Ex-BC Lottery CEO in conflict of interest by taking private gaming-related job, Vancouver Not Vegas charges

“It’s a gross violation of ethics and integrity by a senior executive at the top level in a Crown corporation,”  said Sandy Garossino of Vancouver Not Vegas.

Michael Graydon, left. Image of proposed casino and entertainment complex at BC Place, right.

Former BC Lottery Corporation CEO Michael Graydon was in a conflict of interest when he left his Crown corporation job to work for a U.S. gaming company earlier this year, according to a new government review. Graydon's new employer has high stakes in a proposed casino and resort that would be built beside BC Place in the heart of downtown Vancouver.  

“It’s a gross violation of ethics and integrity by a senior executive at the top level in a Crown corporation,” said Sandy Garossino of Vancouver Not Vegas, a non-partisan citizen's group opposed to gaming expansion in the city.  “It is absurd and profoundly offensive to the public trust.” 

Graydon took a job with PV Hospitality, a co-venture between 360 VOX Corporation and Paragon Gaming, a Las Vegas-based company proposed the controversial expansion of Edgewater casino to BC Place back in 2011. Although the expansion fell through, City Council and the Vancouver Permit Board gave Paragon gave approval to move (without expanding) the casino to BC Place. According to Canadian Gaming Business, Graydon's first project in his new job is to tackle this Vancouver casino project, which he also oversaw while CEO of BCLC. 

Despite entering negotiations for a job with Paragon in late 2013, Graydon didn’t tell BCLC he’d accepted his new position until January 29, resulting in a violation of government rules around disclosure. 

"As an individual, Mr. Graydon would have a private economic interest in his prospective employment with an affiliate of Paragon Gaming," read the report. "This interest could be considered significant enough to at least establish a reasonable apprehension that it would influence the duties and responsibilities of a CEO of BCLC."

Graydon asked to stay at BCLC until the end of March, even though he'd already accepted his job at PV. The BCLC board refused, but agreed to pay him until March 31, after which he received almost $125,000 in severance, bonus and back pay. Graydon was paid $395,196 in 2013, according to a BCLC report, and won't be expected to pay anything back. 

But Garossino argued the severance pay is just a “minute fraction” of what taxpayers could end up paying for the casino and entertainment complex at BC Place. 

“Edgewater casino is likely to be underwritten 42 per cent by the public,” Garossino said. She said it was “ridiculous” for the province to be spending millions on a casino at a time when it is unable to pay teachers to educate children.

Although the Edgewater casino’s move to BC Place is expected to bring well-paying jobs and economic benefits to the area, the project was heavily opposed by a large number of residents due to its location in downtown Vancouver, not far from the Downtown Eastside and Chinatown. The 2011 public hearings on the issue drew over 140 speakers, making it the largest turnout in the City’s recent history. Doctors and nurses warned of a rise in problem gambling, saying it would have severely negative effects on low-income residents, while neighbourhood associations said they weren’t consulted on the project. Some questioned the social merit of building a casino, which could attract gangs and loan sharks. A prominent Vancouver artist, Ken Lum, spoke about the devastating impact of his father's gambling addiction and urged City not to approve the project.

Garossino said Paragon’s track record was dubious, noting that a Paragon-owned casino in Alberta filed bankruptcy this year after racking up a debt of $100 million. The casino’s bankruptcy papers showed that it owed $82 million to Silverpoint Finances, an American financing firm.

"BCLC should have been hauling Paragon up to account for what is going on in their finances and their operations, because we, the public, are going to be on the hook (in the BC Place casino deal)" she said. "Are we about to get hosed here?" 

The government report concluded that despite the apparent conflict of interest, there was “no evidence of Paragon Gaming or Edgewater Casino receiving preferential treatment”, based on interviews with Graydon and other staff. But this is not the first time BCLC was implicated in a potential conflict of interest situation with Paragon. Another former BCLC chair, Richard Turner, acquired shares in the company while he was still working at BCLC, then left to become a Paragon director in 2004.

Paragon Gaming was contacted for comment but did not respond. 

Read the full report below:  

BCLC CEO Review - Final Report

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