Evidence of meeting #57 for Finance in the 43rd Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was kpmg.
A video is available from Parliament.
Liberal
The Chair Liberal Wayne Easter
Mr. Ste-Marie, could I get you to start over? Slow down. The interpreter doesn't have a copy, and she's finding it a little difficult, so just go a little slower. You have the time.
Bloc
Gabriel Ste-Marie Bloc Joliette, QC
All right, thank you.
The issue of using tax havens to hide money or evade taxes is of great concern. The people and firms that use them act with little regard for their duties and obligations to society. Their attitude also seems to show little regard for the Canada Revenue Agency, the government and Parliament. It is high time that this changed.
The committee spent several hours on this issue, and in particular on the KPMG strategies and the theft of the savings of thousands of small savers in the Weinberg, Norshield and Mount Real scandal. Four shell companies with sword names—Shashqua, Katar, Sceax and Spatha—registered in the Isle of Man, were allegedly used in the theft. Disturbing information appears to link these four corporations to KPMG, although KPMG claims otherwise. The purpose of today's meeting is to shed light on these four corporations by directly questioning those who know the background to this dirty business.
The committee invited Ms. Sandra Georgeson and Ms. Anne Couper Woods to testify. Both have been employed by KPMG and are part of the management teams of the four corporations with sword names. They know the background of the case. Ms. Georgeson is the person who wrote the email that states that KPMG Canada helped set up the four corporations. Ms. Georgeson was invited to the May 6 meeting. She declined the invitation, citing a scheduling conflict. She also declined today's invitation and any future appearance. Ms. Couper Woods did not agree to appear before the committee, either. Since these ladies are not Canadian citizens, the committee was unable to subpoena them.
We also invited Mr. Michael Morris, who is a member of the management team at Shashqua, along with Ms. Woods and Ms. Georgeson. Mr. Morris also allegedly helped Mr. Weinberg transfer the stolen money out of Canada. Mr. Morris is a Canadian citizen who lives in Nassau and runs Barrington Bank International. To obtain his contact information, the committee contacted his brother, Toronto lawyer Ian Morris. Following a subpoena to appear before the committee, we received a letter of refusal from Mr. Michael Morris' lawyer. This is unacceptable.
We also invited and subpoenaed Ms. Susan Gibbons, a Canadian citizen working in Bermuda, who was a member of the board of directors of Katar, Spatha and Sceax. We also subpoenaed her boss, Mr. William Maycock, who was also named as a person who made the transfers of funds from these three corporations. Mr. Maycock was educated in Halifax and Hamilton and was a member of the Canadian Tax Foundation. Both of them responded to us, through their lawyer, saying that they refused to come to testify today, despite the subpoena. This is equally unacceptable.
I would like to recall that the invitations and subpoenas stipulated the possibility of joining the committee by videoconference. Distance is not a reasonable ground for their refusal.
So there are five key witnesses, who know the substance of the case, who refuse to cooperate. Three of them, although they are Canadian citizens, have even refused a subpoena. This makes the work of the committee exceedingly difficult and is, in my view, a matter of contempt. Things will not stop there.
It also indicates how important it is that the minister should call a public enquiry into this whole affair. She has the power to do so.
I sincerely hope that the committee's work will help to build greater tax justice.
Liberal
The Chair Liberal Wayne Easter
Thank you, Mr. Ste-Marie. We can take note of that.
Where did Mr. Bilodeau go now? He was on there for the last minute.
The Clerk
He froze again, sir. It seems that a couple minutes after he logs on, he freezes and then he's disconnected.
Liberal
Liberal
The Chair Liberal Wayne Easter
Even if the video is not going to work, could he come on by voice? It's not ideal, but he would be a witness that we could hear by voice. At least it gives us somewhere to go.
I see him again now.
Bryan, do you ever have this trouble at your committee?
Liberal
Bryan May Liberal Cambridge, ON
On occasion. Honestly, we're very lucky to have the tech people that we do have.
Liberal
Bryan May Liberal Cambridge, ON
They work so hard to figure this all out basically from scratch. There are occasions when it's just a bandwidth issue.
Conservative
Damien Kurek Conservative Battle River—Crowfoot, AB
It's not uncommon, depending on security, firewalls and whatnot. MPs' offices don't co-operate with Microsoft Teams, for example. I've spoken to classes a number of times, and I have had to call in via my cellphone as opposed to our constituency office.
Liberal
The Chair Liberal Wayne Easter
With our security systems, we run into that several times as well.
Mr. Bilodeau, are you there now?
Serge Bilodeau Chartered Professional Accountant, KPMG
Yes, I'm here. I don't know for how long, because the IT guys have been trying to fix the problem for one hour and a half.
Liberal
The Chair Liberal Wayne Easter
Okay.
Mr. Bilodeau, I don't know if you have anything to say to start. We could give you a few minutes to say a few words if you like. We can go to a series of questions. When we have technical problems sometimes that's what we do.
On behalf of the committee, thank you for coming. The floor is yours if you want it.
Liberal
The Chair Liberal Wayne Easter
Oh, my French is good. Bonjour, Mr. Bilodeau.
Mr. Bilodeau, you can speak in either language.
Chartered Professional Accountant, KPMG
All right.
Can you hear me well? We spent an hour and a half trying to fix a technical problem, and I'm not the right person to fix it, I swear. IT people were here to deal with it.
Can you hear me well now? I think that's what's important.
Liberal
The Chair Liberal Wayne Easter
Mr. Bilodeau, if you want to make a statement, go ahead, and then we'll go to questions, starting with Mr. Kelly.
Did you want to make a statement, sir?
Chartered Professional Accountant, KPMG
My remarks have already been sent to Mr. Roger. I will now make my opening statement.
Thank you for your invitation to participate in the work of your committee. I'm a retired KPMG employee and I was...
Can you hear me?
Chartered Professional Accountant, KPMG
I'm sorry, but I was told that you couldn't hear me. So I will continue.
Thank you for the invitation.
I am retired from KPMG. I was an associate in the Montreal office for 25 years, from 1987 to 2014. I was never in charge of the tax department or any other department at KPMG, either locally, provincially or nationally. I was a client service associate, not a manager.
In summary, I advised clients on Canadian and international tax matters. I was involved in developing and implementing foreign transactions, such as financial structures, like the so‑called double dipping, the repatriation of foreign profits, and foreign currency management.
I have also acted as an advisor in several mergers, acquisitions and corporate restructuring for both public and private companies.
In the course of my career, I have had numerous discussions with tax authorities to obtain advance rulings or during tax audits. The discussions sometimes concerned foreign operations. My role was to meet the needs of clients by applying tax laws with the highest standards of integrity, compliance and professionalism.
Like most professionals in Quebec, as a CPA, I am bound by professional secrecy regarding our clients and former clients. I will do my best to answer your questions in light of this confidentiality requirement.
However, I can confirm beyond any doubt that I was never involved, as an associate or otherwise in what has been called the Cinar affair. The first time I heard about this case was in the media. Unfortunately, fraud appears to have been involved. As a Canadian taxpayer and a tax professional, I strongly encourage this committee to shed light on the matter.
Today, I am an occasional consultant for KPMG and sit on a few boards of directors.
KPMG is a firm that, in my experience, always acts with integrity and in the best interests of Canadians.
I would like to clarify a few points in that sense.
With respect to the Isle of Man's foreign company structure—the so‑called OCS—I was not involved in its development. I became aware of the structure in the early 2000s, as did several other tax associates in the firm. I reviewed the analysis prepared by the firm's senior tax experts, as well as the two independent legal opinions. At the time, I felt that the structure was valid from a tax and legal perspective, as long as clients followed the advice provided. I personally participated in creating two of those structures. In one case, a third party company was responsible for implementing the structure, so my role was limited.
I also want to make it clear that I was not involved, as an associate or otherwise, in the shell companies named after swords or in Parrhesia. I understand that this may be of interest to you, because those companies were registered in the Isle of Man, but neither of them were associated with the two cases I worked on.
I would not be able to give you any information on that. [Technical difficulty] Ms. Iacovelli, who answered your questions on this subject when she appeared before the committee.
I will do my best to contribute to the discussion today.
Liberal
The Chair Liberal Wayne Easter
Thank you very much, Mr. Bilodeau.
In the first round will be Mr. Kelly, Ms. Dzerowicz, Mr. Ste-Marie—we will go to you anyway—and Mr. Julian.
Mr. Kelly.
Conservative
Pat Kelly Conservative Calgary Rocky Ridge, AB
Thank you.
Would you support the testimony we already heard? You say that KPMG had no involvement in the sword companies or the Cinar affairs. That's your testimony.
Chartered Professional Accountant, KPMG
I said that I was not personally involved and I directed you to the testimony of my former colleague who appeared before your committee.
Conservative
Pat Kelly Conservative Calgary Rocky Ridge, AB
When you were an employee at the Montreal office, your office did offer offshore products to your clients. That was something you did in the course of your work at KPMG in Montreal. You said you had two clients, or you were at least involved in offering offshore products on two occasions.
