review relevant files if the PCs are elected.

“I just want to make sure we get the details first before we promise anything,” Ford said. “But again, we’ll have a very highly qualified person looking into it.”

READ MORE: How Chinese gangs are laundering drug money through Vancouver real estate

PCs still talking about Great Canadian

At 8:14 a.m. on Dec. 20, Tory campaign chair Walied Soliman, received a terse email.

The email, from BloombergSen founder Sanjay Sen, was copied to Jonathan Bloomberg, the hedge-fund’s CEO. There was not much information, but the subject line — “PCs still talking about Great Canadian” — speaks for itself.

Sen’s email included a web-link to a Dec. 19 Globe and Mail story. The story reported that despite ongoing probes in B.C. and Ontario, Great Canadian had just been awarded yet another bundle of southern Ontario contracts, this for several casinos west of Toronto.

Sen’s email included only one quote from the story: “Progressive Conservative finance critic Victor Fedeli said on Tuesday it is ‘quite shocking’ that Ontario’s lottery corporation would award another contract to Great Canadian before the regulatory probes are complete.”

At 8:59 a.m. on Dec. 20, Soliman forwarded the BloombergSen email to then PC leader Patrick Brown, and Brown’s chief of staff Alykhan Velshi: “So I am continuing to get lobbied on this but have actually changed my view,” Soliman wrote. “I think we should attack this … I got some information yesterday from Con Di Nino, who both Patrick and I trust, which is very disturbing. Anyhow, long and short of it, I am not in favour of us pulling back Vic (Fedeli). I am increasingly thinking there is something bad here.”

Global News contacted Walied Soliman, and Soliman said he could not comment for this story.

Con Di Nino is a former Conservative senator. In a brief interview, Di Nino maintained that the “very disturbing” information he conveyed to Soliman, was simply that he couldn’t believe OLG would award Great Canadian significant contracts while a review of money laundering allegations continued in B.C.

“I’m not part of the campaign, but I don’t have a problem as a citizen giving my opinion to Doug Ford,” Di Nino said. “This deal should be questioned.”

Financial records show that BloombergSen was increasing its bets on Great Canadian Gaming in 2017, and by December, it held almost 14 per cent of the company’s stock.

Great Canadian’s stock price surged by about 40 per cent in May 2018 when investors discovered how profitable the new Toronto contracts were for the company, in comparison to the price paid for the assets. Great Canadian’s market value increased by over $900 million.

In a research note titled “Hitting the lottery,” analysts at Scotiabank said Great Canadian “handily beat estimates based on a materially greater contribution,” from the first two months of operating the Toronto-area casinos. And with the profits produced from these assets, including Woodbine Casino, Great Canadian could pay off its $158-million investment in about six months, according to a financial projection reviewed by Global News.

READ MORE: River Rock, other casinos allegedly being used by drug money-laundering operation, report says

In May, BloombergSen’s last reported holding of over eight million Great Canadian shares would have been worth about $420.5 million.

Sanjay Sen and Jonathan Bloomberg did not respond to Global’s request to ask them questions for this story.

Velshi, Brown’s former chief of staff, told Global that after his discussion with BloombergSen executives, he understood they wanted the PCs to stop questioning Great Canadian’s business.

“BloombergSen reached out to Walied, and he asked me to take the call. It was based on (Soliman) being the previous campaign chair, that I took the call from them,” Velshi said. “I spoke to two senior people from BloombergSen, I believe it was this Jonathan Bloomberg, and this Sen person.”

But Velshi insists he was not influenced.

“It was my job as chief of staff to speak to people that didn’t like what we were doing in question period and elsewhere. Nothing they said to me persuaded me that the reporting on Great Canadian out in B.C. was incorrect, or that the Ontario Liberal government behaved appropriately, in approving this deal.”

Velshi said he was aware that Soliman had close relationships with Brian Mulroney and Caroline Mulroney. But last fall, when he spoke to the BloombergSen executives, Velshi said he had no knowledge that Caroline Mulroney was also connected to BloombergSen.

Donation records show that the Bloomberg family, including father Lawrence, son Jonathan, and mother Frances, each donated $1,222 to the failed PC leadership campaign of Caroline Mulroney, in February 2018, for a total of $3,666. Lawrence Bloomberg, a veteran Bay Street banker, is chairman of BloombergSen’s board of directors.

Ontario PC leadership candidate Caroline Mulroney speaks to reporters in Ottawa on February 9, 2018.

THE CANADIAN PRESS

Liberal Lobbyist

In a series of October 2017 emails exchanged between Patrick Brown, Rick Dykstra, and former party communications director Rebecca Thompson, Thompson suggested the PCs should question whether there were changes in the OLG bid process for the Toronto contracts, and whether there was political involvement.

“I was told … the other 2 companies in the bid were American and came in with lower cost/higher yield bids … but lost out,” Thompson wrote. “But even more egregious is the registered lobbyist for Great Canadian is Bob Lipinsky (sic).”

“Yep. Let’s go after Lopinski,” Brown responded.

Records show that in 2015, Lopinski registered as a lobbyist for Great Canadian’s bid to win OLG contracts in eastern Ontario. According to his own promotional materials, Lopinski had just finished leading “Premier Kathleen Wynne’s successful 2014 Liberal Campaign war room and played a key role in helping her new government and campaign team build on the experience of the previous McGuinty administration.”

In an interview, Lopinski said that he was not contracted with Great Canadian for the company’s Greater Toronto Area contract bids.

Liberal Finance Minister Sousa was provided quotes from a number of the PC emails reported in this story, and asked to comment. Sousa declined an interview for this story, but his office responded with a statement.

“While we cannot comment on emails we have not seen, any attempt to discredit a fair and independent selection process for political gain is irresponsible and potentially harmful to hard working communities and businesses in this province.”

In a statement, OLG spokesman Tony Bitoni wrote, “OLG undertook an open, fair and competitive process that was overseen by a fairness monitor in the selection of the service provider for the GTA Gaming Bundle.”

Great Canadian was asked to comment on a number of the PC party emails reported in this story, and the status of the regulatory review the company faces in Ontario. Alcohol and Gaming Commission of Ontario spokesman Ray Kahnert said the review was triggered by allegations in B.C., and Ontario’s review focuses on management’s integrity and reporting obligations in Ontario, and the company’s capacity to minimize unlawful activity including money laundering.

“Our company has a culture of integrity and transparency, founded on our strict compliance with the robust regulatory requirements in the many jurisdictions where our facilities are located,” Great Canadian Gaming’s chief operating officer Terrance Doyle said, in a prepared statement.

 

© 2018 Global News, a division of Corus Entertainment Inc.

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