Quarantine hotel co-owner misappropriated almost $16M of public funds, lawsuit alleges
CBC
The man who oversaw the Westin Calgary Airport hotel's time as a COVID-19 quarantine facility is being sued for allegedly misappropriating nearly $16 million in federal funds.
A new lawsuit claims that part-owner Sukhminder "Sukhi" Rai and his PHI Hospitality corporation kept money from the Public Health Agency of Canada (PHAC) that was supposed to pay for the hotel to house travellers for their mandatory quarantine periods from June 2020 until October 2022.
CBC News has obtained and reviewed hundreds of pages of legal and financial documents related to the lawsuit, filed by two of the hotel owners against the third.
Rai led a "fraudulent scheme" targeting the hotel and PHAC officials, according to the statement of claim, telling the other owners the government was taking over the entire hotel but only paying for 100 rooms — when he had actually negotiated government payment for all 247 rooms.
It's alleged he misappropriated the revenue difference of those 147 rooms: at least $15.7 million.
Documents show Rai, a B.C. resident, set up a bank account under PHI Hospitality one month before PHAC began depositing Westin invoice funds there. That account was not affiliated with PHI's operation of the Westin.
The federal health agency transferred a total of between $27.74 million and $29.07 million over more than two years to that account, according to deposit records.
Affidavits attest that only $12.05 million was ever paid to the hotel for the quarantine facility contract.
Financial documents from RBC, backed up by the affidavits, allege the missing money was funnelled to several entities related to Rai, withdrawn in cash or transferred to offshore accounts.
None of the allegations have been proven in court.
Rai denies the allegations and said he is pursuing legal steps in the interim, including court orders and additional hearings, to combat the claims.
"We intend to defend ourselves in court vigorously," he wrote in a statement to CBC News.
"The allegations of misappropriation in the court documents are completely false. This is simply a business dispute about which parties are entitled to certain money, the amount of which has been admitted to be exaggerated in the court documents, and that has been dressed up to attract attention with sensational and false accusations."
Rai has not yet filed a defence. Representatives for the plaintiffs declined requests for an interview.
This First Person column is the experience of Shannon Flaman, who lives in Red Deer, Alta. For more information about CBC's First Person stories, please see the FAQ.
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