Evidence of meeting #17 for Government Operations and Estimates in the 40th Parliament, 3rd session. (The original version is on Parliament’s site, as are the minutes.) The winning word was gillani.
A recording is available from Parliament.
Conservative
Chris Warkentin Conservative Peace River, AB
I would just comment, Madam Chair, that I think we are going down a slippery slope of devolving into a kangaroo court, and I certainly wouldn't want our committee to be viewed in that way. I want to have that on the record.
Liberal
The Chair Liberal Yasmin Ratansi
Okay, thank you. We now go on to Monsieur Guimond.
You have five minutes.
Bloc
Michel Guimond Bloc Montmorency—Charlevoix—Haute-Côte-Nord, QC
Thank you, Madam Chair.
Mr. Snowdy, when I asked you how you thought Mr. Gillani earned his living, you answered in a direct manner. I ask you the same question concerning Mr. Jaffer. How do you think he made money? His association with Mr. Gillani was not a charitable or philanthropic organization. Mr. Jaffer and Mr. Gillani told us, when they testified, that they had not made a lot of money, but that they had done a lot of canvassing. How could Mr. Jaffer earn money?
As an Individual
It would be through Mr. Gillani's schemes and the way this system works and plays.
I believe it's you, sir, who has a very good source for some of this information. I think you asked Mr. Gillani about the Skias deal. It struck a note. Not many people knew about the Skias business deal, but let me use that as the example of how Mr. Jaffer would then be compensated in this scheme.
Am I correct, sir, that it was you who asked Mr. Gillani about the Skias business arrangement? No, I see that it was Mr. Martin.
Skias was supposed to be a 100-million-share shell deal from a U.S. company. It would then be rolled out to supposed investors in a pump-and-dump scheme at $1 a share, so it was a $100 million business venture. I'm sure we've all seen documents on these types of legal activities; they're copious, and Greenpeace has a fit over the number of trees that are cut for paper.
This is Mr. Gillani's business deal for the $100 million deal: it's one page long, it's four paragraphs, and it's how to obtain the shell corporation.
The shares in that shell corporation are then distributed to nominee account holders, the purpose of which is to avoid the regulations in the securities industry for disclosing more than 10% ownership. Mr. Gillani constructed this list of nominee shareholders by which people would receive shares in the company, and they included principals in the actual corporation. What Mr. Gillani forgot to do when he did this deal was to include himself as a person receiving shares, but all of his nominee shareholders, their children, and various holding companies, etc., are on this list.
This is how Mr. Jaffer would have made money. I think the reference that the Toronto Star reported on was Wright Tech. If we take Wright Tech as an example and say that they're rolled into a shell deal, what would then happen is that a corporation or an individual account at an investment firm or at an offshore bank would be established, and stock in that company would be deposited into those accounts and then sold into the public market during the promotion phase of the market manipulation activity. That's how Mr. Jaffer could be compensated. It would be in accordance with Mr. Gillani's previous schemes.
Bloc
Michel Guimond Bloc Montmorency—Charlevoix—Haute-Côte-Nord, QC
So that involves offshore bank accounts, which takes us to Belize. From what we've observed, at least three companies were reserved for him and his wife in Belize, which is a world-renowned tax haven. Is that correct?
As an Individual
I was informed by Mr. Gillani that accounts had been reserved for Mr. Jaffer and his wife. I think it's important for everyone to understand that Mr. Gillani never mentioned Ms. Guergis by name. He always referred to her as Mr. Jaffer's wife.
Bloc
Michel Guimond Bloc Montmorency—Charlevoix—Haute-Côte-Nord, QC
Did you know that Ms. Guergis, when she was parliamentary secretary to the Minister of International Trade, went on an official mission to Belize? I don't have the date of that trip at my fingertips.
As an Individual
That was one of those serendipitous circumstances we stumbled upon when we made some inquiries as to why it was Belize, of all the offshore tax havens. It raised some questions in our investigative process. Why not Liechtenstein? Why not the Isle of Man? Why Belize, and not other well-known tax havens? Then we discovered that she had travelled to Belize in the company of Mr. Jaffer, and in that capacity she would have had access to commercial business individuals in that country.
It was either a wonderful coincidence, complicity, or a skilful manipulation on Mr. Gillani's part to pick that country.
Liberal
NDP
Pat Martin NDP Winnipeg Centre, MB
Further about Belize, Mr. Snowdy, in your undercover role you chose the three companies that you expressed an interest in because they had been around for a longer period of time. You said that would have been the best choice because they were established for a year or longer.
Would that indicate to you that Rahim Jaffer would have set them up for a year or longer, or could he have put his name onto them at any time--for instance, during the trip to Belize?
As an Individual
As I recall, those companies had actually been incorporated a couple of months after his trip. When you work on this type of thing, you have to postulate some ideas and to theorize, and we thought, well, if you went there, could you have created a relationship, been introduced to people, and over the course of the next month or two opened an account, set up lawyers, and had access to it? Yes, that very much was a working consideration when examining Mr. Gillani's bona fides.
NDP
Pat Martin NDP Winnipeg Centre, MB
Thank you.
Did Mr. Gillani ever tell you that Jaffer had special access or good access to government funds or any influence over the allocation of those government funds?
As an Individual
To the three names that I assumed in dealing with Mr. Gillani by telephone and in my meeting with him in person, he never spoke about Mr. Jaffer's direct relationships, saying only that he had the relationship with Mr. Jaffer and it implied all the benefits that the relationship would come with.
NDP
Pat Martin NDP Winnipeg Centre, MB
Your client paid Gillani a ven-cap fee, as you call it, in the hopes of getting a $5 million loan. Presumably it would be Jaffer's job to help deliver on that $5 million loan. Again speculating, what do you think would be Jaffer's share of the finder's fee that your client paid to Gillani?
NDP
Pat Martin NDP Winnipeg Centre, MB
Wow.
Again, on the pump-and-dump thing, is there not a further element to this market manipulation? The initial offering goes out at a buck or whatever. Some of those principals could have been given a large block of shares at that entry-level fee of a buck a share. You then drive up the value of the shares by whatever means you can. At that point, could the original principals not sell out, and then you can short that stock and manipulate it back down again and buy back in later? Is that the rest of the modus operandi of Gillani?
As an Individual
If the corporation was eligible to be shorted, you could short it after you withdrew the market support, whether or not you are paying for that market support in terms of manipulating stockbrokers, promoters, etc. Yes, that's very much a possibility, and you can actually make a lot more money shorting it and covering your short or going long later. Cover the short, go long, and catch it on the double bounce.
NDP
Pat Martin NDP Winnipeg Centre, MB
That is even more sleazy, in my view. You are selling it to the people at the higher rate, and if you know full well you're going to manipulate that stock back down later, you're obviously lying to the people up here who are buying it at $10 a share.
NDP
Pat Martin NDP Winnipeg Centre, MB
It's about as dishonest as it gets, I suppose. Are you saying that's a standard practice that you see in these people who set about manipulating these companies, such as Gillani? Is that a practice they employ?
NDP
Pat Martin NDP Winnipeg Centre, MB
I'll just remind you that if you could remember any of the names of the three companies in Belize that you would have chosen if you were a real investor, or if you could get back to the committee with that, it would be of great interest.
As an Individual
I'll give you the actual list. I'll get a copy of it and get it over to you. I'll give it to Mr. Girard.