Tag Archives: BC Liberals

Vancouver Not Vegas Calls on Province to Block Graydon Appointment

Vancouver Not Vegas Calls on Province to Block Graydon Appointment

Michael Graydon BCLC

Vancouver Not Vegas calls for the Gaming Policy and Enforcement Branch (GPEB) to refuse to recognize Michael Graydon as a qualified officer of the newly formed PV Hospitality ULC, due to the public perception that Mr. Graydon may have violated the Conflict of Interest Guidelines of the BC Lottery Corporation, and due to his possession of sensitive confidential information pertaining to Paragon’s competitors.

Further, Vancouver Not Vegas calls for the City of Vancouver to attach a restrictive covenant to the property’s Development Permit, permanently limiting the number of slots and gaming tables on the new Edgewater Casino site.

Finally, VNV calls for the BC Lottery Corporation to publicly disclose all financial projections and public subsidies associated with the proposed Edgewater Casino expansion at BC Place.

“Public trust and confidence in the integrity of the BC Lottery Corporation is at stake,” says VNV member Ian Pitfield.  “The corporation’s own Conflict of Interest Guidelines enjoin management from conduct which raises the perception of conflict. These rules are meaningless if there are no post-employment consequences for violations.”

“The City must respond to Mr. Graydon’s actions. Paragon  is building a casino that’s oversized by some 40,000 square feet, and the BCLC governs the number of slots and table licenses that will go there.” says VNV spokesperson Sandy Garossino. “Mr. Graydon’s defection raises grave concerns about his neutrality while at BCLC, and what promises may have been made to Paragon.”

According to previous financial projections associated with an expanded Edgewater Casino, the BC Lottery Corporation was scheduled to transfer $16.9 million annually to Paragon Gaming to off-set construction costs.  PavCo has re-negotiated a 50% lease reduction to $3 million annually. No projections of increased revenues (net of revenue losses to other local casinos) to the BCLC have been made public.

BCLC Conflict of Interest Guidelines

http://corporate.bclc.com/content/dam/bclc/corporate/documents/soebc-for-employees.pdf

Gaming Control Act:

http://www.bclaws.ca/Recon/document/ID/freeside/00_02014_01

Deloitte report showing $16.9 m in construction subsidy: http://vancouvernotvegas.ca/wp-content/uploads/2011/03/Deloittes-Economic-Report-Entertainment-Complex.pdf  P. 8

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Media contacts:

Sandy Garossino
Please TEXT queries to:
778-231-5230

Ian Pitfield
604-828-5494

Brazen Conflict of Interest by Former CEO Exposes Feeble Governance at BCLC

Michael Graydon BCLC

FOR IMMEDIATE RELEASE: Vancouver, Feb. 7, 2014

Brazen Conflict of Interest by Former CEO Exposes Feeble Governance at BCLC

The resignation of Michael Graydon as CEO of BC Lottery Corporation (BCLC) to assume the role of president of PV Hospitality ULC in which Paragon Gaming Corporation is a partner raises serious conflict of interest and BCLC governance concerns says Vancouver Not Vegas.

“It’s a grave concern that the BCLC, which oversees an industry requiring the highest standard of integrity and transparency, would permit a departure of this kind from expected ethical standards”, says founding member Ian Pitfield.

“The Federal Government applies post-employment restrictions to public office holders.  Why should the Province not insist on the same restrictions for senior employees of Crown Corporations?” Pitfield asks.

The Vancouver Not Vegas coalition calls for an investigation into the circumstances surrounding this move, and asks the BC government to answer the following questions regarding this and other governance issues within BCLC (BC Lottery Corp):

  • When did Michael Graydon begin employment discussions with Paragon, a company of which he was the regulator?
  • What assurances or commitments did he make to Paragon, his future employer, while he was in discussions with them concerning compensation, terms, etc?
  • What knowledge did the BCLC have of employment discussions between Graydon and Paragon, and did it approve it?
  • Why, after BCLC chair Richard Turner bought shares in Paragon Gaming in 2004, did the BCLC not institute a firewall policy preventing employment or financial relationships between senior executives. board members and regulated corporations?
  • Senior management at BCLC are in possession of significant confidential financial information pertaining to all gambling operators in BC. It’s unthinkable that it has failed to safeguard that trust by preventing conflicting employment agreements for senior executives.

It is unthinkable that BCLC has failed to safeguard the trust by prohibiting key employees from assuming employment with regulated gaming companies for a period of two or three years following retirement or resignation. But today’s news is only one chapter in a history of governance breakdowns.

Documented lapses in governance at BCLC include:

  • Unprecedented $700K FINTRAC fine in 2010
  • Documented loan-sharking, money-laundering in casinos
  • BCLC Chair Richard Turner’s acquisition of shares in Paragon in 2004, and subsequent move to become director.

Today’s revelation, combined with a repeated pattern of inept governance points to a rudderless corporation unable to exercise basic control over its key operations.

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Media contacts:

Sandy Garossino
Please TEXT queries to:
778-231-5230

Ian Pitfield
604-828-5494

http://vancouvernotvegas.ca

See also this original story.

VNV Calls For Review of the Financing of BC Place Stadium Upgrade and Roof Construction

Vancouver Not Vegas Calls For a Review of the Financing of the BC Place Stadium Upgrade and Roof Construction

BC Place Roof
Photo of BC Place model, by Dustin Sacks from the Flickr Creative Commons

FOR IMMEDIATE RELEASE
Vancouver, September 30, 2011

Vancouver Not Vegas calls for a Review of the financing of the BC Place Stadium up grade and roof construction.

“We don’t know the reason the provincial government departed from the normal practice of securing substantial private sector funding for a project of this nature, and chose to under-write all costs,” says Sandy Garossino, co-founder of Vancouver Not Vegas. “But the timeline of events strongly suggests that the government found the necessary capital for the retractable roof option by instituting devastating cuts to charities and non-profits.”

Major urban stadiums are normally funded primarily through private sector contributions.

• Toronto’s SkyDome was 16% publicly funded, 31 corporations funded the balance;

• Cowboy Stadium in Dallas was 28% publicly funded following a public referendum, with the teams and corporate sponsors providing the balance.

• BC Place Stadium is 100% publicly funded. There has been no disclosure of the business plan supporting this level of public investment.

In the summer of 2009 the provincial cabinet was struggling with cost containment on the stadium roof, because estimates had nearly tripled from when the project was first proposed only one year earlier.

Liberal donor, former BC Lottery Corporation (BCLC) chair and Edgewater representative Richard Turner threatened to withdraw Edgewater’s participation if cabinet did not approve the retractable roof.

In this same period Rich Coleman was minister responsible for BCLC and for gaming grant distribution. He moved in the summer of 2009 to seize $36 million in budgeted and committed gaming grants, and institute long-term cuts that would provide another $200 million over 6 years to the government.

“The public needs to know that financing of the roof construction was conducted in a responsible manner that best serves the interests of all British Columbians province-wide. Until these questions are answered, it seems that financing decisions were driven by the interests of Liberal donors and the Edgewater Casino,” says Lindsay Brown, co-founder of Vancouver Not Vegas.

For more information on the stadium roof, its history and financing, please see our stadium roof post and a detailed timeline.

Gaming Grant Review an opportunity to address crisis in BC’s non-profit sector

Vancouver Not Vegas says the Gaming Grant Review is a welcome opportunity to address the expanding crisis in BC’s non-profit sector.

FOR IMMEDIATE RELEASE:

Vancouver Not Vegas welcomes Premier Clark’s announcement of the provincial gaming review yesterday. “We hope that as a result of this initiative, charities and non-profits will never again have to shill for the gambling industry in British Columbia,” says VNV co-founder Sandy Garossino.

Charities and the communities they serve are entitled to a clear, fair and independent grant process, and not to be pitted against one another in a race for gambling revenues. Eligibility criteria and adjudication should meet broad standards of procedural fairness, and be free of interference by the political interests of any party.

Without public notice, debate or scrutiny, the provincial government instituted rapid gambling expansion as a silent pillar of tax policy, to the point that gambling revenues now exceed corporate taxes in BC. Unaware of the larger picture or the extent of the impact on communities, the charitable sector lent critical support to this strategy. It should have understood the bargain that it made and how hungry government would become for the non-profit share of revenues it controlled. Due to severe cuts to gaming grants, hundreds of charities find themselves on the brink of collapse. Even Vancouver’s venerable Children’s Festival found itself on life support in Spring 2011. British Columbians and their families see insufficient benefit from soaring gambling revenues.

“The system is broken. We must devise a better one for the public and for the charitable and non-profit sector that serves them,” says Lindsay Brown, VNV co-founder.

We look to Premier Clark to demonstrate the government’s good faith by granting emergency interim funding to sustain any organizations close to failure while we await the outcome of the review.

Media contact:
Sandy Garossino
778-231-5230

sgarossino@gmail.com

To see discussion of this issue, follow our Twitter (@vancityVegas) and also the Twitter hashtag #BCgaming.

Below: an example of the charities who benefit (or in many cases have benefited in the past but no longer do) from local gambling establishments.


 

 

Summary of issues surrounding the Edgwater Casino expansion plan

UPDATE: here is a fuller summary of issues with the Edgewater Casino expansion (PDF with hyperlinks).

This post is for those interested in some of the more technical details surrounding the Edgewater Casino application. To read the full application, visit the City of Vancouver site.

Procedural Issues

1. No Adequate Notice to Public

The application before Council is described as a re-zoning application by PavCo (crown corporation BC Pavilion Co). Included, but not detailed in the public notice, is a second application by Edgewater Casino for a by-law amendment licensing approximately 1000 new slot machines and 75 new slot machines; Notices mailed only to residents within a 2 block radius of the project, etc.

No notice to public of scale of expansion: gaming floor equivalent to two NFL football fields (114k sq. ft)

2. Due Diligence gaps

a) Calculation of expected revenues only, no calculation of expected costs–policing, counseling, housing homeless;
b) No report on mental health and addiction issues/social ills;
c) Policing report is one paragraph long. Only one sentence respecting organized crime, money laundering. No estimate of impact or cost to manage. No weapons policy or enforcement provisions in a casino/hotel/sports complex. No reference to the RCMP report cautioning about extreme vulnerability to organized crime and infiltration.
d) Background check of Paragon Gaming–corporate profile misrepresented in public materials. No assessment of suitability to operate a major project of this scale.

3. Key Information Relevant to Public Review

PavCo represents that there is no risk to the taxpayer in the corporate structure of the project; however:

The BC Lottery Corporation Facility Development Commissions (FDC) and Accelerated Facility Development Commissions (AFDC) cover roughly 42% of casino capital development expenses.

Do FDC’s and AFDC’s extend to ancillary buildings such as hotels, restaurants, theatres, and parkades?

Projections indicate the cost of the complex will be approximately $450 million. 42% is almost $190 million in public money. The BC Lottery Corporation has budgeted for capital expenditures of $346 million over the next 3 fiscal years. What percentage of that will go into the Edgewater development?

a) Public disclosure of all financial commitments
b) Public disclosure of the deal structure: Is there an incentive to overbuild? How are expenses calculated and netted out?

4. Irregularities in the BC Lottery Corporation and PavCo Bid Process

a) BC Lottery Corporation board chair Richard Turner purchases shares in Paragon Gaming (operating in Alberta) in 2003. Share purchase violates board code of conduct, and is not disclosed until 2005.
b) In late 2005 Turner resigns from BCLC board. Summer 2006 Paragon Gaming purchases Edgewater Casino out of bankruptcy and installs Turner on the board of Paragon.
c) Fall 2008, City plan for Northeast False Creek is amended to permit major casino at request of PavCo.
d) March 2009, PavCo puts out an RFEI (Expressions of Interest), with an 18 day window. Only two respondents, including Paragon, reply. While the Paragon bid is before PavCo during the RFP phase one month later, Turner issues a $50k cheque to the BC Liberal Party. Paragon Gaming is the successful bidder
e) Autumn 2009 Turner places a phone call to Minister Kevin Krueger advising that Paragon will withdraw if the roof is not built per plans.

What were all the communications between Richard Turner and PavCo in the period 2005-2009?

5. Criminal Concerns

2006: Richmond loan shark Lily Li is murdered. Evidence emerges at trial that loan sharks operate on shifts 24/7 inside River Rock Casino;
2009, January: RCMP special unit IIGET (Integrated Illegal Gaming Enforcement Team) issues a report to government warning of “extreme vulnerability” of casino industry to organized crime–money laundering, infiltration, loan sharking. No resources to investigate suspected money laundering. Concerns expressed about perception of conflict of interest and corruption. Most information redacted from report.
2009. February: IIGET disbanded
2010/ Summer: BC Lottery Corporation fined by FINTRAC for repeated failure to monitor suspicious transactions. First fine of its kind in Canada.
2010/August-October: CBC investigates over $8 million in suspicious transactions at 2 casinos in Metro Vancouver, including $460k in 20’s in plastic bags, and a suitcase with $1.2 million in casino chips.
Insp. Baxter, head of Proceeds of Crime Unit, calls transactions suspicious. Solicitor General Rich Coleman, also responsible for gaming, disagrees that transactions are suspicious and publicly disagrees with Baxter.

Conclusion: Weak BCLC enforcement of rules of conduct and poor compliance and oversight of casinos, leaving the industry vulnerable to uncontrolled criminal conduct and potentially to infiltration.

6. Paragon Gaming: Parent Co of Edgewater

All other projects and operations are on First Nations reserves in the US and Canada. All are small market. No international tourism expertise. No expertise with the Asian market.

BC’s model: Closed door bidding process with a single (geographically pre-selected) casino applicant, and no public input.

By contrast, Missouri recently awarded a casino license in an open, public, competitive bidding process, with multiple applicants and more than one physical location. The successful bidder demonstrated both strong community support via a referendum, and strong local roots in the community. Paragon Gaming was one of the bidders in this process, but was unable to garner a single vote of support from the Missouri Gaming Commission.

US small market casino operations have notoriety, particularly vis-à-vis political corruption. In more than one instance, individuals with some connection to Paragon Gaming or their advisors have been implicated, charged, or convicted on political corruption charges. A detailed background check on Paragon Gaming is recommended, including investigation of the relationship of Paragon principles with Milton McGregor and Robert Sigler (shareholder in Paragon Gaming Missouri) of Alabama.

Is the public, not the casino, in fact paying for BC Place Stadium roof?


Press release today from the NDP. Some good questions were asked. Will Rich Coleman and the BC Liberals answer? Why is so much casino revenue being funneled right back to the private casino owners?

Spencer Chandra Herbert
Official Opposition Critic for Tourism, Culture, and the Arts
MLA, Vancouver West End
www.spencerchandraherbert.ca

B.C. NDP CAUCUS
MEDIA RELEASE
Jan. 9, 2011

B.C. LIBERALS MUST ANSWER ON SUBSIDIES FOR PROPOSED EDGEWATER CASINO EXPANSION – NDP

VANCOUVER — As residents of Vancouver prepare to formally weigh in on the proposed Edgewater casino expansion, the B.C. Liberal government must let the public know whether the casino is going to end up being subsidized by taxpayers even while gaming grants for community groups are being cut, the B.C. New Democrats say.

“The people of B.C. have every right to question whether the top priority for gaming revenue should be subsidizing private casino companies’ car parks and show lounges even while the B.C. Liberals are slashing funds for small charities that help seniors in need, youth engage through the arts, people learn to read, and adults with disabilities connect with their communities,” said New Democrat tourism and arts critic Spencer Chandra Herbert.

“British Columbians were told the proposed Edgewater casino expansion would pay for the $563 million B.C. Place roof project, but we now have to wonder if the public will actually be paying for the casino.The B.C. Liberals must tell the people of B.C. how much government revenue the proposed expanded Edgewater casino is eligible for, and justify why public money should be used to subsidize well-established private companies that are generating hundreds of millions in profits every year.”

Casinos can receive a subsidy amounting to three per cent of their net win in the form of a Facility Development Commission, which can be used for capital projects. An additional one-time subsidy, an Accelerated Facility Development Commission, can amount to an additional two per cent of a casino’s net win. Together, these subsidies have offset around 40 per cent of the capital costs of casino development in B.C. in recent years.

The proposed new Edgewater casino would have double the number of slot machines and table games compared to the current casino, and, if approved by Vancouver council, would be the largest casino in B.C. The expanded Edgewater would pay an expected $6 million a year in lease payments to the province.

While it is not known how much subsidies in FDCs and AFDCs the proposed casino would receive, Chandra Herbert pointed out that since the province estimates the new Edgewater will bring in $130 million per year in revenue, it can be estimated that the expanded casino could receive between $3.5 million and $6.5 million per year in subsidies.

“Casinos were welcomed into B.C. with the understanding that they would generate revenues for non-profits and charities. But under the B.C. Liberals, that social contract has been broken. Gaming grants are actually lower now than they were in the 1990s, even though revenues from gaming have increased dramatically.” said Chandra Herbert.

According to figures supplied to the Vancouver Sun by the B.C. Lottery Commission, casino operators received $40 million in FDCs in 2009-10, up from $16.5 million in 2001-02.

The B.C. New Democrats are advocating for open and transparent governance, including the separation of gaming policy and gaming enforcement in separate ministries, and a full restoration of gaming grants to charities.

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Contact: Sara Goldvine 250-208-3560

What’s the Real Story Behind Edgewater?

If you scratch the surface of the Edgewater mega-casino development, you’ll hit social housing in about 10 seconds.

Vision Vancouver is expected to deliver on new social housing units for Vancouver, and tick tick tick goes the clock on their mandate. To fulfill their promise on social housing, the city needs the province to step up with the money it committed last May: $225M IN HOUSING INVESTMENTS TO CREATE 1,006 NEW HOMES

But something seems to be happening with that money. Or rather, nothing seems to be happening.

Rumours are that the province’s social housing money is taking the slow boat across Georgia Strait from Victoria, and suddenly everything’s gone quiet.

Too quiet.

At the same time, PavCo (aka the BC Liberal government) is applying to City Council to re-zone BC Place Stadium to accommodate construction of the massive Las Vegas-run mega-casino.

Coincidence?

Vancouverites should be asking–what’s the real relationship between the province’s commitment of money for social housing and the expansion of gambling in Vancouver?

Is Vancouver City Council expected to approve a huge Las Vegas-style mega-casino for downtown if it wants to get those social housing units built for Vancouver’s homeless?