Canadian Lawyer

of which are secret (and early last year, Weinberg and his alleged co-conspira- tors were arrested by Quebec police and charged with defrauding the animation company). Meanwhile, two of his lawyers, Joe Groia and Pierre Fournier, are being sued by Cinar, which accuses them of helping Weinberg move his money out of Quebec and breaking a court injunction. Both lawyers deny the charges. AN ALL-TOO-COMMON REALITY C inar's pursuit of Weinberg and his lawyers over money that may have disappeared offshore is an all-too- common reality — one that inevitably embroils lawyers. Offshore banking and tax havens are becoming a hot political issue, especially as the global economy continues to totter. Governments in North America and Europe, facing crippling def- icits, are turning their attention to assets which the rich and corporations have squirreled away offshore, hoping this cash will solve their fiscal woes. "In the U.K., for example, there are estimates of a so-called tax gap, monies that should be paid but isn't for one reason or another, and that ranges from £50 to £100 billion annu- ally," says Nicholas Shaxson, author of a 2011 book on offshore banking, Treasure Islands, and who works for the Tax Justice Network in Zurich. "Of that, about £20 billion is in tax havens. It's that order of magnitude." In fact, the European Union risks breaking apart largely because countries like Greece are unable to pay back their staggering government debts. Yet the Tax Justice Network estimates as much as €20 billion belonging to Greek tax dodgers is hiding in Swiss bank accounts and the amount of Greek-owned offshore com- panies tops 10,000, while the government estimates the evasion of tax and social- security contributions costs Greece €30 billion a year. Overall, the Organisation for Economic Co-operation and Development claims that offshore banks globally hide some US$5 trillion to US$7 trillion from tax authorities, or about eight per cent of the world's assets under management. Moreover, an estimated US$11.5 trillion is being stashed in offshore accounts world- wide for one purpose or another. The U.S. government claims it loses US$100 billion Revenue Jean-Pierre Blackburn, said that 106 wealthy people had used RBC Dominion Securities Inc., the brokerage house of the Royal Bank of Canada, to set up offshore accounts in the European principality of Liechtenstein. As much as $100 million was sitting in these accounts. An investigation by CRA discovered that at least three RBC Dominion Securities advisers had helped people hide this money. Using offshore havens for evading taxes is a time-honoured tradition among Canada's political and business elites. Former prime minister Brian Mulroney received cash payments from German arms wheeler dealer Karlheinz Schreiber totaling $300,000 (Mulroney claimed it was $225,000) in 1993 and 1994, which he didn't bother declaring to the CRA until 1999. For a period of time much of 28 FEBRUA R Y 2012 www. CANADIAN Lawyermag.com of fraud receive any of their money back regardless of where it's committed," remarks David Marchant, the editor of the Florida-based investigative newslet- ter OffshoreAlert. "If they put the money offshore, it's just more expensive to recover it." Indeed, most of the major frauds that have afflicted Canada's capital markets in recent years have contained an offshore component. THE REAL NIGHTMARE ut B for those lawyers representing victims of fraud, offshore banking havens pose a legal nightmare. Finding the money is rarely an easy task, as evidenced in the fallout from the collapse of the Montreal-based hedge fund Norshield Asset Management (Canada) Ltd., which went bust in the summer of 2005. Norshield had attracted retail a year in tax revenue because of undis- closed tax-haven bank accounts. The Canada Revenue Agency refuses to divulge estimates of monies lost due to Canadian tax cheaters hiding cash off- shore, but evidence suggests it's a vast sum. In 2005, Statistics Canada produced a study showing that from 1990 to 2003, Canadian companies invested "substan- tial and growing amounts" in tax havens, mostly in the Caribbean — a total sum that grew to $88 billion from $11 billion during that time period, largely for tax reasons. As The Financial Post's Diane Francis once noted, "Thousands of fabu- lously wealthy Canadians sit on yachts in tax havens without paying any taxes on wealth made in Canada." According to evidence gathered by a U.S. Senate sub- committee, the Swiss financial services company UBS had accumulated about $6 billion from wealthy Canadians that had not been reported to tax authorities. In 2009, then-minister of National this money sat in a safety deposit box in a New York bank. And Canada Steamship Lines Inc., the family business of former prime minister (and lawyer) Paul Martin, has an international division registered in the Caribbean tax shelter of Barbados. The Barbadian corporation is owned by a holding company in Bermuda, another offshore haven. This complicated setup allows Canada Steamship Lines to escape paying millions in Canadian taxes. Even former media mogul (and lawyer) Conrad Black is accused of using offshore havens to hide his compensation. But it's not just tax cheats availing themselves of offshore banking centres: white-collar criminals do the same. "We see that all of the time in criminal inves- tigations," says Biagio Carrese, the inspec- tor in charge of the RCMP's Integrated Proceeds of Crime division in Ottawa. "The offshore component, when it comes to big money, is always there." And the reasons are obvious. "Very few victims "The courts in the Caribbean do not act quickly. It's exceedingly difficult to get a court date and very difficult to move things along." John Finnigan, Thornton Grout Finnigan LLP

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