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Flanked by B.C. Attorney-General David Eby, left, and Finance Minister Carole James, Premier John Horgan departs a news conference called to announce a wide-ranging investigation into money laundering in the province on May 15, 2019, in Victoria.CHAD HIPOLITO/The Canadian Press

British Columbia is calling a public inquiry into how money laundering has corroded the provincial economy, inflated B.C.'s housing market and contributed to the ongoing deadly opioid crisis.

B.C. Supreme Court Justice Austin Cullen will lead the examination into how dirty money has impacted gambling, real estate, banking, luxury goods and the use of shell companies, as well as how professionals such as accountants and lawyers may have assisted this illegal activity.

Premier John Horgan announced Wednesday morning that the inquiry will also review how well the regulators of each of these industries have tackled money laundering, issue recommendations on ways to close any loopholes and forward any evidence of potential criminal wrongdoing it finds to the appropriate authorities. Justice Cullen, who will have the power to compel witnesses to testify and order the disclosure of evidence, will also weigh in on the ways in which police are hamstrung in investigating this sophisticated crime.

Mr. Horgan said this move was deemed inevitable after the collapse of the largest criminal money-laundering prosecution in the province’s history last November and two recent reports that found problems in the real estate sector were “far worse” than his government had initially thought.

“In a very short period of time, they collected information that I know shocked everyone in this room and all British Columbians,” Mr. Horgan told reporters at a news conference in Victoria. “The commissioner is not constrained in terms of his timelines; he can go as far back as he needs to to get answers for British Columbians.”

Attorney-General David Eby said the inquiry will also examine the effectiveness − or lack thereof − of key federal agencies, such as the RCMP and the money-laundering watchdog Financial Transactions and Reports Analysis Centre of Canada (FinTRAC).

Bill Blair, the federal Minister for Border Security and Organized Crime Reduction, said Ottawa will provide support to the provincial inquiry, telling reporters on Parliament Hill on Wednesday that his government has already increased funding to FinTRAC and the RCMP in its last budget and created a new expert task force to identify threats and loopholes and improve how various agencies share intelligence.

Mr. Eby said: “[FinTRAC] did not protect us, so the commitment of co-operation from the federal government is very important.”

A report released last week from professor Maureen Maloney estimated that up to $47-billion worth of dirty money – the proceeds of criminal activity – was washed through the Canadian economy last year. Of that, an estimated $7-billion could have flowed through B.C.'s economy, distorting the housing market and feeding the opioid crisis.

Over the past year, the NDP government left the door open to calling such an inquiry as the public, municipal politicians and the province’s largest public-sector union pushed for the process to begin.

The inquiry will look into criminal activity but is bound to have a large political component. Justice Cullen’s final report is due in May, 2021, just months ahead of the next scheduled provincial election. That could be advantageous to the NDP government, if the inquiry finds that the “acts or omissions” of the former Liberal government helped money launderers thrive.

Liberal MLA Rich Coleman, who was a senior minister in the Liberal government that oversaw a massive expansion in casinos, said Wednesday that he welcomes the inquiry “to finally get past some of this innuendo and accusation, and let’s get down to some facts.” Mr. Coleman said he would testify if asked, and to answer questions “about anything I’m allowed to disclose publicly.”

The Premier said he could not predict the cost of the inquiry, “but we know the value for money of making sure the public has a good understanding of how we got here, and more importantly, how can we ensure we stifle this activity and eradicate it if at all possible.”

Port Coquitlam Mayor Brad West, who wrote Mr. Eby a year ago calling for an inquiry, said he wants Justice Cullen to go beyond partisan politics to identify the systemic weaknesses in this “world-class region.” However, the suburban Vancouver politician also wants to see criminal prosecutions stemming from the exercise, much like the Charbonneau commission into Quebec corruption, which cost $45-million and has led to more than 100 convictions.

"[Criminal charges are] the only way you’re going to send a message to the rest of the world that this sort of garbage isn’t going to happen in our province.”

With a report from Bill Curry in Ottawa

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