Thursday, January 26, 2017

Investigation: Canadian Shell Companies

From the Canadian Broadcasting Company, Jan 26, 2017:

How 2 Canadians named in Panama Papers led nearly 200 companies they claim to know nothing about
Rules that permit figurehead directors make Canada ripe for tax-haven-type abuse, critics say 
A law clerk from Toronto and a paralegal in Montreal commanded a prolific corporate empire of nearly 200 companies over the past 25 years — while knowing nothing about the businesses or the multimillion-dollar deals bearing their names, they say. 
Karen McIntyre of Toronto and Annette Laroche of the Montreal area both say they filed company tax returns without any idea if the numbers were accurate, signed blank forms granting power of attorney to people they had never met and put their names to corporate documents without knowing their purpose, all in the course of acting as professional fronts for a vast array of businesses. 
It's a practice that allows the true owners of companies to obscure their identities and mask activity like fraud and tax scheming, a jointCBC/Radio-Canada and Toronto Star investigation based on thePanama Papers has found. And that has critics raising alarms about how Canada's corporate rules are quietly seeing the country exploited as a kind of offshore haven. 
"If we really want to fight tax evasion and avoidance," said Marwah Rizqy, a tax law professor at the University of Sherbrooke in Quebec, "this kind of practice has to stop." 
Mainstay of tax havensFederally and provincially incorporated companies in Canada are allowed to have "nominee" directors — basically, stand-ins who serve as the company's officers on paper only. Meanwhile, the real controlling owners keep their names off the paperwork, shrouding themselves from the taxman and other authorities.   
Such dummy directors are rampant in the shady milieu of tax havens. But the cases of McIntyre and Laroche show the phenomenon isn't restricted to sun-baked Caribbean islands or Pacific micronations.
Both women rented their signatures to nearly 200 companies involved in a variety of businesses, including luxury real estate and the diamond trade — almost all of them provincially incorporated in Quebec. A number of those companies show up in the Panama Papers, a huge trove of offshore financial records that were leaked in 2015 and continue to make headlines around the world. 
Testifying in 2011 as part of a fraud lawsuit involving some of the firms her name had been attached to, McIntyre said she got her start while working as a clerk at a Toronto law firm in the early 1990s. One day her boss hooked her up with a Swiss lawyer looking for someone to put their name to "holding companies for tax purposes or companies for trust purposes in Canada." 
She said she earned $100 a year per company, for a total of about $20,000 in the most lucrative years, which would be wired to her from Switzerland around Christmas....MUCH MORE
A similar story from last November at Reuters:

How a British town became a hub for online porn and poker