The News Rundown

Luxury mansions. Millions in suspicious bank transfers. And concern that a Chinese businessman accused of bribery helped froth Canada’s housing market

Much has been said about the housing crisis in Canada, but not much has been made of the problems of money laundering, especially in British Columbia, which may have contributed to an overheated housing market that has priced out many in the working and middle class from ever owning their own homes in their lifetimes.
We've discussed money laundering on the show before, most recently last October on Western Context episode 247, where we detailed a man making $40k/year who bought $32m in Vancouver real estate via Chinese Communist Party-linked offshore accounts. We now can attach a name to the case, with an organized Crime and corruption reporter revealing that the man is named Runkai Chen, who has caught the eye of a B.C. commission probing money laundering and surging home prices. Chen and his family have been revealed as the faces behind suspicious money transfers of unexplained millions through offshore shell companies and Hong Kong money exchanges.
Before moving from China to Canada in 2006, Runkai Chen told immigration officials that he made at most $41,000 a year. His wife, he said, was employed as a clerk. Despite their modest incomes, a series of money transfers poured $114 million into the Chen family’s Canadian bank accounts a few years later.
Chen is now wanted for arrest by the Chinese government on charges of bribery for his alleged role in a major corruption scandal involving a senior military official. He’s fighting to stay in Canada, where his family has two mansions in Vancouver overlooking the Pacific.
He is the owner of a Tudor-style home with mountain and ocean views he purchased in 2016 for $15.6 million. It sits a few doors down from another mansion his daughter bought in 2012 for about $14 million when she was 25. She did so without a mortgage and while listing her occupation as “student.”
The Chen family’s investments in Canada add to mounting concerns about illicit overseas money flowing into the country’s overheated real estate markets, helping to push already sky-high housing costs out of reach for many Canadians. Amid vigorous public debate about billions of overseas dollars laundered through Vancouver’s real estate market —— including from organized crime groups —— the B.C. government formed the Cullen Commission in 2019, which is expected to deliver its final report shortly.
Chen’s Toronto lawyer, Lorne Waldman, claims that Chen is innocent, and said that while his client was involved in a controversial land deal in China, he paid no bribes and had been caught up in a “political” case against the military general for which he was innocent. Waldman also says that while Chen declared a low salary upon arrival to Canada in 2006, a “big (land) development occurred after that,” which lifted his income, which sounds pretty fishy.
The federal government has been quietly analyzing the source of Chen’s wealth through documents dating back to before he arrived in Canada in 2006, according to documents obtained by the Cullen Commission that include a report from the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) — Canada’s financial intelligence unit. Before arriving in Canada, Chen and his wife had amassed $1.26 million to bring into Canada despite the modest incomes they reported to Canadian authorities.
According to a forensic financial analysis quoted in the case study: “Unless they made considerably more before the majority of funds began to come to Canada in 2010, Person A and his family did not have sufficient resources to account for the funds they transferred. The discrepancy between the funds they had available and the volume of subsequent transfers to Canada is a significant indicator for money laundering activity.”
Concerns about suspicious foreign money in Canada’s real estate market reach well beyond the Chen case. Experts have testified to the Cullen Commission that real estate has also become inundated with dirty money derived from the drug trade and other crimes, as well as alleged corruption. By laundering illicit funds, serious and other organized criminals are able to profit from some of the most damaging crimes, including drugs and human trafficking, violent crime and fuelling the devastating opioid crisis.
A 2020 report from the Criminal Intelligence Service of Canada found that as much as $113 billion is laundered annually. In all, 176 organized crime gangs — half with international ties — were fully integrated into the country’s economy, the report says, and nearly half were involved in the cocaine trade. The real estate sector, in particular, is “vulnerable to exploitation by criminals looking to launder illicit (proceeds of crime),” by providing a secure, legitimate investment and a location to live and conduct “further criminal business.”
In 2019, a B.C. government expert panel estimated that more than $7 billion in dirty money was laundered in the province in the previous year alone. As much as $5.3 billion of that was laundered through real estate, causing housing prices to increase about 5 per cent.
Financial and law enforcement experts say the problem extends to other Canadian cities too, notably the Greater Toronto Area (GTA), which in February surpassed Vancouver as the most expensive place in the country to buy a home, according to RBC Economics.
In the meantime, a teardown home on Vancouver's west side has been listed for just under $3.5 million, a year after it was purchased by a numbered company for $2.5 million. It's unclear how the seller decided on the asking price, which is approximately 40 per cent higher than the property last sold for in February 2021. Images show the windows and entrances of the home boarded up, and the exterior marked with graffiti, including the words "Eat the rich."
Even then, Tom Davidoff, a housing researcher and professor at UBC said the price didn't strike him as "totally crazy," given the state of the market: "Prices have certainly escalated over the past 12 months. Now it is a totally crazy number in terms of there not being a lot of people in Vancouver who can pay $3.5 million just for land, then build a house on top of that. You're probably looking at $5 million at that point."
But with the Bank of Canada expected to continue with a series of interest rate hikes, some analysts believe Vancouver real estate is poised for a downturn that could last years. A Royal Bank of Canada outlook published last month predicted B.C.'s aggregate benchmark price will drop 3.8 per cent in 2023, which is the biggest decrease forecast across the country.
That said, a small downturn will do little to help people find affordable housing if organized crime is able to run roughshod over the governments, both federal and provincial, especially with a feeble response and slow reaction times just making things worse. One hopes that someone will come along that will put a pin in this issue for good.
Supplementals:

This week the Alberta legislature wrapped its spring sitting culminating with the UCP grass roots voting to remove Jason Kenney as leader.
But with that being said, this session promised more money for ICU spaces, more government investment in aerospace and manufacturing and TV and film. But most surprisingly, the session also delivered Alberta’s first balanced budget in over 10 years.
Most of the discussion has centred around what the future looks like after coming out of the dark times over the past few years and our cities feel that.
There have been countless media reports done on the state of transit in Edmonton and Calgary.
This week the focus is on Edmonton as Justice Minister Tyler Shandro invoked Section 30 of the Police Act giving Mayor Amarjeet Sohi 30 days to come up with a public safety plan.
The letter written to the city says, “Within the next two weeks, I will require a public safety plan from you that will increase police response to this disorder and ensure members of the public can use Edmonton’s public transit safely.”
Overall crime levels are said to have risen by 11% and crime severity around transit centres has risen by 60% since 2019.
This equates to 549 LRT and transit centre disturbances in 2022, 130 violent incidents, and 42 weapon complaints.
The City for their part has chosen to focus on the social services angle of the problem wanting to increase that part of the police budget rather than tried and tested community policing.
The Minister says that the Edmonton Police Service is poised to receive less cash if the current plan before council is approved. The $385 million would exclude annual top ups from photo radar totalling about $22m lost.
The mayor blamed the lack of photo radar funding on the province.
Councillor Erin Rutherford told Postmedia the only way to make up the $22 million is either by the province lifting the moratorium on photo radar, allowing cities to collect money in other ways, or by bringing in an additional two per cent tax increase.
What we are seeing now was predicted and brushed away by candidates like Amarjeet Sohi and the media during the municipal elections last year. People tried to point out what was happening but it was conveniently ignored in the campaign.
We saw this as a potential outcome when back in December city council voted 8 to 5 in favour of reducing the police budget by $11m.
Factoring in the missing $22m this brings us up to more than $30m that the Edmonton Police could be missing out on.
Back then, Police Chief Dale McFee warned that this would impact the level of service that the police can offer.
Justice Minister Tyler Shandro also announced an extra $850,000 for Crime Stoppers over three years to help fund the organization’s operation and expand its capacity.
In addition to LRT and transit safety this story draws a focus because it was just one week ago that two were killed in random attacks in Edmonton’s Chinatown.
Put simply at the end of the day, the UCP government is employing a systems approach while the Edmonton Mayor and council is resorting to pushing ideology and rightly or wrongly blaming the province due to a lack of photo radar revenue.
Though at the end of the day, we knew this council was motivated by 2020’s defund the police movement, a problem largely imported from the United States now causing real problems in our cities.
Supplementals:

Little coalition' of Charest and Brown spar with Poilievre during French-language leadership debate

This year's Conservative leadership debate is much more lively and exciting than in years past, where in 2017 there was a smorgasbord of candidates, which I believe made it harder for supporters to rally around a consensus leader (something that eventual winner Andrew Scheer struggled with during his tenure), or in 2020 where Erin O'Toole won over a field of relatively unexciting candidates. This year, in comparison, seems much different as there is a seemingly consensus #1 candidate in Pierre Poilievre, whose campaign has taken social media by storm.
Poilievre's focus has been on getting his message out through both his Youtube, Instagram and Facebook accounts, as well as through in person rallies of a size not seen in Canada in a long time. In contrast, his closest competitor in Jean Charest entered the race without a significant online presence, and is mainly riding on his past experience as the leader of the Progressive Conservatives during Chretien's majority governments, as well as when he was the Premier of Quebec when he headed the Quebec Liberal party.
The other competitors see Poilievre's momentum and during the debates he's had to vigorously defend himself from some of his opponents. This was especially clear during the French language debate held this past Wednesday. Patrick Brown, who has admitted that when he was younger he was (and presumably still is) a major supporter of Charest, has been in lockstep with Charest to attack Poilievre from every angle. Towards the end of the debate, Poilievre even referred to them as a “little coalition.”
Unsurprisingly, two controversial Quebec bills, Bill 96 and Bill 21, consumed a large chunk of debate on Wednesday night. The former, which seeks to affirm that the only official and common language of Quebec is French and ensure that French is used exclusively in workplaces and municipalities, was adopted by the National Assembly on Tuesday. The latter bans several types of public workers, including teachers and police officers, from donning religious symbols while on the job and was passed in 2019.
Brown argued that Bill 96 goes against Canada’s Charter of Rights and Freedoms. He and Charest accused Poilievre of changing his opinion of Bill 21 based on who he’s speaking to, sometimes supporting it, sometimes opposing it. Poilievre refuted this, stating he has consistently opposed the legislation and would vote against it if tabled in the House of Commons.
At various points during the night, both Charest and Brown made efforts to direct their critiques at Poilievre and his positions.
At one point, Brown accused him of flip-flopping on his position on the carbon tax, and then later on he suggested his opposition to vaccine mandates has only really become his position since running for leadership, stating that during the pandemic he tweeted thousands of times but not about COVID-19 vaccine mandates, which Poilievre refuted.
Poilievre did not hold his punches either though, suggesting Brown could not be trusted citing his time as Ontario PC leader, and going hard after Charest's record as Quebec premier. Few, if any, of the evening's attacks were directed at the other three candidates on stage.
In a French language debate, you would expect Charest to dominate. From the get-go, Charest’s mastery of French allowed him to stand out and deliver more complete answers than the five other candidates, whose French ranged from very good (Poilievre) to near nonexistent (Baber and Lewis).
But he was visibly uncomfortable and less loquacious when grilled again (as in previous debates) by Poilievre on his advisory work he did for Huawei after China detained Canadians Michael Kovrig and Michael Spavor. Charest slowly repeated that none of his work with Huawei was done against Canada’s interests, while Poilievre dogged him with questions about how much he was paid by the Chinese firm.
With Brown immediately going on the attack on Poilievre afterwards, which took the heat off of Charest once more, it has raised questions of Brown's legitimacy as a candidate. Seemingly he is only in the race to boost Charest's campaign and to torpedo Poilievre's.
We saw this similar scenario in Alberta in 2017, where the RCMP and the Alberta Election Commissioner investigated allegations that Jason Kenney and his team were involved in orchestrating Jeff Callaway's campaign for the leadership of the United Conservative Party in an attempt to harm Kenney's biggest rival, Brian Jean. Dubbed the Kamikaze Campaign scandal, it was alleged that Callaway's entire reason for being in the race was to attack Jean, and then withdraw. It's odd that comparisons have not been made between Callaway and Brown, but we will have to see as time goes forward if Brown will stay in the race, or just how closely his team is working with Charest's team.
As we enter into the summer, we may yet see more twists and turns in the Conservative leadership race, and we'll keep you up to date.
Supplementals:

https://www.ctvnews.ca/politics/charest-and-brown-challenge-poilievre-and-other-notable-moments-from-the-french-conservative-leadership-debate-1.5919034

Firing Line

Trudeau signals new gun-control changes coming; here's what the Liberals have promised

This week saw the horrific shooting at the Robb Elementary School in Uvalde, Texas. After leaving almost 2 dozen dead, there are many questions yet to be answered.
We’re here this week with another story where the Canadian media has successfully imported American problems and leaves many asking if Justin Trudeau would be happier pushing his agenda if he were a US Senator.
Before we begin talking about the stories this topic has unearthed in Canada, we need to provide some context on the Uvalde shooting.
The shooter had a troubled home life, bought two rifles with ammunition before the shooting, was bullied for a speech impediment, and had lashed out in recent years to the point of attacking family members and inflicting self-harm with knives on his face.
Put simply, the system failed at protecting those around the school and the institutions also failed to realize that the shooter was a ticking time bomb.
There was an excellent article in the Washington Post this week detailing the many failings on BOTH sides. It is linked in our supplementals.
Now, there have also been an influx of gun related stories in the news this week here in Canada.
First, the police shot and killed a suspect near a Toronto elementary school on Thursday afternoon.
The gun that looked real turned out to be a BB gun and the Ontario Special Investigations Unit is investigating, needless to say though, with nerves being raw this story had everyone on edge.
The question of guns also has come up in Calgary where so far the city has had 12 homicides this year with 4 being targeted shootings.
According to the police, the suspects don’t care about being caught with a firearm because that is preferable to meeting a gang rival without a weapon.
A teen was also arrested after bringing a loaded handgun into Bowness High School.
We have talked in the past on the show about how Ontario’s guns are often imported from the US illegally.
Data in Calgary shows that handguns that are legally obtained are being stolen and then being used in crime rather than being smuggled illegally.
Deputy Chief Paul Cook said that “We need that full system of justice to come together to affect the required change to keep our communities safe. I think we have the laws on the books but we need the system (to act more strongly)”
Cook was later asked if such a situation that was seen in Uvalde Texas could happen here, and that lead to the exchange about the law needing to be enforced.
It’s at this point we come to the Prime Minister who wants to be enacting policy for the United States. Justin Trudeau has said that the government will be moving on new gun-control measures “in the coming weeks.”
Listeners may recall that in the past the government banned by order-in-council over 1,500 variants of weapons that were coined as “assault-style” firearms.
Gun experts and owners said back then that a lot of the guns banned were due to how they looked when similar weapons that looked different were not banned.
There were also strange things on the ban list like the M1942 Anti-Tank gun, MARK 153 SMAW Rocket Launcher, and most notably the FGB-148 Javelin missile launcher. We discussed this ban back on Western Context episode 167.
These weapons banned were the weapons that farmers on the prairies use to combat dangers to livestock and in the case of the anti-tank weaponry, the weaponry the citizenry would use to overthrow a government. Perhaps the Prime Minister is worried about something else than hand firearms?
We don’t have an exact picture of what Trudeau and company plans to do but most of what this government has done on firearms has been emotional rather than technical.
CTV news in running spin for the government said that the government could:
Follow through on requiring owners of banned firearms sell them back to the government to be destroyed or "rendered inoperable";
Move to ban the sale or transfer of high-capacity magazines that can hold more than the legal number of bullets;
Require long-gun magazines be permanently altered "so that they can never hold more than five rounds”;
Provide funding to provinces and territories who move ahead with banning handguns in their municipalities;
Increase the maximum penalties for firearm trafficking and smuggling; and
Table "red flag laws" that would allow firearms to be immediately removed if the owner is deemed a threat to themselves or others.
What we have proven in this story is that there are police agencies in this country who believe our laws are sufficient. The government wants to go another way.
The question going forward that the opposition will have to hold the government to account on is: will there be adequate consultation with law enforcement and stakeholders to ensure that any changes made result in common sense?
And with that, will the government focus on actual substantive matters rather than trying to wedge the opposition and gun owners into a corner?
Supplementals:

Quote of the Week

“We need that full system of justice to come together to affect the required change to keep our communities safe. I think we have the laws on the books but we need the system (to act more strongly)” - Calgary Deputy Police Chief Paul Cook on the current gun laws in Canada.

Word of the Week

Kamikaze - A Japanese word meaning ‘divine wind’, refers to Japanese WW2 aircraft loaded with explosives and making a deliberate suicidal crash on an enemy target.

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Show Data

Episode Title: A $3.5M Teardown

Teaser: A family from China is tracked for money laundering, Edmonton needs to come up with a transit safety plan, and Poilievre fights off the little coalition of Charest and Brown. Also, the media and government imports the US gun control issue once more.

Recorded Date: May 27, 2022

Release Date: May 29, 2022

Duration: 51:12

Edit Notes: Pause after FL

Podcast Summary Notes

Duration: XX:XX