Perhaps some Canadians involved in these deals may have friends in high places or perhaps our investigators are just not very quick or efficient compared to those in other countries.
MP presses Tories on Liechtenstein tax evasion scandal
Last Updated: Friday, July 18, 2008 10:22 AM ET By Nathan Crocker CBC News
A Bloc Québécois MP is pressuring the Tory government to provide more information about Canadian involvement in a growing global Liechtenstein tax evasion scandal, CBC's The Fifth Estate has learned.
Paul Crête, vice-chair of the standing committee on finance, wants to know how many of the 100 Canadians who have been linked to the case have voluntarily told the Canada Revenue Agency about previously undeclared earnings, thereby possibly avoiding prosecution.
He believes Canada should follow the lead of other countries investigating their citizens who have accounts in Liechtenstein. Those countries have made public the number of people who have stepped forward and declared their offshore income.
Since the case broke in February, governments have been probing whether their citizens used accounts in the alpine principality to avoid paying taxes. Germany, which is leading the international crackdown on tax evaders, has reportedly collected up to 250 million euros from more than 200 tax evaders who have turned themselves in, and 330 others who wrongly believed they were on the list of accounts stolen from LGT Group.
Crête said that he believes the key to fixing the tax haven issue is transparency, both offshore and on.
During a finance committee meeting in March, Crête questioned Janet DiFrancesco, an official with Canada’s financial intelligence agency (FINTRAC), about why Canada has not responded as quickly as other countries involved.
“I think probably the [Canada Revenue Agency] would be better placed to be able to respond to that particular investigation,” DiFrancesco said, adding that FINTRAC's intelligence would have been given to the CRA for their examination.
The CRA has repeatedly denied requests by The Fifth Estate for the information, saying only that the investigation is ongoing.
During the finance meeting, DiFrancesco also refused to explain what role FINTRAC has played in the case.
On June 17, Crête sent a letter to Revenue Minister Gordon O'Connor, asking how many of the Canadians involved have utilized a voluntary disclosure program and how many will face prosecution. The voluntary disclosure program allows taxpayers to come forward and disclose material they did not report during previous dealings with the CRA, without penalty or prosecution.
Crête is out of the country and was unable to say whether he received a response.
“We need to look at the way money is going out to countries like Barbados, and give a realistic picture of this to Canadians,” he said in an interview in June.
“Twenty or 30 years ago, globalization wasn’t an issue like it is today. We need to ensure there are clear rules about these kinds of transactions. Some countries aren’t playing the game and we must make sure people know about this,” he said.
Man who stole bank information testifies
In February, Liechtenstein’s reputation was tainted when former LGT computer technician Heinrich Kieber’s sale of the stolen account information of about 1,400 wealthy clients to the German foreign intelligence service, the Bundesnachrichtendienst or BND, made headlines.
When Germany shared the data with other countries, it triggered an international crackdown on tax evasion.
Kieber has been given a new identity and placed in witness protection in an undisclosed country, unreachable by even his lawyer, Jack Blum. As hearings took place in Washington Thursday probing U.S. citizens' use of banks in Liechtenstein and Switzerland, Kieber spoke publicly for the first time in a pre-recorded video interview.
The half-hour recording shows a silhouette of Kieber answering questions in English from the congressional investigators and outlining the extensive efforts and schemes enlisted by the bank to ensure secrecy.
“The LGT strongly recommends to all clients to follow instructions, such as, firstly, not to tell anybody, concerning the legal entity, to their lawyers, to other family members or relatives who are not part of the pool of beneficial owners, to friends or business partners.… Secondly, not to call the LGT Group from home — not from home, not from work. Use public phones instead,” said Kieber.
The hearings heard how seven affluent Americans used secret accounts and foundations in Liechtenstein to conceal millions from the taxman. The tiny country with a population of 35,000 and no army has come under fire from the EU to improve transparency as a result of the investigations.
The hearings also heard details about the recent case of Bradley Birkenfeld, the private Swiss banker employed by UBS AG, who helped millionaire real estate developer Igor Olenicoff stash $200 million in Switzerland and Liechtenstein. In his opening statements before the subcommittee, UBS representative Mark Branson announced that the bank will no longer provide offshore banking or securities services to US residents through its bank branches.
“This is just the tip of the iceberg," warned Paul DioGuardi, a senior partner of Toronto-based DioGuardi Tax Law who specializes in voluntary disclosure cases. "The whole idea of tax havens is really in disfavour in all the capitals of North America and Europe because they’re losing huge amounts of taxable income. I think they’ve only come to dimly realize the amounts they’re losing."
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