Who’s involved? How Canada views the Panama Papers

Officials in Canada have been trying to figure out how an offshore company in Gibraltar might be associated with controversial past Canadian prime minister, Brian Mulroney. T he Globe and Mail first reported on…

Who's involved? How Canada views the Panama Papers

Officials in Canada have been trying to figure out how an offshore company in Gibraltar might be associated with controversial past Canadian prime minister, Brian Mulroney.

T he Globe and Mail first reported on the existence of Pandora Papers, a cache of 13,276 documents that detail how offshore tax schemes can be used to hide a range of wealth and ill-gotten gains. The paper’s online edition published stories detailing a shadowy offshore land deal and the Franklin expedition. The papers shed light on some high-profile Canadians, including the late Senator Jacques Parizeau and Brian Mulroney, the country’s former prime minister.

Who is involved?

Documents that have been leaked and published by the International Consortium of Investigative Journalists involve offshore shell companies. They generally differ from tax havens in that they have no official government registry to indicate that they are official bodies or registered as such, but they do have a register of directors, where they can be traced.

The documents relate to companies in Gibraltar and Luxembourg, whose owners were all named in the papers.

“Every country has the right to assume that what’s been done is something the government would disapprove of, or should have known about,” says Micah Peters, a law professor at Queen’s University in Kingston, Ontario. “If, through this Panama Papers release, there was any kind of violation of Canada’s legal rules, that’s going to be grounds for tax-evasion charges and other charges against those who are involved.”

Some Canadian political figures appear to have used offshore accounts as an alternative form of income tax payment. In 1994, Mulroney opened a company called PBM Inc, in Bermuda. He had promised to donate his government salary and Prime Minister’s income to charity if he lost office.

Yet only 29 of the company’s creditors were Canadians, according to the papers. Most of the rest of its money was donated to charities in Canada. “I thought it was very nice of [Mulroney] to reserve my income in order to be able to be charitable,” Mulroney said on CBC Radio in 2005. “This is based on a frank assumption that I am morally straight and don’t choose, on the other hand, to tax other people’s income.”

The CBC also reported on a possible relationship between one of Mulroney’s sons and one of the company’s directors, who was known for his links to a tax haven. It also reported that the Mulroneys might have been under pressure to give up a home in London if Mulroney made enough donations.

When was this?

The Guardian first saw the documents on 23 March, but they are available online for the first time via ICIJ.org.

Canada and Bermuda teamed up in the 1980s to create a partnership called Pebble Project – set up under the Cayman Islands, which has a record of facilitating offshore banking, although it also prohibits ownership by foreigners. Shortly after the agreement was signed, former prime minister Mulroney and ex-foreign minister Gary Lunn were linked to the company.

On 26 March, the Globe and Mail published its story highlighting the Apollo subsidiary whose directors appear to have been Mulroney’s own sons.

What does Canada know about these companies?

They won’t do anything. Canada has a constitutional prohibition against laying criminal charges unless both the Crown and the victim agree to do so. “There’s no understanding under Canadian law that a non-profit company can donate income to a political party,” Peters said.

But there is no such restriction when it comes to offshore tax havens, a space in which Canada holds a relatively large share.

Canada’s finance department said in a statement that it expected companies operating in offshore jurisdictions to act lawfully and transparently, and it is aware of what it considers to be inappropriate financial activity.

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