Winnie Dube: What is behind Canada’s offshore tax probe?

Image copyright Getty Images Image caption Winnie was among the signatories to a letter calling for an inquiry into the allegations Some of Canada’s major political parties have agreed on the need for a…

Winnie Dube: What is behind Canada's offshore tax probe?

Image copyright Getty Images Image caption Winnie was among the signatories to a letter calling for an inquiry into the allegations

Some of Canada’s major political parties have agreed on the need for a parliamentary inquiry into allegations that some of the country’s wealthiest individuals and businesses are hiding money abroad.

But no precise date has been set and no details on who would take the inquiry forward have been released.

So what do the reports stand for and why has the country not formally charged tax havens?

The driving force for action

The initial investigation was sparked by an account statement of 94-year-old Winnie Dube, which was released to the public by her son, Joe, in August.

She was named as one of a group of Canadians, which also included a former cabinet minister, a lawyer and an insurance broker, allegedly avoiding tax by transferring assets through accounts in the British Virgin Islands.

That investigation has led to the filing of the first charges in Canada, against wealthy individuals and corporations.

Seven of those charged are members of families that have business links to Vancouver-based AgBank (the offshore bank), according to documents that were previously made public.

However, the prosecutor has declined to name which individuals, or businesses, are involved.

The group of wealthy Canadians has included several current or former MPs and provincial politicians, some of whom became members of the Liberal Party – the main party in Canada.

Three of the officers and directors of AgBank are on a committee of MPs chaired by Jimmy Breslin, who also sits on the board of Valeant Pharmaceuticals. One director, Craig Donaldson, has been a Liberal Party councilor since 2011, according to his LinkedIn profile.

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Three of the seven people charged have publicly acknowledged being investigated.

Two of the business executives – Aqib Shah and Kulwant Singh Bains – have denied any wrongdoing.

It is illegal in Canada to hide assets abroad.

However, rules on the duty of disclosure to tax authorities, where and when assets may be moved, are complicated.

So the issue of forfeiting assets is thorny. Tax haven lawyers say legal action against accused individuals and businesses could break tax treaties with countries they might move assets to, as well as international law.

Nobody has been formally charged in Canada over offshore tax avoidance, but it is said to be part of the government’s investigative priorities.

What is the case?

Image copyright Getty Images Image caption Mr Breslin is said to be one of the lead investigators

The details of the allegations in the case are contained in the search warrant application.

The police are examining the accounts of seven bank employees, two of which were registered at the four-star hotel near the US border where many PMs and others from the world of politics stay.

Accounts were allegedly set up for Mr Breslin, another lawyer, one of his sisters, and a group of executives from AgBank.

Those companies controlled by the Canadian trio listed over £3.4bn ($4.9bn) in total, the documents filed in court allege.

Other accounts in the UK, Cyprus and the Cayman Islands, it is claimed, included assets that would likely have been subject to tax in Canada.

It is not clear how much was transferred via these offshore accounts.

The investigation further alleges that one of the companies controlled by Mr Breslin “obtained by or on behalf of or in concert with Mr Breslin and others the interest in certain real estate assets of approximately $70m, of which it may or may not have paid any taxes on or report any taxes due.”

That company is one of the firms that will be part of the inquiry into offshore tax avoidance, along with four others which are believed to hold a total of about $10bn in assets, lawyers involved say.

The case is the first among seven charging individuals and businesses alleged to have engaged in offshore tax avoidance to go to trial.

The investigation has previously secured £1bn in unpaid tax from other owners of offshore entities.

The investigation also found that a number of companies and individuals allegedly involved in offshore tax avoidance “turned up” to pay them.

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