CULLEN COMMISSION OF INQUIRY INTO

MONEY LAUNDERING IN BRITISH COLUMBIA

APPLICATION FOR STANDING

GREAT CANADIAN GAMING CORPORATION
and its subsidiaries

Great Canadian Gaming Corporation

95 Schooner Street
Coquitlam, BC V3K 7A8

Telephone: 416-708-3623
Email: jrussogcgaming.com

Mark L. Skwarok
Melanie J. Harmer
McMillan LLP, Counsel for Great Canadian Gaming Corporation

1500 1055 West Georgia Street

-

Vancouver, BC V6E 4N7

Telephone: 604-689-9111
Email: mark.skwarok@mcmillan.ca
melanie.harmer@mcmillan.ca

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I. OVERVIEW

1. Great Canadian Gaming Corporation ("GCGC"), through its wholly -owned

subsidiaries Great Canadian Casinos Inc., Hastings Entertainment Inc., Orangeville Raceway

Limited, Great Canadian Entertainment Centres Ltd., and Chilliwack Gaming Ltd., operates

more than one -quarter of the gaming facilities in British Columbia, two of the largest casinos in

British Columbia (River Rock Casino Resort and Hard Rock Casino Vancouver), and the only

two racetracks in British Columbia that continue to host live horse racing.

2. GCGC seeks standing, on its own behalf and on behalf of its subsidiaries, as a

participant in both the study and hearing components of the Cullen Conmiission of Inquiry into

Money Laundering in British Columbia (the "Cullen Commission") with respect to the

following aspects of the Cullen Commission's terms of reference:

(a) the extent, growth, evolution and methods of money laundering in the following
sectors:

i. gaming and horse racing;

(b) the acts or omissions of regulatory authorities or individuals with powers, duties
or functions in respect of the sectors referred to in paragraph (a) [specifically, i. gaming
and horse racing], or any other relevant sector, to determine whether those acts or
omissions have contributed to money laundering in British Columbia and whether those
acts or omissions have amounted to corruption;

(c) the scope and effectiveness of the powers, duties and functions exercised or
carried out by the regulatory authorities or individuals referred to in paragraph (b)
[specifically, as it pertains to gaming and horse racing]; and

(d) the barriers to effective law enforcement respecting money laundering in British
Columbia [again, specifically as it pertains to gaming and horse racing].

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3. GCGC further seeks to participate in the development of recommendations

respecting the terms of reference detailed above and the review of the reports of Mr. Peter

German, QC referenced in the terms of reference (namely, Dirty Money: An Independent Review

of Money Laundering in Lower Mainland Casinos conductedfor the Attorney General ofBritish

Columbia ("First German Report") and Vancouver at Risk Turning the Tide An
- -

Independent Review of Money Laundering in B.C. Real Estate, Luxury Vehicle Sales & Horse

Racing ("Second German Report")).

II. BASIS FOR APPLICATION

4. GCGC was founded in British Columbia in 1982 and has grown to be a publicly

traded corporation operating properties in British Columbia, Ontario, Nova Scotia, and New

Brunswick. Its history is described in the First German Report as paralleling that of gaming in

British Columbia.

5. Through its subsidiaries, Great Canadian Casinos Inc., Hastings Entertainment

Inc., Orangeville Raceway Limited, Great Canadian Entertainment Centres Ltd., and Chilliwack

Gaming Ltd., GCGC currently operates ten properties in British Columbia:

(a) River Rock Casino Resort (Great Canadian Casinos Inc.);

(b) Hard Rock Casino Vancouver (Great Canadian Casinos Inc.);
(c) Hastings Racecourse & Casino (Hastings Entertainment Inc.);

(d) Chances Maple Ridge (Great Canadian Entertainment Centres Ltd.);

(e) Chances Chilliwack (Chilliwack Gaming Ltd.);
(f) Chances Dawson Creek (Great Canadian Entertainment Centres Ltd.);

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 (g) Elements Casino Surrey, which includes the Fraser Downs racetrack (Orangeville
Raceway Limited);

(h) Elements Casino Victoria (Great Canadian Casinos Inc.);

(i) Casino Nanaimo (Great Canadian Casinos Inc.); and
(j) Bingo Esquimalt (Great Canadian Casinos Inc.).

6. Gaming operations at these properties are conducted by the British Columbia

Lottery Corporation ("BCLC"). GCGC provides operational services to BCLC pursuant to

operating service agreements entered into with BCLC for each facility. GCGC provides premises

to host the gaming operations conducted and managed by BCLC and provides certain gaming

equipment and supplies and other services, such as supplying security and surveillance and

gaming personnel to operate the casinos

7. As one of the most significant casino operators in the province and the only

current operator of live horse racing tracks in the province, GCGC submits that its interests will

inevitably be directly affected by the findings of the Cullen Commission, its participation will

further the conduct of the inquiry, and its participation is necessary for the fairness of the

Commission.

A. GCGC Will be Directly Affected by the Cullen Commission

The Cullen Commission's Rules for Standing state that a prime criterion for

granting standing is whether, and to what extent, the person's interests may be affected by the

findings of the Cullen Commission. GCGC submits that it easily meets this test.

9. The history of the Cullen Commission speaks to the interest that GCGC has in

participating in the inquiry. This Commission's origin is described by government as being, in

part, a result of the First German Report, which looked into the issue of money laundering in

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Lower Mainland casinos (and particularly those operated by subsidiaries of GCGC). Indeed, the

significance of the First German Report to this Commission is highlighted by the requirement in

the terms of reference that the First German Report be reviewed and considered by this

Commission. The First German Report, in turn, traces its origin to the money laundering report

prepared by accounting firm, MNP, whose singular focus was the River Rock Casino Resort

("River Rock") operated by Great Canadian Casinos Inc., a subsidiary of GCGC. There is no

doubt that the associated media coverage of money laundering in British Columbia, and the

negative narrative regarding money laundering at the River Rock, motivated the public's and

government's concerns regarding money laundering that led to the establishment of this

Commission. Given the central role played by GCGC, and particularly the River Rock casino, in

the origins of this Commission and in the First German Report that the Cullen Commission is
mandated to study, it is apparent that GCGC's operations will be the subject of evidence given at

the inquiry.

10. The potential impact on GCGC of the fact-finding of this Commission and the

recommendations developed by the Commission with respect to the gaming sector are well

illustrated in the First German Report. The First German Report describes GCGC as being one of

three gaming service providers "at the pointy end of the stick":

24. At the pointy end of the stick are the service providers, three large corporate
entities which operate the large Lower Mainland casinos. Great Canadian Gaming
Corporation (GCGC) is a homegrown B.C. company which is now publicly
traded. Gateway Casinos & Entertainment Ltd. (Gateway) and Paragon Gaming
(Paragon) have also operated in B.C. for many years and have broad experience in
gaming. GCGC and Gateway are also present in Ontario and elsewhere, while
Paragon has casinos in Nevada.

25. It is the casino operators who serve as the front line of defence against the
infusion of dirty money into casinos. Cage personnel receive cash, and
surveillance employees track the movements of gamblers. The casino operators

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 are responsible for completing and forwarding transactional reports to BCLC and
GPEB.

26. Service providers are audited by BCLC, FinTRAC, GPEB and their own
company auditors. They are subject to a dizzying array of regulations and
policies. Most difficult of all, the GSPs must walk the fine line of not offending
either their contractor, BCLC, or the regulators, GPEB and FinTRAC, despite
often receiving contradictory directives and constantly witnessing the dysfunction
which exists between BCLC and GPEB. Equally frustrating to the service
providers is the perception that GPEB and, to a lesser degree, BCLC do not
sufficiently understand the economics and business of gaming.

11. As the so-called "first line of defence", GCGC's actions are likely to come under

scrutiny during the course of the Cullen Commission and be the subject of both positive and

negative comment by witnesses. Further, as the First German Report highlights, service

providers are often caught in the middle of the competing interests and priorities of other

organizations. It is essential that GCGC be given the opportunity to participate so that its actions

and role can be fully and fairly explored, including by having counsel make submissions and

participate in the cross-examination of witnesses who may have interests adverse to those of

GCGC.

12. In addition to the central role that GCGC plays in regards to gaming in British

Columbia, GCGC operates the only two currently operating live horse racing tracks in British

Columbia. Part Four of the Second German Report, which must also be considered according to

the terms of reference, focuses on the two racetracks operated by GCGC. Any fact-finding and
any recommendations regarding the horse racing sector in British Columbia will inevitably

comment on GCGC' s actions and affect GCGC s ongoing interests as the sole operator of live
'

horse racing tracks in the province.

13. Given all of the forgoing, it is difficult to see how GCGC could not be directly

affected by the findings of the Cullen Commission.

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B. GCGC's Contribution to the Cullen Commission

14. As the largest service provider in the gaming and horse racing sectors in British

Columbia, GCGC is in a unique position to make a significant and pertinent contribution to the

work of the Cullen Commission.

15. As discussed above, the terms of reference require that findings of fact be made

regarding the extent, growth, evolution and methods of money laundering in the gaming and

horse racing sectors. GCGC will have extensive information to provide to the Cullen

Commission in that regard. GCGC will also be able to draw on both its historical and current

knowledge to instruct its counsel regarding the cross-examination of witnesses, where

appropriate, in furtherance of the Commission's fact-finding process.

16. The current public discourse includes competing narratives regarding the role of

gaming service providers in money laundering in British Columbia. On the one hand, there have

been numerous negative headlines directly implicating GCGC, such as "Documents allege

complicity in money laundering in major investigation of River Rock Casino", "River Rock

Casino warned employees may have shred large cash transaction records"2, and "Dirty-cash

train 'insider' ready to rock B.C. money-laundering inquiry"3. On the other hand, there have been

audits and investigations such as the one completed by Ernst & Young that found no systemic

pattern of money laundering at River Rock. The participation of the gaming service providers,

and particularly GCGC given its prominent role in both the gaming and horse racing sectors, is

essential for the Cullen Commission to ensure its factual findings are accurate and the truth is not

obscured by sensational stories or witnesses who have a stake in a particular narrative.

Sam Cooper, Global News, published September 28, 2018.

2
Sam Cooper, Global News, published August 29,2018.
Mike Smyth, Vancouver Sun and The Province, published May 18, 2019.

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17. As noted in the First German Report, GCGC provided complete access to its

facilities and no requests for information were rejected during that review. As the First German

Report accurately observes, cooperation is in the best interests of GCGC. GCGC wishes to

continue to participate to the fullest extent possible in these important examinations of the

intersection between its business and money laundering.

18. GCGC's experience as an operator in both British Columbia and other

jurisdictions is also likely to be of assistance to the Cullen Commission in formulating the

recommendations required by the terms of reference. As a significant operator in British

Columbia, GCGC has a vested interest in the recommendations that will be developed by the

Cullen Commission and wishes to participate in that process in any way possible.

C. The Fairness of the Cullen Commission

19. In our submission, it is essential to the fairness of the Cullen Commission that

GCGC be granted full standing as participants. The terms of reference mandate that the Cullen

Commission make findings of fact respecting money laundering in the gaming and horse racing

sectors. To the extent that gaming service providers (as a group or as individual operators) may

be the subject of criticism in that regard, fairness requires that GCGC be given the opportunity to

cross-examine witnesses, request that Commission counsel call certain witnesses, and make

submissions. It would be unfair to make findings regarding GCGC's conduct without GCGC's

participation.

20. It is also conceivable that, at the end of the inquiry process, GCGC could be the

recipient of an adverse finding notice under section 11(2) of the Public Inquiry Act. In the

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circumstances, GCGC submits that its participation from the commencement of the Commission

would be far preferable.

III. EXTENT OF PARTICIPATION SOUGHT

21. GCGC requests that it be given full standing to participate in any aspects of

evidentiary hearings or study commission proceedings that relate to the gaming and horse racing

sectors. As full participants in such hearings or proceedings, GCGC wishes to have the right to

make written and/or oral submissions, bring applications before the Commission, request that

Commission counsel call particular evidence, cross-examine witnesses, and have advance access

to documents disclosed to the Commission, summaries of anticipated witnesses statements, and

written statements.

22. Please feel free to contact us should the Commission have any questions

regarding this application or GCGC's proposed participation in the Cullen Commission.

DATED: August 27, 2019.

McMILLAN LLP

Mark L. Skwarok and Melanie J. Harmer

Counsel for Great Canadian Gaming Corporation

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