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British Columbia Western Canada: Second report on B.C. money laundering focuses on luxury car market

Good morning! Wendy Cox here.

Peter German’s latest instalment documenting the unhindered and cash-drenched underworld of money laundering in British Columbia paints some vivid pictures.

The former deputy commissioner of the RCMP was hired by the NDP government to examine the degree to which British Columbia is used as a hospitable jurisdiction for criminals to wash their ill-gotten gains. Mr. German’s first report detailed how the province’s casinos were used to launder millions of dollars.

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This latest instalment tells a tale of recruits used to purchase luxury vehicles on behalf of someone else, have them shipped overseas and then have the buyers collect the provincial tax rebate for doing so. Mr. German heard reports of luxury-car dealerships accepting payments in bags of cash for vehicles worth more than $200,000.

Mr. German found that before 2014, fewer than 100 vehicles a year were eligible for a tax refund for the purchase of a vehicle that was intended to be exported. By 2016, the provincial sales tax had been rebated for 3,674 vehicles, requiring the Ministry of Finance to hire more staff to keep up with the paperwork.

The report concluded many of the so-called “straw buyers” were foreign students hired to buy the cars so they could then be exported to China, where they could be sold at a profit. The straw buyers masked the identity of the real purchaser.

B.C. Ministry of Finance staff handling these PST refunds linked 1,000 of these straw buyers to a single exporter and more than 4,000 such nominees in total.

“Quite frankly, I got the impression the staff weren’t too pleased that they had to help these straw buyers work through their refund situations,” Mr. German told reporters Tuesday.

During a news conference Tuesday, Attorney General David Eby noted the spike in exports of luxury cars corresponds with the “exponential” growth of suspicious cash transactions at casinos and also with the explosion of the real estate market.

Mr. German has written a separate report into money laundering in B.C.'s real estate market. That report will be released in the coming days.

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This is the weekly Western Canada newsletter written by B.C. Editor Wendy Cox and Alberta Bureau Chief James Keller. If you’re reading this on the web, or it was forwarded to you from someone else, you can sign up for it and all Globe newsletters here. This is a new project and we’ll be experimenting as we go, so let us know what you think.

Around the West

NANAIMO BY-ELECTION: The federal Greens have doubled their presence in Parliament after Paul Manly won a by-election in Nanaimo. The vote comes six months before the federal election and pundits are falling over themselves to declare what the results foreshadow about what might happen in October. The riding was previously held by the New Democrats and the race was seen as the NDP’s to lose, but Mr. Manly captured 37 per cent of the vote.

ALBERTA’S BUDGET: Alberta Premier Jason Kenney has struck a panel to figure out how to freeze spending to balance the province’s budget. The United Conservative Party’s election platform promised to balance the budget by 2022-23 through an aggressive program of fiscal restraint: four years without any increases to government spending and no new taxes. But Mr. Kenney also promised not to slash public services such as health care, even though economists say keeping spending frozen in the face of inflation and population growth would amount to a 14-per-cent cut. The chair of the panel, former Saskatchewan finance minister Janice MacKinnon, says getting the province’s finances sorted now will prevent “draconian” cuts in the future.

GAS PRICES: B.C. Premier John Horgan wants to force oil companies to testify about high gasoline prices in the province. Mr. Horgan’s NDP government has ordered the B.C. Utilities Commission to investigate a record-breaking spike in gas prices that have some drivers paying more than $1.70 a litre. Mr. Horgan stopped short of asking the BCUC to regulate gas prices, but that could be the next step if the regulator recommends it.

SURREY POLICING: The mayor of Surrey, B.C., says he’ll invite public input on his plan to create a municipal police force to replace the RCMP. But Doug McCallum, who rode a wave of anger about crime in the city to win last fall’s municipal election, is still refusing to release details of his plans before submitting them to the provincial government. The RCMP has policed Surrey since the 1950s.

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VANCOUVER FILM: How does a film crew transform Vancouver into a dystopian world in which the Nazis won the Second World War? As it turns out, very carefully. Ian Bailey looks at how the crew behind Amazon’s Man in the High Castle handles filming in public locations, always careful to keep images such as swastikas out of public view or digitally added later on.

EDMONTON OILERS: The Edmonton Oilers have hired Ken Holland as their new general manager as the team looks to recover from a dismal season. Mr. Holland has been GM of the Detroit Red Wings for the past 22 years.

Opinion

Gary Mason on Alberta alienation and national unity: “Mr. Kenney talks about the rise of alienation in his province, one he exploited so successfully on the campaign trail. Rather than attempt to temper hostilities, however, the new Premier has breathed life into the embers of Western separatism at every turn. And he hasn’t been alone.”

John Ibbitson on the Nanaimo by-election: “And the result offers further proof that Canada continues to resist the tide of intolerance sweeping the rest of the democratic world.”

Jennifer Keesmaat on Canada’s housing markets: “Over the last 20 years, Toronto and Vancouver – two of Canada’s three most populous cities – have built 400,000 homes between them. That’s an enviable number for any city in North America seeking to increase supply, a reliable tactic for relieving a housing crisis. But for its efforts, Toronto and Vancouver continue to top international rankings of unaffordable cities."

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Paul Abela on carbon taxes: “The carbon tax only feeds into the decades-long perception that environmentalism is a class-blind movement and that belief has only made it easier for the populist right to capture portions of the working class.”

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