I won't take 10 minutes.
The main point that I've noticed in testifying before standing committees is that usually I'm off topic, because some of what I'm doing, of course, overlaps into other areas, and I keep getting the comment back, “You're not sort of in our compartment right now.” Again, at the risk of being off topic, there are a couple of points I want to make.
First, I have a handout. It's translated, and on the second or third page I start to list all of the reasons why there can be these offshore bank accounts. Given that we've done quite a few of the major sorts of securities scams—I guess that's a polite word—and quite a few of the failures of the major Canadian companies, we of course run into the offshore bank accounts all the time.
I just don't want to somehow leave the impression that people just take money offshore and leave it in an account in Switzerland, or whatever it happens to be, and earn pitiful interest rates. In the cases we've had over the years, for the most part somebody works some sort of securities problem. For example, they sell short; they do all sorts of other trades. There are restrictions on securities, but they ignore that and sell them anyway.
So the money then gets sent to a particular location, and within hours it gets flipped out of there into other locations. On that particular basis, trying to track these things is not at all easy. Mostly we've had to bring in other specialists with the problem. So this is not a situation where you just look at it and say somebody has something in a bank account. Where did it come from, to me, is the problem.
If you look at just the CRA attacking “particular accounts”, they could be gone days or even hours later. And this is not going to stop, because the root causes of most of these are, for example, people getting ready for a divorce and they send offshore. But the ones that trouble me immensely are the ones that arise from securities situations where trades that are barely legal, if at all, then end up offshore and the money gets transferred.
So if you look at this logically, eventually that money has to end up in territories where someone is going to get a decent return on investment. When you look at it that way, these plans are set up long in advance. I'm going to send it into A, then to B, then to C, then to D, and then finally it's going to be placed somewhere else.
Quite often you're going to find that lawyers' trust accounts are used to launder the money. Quite often you're going to find that these plans were put together by professionals, and as long as they are left exempt, that's not going to solve any problems.
We have, at this point, a major problem in Canada that is not being addressed at all, which has to do with where we're going to have these offshore accounts, etc., in a few years. This is a subject called international financial reporting standards. This was brought into Canada with virtually no debate. This affects the provinces as well as the federal government, and this is such a totally different concept we've had in my lifetime of how one counts income.
Many of these offshore accounts and so on are the result of Ponzi schemes, where you represent to people that you are giving them a return on investment, but all you're really doing is giving them back their own money. So if that's the basis for what is happening, then we have to look at how you minimize these Ponzi schemes, because that's where you cut off the money going offshore.
So these international financial reporting standards...it's not being monitored in Canada. It's being pushed by the audit community. It is based on European ethics and standards. We are sending out information to our clients about all of the frauds that can be worked through this IFRS. I have given up, quite frankly, but I've tried, along with my son, to alert most of the cabinet ministers and so on across Canada that this is a problem.
So what is the problem? The problem is, how did IFRS get brought into Canada with virtually no debate? Despite what's been said, it's been misrepresented as principles based and everything else. So we left control in self-regulating organizations for mutual funds, for investment dealers, auditors, and so forth, and there is the problem that then leads to the offshore.
There's no doubt in my mind. If you check my track record, we called the Nortel failure years in advance. We called the business income trusts years in advance. We had involvement with the asset-backed commercial paper to point out that the accounting and reporting didn't work. For leveraged ETFs, the same thing. If you look at Loewen Group, Cott, and so on, we called these in advance, so we're not stupid people. On that basis, somebody should be paying attention, and we've tried to do it through Finance, repeatedly, to say that this is a major problem.
So just trying to sum up where I am, I'm saying that many of the real serious problems start long before the bank account is set up offshore. If that is not looked at, in conjunction with whoever has to look at it, then you're picking the low-hanging fruit, so to speak, instead of dealing with the most serious problems.
Thank you.