Two B.C. casino company executives, including Great Canadian Gaming CEO Rod Baker, complained to BC Lottery Corporation executives in 2015 that their revenue was taking a hit because Lottery Corp. investigators had questioned high rollers at Richmond’s River Rock Casino who were connected to a Chinese transnational gang, the province’s money-laundering inquiry has heard.
On Monday, lawyers for the Cullen Commission questioned Lottery Corp. chief operating officer Brad Desmarais about the complaints from Baker and Vancouver Edgewater Casino executive Michael Graydon. Graydon contacted Desmarais in September 2015 to complain about the business impact of high-roller interviews, the inquiry heard. And Baker had called Lottery Corp. CEO Jim Lightbody.
The Crown corporation had learned from RCMP in July 2015 that a number of River Rock high rollers were potentially funded by a transnational drug-trafficking network with links to terrorist financing, the inquiry heard. This caused the Lottery Corp. to question high rollers whom police had linked to organized crime suspect, Paul King Jin, about their source of funds. But the casino executives felt lucrative patrons were being scared away.
“We are acutely aware of the revenue implications for both of us,” Desmarais emailed to Graydon, the inquiry heard. Desmarais said he was “pressing” B.C.’s casino regulator to disrupt illegal casinos where the high rollers may have taken their business.
The inquiry also heard about a September 2015 email from Lottery Corp. CEO Jim Lightbody to Desmarais. Lightbody had previously testified that Baker complained to him about driving away River Rock high rollers with source-of-funds interviews.
“I called Rod today … reiterated (Lottery Corp. compliance executives Desmarais and Robert Kroeker would work with Great Canadian staff),” Lightbody’s email to Desmarais said. “He seemed to calm down.”
Desmarais was probed Monday about a series of emails between him and Lottery Corp. investigator Daryl Tottenham in December 2014.
A River Rock patron made $1.8 million in transactions with small bills in just seven days, the inquiry heard, and casino staff had not reported some of the high roller’s suspicious transactions. In the middle of the spree Tottenham warned Desmarais about the alarming transactions and that the patron was likely to return to the casino the next night.
Desmarais responded, asking if River Rock could question the VIP on his source of funds. However, the patron continued with suspicious cash transactions and River Rock staff did not question him, the inquiry heard.
“I recognize we do not want to jeopardize revenue,” Tottenham said in the email to Desmarais, adding that it might be best for Lottery Corp. investigators to interview the patron instead.
The inquiry heard last week that Graydon — who was CEO of the Lottery Corp. until 2014 — had pressured executives to meet their revenue targets or else have their bonuses withheld.
The revenue pressures occurred while B.C. Gaming Policy Enforcement Branch staff were urging Lottery Corp. management to crack down on hundreds of millions in $20 bills flooding into B.C. casinos through the bets of Chinese high rollers that the branch believed were funded by Asian gangs.
“I want to stress to this group that it is critical that we come in on budget from a net revenue perspective,” an email from Graydon to his Lottery Corp. executives said, the inquiry heard. “I expect everyone to achieve that.”
When Desmarais was hired in 2013, he pushed back on the enforcement branch’s warning that organized crime was flooding B.C. casinos with drug cash from China, the inquiry heard.
In one case, he wrote an internal report that suggested legitimate underground banking was the source of funds for foreign high rollers, the inquiry heard, and that large amounts of cash in B.C. casinos were “often erroneously associated to organized crime.”
The inquiry also heard that in December 2014, Desmarais provided a “technical briefing” on B.C. casinos to the deputy minister responsible for gaming, Cheryl Wenezenki-Yolland, and that Lightbody and a staffer for then-gaming minister Mike de Jong were there too.
Commission lawyer Alison Latimer asked Desmarais why he told Wenezenki-Yolland that forms of international underground banking could explain the high rollers’ source of cash.
Desmarais had already met with B.C. anti-gang units to discuss investigations into a suspected Asian organized crime loan-sharking ring at River Rock Casino, Latimer said, and that he had communicated repeatedly with Lottery Corp. investigator Mike Hiller, who told him that most Chinese high rollers at the casino got their cash from loan sharks and arranged to pay back loans in China.
“Did you tell (Wenezenki-Yolland that the suspicious cash used by high rollers) could be attributed to underground banking?” Latimer asked.
“I never said it was entirely attributable,” Desmarais said.
Latimer pointed out that Wenezenki-Yolland raised a concern that underground banking transactions could breach Canada’s “banking act.”
Desmarais told Latimer that he agreed with Wenezenki-Yolland, yet took no action on the concern she highlighted.
And Desmarais maintained he still believes most River Rock high-rollers were legitimate business persons that were “unwitting” of being funded by transnational drug-trafficking and money laundering schemes, which is what the RCMP has alleged.
His cross-examination was set to continue this week.
Rod Baker stepped down as Great Canadian Gaming president in January after he and his wife were investigated for misrepresenting themselves to obtain an early dose of a COVID-19 vaccine.
It’s still possible Baker could be summoned to testify at the inquiry, a spokeswoman for the commission confirmed to Global News.