Price Tags: The Georgia Straight helpfully provided the full text of Attorney-General David Eby’s speech: “Housing and trans-national money laundering: an update on what I’ve been doing as AG to address the housing crisis in BC”.

Here are some highlights: 
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It is clear, in my opinion, that the previous administration was aware we had a serious and growing reputational issue. It is also clear to me that they evaluated the costs of cracking down on white collar crime, on fraud, on money laundering, and determined that the benefits of inaction outweighed the costs of action. …It is hard for me not to speculate that some may gone further and seen a lax approach to money laundering, fraud, corporate transparency, land title registry transparency, as a competitive advantage, or a budgetary advantage, for the province.

But, of course, nobody wrote this down. I’m just speculating.

If anyone did see a lax approach to white collar crime, tax evasion and money laundering as a net benefit to B.C., they were dead wrong. The chickens have now come home to roost, and our international reputation is on the line.

I do not make this assessment lightly. …

I was sat down by members of B.C.’s Gaming Policy Enforcement Branch. One of the members of the public service said, “Get ready. I think we are going to blow your mind.”

He was right. …

In response to this startling report from the police about the need to increase enforcement, the Province of B.C., under the oversight of then minister Responsible Rich Coleman, defunded the policing team, shutting it down. …

This was not the first report received by the then finance minister on the problem, there were countless red flags from regulators, just the most explicit. It is important to note that this same period was a period of exceptional growth in the province’s gaming revenues.

Although the activity behind the scenes in government was remarkable, in the legislature, you would never have guessed there was a problem.

A month after receiving that report about the significant increase in the legitimization of proceeds of crime through B.C.’s gaming facilities, the former finance minister (Mike de Jong) told the legislature, on April 4, 2016, quote “I can tell you this. We take very seriously the obligation that we have to British Columbians to ensure that the activities that take place within regulated and lawful gaming establishments are being conducted with proceeds that are not—I repeat not—the result of criminal activity.”  …

The previous administration’s lax attitude towards this issue means British Columbia has apparently developed its own, internationally recognized, model of money laundering.

This has a major and serious consequence for our international reputation, and also for the encouragement of whatever illegal activity might be generating these proceeds of crime. …

Why criminal organizations might consider locating in B.C.

…. with fewer than two percent of penalties and fines collected, and limited criminal charges going ahead, the message is obvious to those who might wish to participate in white collar crime.

You’ll have a better chance to get away with it in B.C.

… A final and more notorious benefit to an individual or corporation seeking to avoid the law and accountability in British Columbia is the fact that you can put your money into housing here without having to give up your name or identity.

There is a growing outrage among people in the lower mainland that their housing market has transitioned from one that is rationally connected to local incomes, to one that has no connection to local wages. …

The question that flows from this economic reality is quite simple.  Where is the money coming from? …

Others have pointed out that for luxury and commercial properties, transfer taxes are avoided through a non-transparent transfer of trust benefit rather than a sale of the property itself. Such a transfer results in no change in ownership being registered in the public registry. …

But the previous administration was well aware of these issues. … And the consequences of not acting are very apparent now.

  • Our own internationally recognized model of money laundering.
  • Articles in the New York Times outlining a cozy and opaque tax break program exploited by an alleged transnational criminal organization, and an out of control political donation system.
  • A preference for administrative penalties over criminal charges for white collar crime, but penalties that go uncollected.
  • A total lack of transparency around who owns half of the 100 most valuable real estate properties in our biggest city, and real estate values completely disconnected from local wages reported for tax purposes. …

You cannot build a strong home for British Columbians on a foundation of illegitimate activity. Thanks to the work of many of the people in this room, we have the policy tools and information we need to give us a head start to check some big items off the list. …

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Price Tags: The most politically devastating comment is this: “(the previous Liberal administration) evaluated the costs of cracking down on white collar crime, on fraud, on money laundering, and determined that the benefits of inaction outweighed the costs of action. …”

My guess is that the Liberals assumed the consequences would be minor and not result in consequential issues, not be connected in local reporting to, say, the costs of housing – or in any event be political tolerable if the negative results only impacted high-end housing in parts of Metro Vancouver, from which they were getting hundreds of millions in property transfer taxes in any event.

Those Liberal politicians are still around.  Some like Coleman are in the Legislature; others are running for leadership.  Let’s hear from them.  What were they were thinking, why did they decide not to act, what will they do now?

Not as seriously but analogously, it is like the previous Transportation minister Todd Stone (now running for leadership) not really acknowledging or apologizing for the impact of the imposed referendum on regional transportation funding in Metro.  It divided us, it delayed us, it was unnecessary – and the Liberals figured it would be politically inconsequential if it was only Metro they screwed over.  They had no plan for the future.

Again, will they acknowledge this record (some have) – and what will they do now?  Have they learned anything, and how will they demonstrate both contrition and a constructive approach to Metro issues: housing costs; white-collar crime and transparency; transportation, funding and governance. 

They will have abundant opportunities in the Legislature and in their leadership campaign.  Let’s see what they have to say – because they had better have something serious, specific and constructive.