Last month, B.C. Attorney-General David Eby flew to Ottawa to brief the federal government about his probe into money laundering in the Lower Mainland.
He presented his findings – a compilation of information from civil servants, police and investigative reports from media, including The Globe and Mail’s Kathy Tomlinson – to the House of Commons standing finance committee. His report stunned even the most seasoned political watchers.
Mr. Eby described his shock when, early in his tenure, gambling regulator staff showed him videos and photographs of people wheeling large suitcases stuffed with money into casinos and plopping down stacks of cash at casino cages. “On a purely practical matter, $800,000 in twenties is very heavy,” Mr. Eby said, driving his point home.
The link between casinos and money laundering was not a huge surprise. But the scale of the transactions, which Mr. Eby pegs in the millions, far exceeded most people’s imaginations.
However, it was Mr. Eby’s assertion that laundered money is connected to Vancouver’s real-estate market that really cranked up the crowds. A growing chorus of Vancouverites from all sides of the political spectrum are calling for a public inquiry into the role money laundering played in foreign-buyer real-estate deals, which have helped push housing prices sky high.
The “Vancouver model” of money laundering works like this. Wealthy Chinese investors who own property in B.C. and are desperate to circumvent China’s currency controls and move more money out of China fly to B.C., ostensibly to gamble. They arrange loans with local gangsters who also control bank accounts in China. Using B.C. property as collateral, a gangster supplies stacks of tainted bills to the investor, who repays the loan by transferring money to the gangster’s Chinese account. The dirty cash is used to buy cars and casino chips and to pay down Canadian mortgages, many of which are held by unregulated private lenders. Gambling losses plump provincial coffers. Winnings come out clean in the form of a cheque or chips.
How many investors have bent the rules? We don’t know. Did these investors earn their money through criminal means in China? Not necessarily, but there is almost no way to find out from here. All we really know is that rules are being broken and the moral laxity of some are tainting the reputations of many honest investors from China and elsewhere who have used legal means to invest in B.C. property.
The conflation of money laundering and Chinese investors is feeding a serious and growing anti-Chinese sentiment. That is one of the compelling reasons for an inquiry, says Justin Fung, a software engineer who helped found a non-partisan community group call HALT, Housing Action for Local Taxpayers. “I’m concerned that I get lumped into that bucket,” said Mr. Fung who was born in B.C. to parents who immigrated from Hong Kong.
He believes that the sooner the truth comes out, the easier it will be to dispel broad-brush aspersions being cast against all Chinese investors. “I think it’s critically important to understand how bad this problem is.”
That view is shared by two former provincial attorney-generals, Wally Oppal (Liberal) and Ujjal Dosanjh (NDP). Both applaud Mr. Eby’s efforts to get at the truth but say calls for a public inquiry are premature.
On a purely practical matter, $800,000 in twenties is very heavy.— B.C. Attorney General David Eby
Public inquiries work best when they are narrowly focused. Both Mr. Oppal and Mr. Dosanjh agree the person best positioned to limit the scope is Peter German, a respected former RCMP officer hired by Mr. Eby to investigate money laundering and its connections to real estate.
And although Mr. Dosanjh worries about fanning the flames of racism that emerged as Vancouver’s housing crisis worsened, he says that’s no reason to shun the truth. “It would be wonderful … to settle the issue once and for all.”
Mr. German’s report is already in Mr. Eby’s hands, and the government’s response is being drafted. No doubt questions will linger, including who knew what and when – and what efforts were made to stop it.
If — and it’s still a big if — money laundering played a pivotal role in pushing Vancouver property prices into the stratosphere, a public inquiry should be called. It’s Vancouver’s most pressing social problem, and citizens deserve to know how it happened.