Graydon's got to go: ex-BCLC CEO's conflict of interest and Paragon casino
“At BCLC we understand the importance of public confidence in our organization and the people who provide our products and services.
We are focused on building public trust through good corporate citizenship.”
--BCLC Statement Mission and Values
We need to talk about Michael.
That’s Michael Graydon, the former BC Lottery Corporation (BCLC) CEO who skipped over to become Paragon Gaming’s new Edgewater project, PV Hospitality.
Michael’s got to go.
If the Clark government insists on kicking sand in the face of kindergarten teachers, then it has to stop mollycoddling six-figure executives and casino companies, especially those whose misconduct opens the door to public corruption.
Finance Minister De Jong’s limp hand-wringing isn’t good enough. Not just because Graydon still walked with a $125,000 golden handshake (some of which might be returned), but because the BCLC will substantially subsidize the construction of the $450 million new Edgewater Casino project. Under BCLC agreements with its license holders, typically 42 per cent of casino construction is paid for by the public company. And Michael Graydon’s the guy who can squeeze every dime out of that fund.
That knowledge is priceless to Paragon, his new employers.
Another reason Graydon’s a big get for Paragon is that he knows the financial nooks and crannies of Edgewater’s competition, especially Richmond’s River Rock Casino and the Hard Rock Casino in Coquitlam. The vast majority of Edgewater’s new market will come from those casinos, and Graydon knows their marketing plans, projections, and corporate weaknesses. Everything a predatory competitor would want to get its hands on.
Knowledge is power, and Michael Graydon is the most powerful man in BC’s gambling industry. We, the BC public, paid him almost half a million dollars a year to acquire that knowledge, but it now belongs to Paragon Gaming. Graydon says he won’t convey inside information, but seriously, how believable is that?
And Paragon needs to hit the penalty box over this fiasco, too, because this isn’t the first time it’s scored while off-side with BCLC. In 2004 Richard Turner, chair of the BCLC board, bought shares in Paragon and didn’t disclose this fact until shortly before resigning prior to taking a post as a director of Paragon.
The BC Lottery Corporation, Michael Graydon, and Paragon Gaming together have a massive credibility program. The fiasco of Paragon’s 2011 mega-casino plans for BC Place laid bare the company’s close relationship with the Liberal party, BC Pavilion Corp and BCLC.
Nobody believes we’ve got to the bottom of that story.
Why would PavCo grant a 50 per cent reduction in the lease rate for a small underperforming operation? Why would investors put up the money to build a casino 40,000 square feet larger than industry standard for the approved licenses? None of this makes sense without expanded casino revenue, which can only come through added slots and gaming tables.
What’s the secret handshake agreement? No expansion can happen without BCLC support. What is the true role of the provincial government, the BCLC, and Michael Graydon? The smell test is stinking the place out.
Luckily, there are other players holding cards.
Paragon isn’t like other BC corporations free to compete in the marketplace. It’s a service provider to the BC Lottery Corporation and the BC public, and is regulated by the Gaming Policy and Enforcement Branch. GPEB has the power to impose conditions on its casino licensees, and it should use it to get Graydon out of the Paragon offices.
The City of Vancouver is itself in an interesting position. As the host local government, the City is entitled to 10 per cent of the net return Edgewater pays to BCLC, so for all intents and purposes it’s a financial partner in this deal. But its interests extend beyond financial concerns. The City has a vital interest in ensuring that Edgewater is operated with a transparent commitment to ethics and integrity.
In the current atmosphere of widespread public suspicion, this is a perfect moment for City Council to step up and assert that our city belongs to the people of Vancouver. It should call for the removal of Michael Graydon, and put to rest the widespread public fears that the BCLC and Paragon have gamed the system.