VANCOUVER—Peter German, the former deputy RCMP commissioner tasked with investigating crime in British Columbia’s casinos, knew he had his work cut out for him when the province hired him nine months ago.

But in an interview with the Star, he said he couldn’t have done it without the co-operation and encouragement of investigators, officers and whistleblowers who tried for a decade — largely in vain — to raise alarms.

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Nor could he have done it, he said, without some old-fashioned police work.

“You do get the old bug,” he told the Star following his report’s release. “You know, I love doing this type of thing. They say in police work, it’s your first five years that are the most fun. But most of my mid-career was in corruption investigations, and they can be fascinating. This was really, in many ways, much like that.”

German gave belated kudos to Joe Schalk, the former senior investigations director for the province’s Gaming and Policy Enforcement Branch, who repeatedly tried to get the government to listen in 2012.

“Who has $200,000 in $20 dollar bills wrapped in elastic bands in $10,000 bundles?” Schalk wrote in a 2012 email quoted in German’s long-awaited report.

German also credited investigative journalists — including those at CBC News, CTV, the Province, the Globe and Mail and thebreaker.news — for drawing public attention in the years before German got to work on the file.

As they say in the gambling world, the stakes were high.

German’s investigation concluded that the Lower Mainland’s casinos “unwittingly served as laundromats for the proceeds of organized crime,” representing “a collective system failure” for which the province bears major responsibility.

Not only were criminals routinely allowed to dump hundreds of thousands of elastic-bound $20 bills from “inexpensive plastic bags” at casino cashier wickets, but the publicly owned BC Lottery Corp.’s anti-money-laundering unit didn’t even work evenings or weekends, the report says.

Investigators told German they were “frustrated by the lack of tools.”

Peter Goudron, executive director of the B.C. Gaming Industry Association, said the group welcomes the report’s 48 recommendations and that it has always reported suspicious transactions in its casinos within the requirements of the law.

In fact, he said, that it was actually “diligent reporting by the industry that brought this to light.”

“We’re very focused on making sure that we understand the provenance of cash,” he said. “I can only speak for the industry as a whole, but I can tell you that we played our role and did our very best to fulfil our obligations.

“Clearly there was a breakdown. … What’s most important now is that we never allow such a breakdown to occur again. … But to say this is entirely on the operators, I don’t think that’s accurate at all.”

Among the names named in German’s report: former B.C. Liberal deputy premier Rich Coleman, who was the minister responsible for gaming from 2001 to 2006, and again in 2009-10 and 2012-13.

In 2009, Coleman — a former RCMP officer himself — oversaw the elimination of the only independent, dedicated gambling crime police unit, the integrated illegal gaming enforcement team (IIGET). The team was created in 2004 to “maintain the integrity of public gaming in B.C. by enhancing the level of enforcement specifically targeting illegal gaming,” with 12 RCMP members staffing it at its peak.

“The loss of IIGET meant that the future rise of loan sharking, money laundering and organized crime in casinos, let alone illegal gaming outside of casinos, remained primarily with (BC Lottery Corp. and Gaming Policy and Enforcement Branch) to sort out,” German’s report says.

“Although the team had made inroads into illegal gaming, the prevailing view in government was that the results did not justify the expenditure,” the report continues, despite the fact that “IIGET was swamped with reports of illegal activity.”

Coleman could not be reached for an interview despite several attempts, nor has he spoken to any other media outlets in the four days since German’s report was made public.

Instead, the B.C. Liberals put forward newcomer MLA and former Global News personality Jas Johal to answer reporters’ questions about the report.

“When we became aware of this issue, we were advised not to make this public because this is a long-term cross-jurisdictional investigation involving many layers of law enforcement,” Johal said. “Our decision in 2009 was based on advice from law enforcement to disband the program because it was a waste of resources.

“The B.C. government at that time decided not to make it public, because of the advice of law enforcement.”

The B.C. RCMP was not available by the time of publication to respond to Johal. But in a statement the force said, “At times, government is briefed on sensitive information concerning police investigations that cannot be released. However, it was the decision of government to disband IIGET.”

On Wednesday, Attorney General David Eby alleged that the B.C. Liberal government “turned a blind eye” to suspicious activity it knew was occurring (including one case of a person carrying $3.1 million in bundled $20s into Richmond’s Starlight Casino in late 2010). He pointed to media reports as early as 2004 that raised questions about laundering and loan sharking in casinos.

Eby said that the Liberal government also failed to respond adequately to internal concerns over the IIGET disbandment.

“It was so strange that it took so long to take action,” Eby said, adding the suspicious cash transaction reports filed by the casinos themselves exceeded $100 million.

Johal countered: “Our attorney general has sensationalized the issue, so we’re asking … where are the arrests? The Attorney General was hoping to play politics with this but what he really should be doing is focusing on the recommendations of this report.”

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German’s report praised whistleblowers in police departments and the BCLC casino investigation unit for trying repeatedly to make their concerns known.

One named in the report is RCMP commercial crime investigator Insp. Barry Baxter, once in charge of the force’s Vancouver proceeds of crime section. Today, Baxter is the officer in charge of the national force’s counterfeit and identity fraud unit.

According to German’s report, Baxter became alarmed as he witnessed surveillance videos “of stacks of $20 bills being delivered to the cash cage at casinos.” In one incident nearly a decade ago, Baxter raised concerns about a single $460,000 transaction at Richmond’s River Rock Casino, which German alleges was the “epicentre” of the money laundering he documented.

But after Baxter spoke out in January 2011, German wrote, “the Minister responsible for gaming objected to Insp. Baxter’s comments and told the media that … the position expressed by Baxter was wrong.”

“Insp. Baxter was cautioned within the RCMP regarding his comments,” German wrote. “To his credit and that of his staff, they continued to monitor the situation in casinos.”

But, the report says, for “a number of years,” it was the last time any RCMP officer would comment publicly on the issue of casinos.

Another person alarmed long ago, and featured in German’s report, was an investigator with the Gaming Policy and Enforcement Branch who tracked the rapid growth of casino transactions after 2010.

Interviewed by German, the investigator told of an instance in 2012 when a patron at the River Rock deposited $100,000 in $20 bills then cashed it out in $100 bills before returning the next day with another $100,000 in bricks of $20s.

“The investigator ‘directed the casino to stop his play and pay him back his $20s,” German wrote. “A casino official ‘told (him) not to interfere or direct his staff.’”

“The investigator interviewed the patron a day or two later. He admitted collecting cash outside a local mall from an ‘unknown’ source that he telephoned. The money was to be paid back in the form of $100 bills.”

For German, stories like that show that it wasn’t for a lack of investigations or diligent police work that money laundering got as bad as it did.

Certain individuals’ efforts to bust criminals — many of whom were “high limit gamblers, referred to as ‘whales,’” who were “untouchable” in casinos — and raise the alarm to government impressed German during his research, he said.

And he said “chasing the money” remains his and other police forces’ preferred model for tackling the problem today.

“It’s an interesting fact that money tends to weigh more than drugs,” he said. “A kilo of heroin will produce many kilos of bills. So dealing with the money becomes a bigger problem for drug trafficking organizations than the drugs themselves. And, in some ways, money is easier to follow.”

German said that the next phase of his investigation — to dig into his finding that money launderers and organized crime have become involved in the skyrocketing housing market — will be the hardest.

“With real estate, you’ve got mortgages and so many different players and different boards — there’s a whole lot of moving parts,” he said in the interview.

“Casinos are a very self-contained industry.”

It’s an industry, the B.C. Liberals’ Johal argued Wednesday, that “is an integral part of our economy.”

“I also want to remind you that the casino industry itself sends over $1 billion to government,” he told reporters. “That comes back in health care and education programs, that comes back in community grants, that comes back to city councils which pay for firehalls and community centres.”

The casino and gaming industry has also donated $362,632.97 to the B.C. Liberal coffers since 2005 — nearly twice as much as the sector gave the then-opposition NDP ($202,071.69).

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