Royal Bank of Canada has been ordered to divulge the real owners of 97 offshore corporations that used its services, but a critic is wondering why it’s taken the Canada Revenue Agency six years to acquire a fount of information that could help detect tax cheats.
In submissions to the Federal Court of Canada, the CRA says most of the companies used tactics to “obfuscate the identities of the persons who truly control and beneficially own these entities,” and it wants to check whether the real owners are Canadians hiding money in tax havens.
“The CRA is concerned that any or all of these 97 Bahamian corporations may be controlled and/or beneficially owned by persons resident in Canada,” the agency says in a court filing.
Canadian individuals and corporations have $23 billion in declared, known funds held in or invested through the Bahamas — more than France, Spain and Portugal combined. A 2018 CRA study suggested Canadians have another $76 billion to $241 billion in undeclared, hidden wealth stashed in all offshore jurisdictions combined, but it didn’t break it down by country.
In May, a judge granted the federal government’s request for an order for Royal Bank and its RBC Dominion Securities subsidiary to provide any information that would help the CRA identify the owners of the 97 Bahamas corporations. The bank did not oppose the government.
The CRA says in its court filings that all the companies had investment accounts at Royal Bank or RBC Dominion at some point, “which suggests that they might be or have been controlled by persons resident in or situated in Canada.”
It’s not inherently illegal for Canadians to have an offshore account or company, but any assets over $100,000 and any income have to be reported for tax purposes.
CRA mum about other banks
CBC/Radio-Canada originally reported in 2016 that the Bahamas Leaks revealed that three Canadian banks had provided services to nearly 2,000 offshore companies in the Bahamas since 1990. The banks were what’s known as “registered agents” — licensed intermediaries who pay the annual fees to the Bahamas corporate registry, manage the paperwork and in many cases also incorporate the offshore companies.
The leaked files showed that Royal Bank acted as agent for 847 Bahamian companies listed in the leaked data, companies with names from Abbatis 1 Inc. to Yellow Jacket Holdings Ltd., while CIBC registered or administered 632 and Scotiabank handled 481.
Royal Bank didn’t answer questions from CBC News about the Bahamas corporations, but did provide a statement saying that in general, it has “high standards and an extensive due diligence process to detect and prevent any illegal activity occurring through RBC.”
Neither the CRA nor RBC would explain how the number of offshore companies of interest was whittled down to 97 from the 847 number. Some of that reduction is likely because even back in 2016, nearly half of those companies were already dormant or dissolved. It’s possible the CRA also determined that many of the companies had no Canadian shareholders or other ties to Canada that could lead to tax obligations.
Toby Sanger of Canadians for Tax Fairness says the Bahamas is a notoriously secretive jurisdiction where people often route money in order to keep hidden. (CBC)
There is no indication in the docket of the Federal Court that the CRA has also gone after any of the companies managed by CIBC or Scotiabank. It’s possible the tax agency obtained information directly and confidentially from those two banks using powers under the Income Tax Actthat don’t require it to first get a court order, but it wouldn’t say.
“The CRA does not generally release information related to our compliance approaches, as it could provide a roadmap to non-compliance,” the agency said in a statement to CBC News. “As such, we are unable to confirm if the CRA will be seeking authorization to retrieve third party data from CIBC and Scotiabank.”
‘Very frustrating’
Toby Sanger, a senior policy adviser to the advocacy group Canadians for Tax Fairness, said the lack of transparency doesn’t help the impression that the CRA “seems to be more focused on going after the easy targets, the small-time individuals,” rather than the bigger and more complex cases of offshore tax evasion and avoidance.
“We shouldn’t just kind of write these carte blanche cheques allowing wealthy corporations and individuals with money in whatever jurisdiction they decide to park it in to avoid taxes,” he said in an interview.
The CRA, which proclaimed in the wake of other leaks, such as the Panama Papers and the Paradise Papers, that it was cracking down on offshore tax shenanigans, also wouldn’t explain why it’s only seeking ownership records for the 97 offshore companies now — six years after the Bahamas Leaks brought them to light.
“It’s very frustrating and disappointing that it has taken the CRA so long to act on these leaks,” Sanger said. “The slow action in this instance on the Bahamas Leaks means that they’re just kind of crying wolf, and that it’s more bark than bite.”
The Bahamas Leaks records were obtained by Sueddeutsche Zeitung, the same German newspaper that was leaked the Panama Papers, which then shared the files with the Washington-based International Consortium of Investigative Journalists and its network of global media partners, including CBC/Radio-Canada.
The Panama Papers emerged a few months earlier in 2016, but the CRA has yet to lay any criminal charges against anyone named in that leak. Other countries have already brought hundreds of charges and secured convictions.
The CRA received nearly $1 billion in extra funding between 2016 and this year to combat tax evasion and tax avoidance. In an email to CBC, the agency couldn’t point to a single criminal conviction it’s obtained in the last 4½ years that had to do with offshore tax evasion.
The agency said last week that at one point, it had five open criminal investigations stemming from the Panama Papers, but it subsequently dropped three. The two remaining cases appear to be ongoing probes into $77 million in alleged withholding-tax evasion in Vancouver, and an investigation into an Alberta oilpatch financier.
OTTAWA – The New Democrats confirmed Thursday they won’t help Pierre Poilievre’s Conservatives topple the government next week, and intend to join the Bloc Québécois in blocking the Tories’ non-confidence motion.
The planned votes from the Bloc and the New Democrats eliminate the possibility of a snap election, buying the Liberals more time to govern after a raucous start to the fall sitting of Parliament.
Poilievre issued a challenge to NDP Leader Jagmeet Singh earlier this week when he announced he will put forward a motion that simply states that the House has no confidence in the government or the prime minister.
If it were to pass, it would likely mean Canadians would be heading to the polls, but Singh said Thursday he’s not going to let Poilievre tell him what to do.
Voting against the Conservative motion doesn’t mean the NDP support the Liberals, said Singh, who pulled out of his political pact with Prime Minister Justin Trudeau a few weeks ago.
“I stand by my words, Trudeau has let you down,” Singh said in the foyer outside of the House of Commons Thursday.
“Trudeau has let you down and does not deserve another chance.”
Canadians will have to make that choice at the ballot box, Singh said, but he will make a decision about whether to help trigger that election on a vote-by-vote basis in the House.
The Conservatives mocked the NDP during Question Period for saying they had “ripped up” the deal to support the Liberals, despite plans to vote to keep them in power.
Poilievre accused Singh of pretending to pull out of the deal to sway voters in a federal byelection in Winnipeg, where the NDP was defending its long-held seat against the Conservatives.
“Once the votes were counted, he betrayed them again. He’s a fake, a phoney and fraud. How can anyone ever believe what the sellout NDP leader says in the future?” Poilievre said during Question Period Thursday afternoon.
At some point after those comments, Singh stepped out from behind his desk in the House and a two-minute shouting match ensued between the two leaders and their MPs before the Speaker intervened.
Outside the House, Poilievre said he plans to put forward another non-confidence motion at the next opportunity.
“We want a carbon-tax election as soon as possible, so that we can axe Trudeau’s tax before he quadruples it to 61 cents a litre,” he said.
Liberal House leader Karina Gould says there is much work the government still needs to do, and that Singh has realized the consequences of potentially bringing down the government. She refused to take questions about whether her government will negotiate with opposition parties to ensure their support in future confidence motions.
Bloc Québécois Leader Yves-François Blanchet hasn’t ruled out voting no-confidence in the government the next time a motion is tabled.
“I never support Liberals. Help me God, I go against the Conservatives on a vote that is only about Pierre Poilievre and his huge ambition for himself,” Blanchet said Thursday.
“I support the interests of Quebecers, if those interests are also good for Canadians.”
A Bloc bill to increase pension cheques for seniors aged 65 to 74 is now at “the very centre of the survival of this government,” he said.
The Bloc needs a recommendation from a government minister to OK the cost and get the bill through the House.
The Bloc also wants to see more protections for supply management in the food sector in Canada and Quebec.
If the Liberals can’t deliver on those two things, they will fall, Blanchet said.
“This is what we call power,” he said.
Treasury Board President Anita Anand wouldn’t say whether the government would be willing to swallow the financial implications of the Bloc’s demands.
“We are focused at Treasury Board on ensuring prudent fiscal management,” she said Thursday.
“And at this time, our immediate focus is implementing the measures in budget 2024 that were announced earlier this year.”
This report by The Canadian Press was first published Sept. 19, 2024.
OTTAWA – Treasury Board President Anita Anand has been sworn in as federal transport minister at a ceremony at Rideau Hall, taking over a portfolio left vacant after Pablo Rodriguez resigned from cabinet and the Liberal caucus on Thursday.
Anand thanked Rodriguez for his contributions to the government and the country, saying she’s grateful for his guidance and friendship.
She sidestepped a question about the message it sends to have him leave the federal Liberal fold.
“That is a decision that he made independently, and I wish him well,” she said.
Prime Minister Justin Trudeau was not present for the swearing-in ceremony, nor were any other members of the Liberal government.
The shakeup in cabinet comes just days after the Liberals lost a key seat in a Montreal byelection to the Bloc Québécois and amid renewed calls for Prime Minister Justin Trudeau to step down and make way for a new leader.
Anand said she is not actively seeking leadership of the party, saying she is focused on her roles as minister and as MP.
“My view is that we are a team, and we are a team that has to keep delivering for our country,” she said.
The minority Liberal government is in a more challenging position in the House of Commons after the NDP ended a supply-and-confidence deal that provided parliamentary stability for more than two years.
Non-confidence votes are guaranteed to come from the Opposition Conservatives, who are eager to bring the government down.
On Thursday morning, Rodriguez made a symbolic walk over the Alexandra Bridge from Parliament Hill to Gatineau, Que., where he formally announced his plans to run for the Quebec Liberal party leadership.
He said he will now sit as an Independent member of Parliament, which will allow him to focus on his own priorities.
“I was defending the priorities of the government, and I did it in a very loyal way,” he said.
“It’s normal and it’s what I had to do. But now it’s more about my vision, the vision of the team that I’m building.”
Rodriguez said he will stay on as an MP until the Quebec Liberal leadership campaign officially launches in January.
He said that will “avoid a costly byelection a few weeks, or months, before a general election.”
The next federal election must be held by October 2025.
Conservative Leader Pierre Poilievre said he will try to topple the government sooner than that, beginning with a non-confidence motion that is set to be debated Sept. 24 and voted on Sept. 25.
Poilievre has called on the NDP and the Bloc Québécois to support him, but both Jagmeet Singh and Yves-François Blanchet have said they will not support the Conservatives.
Rodriguez said he doesn’t want a federal election right away and will vote against the non-confidence motion.
As for how he would vote on other matters before the House of Commons, “it would depend on the votes.”
Public Services and Procurement Minister Jean-Yves Duclos will become the government’s new Quebec lieutenant, a non-cabinet role Rodriguez held since 2019.
This report by The Canadian Press was first published Sept. 19, 2024.
— With files from Nojoud Al Mallees and Dylan Robertson
