‘Punish the banks’: how the Swiss bank had its files leaked

Whether or not Canada’s bank secrecy laws apply to a secret Swiss bank account belonging to Prime Minister Justin Trudeau, Finance Minister Bill Morneau, his chief of staff and Trudeau’s former director of public…

'Punish the banks': how the Swiss bank had its files leaked

Whether or not Canada’s bank secrecy laws apply to a secret Swiss bank account belonging to Prime Minister Justin Trudeau, Finance Minister Bill Morneau, his chief of staff and Trudeau’s former director of public engagement could be in trouble.

The Guardian Canada has published a series of stories on off-shore tax havens called the Pandora Papers, and is asking that the Canadian government order the release of banking records.

To illustrate how the Pandora Papers were obtained, Canada’s Globe and Mail has prepared a pictorial guide to the offshore tax havens where Trudeau, Morneau and their associates reportedly hold offshore accounts.

Canada has some of the toughest laws on offshore tax havens – especially when it comes to Swiss banking secrecy – but their enforcement is so weak that nothing has ever been done.

On 27 May, government insiders revealed that Stephen Harper’s former director of policy and former media relations assistant had asked a private account to “get out” about Toronto mayor Rob Ford’s expense reports.

Political parties had been warned to keep the financial details under wraps, and Harper’s spokesman, Jason MacDonald, made sure no Australian government minister gave any information about Australia’s offshore tax havens to the media.

Kathleen Wynne, Ontario’s premier and leader of the Ontario provincial Liberal party, and Justin Trudeau, Canada’s prime minister, announced a tax partnership earlier this year, which may also have ended up moving money offshore. Photograph: 1 for/Pedro Nunes/AFP/Getty Images

The Swiss bank’s systems had already been tipped off to the existence of the secret accounts, and the bank’s accounts manager was instructed not to tell any of his superiors what had happened.

Those who have gone to task to get the details say the documents, which date back to 2001, seem to be impossible to verify.

What does the Canadian government do when it comes to tax evasion?

Both countries play a leadership role at the Organisation for Economic Co-operation and Development (OECD) on cracking down on offshore tax havens.

Australia leads the world in transparency, and has a voluntary approach to disclosure, in which anyone who wants to find out more about their tax affairs in the OECD is supposed to declare them to the Australian Tax Office.

The US, by contrast, has no such treaty and does not sanction non-disclosure by governments.

As the Guardian has found, though, the “de facto” banking information sharing between Australia and the US continues to meet with resistance.

In addition, with the BP oil spill wreaking havoc on the economy, countries have such loose banking secrecy laws that they are not really that concerned about tax evasion.

The US government is pursuing a US court case against Singapore to recover $1.5bn in taxes from the refineries of Royal Dutch Shell. Photograph: Dhiraj Singh/Getty Images

The US does not directly prosecute offshore tax evaders, except with limited exceptions for large corporations.

That being said, the US is still pursuing Singapore over the Shell oil spill, which more than 100 Shell refinery workers are suing. The plant was shut down for 10 months and may have been destroyed by the spilling, if claims of $2.2bn are valid.

Shell, with that stake, is one of the seven largest offshore oil producers in the US. The business is important enough to Shell to have paid its closest neighbours $100m to end its tax dodge in 2014.

What do people expect of the Canadian government?

I’m not sure what “punish the banks” would be.

Canada, with its tough offshore banking secrecy laws, has one of the least active enforcement capabilities of any tax authorities in the OECD.

Account details of the dozen or so suspects still under investigation is held by the Quebec regulatory commission, a small arm of the federal agency that wants to prosecute them, which won’t have the resources to enforce that law.

The only thing we know is that someone has tried to break Canada’s banking secrecy, perhaps several times, and so far, they’ve got away with it.

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