More than three years have passed since the provincial government chose to establish the Commission of Inquiry into Money Laundering in British Columbia, also known as the Cullen Commission.
A lot has changed since May 2019, when it seemed that the final report would be released just a few days before an expected electoral campaign. COVID-19 happened, and with it, the opportunity for the provincial government to call an election and get a renewed mandate from voters.
In the end, the final report made its way to our desks and computers last week. Some of the conclusions fell short of the expectations of some political observers, who may have hoped for severe punishments for politicians and bureaucrats. For others, the fact that the commission could not unequivocally ascertain the existence of corruption led to peculiar victory laps and recriminations on social media.
Research Co. and Glacier Media last asked about the Cullen Commission in October 2021 and found a public that welcomed a deeper analysis into how people were illogically allowed to bring in hockey bags full of cash into casinos.
This month, upon the release of the final report, the level of satisfaction is higher. In our latest survey, more than three in five British Columbians (62 per cent, up five points) believe the provincial government made the right decision in establishing the Cullen Commission. A similar proportion (60 per cent, up seven points) feel we have learned more about why money laundering became a problem in British Columbia, and a majority (54 per cent, up five points) say we now know more about what to do in the future to curb money laundering in the province.
There is some movement when British Columbians are asked about who deserves “all of the blame” or “most of the blame” for the situation that transpired. More than two in five respondents (41 per cent, up two points) point the finger at the previous provincial government headed by the BC Liberals, while 31 per cent (down five points) think the responsibility primarily belongs to the British Columbia Lottery Corp. (BCLC).
Fewer residents openly blame the current federal government headed by the Liberal Party of Canada (27 per cent, up seven points), the current provincial government headed by the BC New Democratic Party (NDP) (20 per cent, up three points) or the Royal Canadian Mounted Police (RCMP) (18 per cent, up one point).
In spite of the Cullen Commission’s findings, the level of support for a new type of relationship between governments and contractors has grown. More than three in four British Columbians (78 per cent, up seven points) would welcome the creation of a Quebec-style Office of Anti-Corruption Commissioner "to ensure the co-ordination of actions to prevent and fight corruption in the public sector, including in contractual matters."
When we asked British Columbians to rate the veracity of a couple of statements, the numbers were extremely high. Almost seven in 10 (69 per cent) think it is “definitely true” or “probably true” that executives at the BCLC allowed suspicious cash transactions to continue in their casinos because these transactions resulted in higher revenue and pay bonuses. This is a troubling statistic for a Crown corporation that is looking to restore goodwill with the public.
For two-thirds of British Columbians (66 per cent), the notion that former minister of public safety and solicitor general Rich Coleman knowingly ignored warnings about suspected drug-money laundering in casinos rings true. This includes 75 per cent of those aged 55 and over and 67 per cent of residents of southern B.C. – two demographic groups that are crucial to the electoral success of the probably-soon-to-be-renamed BC Liberals.
More striking, only 12 per cent of BC Liberal voters in the 2020 provincial election consider the statement about Coleman – who according to the report failed to recognize that action was needed to bring “an immediate end to the suspicious activity” – as “untrue.” This explains why current BC Liberal leader Kevin Falcon was quick to “apologize unreservedly” for the situation. Only one of these two men has a political career to protect.
The final report from the Cullen Commission invites us to look carefully into the future. It recommends the appointment of an independent commissioner to oversee the provincial response to money laundering, as well as the reporting of all five-figure luxury goods transactions to a central authority.
The province’s authorities and ministers responsible must focus on identifying new scams and schemes, with a public that is happy to have learned about the past. Omission and incompetence may bizarrely seem like morally superior options to corruption in the minds of those eager to put the money laundering ordeal behind them. At this point, the court of public opinion is not convinced that there is much of a difference.
Mario Canseco is president of Research Co.
Results are based on an online survey conducted from June 17 to June 19, 2022, among 800 adults in British Columbia. The data has been statistically weighted according to Canadian census figures for age, gender and region in British Columbia.The margin of error – which measures sample variability – is plus or minus 3.5 percentage points, 19 times out of 20.
The past three months have brought a caravan of negative news about the global economy.
Amid the war triggered by Russia’s invasion of Ukraine and the continued ructions stemming from the stubborn COVID-19 pandemic, the world is dealing with a toxic mix of escalating inflation, soaring oil and food prices, gummed-up supply chains and rapidly tightening monetary policy in the major advanced economies.
Since the beginning of June, both the World Bank and the Organization for Economic Co-operation and Development have sharply downgraded their economic growth projections for 2022 as well as 2023.
Measures of consumer sentiment have plunged in the United States, and housing markets have started to wobble. Soaring energy prices and trade disruptions linked to the Russia-Ukraine conflict have set the stage for a probable recession in Europe.
Of greatest concern, inflation readings are running at three to four times the official targets set by central banks, including the Bank of Canada. Equity markets have been tanking, shaving many trillions of dollars from worldwide wealth as investors recalibrate previous frothy valuations distorted by a long stretch of near-zero interest rates. Indeed, after two years of serving as cheerleaders for bloated asset markets, central bankers have radically shifted course. They are now the principal enemies of what, until recently, were sky-high valuations for public equities, private businesses, crypto assets and real estate.
This is the uncomfortable backdrop for Canadian forecasters struggling to update their assessment of what lies ahead for our economy.
At first glance, it is hard to see evidence of an imminent slump in the Canadian context– still less in B.C.
The job market is drum tight. Employment in B.C. now stands 100,000 above the pre-pandemic benchmark, and employers are scrambling to fill vacant positions. Canadian household net worth reached an all-time high in March 2022. Moreover, high global prices for energy, foodstuffs and some parts of the minerals/metals complex have worked to Canada’s economic advantage, generating a significant positive “terms of trade” shock.
In the year to April 2022, due mostly to rising commodity prices, the value of Canada’s exports surged by 21 per cent, while the cost of imports climbed by 11 per cent. The export lift has translated into tens of billions of dollars of additional income for Canadian businesses, employees, investors and governments. Closer to home, the improved terms of trade have also boosted B.C.’s merchandise exports, which were up 40 per cent in April over the previous year.
The challenge for forecasters is that the positive data noted above reflects the recent past. The key question is how runaway inflation and higher borrowing costs will weigh on the economy going forward.
Most forecasters – including the Business Council of BC – still see B.C. posting solid GDP growth in the range of three to four per cent this year, before dipping to around two per cent in 2023. But this projection rests on a few key assumptions: most importantly, that the world economy continues to expand, even if modestly, and that higher interest rates don’t crush the housing and real estate sectors, which play an outsized role in B.C.’s economy.
A few other factors should also help B.C. avoid a pronounced economic downturn. One is the elevated level of construction spending, flowing from a handful of large projects and further augmented by robust growth in public sector capital outlays. Second is the demographic picture.
Last year, B.C. saw a net inflow of 100,000 migrants, as international immigration roared back following a brief hiatus in 2020. The number of interprovincial migrants arriving in B.C. also rose.
The Trudeau government has settled on accelerating immigration as the main plank in its overall economic strategy. Whether this is a wise choice is debatable, but it will result in an expanding domestic economy as a growing population bolsters spending on goods, services and housing. A third factor that’s particularly relevant to B.C. is the expected rebound of international tourism, following two years of pandemic carnage. International visitors are by far the most lucrative slice of the broader tourism market, and they should be returning in large numbers over the balance of 2022 and beyond. That, too, should provide a boost for the province’s economy
From today’s vantage point, B.C. looks reasonably well-positioned to steer clear of a recession, even as the global economy loses steam. But the external backdrop has deteriorated dramatically, and the threat of more persistent inflation means downside risks are mounting.
Jock Finlayson is the Business Council of British Columbia’s senior policy adviser. Ken Peacock is the council’s senior vice-president and chief economist. This column first appeared in Business In Vancouver.
Re. Joe Killoran’s guest column Lawyer blasts Kamloops MP and RCMP boss over 'supposed' crime wave (Castanet, June 3)
When I tabled my first Private Members Bill, C-274 An Act to amend the Criminal Code (detention in custody) on May 19, I naturally expected some criticism to come my way. Rarely is a piece of legislation tabled without a dissenting opinion.
To those who have come out publicly to say their piece about my bill, I have one thing to say: thank you.
The debate of laws is at the core of our democracy. It is the basic purpose of the House of Commons and I welcome the opportunity to further debate the merits of this bill. Good legislation will always stand against scrutiny. If it doesn’t, it should not become law.
For context, C-274 is meant to reform bail due to issues that have been caused by recent Supreme Court of Canada and local decisions. Recent decisions have led to detention pending trial being very rare. While well intentioned, the result has seen prolific offenders repeatedly released on bail while awaiting trial. Only after multiple, repeated serious offences will detention typically be order.
The mechanism of C-274 is straightforward. If a prolific offender commits three serious offences with maximum sentences of five years or greater, they are denied bail except in exceptional circumstances. This bill will only apply to three separate allegations of serious criminality. This highly targeted measure addresses a specific deficiency in our justice system. Very few offenders will meet these criteria since, as police have noted, only a handful of offenders are committing a majority of serious crimes.
Some have questioned whether this Bill is constitutional because the wording is broad and a (some believe) a violation of Charter rights.
Readers of the text of the Bill itself would note what lawyers refer to as an “exceptional circumstances” provision. In essence, this allows a judge the discretion to apply this law or not, meaning the Bill is targeted and its use is not mandatory when circumstances are exceptional. That may include socio-economic status, a person’s upbringing or factors relating to the overrepresentation of Indigenous peoples in the justice system.
One recent critic went so far as to entirely deny that crime is a concern in our community, citing statistics from the middle of COVID-19 lockdowns in 2020 as proof that crime rates are at an all time low.
I would invite that person to speak with local law enforcement, business owners, his MLA or the vast majority of residents of Kamloops-Thompson-Cariboo who will tell him the exact opposite is true.
I also note that much of the community was locked down in 2020. It is also now 2022 and most (residents) would likely acknowledge a feeling that crime has increased in the past two years.
It is disingenuous to believe that crime is not having an impact on our community. I have yet to hear about another city losing its McDonald’s restaurant because of repeated criminal acts.
I have heard about multiple cases of businesses reporting commercial break-ins, buying new security systems and being broken into again before those systems can be installed.
While reviewing this article, I received a note from a constituent who suffered a fourth serious offence against their business in the past few weeks. The simple reality is that something needs to change.
It’s notable that the vast majority of public criticism has come from defence lawyers due to their unique ability to speak publicly. Their contributions thus far represent one side of the debate.
I carried out extensive consultations in advance of the tabling of this bill. Unfortunately, Crown prosecutors, judges and other workers in the justice system are unable to publicly react to this bill. That has led to one-sided criticisms of my bill despite many private messages of support.
There are multiple causes of crime. It must be made clear that addressing issues like housing, substance abuse and current laws can all play a role. Bail is one such issue. Bill C-274 will not address every problem, but it is one important step in addressing high rates of crime that have had a deep impact on our community.
Frank Caputo is the Conservative MP for Kamloops-Thompson-Cariboo.
The release Wednesday of the 1,804-page Cullen Commission report on money laundering in British Columbia landed like a block of cement.
It is, however, really just a piece of the structural foundation.
It challenges the provincial government’s courage to bear the cost of truly rebuilding a system that would ultimately feed its coffers far less. What is clear in an early reading is how the public purse developed a dependence on casino revenue, real estate transfers and consumer spending most everyone knew was unsavoury – even the commission can’t surmise how much laundering takes place, only that it’s a large sum in the billions each year here.
Austin Cullen’s exploration is the starting point in a necessary marathon to tackle the prodigious currency that illicitly courses through our drug deals, white-collar crime and overseas flights of capital into our drug deals, real estate, yachts, jets, luxury cars and, for many British Columbians, their living large in la vida loca.
Like any good study, it looks at systems more than the actors within them. (Mind you, it does suggest previous BC Liberal governments were aware of the problems and ineffective in dealing with them, but not corrupted). Name a system around this field and Cullen found fault: among them the police, the regulators, the realtors, money services, corporate registries, international trade services, accountancy, cryptocurrency, and of course politics. The legal profession, however, is doing well in his books in contending with the challenges money laundering brings its way.
Its 101 recommendations are daunting and, at first blush, beyond any province’s capacity without national and even international concurrence. Simply in the B.C. context, Cullen is calling for a new level of attention that would revolutionize scrutiny on the economy.
It would involve a powerful independent commissioner to oversee the province’s response to money laundering, a special intelligence and investigation unit dedicated to this field, a reporting of all luxury goods transactions of more than $10,000 to a central authority, much clearer attention to wealth transfers often at the core of laundering, a deeper resolve to seize assets, and new anti-laundering credentials for realtors and chartered accountants. This is not work to be done by week’s end, even decade’s end.
In some ways, Cullen is saying it’s time for the province to chart its own course. “The RCMP’s lack of attention to money laundering has allowed for the unchecked growth of money laundering since at least 2012,” the report concludes, and its criticism of the federal financial tracking system known as FINTRAC suggests B.C. at least needs to get into its own hunt on money services.
The most tangible finding is also one of its most controversial. The former B.C. Supreme Court justice concluded that money laundering was not a significant impact on housing unaffordability. This will gall many, but in reviewing this section of the massive document, the commission effort to confirm speculation was never fortified by sufficient evidence. There are other things like much more to blame, he concluded – like supply and demand, population growth and interest rates.
It is difficult to know if Wednesday’s release was Attorney General’s David Eby’s vision in 2017 and 2018 when it became obvious something needed to be done. He probably thought “something” wasn’t “this thing.”
His first effort to study money laundering under former RCMP deputy commissioner Peter German – praised Wednesday by Cullen for changes in casino practices that no longer make them laundering havens – only sent him deeper into the weeds to initiate a full-fledged commission under Cullen.
The idea at the time seemed to be to produce a rapid report in time for early 2020 to then produce legislation by that fall’s scheduled election that would position Eby as the white knight to cleanse British Columbia. A few things, like elongated research ahead of the hearings, like elongated hearings ahead of the report, like that pesky pandemic, were uncooperative. But what few could have surmised then was that the probe would be both so lengthy in one sense and so surface-scratching in the other.
The study demands other studies, the commission more commissions, the prescription more prescriptions. Wednesday is merely an on-ramp to an eight-lane highway.
Is there the political willpower, the availability of talent and capital to tackle these beasts that have taken shape, the acceptance that concerted public effort will yield few immediate results, and the recognition that we will all pay some sort of price for the diminution of this dirty money into cleaner coffers?
Cullen spends about a page of his 31-page executive summary trying to keep readers from believing the massive renovation can’t be taken down to the studs and structured in a more sustainable way. He admits the evidence can render a sense of helplessness.
“From what I have seen, heard, and read during this Inquiry, the provincial government has, in recent years, demonstrated a strong will, and it is working on strategies to convert its will into action,” he writes in reasoned optimism. Even politically partisan critics must hope he is right.
Kirk LaPointe is publisher and editor-in-chief of Business in Vancouver and vice-president, editorial, of Glacier Media.
The food we buy is always changing, so keeping customers engaged with brands is challenging
Sobeys recently decided to dump Air Miles and start its own loyalty program.
Empire Co. Ltd., Sobeys’ parent company, is joining the Bank of Nova Scotia and Cineplex as co-owners of the Scene+ program.
This move by Sobeys is no coincidence. As we brace for higher food prices and cope with a post-COVID-19 workforce still trying to figure things out, loyalty will probably be the next major battleground for Canadian grocers.
The Scene+ program at Sobeys will start in Atlantic Canada in a few months, and the cross-country rollout will be done by early 2023. The partnership with Air Miles will officially end soon after.
Most Sobeys-owned stores, (Sobeys bought Safeway's Canadian operations in 2013 and owns FreshCo), including its online service Voilà, will have the Scene+ program. Given how the market is changing, this move was critical and perhaps long overdue.
Since March 2020, 26 per cent of Canadians have switched the primary location where they regularly buy food, according to a recent poll by Angus Reid.
Having more people working from home has triggered behavioural changes in grocery shopping. And with food inflation at 10 per cent, consumers are either trading down or changing shopping habits almost weekly. With higher food prices, everything is negotiable.
Where people buy food and what they buy is constantly changing. So keeping customers engaged with brands and stores is going to be challenging over the next several years. That’s coupled with the fact that younger people are rarely dedicated to brands or stores.
That means encouraging consumer loyalty is a bigger issue now than ever.
Sobeys’ quick rollout will serve the company well since it needed a better loyalty program.
PC Optimum is by far the most popular program in Canada related to food sales. More than 63 per cent of Canadians use the Loblaws program, followed by Air Miles at only 18.3 per cent, according to a recent survey by Caddle. The current Scene program is sixth on the list: just 1.9 per cent of Canadians use it.
The gap between PC Optimum and the rest of the field is enormous.
While 58 per cent of Canadians use loyalty programs at the grocery store every week, 73 per cent of us are influenced by what kinds of benefits these programs offer.
With few promotions at the grocery store and prices rising, Canadians need any help they can get. And food prices aren’t about to drop anytime soon.
Air Miles is a versatile loyalty program used by many retailers. But for Sobeys, it became an invisible advantage few really cared about. Sobeys never really had control over it. With the high number of miles you could collect, the program became confusing for members and retailers.
But the fact that Metro, one of Sobeys’ main competitors in Eastern Canada, also had a deal with Air Miles was becoming increasingly awkward in an era in which getting customers back, and back again, is challenging. The market just isn’t the same as it was in 2020 when the pandemic started. Consumers are economically challenged in many ways, and a strong loyalty program can allow Sobeys to empathize with a struggling public.
With higher prices and an acute focus on private labels, Loblaws and its PC Optimum program clearly have an advantage that Sobeys wanted to address. While Sobeys is getting its private-label act together, it also needs a program to push its brands like Compliments and Panache. Loblaws’ private labelling strategy, along with President’s Choice and No Name, left the competition in the dust.
Only time will tell what the program will look like and how it will encourage consumers to shop more often at Sobeys. But seeing Empire/Sobeys, a Nova Scotia-based company, partner with the Bank of Nova Scotia was anything but a surprise.
Even if Scene doesn’t have the clout of PC Optimum, it has the potential to do well. Scene has 10 million members, but the brand’s awareness is lacklustre and few use the points. Sobeys’ network could change that. It also needs a unique name to make it Sobeys’.
For Sobeys, working with Air Miles was like rowing against the current. Sobeys was likely just waiting for its contractual obligations to end so it could adopt a program it can better control.
Sylvain Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at Dalhousie University.
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