By Bob Mackin

Published February 7, 2014 01:35 pm |

Just over a week after he suddenly quit as B.C. Lottery Corporation CEO, Michael Graydon resurfaced as the president of a company planning to build a casino next to BC Place Stadium.

Graydon will join PV Hospitality ULC, a partnership between Paragon Gaming and its financial backer 360 VOX Corporation, on Feb. 11, according to a news release.

Las Vegas-based Paragon Gaming received City of Vancouver approval in 2011 to move its existing Edgewater Casino licence from the Plaza of Nations to land leased from B.C. Pavilion Corporation. City council, however, voted unanimously to deny Paragon's bid to triple the number of slot machines.

Paragon announced the partnership with Montreal-based 360 VOX last September to build the $535-million casino/hotel complex and received conditional development permit board approval in December. City council has yet to give its rubber-stamp.

Graydon headed the lottery corporation for almost six years until resigning Jan. 29 after BCLC held its second annual responsible gambling convention in Vancouver. Vice-president Jim Lightbody was announced as the interim CEO the next day. Graydon's job heading the Crown corporation, which partners with private casino operators, paid $465,000 last year.

"What were the terms of Mr. Graydon's contractual relationship with the lottery corporation when he was leading that Crown corporation?" NDP gambling critic Shane Simpson said today.

"There are serious questions to be asked of the [finance] minister now about what were the terms of that agreement, and were there any impediments to him jumping, in a matter of days, to becoming the head of one of the more prominent players in the corporate sector that interacts with the lottery corporation?"

A request for comment from the office of Finance Minister Mike de Jong, who is responsible for BCLC, was not fulfilled. A prepared statement from BCLC, attributed to board chair Bud Smith, said BCLC was informed of Graydon's departure Jan. 29 and it has no restrictions for post-BCLC employment.

"All BCLC employees sign confidentiality agreements about BCLC information. These agreements remain in effect for life. There are no provisions in public sector employment legislation or Mr. Graydon's employment contract that would preclude him from working for PV Hospitality," said the statement. "Mr. Graydon provided working notice until March 31, 2014. BCLC made the decision that it would be in the best interests if he resigned from his duties immediately."

PV Hospitality ULC was incorporated Sept. 10, 2013 as Paragon 360 Management. Paragon CEO Diana Bennett and president Scott Menke along with 360 VOX CFO Colin Yee and CEO Robin Conners are the directors. The company filed a name change on Feb. 6.

This isn't the first time a high-ranking official with the lottery corporation has been tied to Paragon. During his December 2001 to December 2005 term as chair, Richard Turner invested in Paragon. He eventually became a director of the company's Canadian operation and lobbied afterward for PavCo to renovate BC Place with a retractable roof to benefit the Paragon casino proposal.

Turner is in a legal battle to keep secret his email correspondence with Vic Poleschuk, the BCLC CEO who was fired in 2007 after Ombudsperson Kim Carter found lotteries were prone to fraud.

"Graydon's brazen move exposes the feeble and inept governance structure at BC Lottery Corporation. It's unthinkable that Graydon wasn't negotiating compensation and other terms with his future employer at the same time he was acting as its regulator," said Vancouver Not Vegas founder Sandy Garossino.

"Now inside BCLC information and confidential financial information respecting other casino operators like Great Canadian Gaming are sitting behind a desk at Paragon Gaming, care of the B.C. taxpayer."

A statement from Paragon said Graydon was not available for comment.

"In the interim, in light of the questions being raised, it is important for people to know that the regulation of gambling in British Columbia falls under the Province's Gaming Policy Enforcement Branch, not BCLC. This is a highly regulated industry, both by provincial and federal regulators. Michael's record of integrity and leadership is well known in the industry, and we are very excited to welcome him to our team," it read.

BCLC, which reported a $1.1-billion profit last year, is undergoing an internal cost-savings audit. In August 2013, it sought business transformation consultants and a tendering document said as much as $650 million in income was at risk over the next five years.

"Opportunities for growth could be through greater innovation and faster transformation but the pace of change is accelerating in the marketplace, and we run the risk of becoming increasingly irrelevant to consumers and their changing entertainment tastes," said the tendering document.

Vancouver journalist Bob Mackin is a frequent contributor to The Tyee.