The BC Government today released two new reports outlining the scale of money laundering that has been rampant in British Columbia over the last few years.

The first report was coauthored by Professor Maureen Maloney (SFU School of Public Policy), Professor Tsur Somerville (UBC Sauder School of Business), and Professor Brigitte Unger (School of Economics, Utrecht University). It painted an extraordinarily grim picture of widespread money laundering through British Columbia’s real estate sector totalling upwards of $7.3 billion in 2018 alone. In making 29 recommendations this expert panel noted that “a strong government response is urgently required.”

The second report comprised Part 2 of Peter German’s comprehensive three-part analysis into money laundering in BC. Part 2, entitled Dirty Money — Part 2.  Turning the Tide – An Independent Review of Money Laundering in B.C. Real Estate, Luxury Vehicle Sales & Horse Racing, expanded upon his initial analysis into money laundering in BC casinos released on March 31, 2018. The release of Part 2 followed on the heels of government releasing Part 3 of German’s analysis (on Tuesday) into money laundering in luxury cars.

Money laundering through the purchase and sale of luxury automobiles formed the basis of my questions to the Attorney General today during Question Period today. Below I reproduce the video and text of our exchange. I also reproduce copies of the media statement we issued in response to government’s release of today’s reports and my statement delivered at today’s press conference.

Video of Exchange

Question

A. Weaver: Earlier this week the Attorney General confirmed that money laundering goes beyond our casinos. Our biggest city is not just known for the dubious criminal distinction as the Vancouver model for money laundering, it’s also known as the luxury car capital of North America, fuelled, in part, by suspected criminal activity. Indeed, provincial employees identified numerous red flags connecting money laundering to the luxury vehicle export market, and despite these flags, the province issued over $85 million in PST refunds since 2013 to many suspicious individuals.

My question is to the Attorney General. He has said he has taken action on this finding, but why was this suspicious activity allowed to persist for so long? And why did it take this special report to highlight what government officials have known for many years?

Answer

Hon. D. Eby: I thank the member for the question. This is obviously a very serious issue, and I’m very grateful to Dr. German and his team. Former chief LePard was a key part of this report that uncovered this troubling information: among other things, car dealers saying they’re in the middle of money laundering; uncovering the use of straw buyers to purchase luxury cars; thousands of straw buyers acting on behalf of exporters who are the true purchasers, claiming PST rebates; people with extensive criminal backgrounds running resale operations of luxury cars, people who wouldn’t qualify for a liquor licence or other government licences but allowed to operate and run these businesses — obviously, major issues.

The member asked why it has taken so long to uncover these things. One of the major reasons that has been a theme throughout Dr. German’s reports is a lack of oversight, a lack of enforcement. We are moving quickly to address those issues. The Finance Minister is, obviously, reviewing this program, making sure that criminals don’t get PST rebates, for a starter, which seems like a pretty good start. The second piece is we’re working with RCMP, with police and with the Solicitor General’s office to ensure that the provincial government can do everything we can in terms of enforcement. We’re working with regulators in terms of their mandates.

There is a lot going on in this file to respond, and I’m very grateful that Dr. German’s bringing this stuff to our attention so that we can take action on it. And I agree with the member about: why did it take so long?

Supplementary Question

Thank you to the Attorney General for the answer. One quote in the German report on luxury cars, the section released earlier this week, stood out for me. A car dealer said: “I’m right in the thick of money laundering here.” He also said: “It’s unequivocally money laundering.”

It’s not surprising he came to that conclusion when it appears to be a regular occurrence for cars to be bought with bags of cash, sometimes in the hundreds of thousands of dollars, with zero reporting requirements in the industry. It’s absolutely crazy, what’s happening in B.C., not just in casinos but in the luxury car sector. We know the next chapter of the German report will tell us the extent of money laundering in our real estate sector.

To the Attorney General: the more we learn about this, the more we know how important it is now to have a public inquiry. The B.C. Green caucus has been calling for one for months now. Thousands upon thousands of British Columbians have been calling for a public inquiry, and just last week I introduced a petition from a federal EDA of the NDP calling on this government to bring forward a public inquiry.

My question to the Attorney General is: will this government launch a public inquiry, and if so, when?

Answer

Thank you very much to the member for the question. The member knows — and I’ve outlined for him and for the Legislature — our government’s approach on this, which has been to identify what’s happening right now and move as quickly as we can to stop it. We’ve had some success in the casino sector, stopping the bulk cash transactions. We will have success in the luxury car sector, addressing the issues that have been raised here.

The issue around public inquiry is really more aimed at: who knew what when, and are there any issues related to corruption? People want to know the answers to those questions. I understand why people want to know that. I mean, this went on for a long time. It’s the decision that is in front of cabinet, and cabinet will have a decision, and government will have a decision for British Columbians very shortly.

I thank the member for that.

Media Statement

Most recent money laundering reports support BC Green call for public inquiry
For immediate release
May 9, 2019

VICTORIA, B.C. – The two reports into money laundering in B.C. directly support the value of a public inquiry, reinforcing the B.C. Green caucus’ call for government to act.

“We saw in German’s report a direct rationale for a public inquiry. Namely, that it would improve public awareness, play a crucial role in fault finding, and would help to develop full recommendations,” said B.C. Green Party leader Andrew Weaver. “The B.C. Green caucus has been calling for a public inquiry for months, as have thousands of British Columbians. It is time for this government to start a public inquiry so that the public can get the answers it deserves and B.C. can move forward.

“Today, we discovered a much fuller picture of money laundering going on in our province. It is no surprise, but we can now be confident that illicit money has been influencing Vancouver’s housing market.

“One of the key findings of both reports was the issue of beneficial ownership. This is something I have been raising in the legislature under both the BC Liberal and BC NDP governments as a huge loophole in our system that should have been fixed long ago. Recent steps by government to address beneficial ownership through establishing a registry are encouraging, but we need to go further and end the use of beneficial ownership as a tax avoidance tool.

“We also saw that there are many sectors of our economy that have lax financial regulation, leaving them vulnerable to money laundering: from bags of cash being used to buy luxury vehicles, pianos and even to pay post-secondary fees. To deal with all of this the report recommended a ‘system-wide reset’ in criminal prosecution.

“With each new finding and each new report, we learn more about how our province has been exploited by criminals and how the systems and people charged with protecting us have failed over and over again. It is time to remove this investigation from any possible political influence, to get to the bottom of what happened, and to ensure this assault never happens again. British Columbians deserve to have their public interests protected and their trust in government restored.”

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Media contact
Macon McGinley, Press Secretary
B.C. Green Third Party Caucus
+1 250-882-6187 |macon.mcginley@leg.bc.ca

Speaking notes

Today we discovered a much fuller picture of money laundering in BC –  it is clear that illicit money has been influencing our real estate market as British Columbians struggle with the impacts of the housing crisis.

One of the key findings of this report was the issue of beneficial ownership. This is something I have been raising in the legislature under both the BC Liberal and BC NDP governments as a huge loophole in our system that should have been fixed long ago.

Aside from real estate, the German report showed that there are many sectors of our economy that have lax financial regulation, leaving them vulnerable to money laundering: from bags of cash being used to buy luxury vehicles, pianos and even used to pay post-secondary fees. To deal with all of this Germans report recommended a ‘ system-wide reset’ in criminal prosecution.

With each new finding and each new report, we learn more about how our province has been exploited by criminals and how the systems and people charged with protecting us have failed over and over again. It is time to remove this investigation from any possible political influence, to get to the bottom of what happened, and to ensure that this assault never happens again. British Columbians deserve to have their public interests protected and their trust in government restored.

We have a clear rationale for a public inquiry. German himself referenced a positive change that came out of the Charbonneau Commission in Quebec. Clearly public inquiries can be useful and result in real change.

My colleagues and I have been calling for a public inquiry for months, as have thousands of British Columbians. The housing and opioid crises have impacted every single community and it is unacceptable that criminals have been profiting from these very personal, heartbreaking challenges. We need to work together. It’s time for a meaningful, independent explanation – we need a public inquiry.

Thank you.

Today in the legislature I rose during budget estimate debates for the Ministry of Finance to ask about the growing liability that British Columbia is incurring through the deep well royalty credit program. Last spring I extensively canvassed the Minister of Energy, Mines and Petroleum Resources on the same topic. It was revealed that that as of December 31, 2017 there are $3.1 billion in unclaimed credits. It turns out that another $383 million was added last year.

Below I reproduce the video and text of our exchange. The BC Green Caucus remains profoundly troubled by the generational sellout embodied in the BC NDP corporate welfare aimed at trying to attract LNG to BC.

Video of Exchange

Text of Exchange

A. Weaver: This is for the benefit of the children in the gallery from, I believe, Surrey Christian School. What we’re doing here in the Legislature is we’re debating estimates for the Ministry of Finance. It’s a time for opposition MLAs, the Liberals or the Greens here, to pose questions to the minister about various budgetary issues that are related to her file. I’ll be asking about some finance questions with respect to natural gas royalties.

The reason why I’m posing these to the minister is that I did ask last time: the deep-well royalty credit program is actually administered by the Ministry of Finance. The qualified wells receive these credits automatically, and they don’t need to apply separately.

The credit was first created in 2003, expanded in 2014, and in last year’s public accounts, the unclaimed balance of deep-well credits totalled $2.59 billion. A further $3.5 billion has already been cashed in to reduce royalties that would otherwise have been payable. This program has reduced gas producers’ existing and future royalty liability to the Crown by nearly $6 billion.

My questions in this area are this: how many deep-well credits were issued over the past year and to whom?

Hon. C. James: The member asked how many deep-well credits. We don’t have the information around the breakdown of which are new credits and which are continuing credits with us, but I’m happy to get that information for the member of which are new. We don’t have that breakdown with us, and we’ll get that information.

On page 120, it identifies the number for new, and that would be $383 million. Then the identifier — the member asked how many and who got them — is personal tax information so we can’t provide that. But we’re happy to get the information and get it back to the member around the number of new credits for this year.

A. Weaver: Further on…. I suspect I’ll get a similar answer, and I welcome the information at a later date. How many deep-well credits have been issued since 2014 and to whom?

Hon. C. James: We’ll add that to the information for the member. We don’t have that information with us.

A. Weaver: My question, then, is: why is there not a standard public disclosure of these credits and royalties that are received? There is, for example, for stumpage fees in the province, under the harvest billing system. Why are we not making public the royalty credits that are being claimed here?

Hon. C. James: This credit, the deep-well credit, fits under FOI, and under FOI, we can’t release taxpayer information. I can’t give an explanation around why it would be different, as the member talks about, in stumpage. But the requirement is under FOI to protect individual taxpayer information, which would include, of course, the names and the identifiers.

A. Weaver: The inconsistency, as was noted, is with respect to the harvest billing system, so perhaps we could explore that at some other date.

What’s the total value of deep-well credits that are still outstanding and that could be claimed against?

Hon. C. James: As the member pointed out, $2.6 billion in ’17-18. The ’18-19 numbers get reported out in Public Accounts. That tracking is just being done now, and they get reported out in Public Accounts.

A. Weaver: My final question is with respect to FOI, freedom-of-information, requests that went to the Ministry of Finance. The file number, for reference, is FIN-2019-90584. This was a freedom-of-information request put in by an independent person outside of the Legislature. What was being requested there was a list showing the total royalty credits granted to each company that applied for such credits in the most recent fiscal year.

Now, the freedom-of-information requests from the Ministry of Energy and Mines and from the Ministry of Finance provided completely different answers. The Ministry of Energy and Mines had no issue and provided, actually, the detailed credits, by whom and to whom, whereas the Ministry of Finance withheld all information.

So my question to the minister is: why is there a discrepancy between information we’re getting from the Ministry of Energy and Mines versus the Ministry of Finance?

Hon. C. James: The FOI request that the member is referring to was asking about the infrastructure royalty credits. The infrastructure royalty credits actually have a provision where when someone applies for the credit, they give permission for their information to be shared. That’s why Energy and Mines was able to share the information, because the infrastructure royalty credits have that application for the individuals when they apply. So that’s, obviously, a different program than the deep-well credits

Today in the legislature I rose during Question Period to ask the Minister of Forests, Lands and Natural Resource Operations two distinct questions. In the first, I asked how he reconciles his Ministry’s efforts to preserved at-risk caribou herds while at the same time issuing more hunting permits for the same caribou.  In the second question I ask him what he plans to do to preserve the last remaining old growth valley-bottoms on Vancouver Island.

Below I reproduce the text and video of our exchange.

Video of Exchange

Question

A. Weaver: I’ve just been walking around with a smile on my face today from ear to ear, and I continue to ask that question in that spirit.

There are 54 caribou herds in British Columbia, 30 of which are at risk of extirpation. Fourteen have less than 25 animals, and the B.C. Government website lists that one of these herds has precisely one individual, whereas another has three. Since the information was posted on the site, it’s likely that they’re gone as well.

British Columbia’s caribou herds are in crisis, and scientists have been raising the alarm for many, many years. After nearly managing the species into oblivion, we’re now desperately trying to save them by any means possible. Yet, at the same time as we try to avoid extirpation in one area, in a neighbouring area, the government issues and permits a legal caribou hunt.

To the Minister of Forests, Lands, and Natural Resource Operations: aside from the First Nations’ food, social and ceremonial hunt, how many caribou is he permitting to be hunted in British Columbia in the 2019-2020 limited area hunt and general open season in management units 617 to 620 and 622 to 627?

Answer

Hon. D. Donaldson: Thank you to the Leader of the Third Party for the question to talk about an important animal, an iconic species in B.C. and across Canada and internationally. That is the caribou.

I think it’s been pointed out already in question period so far that unlike the old government, we take the decline in caribou populations very seriously. Going back to 2003, the previous government ignored calls for action to protect caribou habitat for over a decade and kept in place a patchwork of measures that don’t meet federal standards, putting jobs at risk and caribou at risk.

As far as the hunting of caribou that the member asked about, we know that the Chase, Wolverine and Itch-Ilgachuz herds are classified as threatened, and the herd populations continue to decline. That’s why we closed the caribou hunt for these three herds this past March, and this hunt will remain closed until further notice. There are some herds that are still available for hunting, and those are the Carcross and Atlin herds in my constituency, in the northwest corner of B.C. Both herds have in excess of 800 animals.

The member is right. When it’s based on the best available science, and when conservation is the top priority, followed by First Nations’ food spiritual and ceremonial needs, only then is hunting allowed. There are very few animals available for hunt — approximately ten.

Supplementary Question

A. Weaver: Well, that’s inconsistent with the information I have here, where it looks like 268 permits have been issued for caribou in Skeena region 6, which would be ironic in light of the fact the minister just mentioned 800-some animals in and around that area.

The point I’m making here is we’re hunting caribou while we try to save caribou. There’s no overall strategy. Caribou, as we know, are dependent on old-growth boreal and mountain economic systems. For many herds, their main food source is lichen that grows on old trees, and cutblocks and logging roads make them much more vulnerable to predators, as we all know.

Yesterday the United Nations released a landmark study reporting that over a million species are now at risk of extinction, and habitat loss is the driving factor. In B.C., we only act when it’s already too late. For example, our invaluable Vancouver Island valley-bottom old growth is globally rare and is an essential habitat for many species.

My question is again to the Minister of Forests, Lands and Natural Resource Operations. Will this government stop its Loraxian approach to resource management and step in to protect the last intact, productive valley-bottom old growth on Vancouver Island?

Answer

Well, I understand we were talking about caribou. There are no caribou on Vancouver Island. I’m sure the member knows that. As far as old-growth forests go on Vancouver Island, we’re committed to creating an old-growth plan in consultation with industry, in consultation with environmental NGOs and in consultation with communities.

We know that old-growth forests provide incredibly important habitat for biodiversity. There are over 500,000 hectares of old growth already protected on Vancouver Island through protected areas and parks. We also know that old-growth forests provide important revenue for communities and important jobs for forestry workers. We’ll continue to manage old growth in a sustainable way, and we’ll continue to work on the caribou file to protect jobs and to protect caribou.

The Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) today released its landmark assessment detailing the world’s declining state of biodiversity. Remarkably, British Columbia’s government has still not announced how it plans to deliver on its 2017 mandate to enact an endangered species law. Below I reproduced the text of our media release in response to the IPBES report.

Media Release

Humans threaten 1 million species with extinction worldwide, B.C. still without any endangered species legislation
For immediate release
May 6, 2019

VICTORIA, B.C. – One million of the planet’s eight million species are threatened with extinction, according to a comprehensive report released today from the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES), a UN committee, and yet British Columbia’s government has still not announced how it plans to deliver on its 2017 mandate to enact an endangered species law.

“The report identifies habitat loss, sustainable exploitation, climate change, and pollution as the main culprits, which are all areas that we can and should focus on in British Columbia to protect our at-risk species and the health of our province,” B.C. Green Party Leader Andrew Weaver said.

“I drafted and introduced an endangered species act for British Columbia twice in the legislature, most recently in November 2017. British Columbia is the most bio-diverse province in Canada, but it is also home to more at-risk species than any other province with 1,807 species at risk of extinction. In addition to detailing policies to identify, protect and rehabilitate at-risk wildlife populations and habitats, my Endangered Species Act introduced proactive measures that would prevent healthy species from declining in the first place.”

The world is in the midst of the sixth great global extinction event, and humans are the driving force. Proactive protection and active restoration are key to the resiliency of British Columbia.

Humans are part of nature and inextricably linked to its deterioration. As stated in the IPBES report, some 70 percent of drugs used for cancer treatment are natural or synthetic products linked to nature, and 75 percent of global food crops rely on animal pollination. In B.C., in 2017 nearly 10,000 people were employed in fisheries-related jobs and other 141,000 worked in forestry-related positions.

“If our ecosystems collapse, so does our economy,” Weaver said. “We need biodiversity for pollination, flood prevention, water and air purification, climate change resiliency, and social and cultural well-being.

“The IPBES report makes it abundantly clear governments must act urgently to change the trajectory of global extinction. My B.C. Green caucus colleagues and I will fight for the same in British Columbia.”

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Media contact
Macon McGinley, Press Secretary
+1 250-882-6187 |macon.mcginley@leg.bc.ca

Yesterday during question period yesterday I rose to ask the Minister of Energy, Mines and Petroleum Resources questions about the ever increasing liability British Columbians are taking on as the number of orphan gas wells grows out of control. I remain deeply concerned about the Minister’s grasp of the file and profoundly troubled by the lack of substance in her answers to our questions.

Below I reproduce the video and text of our exchange

Video of Exchange

Question

A. Weaver: Yesterday my colleague from Cowichan Valley asked the Minister of Energy, Mines and Petroleum Resources how many gas wells in British Columbia are leaking, and she didn’t know. Well, here’s some information for her: out of the 134 wells in the province with confirmed gas migration — that’s leaking problems, as documented by the Oil and Gas Commission — almost half are owned by one company, the Shanghai Energy Corporation.

This company, which has strong links to the Communist Party of China, is buying up wells in our province at an alarming rate. They now own 1,128 wells, with 863 active, 184 inactive and 13 that are being decommissioned.

My question is to the Minister of Energy, Mines and Petroleum Resources: does she think that the Communist Party of China buying up stranded assets in B.C. is concerning, and does she think that the Shanghai Energy Corporation will be a good corporate citizen and clean up their activity and all their leaky wells when the time comes?

Answer

Hon. M. Mungall: We have an open marketplace for tenures and for gas wells. That means that companies from around the world are able to purchase these tenures as well as the wells and so on. They then have the duty to be good corporate citizens, no matter who they are, no matter where they come from. We have the Oil and Gas Commission, as well as this government, who is taking its role as a regulator very seriously to ensure that, again, no matter who they are, no matter where they’re from, that any corporation who’s doing business in British Columbia and business in our oil and gas sector is following the rules.

Supplementary Question

A. Weaver: I’m not sure I understood what the answer to the question was there, but nevertheless, let me try again.

Ranch Energy was one of three companies that became insolvent last year, leaving a forecasted $12.3 million deficit in the B.C. Oil and Gas Commission’s orphan reclamation fund. Currently — I know these facts are troubling to the minister — there are 310 sites designated as orphan sites, requiring further restoration. But there are 300 to 500 Ranch Energy wells that could be added to this, creating a further potential liability of $40 to $90 million.

Yesterday the minister told the chamber that things have gotten a lot better since her government was sworn in. Yet over the last two years, B.C.’s orphan well sites have increased by — get this — 48 percent. Bankrupt companies have left the province with massive cleanup bills.

Last month we heard from the Auditor General. There are more than 10,000 active wells, with a $3 billion price tag for decommissioning them. All the while, her ministry is giving massive handouts, corporate handouts. It’s not an open market. It’s a subsidized market by this government because the market would not exist in a free and open market, because it does not compete on the international scene.

What is the minister’s plan? Please, please, I beg you — no more non-answer, no more rhetoric, no more 16 years nonsense. Answer the question for a change.

What is the minister’s plan to ensure British Columbians are not on the hook for the cleanup costs of this industry? There is no excuse for not hearing an answer here.

Answer

Hon. M. Mungall: The member might recall that just over a year ago we passed legislation — it was Bill 15 at the time — to address the issue of orphaned wells. We have done a considerable amount of work. Part of that bill was to address how we are funding the orphaned well reclamation fund.

The previous government had it funded through a taxation on production. We have moved from that because that was not an effective way to fund this fund. We’ve moved away from that, and we have a liability levy so we’re actually able to get the financial resources so that we can start reclaiming the orphaned well sites.

We have a multi-year plan to reclaim all of these sites. It involves Treaty 8 First Nations, who are doing a wide array of work to do this reclamation, including having nurseries with the appropriate vegetation of native plants so that we can truly reclaim these sites and the land to the state that they need to be in for future generations