Former cop who blew whistle wants standing in B.C. money laundering inquiry

VANCOUVER - An inquiry into money laundering in British Columbia would not exist without the “courage” of an ex-RCMP officer who spoke out about organized crime in casinos, his lawyer says.

Paul Jaffe told a hearing Friday that the public perception of the inquiry will be damaged if it doesn't grant standing to Fred Pinnock, the former head of the illegal gaming enforcement team in B.C.

“Mr. Pinnock ... was in a fairly unique position to see what he perceived as the interference with his stated mandate, far beyond simple indifference or neglect, as to the systemic use of gaming venues to facilitate money laundering,” Jaffe told commissioner Austin Cullen.

Cullen called the hearing to consider applications for standing from Pinnock as well as B.C. Lottery Corp. executives James Lightbody and Brad Desmarais. He reserved his decision on Pinnock and Lightbody while granting Desmarais a one-month adjournment to allow his lawyer to obtain further documents.

Jaffe said that Pinnock served the RCMP for 29 years and became the unit commander of the gaming team in 2005. His concerns about money laundering were so meaningful that he took early retirement in 2008 and became a “whistleblower,” the lawyer told the hearing.

He also credited Ross Alderson, a former investigator employed by the lottery corporation, with bringing forward concerns that helped spur the inquiry. Alderson had also requested standing but he has since withdrawn his application in favour of being a witness.

However, Jaffe said it's essential to the public's view of the inquiry as operating on a “level playing field” that Pinnock be treated as more than a witness, with the ability to cross-examine and call witnesses of his own.

“If you exclude Mr. Pinnock from having standing here, virtually all the participants are parties that have interests to protect,” he told Cullen.

The inquiry has already approved 17 applications for standing, including from the provincial lottery corporation, B.C. Ministry of Finance, the federal government, Canadian Gaming Association and the Law Society of B.C. Cullen said Friday that the B.C. Real Estate Association has now also been approved.

The hearing did not delve into specific evidence but Cullen summarized Pinnock's allegations in a ruling last month ordering the hearing.

The ruling states that Pinnock alleges that during the time he led the gaming team the public was being “misled” about the degree of criminal activity in casinos in B.C.

Between 2006 and 2019, Pinnock made a number of public statements that reflected his concerns that casinos were “havens for organized criminal activity,” the ruling says.

“He further emphasized that this criminal activity could not have achieved the levels it had without government and law enforcement agencies engaging in wilful blindness and worse,” it says.

“Mr. Pinnock is concerned that the acts or omissions of individuals he and his colleagues observed allowed criminal organizations to flourish in B.C. and beyond, contributing to the opioid crisis and untold numbers of overdose deaths in recent years.”

The inquiry also heard Friday from lawyers for Lightbody and Desmarais who argued that they should have standing as senior executives within the lottery corporation.

Lawyer David Butcher said Desmarais, the vice-president of casino and community gaming, has been the subject of some “critical comment” by Peter German, an ex-deputy commissioner of the RCMP who wrote a report about money laundering in B.C.

Butcher said his client was concerned by the part of the commissioner's mandate that directs him to make findings about acts or omissions of responsible regulatory agencies and individuals, and whether those individuals contributed to money laundering or amount to corruption.

“Those are very serious words ... and make every person who sits or sat in the decision-making chairs of the responsible regulatory agencies concerned about the evidence that may be read and concerned about whether or not they are at jeopardy,” Butcher said.

Lightbody, the president and CEO of the lottery corporation, has significant privacy, reputational and professional interests that could be affected by the inquiry, said his lawyer, Robin McFee.

McFee said German's report is highly critical of the corporation's alleged “failure” to recognize the evolution of money laundering in gaming and its response to the issue when identified.

“All of German's observations and criticisms occurred, it's fair to say, on Mr. Lightbody's watch,” said McFee. “Mr. Lightbody takes significant issue, significant issue, with a number of Mr. German's observations and conclusions.”

For example, German's report quotes an investigator with the lottery corporation who alleges no transaction was refused before 2015 and that a senior official within the organization told him in 2012 that his job was “not to investigate money laundering.”

The investigator also alleges in the report that nobody was investigating money laundering, despite copies of suspicious transaction reports being provided to the province's gaming policy and enforcement branch and the RCMP.

“Mr. Lightbody, the buck stopped with him. He takes great issue with that,” said McFee. “That's incorrect and that's only one example.”

The B.C. government called the inquiry in May following three independent reviews, including two by German, that concluded crime groups were funnelling billions of dollars through real estate, luxury cars and other parts of the economy.

The commission will hold a series of public meetings starting in Vancouver on Wednesday. A final report is due by May 2021.

This report by The Canadian Press was first published Oct. 18, 2019.