The Canadian eGaming scandal that will not go away

The loss of a million dollars of taxpayer’s money in an abortive attempt to set up a tribal online gambling licensing and regulatory regime in the Canadian province of Prince Edward Island (see previous reports) continues to linger after four years of finger-pointing and enquiries, and could be about to be resurrected again in fresh litigation.

A company titled Capital Markets Technologies is behind the new drive to extract more money – around Cdn 25 million – from the provincial government, and is serious enough to have deposited Cdn$732,098 with the Supreme Court of P.E.I. in security for a new lawsuit.

CMT has dispatched a registered letter to the province’s deputy attorney general giving the necessary 90 days’ notice that it intends to file a new statement of claim against the province.

Our readers may recall that CMT filed a $25 million legal claim against the PEI government last year, accusing it of breach of contract and confidentiality, as well as corruption and collusion involving government officials and two private businessmen.

The action failed in February this year, but Supreme Court Justice Gordon Campbell left the door open for the company to file a new statement of claim, which it has now done.

The fresh litigation names the PEI government and local businessman Paul Jenkins, whilst the letter of notice adds almost a dozen others, among them both politicians and business people.

It reveals that CMT was a shareholder in the U.K. firm, Simplex, which worked with the P.E.I. government and its proposed tribal partner the Mi’kmaq Confederacy in 2011-12 on a proposal to make P.E.I. a countrywide Internet gambling regulator.

The e-gaming proposal was abandoned by the province in February 2012 (see previous reports), but later that year, a numbered company owned by CMT, called 7645686 Canada Inc., signed a memorandum of understanding (MOU) with Innovation P.E.I. to explore the idea of establishing a financial services platform in P.E.I.

CMT’s legal representative, John Findlay, claims in his new notification to the provincial AG that CMT and its subsidiary 7645686 Canada Inc. intend to claim breach of the confidentiality provisions of the MOU in a new statement of claim, along with accusations of “malfeasance in a public office,” intended to harm his clients….likely in connection with minor penalties CMT had to pay in a separate securities investigation.

And, Findlay warns, “It is anticipated that the damages will be substantial.”

Jonathan Coady, representing the provincial government in the prior litigation, has received the notification from Findlay and commented:

“We remain of the view that there is no legal merit to this claim.”