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Results: 61 - 75 of 174
View Gabriel Ste-Marie Profile
BQ (QC)
Let me ask my question again, since that's not exactly what I wanted to know.
Was KPMG Canada directly or indirectly involved in the creation or use of one or more of those four companies?
If so, which ones were they and how did that happen?
Lucia Iacovelli
View Lucia Iacovelli Profile
Lucia Iacovelli
2021-05-06 16:27
We did not participate directly or indirectly. We did not ask another firm to set up these companies. We have no relationships, whether directly or indirectly, with the “sword” companies.
View Peter Julian Profile
NDP (BC)
Thank you very much.
I'm going to move on to Ms. Iacovelli. As Mr. Ste-Marie has mentioned, when a committee requests information, it's important to follow that request. As you know, there's a non-cooperative tax jurisdiction list, which basically lists tax havens around the world.
I have a series of questions. As well, we'll be following up with a letter that we'd like KPMG to answer.
First off, how many client companies or shell companies—you called them “client companies”—that currently exist in the Isle of Man and in all of the other tax jurisdictions that are “non-cooperative jurisdictions” has KPMG set up? That's my first question.
Second, how many were established since 1999—again, in the same list—by KPMG internationally?
How many have been dissolved or wound up since 1999? That's my third question.
My fourth question is, how many Canadian clients of KPMG invest in overseas tax havens, either offshore bank accounts or shell companies—you've called them “client companies”—and how many out-of-court settlements has KPMG negotiated on behalf of those clients with Revenue Canada?
Those are the questions that we will ask you to follow up on.
I also note that you are here voluntarily. We certainly appreciate that. We will be convening other witnesses from KPMG, I believe, including Serge Bilodeau, who runs your Montreal office, and we appreciate that co-operation.
Can you also indicate, when you receive a notice to preserve documents, how those notices are observed within KPMG internationally?
My final question is around Parrhesia, which you've acknowledged is a KPMG client company incorporated on the same date as the “sword” companies on December 17, 2001. First you said in your testimony that it was a common registrar that KPMG had approached, and then you said that nobody was engaged to actually incorporate Parrhesia. Could you clarify that, please? Who within KPMG actually moved to register that client company?
Lucia Iacovelli
View Lucia Iacovelli Profile
Lucia Iacovelli
2021-05-06 16:34
Maybe I'll start with the question with respect to products. We don't offer products. We offered the OCS product until 2003. We stopped offering the product in 2003, and we have not offered products since 2003.
I think you also asked a question with respect to tax havens. We don't provide any tax schemes or shelters with respect to clients. It's not what we do. We provide legal tax planning with respect to our clients, and we ensure that our clients pay the taxes that are required.
Unfortunately, I can't speak to Parrhesia. I'm not familiar with that. I will have to undertake to provide that if I can. You could appreciate that if it is a client, I can't provide information with respect to client files.
View Ted Falk Profile
CPC (MB)
View Ted Falk Profile
2021-05-06 16:38
With that, I would like to switch over to KPMG.
Ms. Iacovelli, you've indicated that you weren't involved as a company and that you didn't provide advice to your clients on how to develop any of these schemes. Have any of your clients or your organization been involved in the Liechtenstein scheme?
Lucia Iacovelli
View Lucia Iacovelli Profile
Lucia Iacovelli
2021-05-06 16:38
Unfortunately, I'm not aware of any.
View Ted Falk Profile
CPC (MB)
View Ted Falk Profile
2021-05-06 16:38
Okay. What about the Panama papers scheme?
Lucia Iacovelli
View Lucia Iacovelli Profile
Lucia Iacovelli
2021-05-06 16:38
My understanding is that the listings with regard to the Panama papers are not publicly available. I'm not aware that any of our clients are within those Panama papers.
View Ted Falk Profile
CPC (MB)
View Ted Falk Profile
2021-05-06 16:39
When this committee was discussing concerns about tax avoidance and evasion with KPMG in 2016, Gregory Wiebe was asked about whether the Isle of Man scheme helped to restore the trust of Canadians in the tax system. He had this to say, and I'll quote:
I think that if you look at that particular issue through the lens that we look through today, no. I think that if you look at that issue through the lens that existed at the time, in 1999, when it was policy and practice for individuals to have monies in a non-resident structure offshore, it was a very different time. We used to smoke in restaurants in 2006. We used to text in our cars up until two years ago. Times change, and we change with them.
Looking at it through that lens, I can't defend it.
My question to you, Ms. Iacovelli, would be this: How would you say that KPMG has changed since 2016, when that testimony was provided?
Lucia Iacovelli
View Lucia Iacovelli Profile
Lucia Iacovelli
2021-05-06 16:39
I think that we had already changed by 2016. We operate under our global and national code of conduct, which is our responsible tax practice. Some of the highlights from that responsible code of conduct are that we act lawfully and with integrity and that we provide clients with the highest quality of tax advice.
When we look at the lens from 20 years ago, the lens that we looked through was legality, and it was looking at GAAR. Since then and since the mid-2000s, we've added the additional lens of responsible tax. The tax landscape and social acceptances have changed greatly over the last 20 years.
You can also see it through a great deal of legislation that's been put in place, not just in Canada but globally as well, including Sarbanes-Oxley and the FIN 48 legislations. There was the global financial crisis, which impacted us greatly. The common standards reporting was introduced as well. There's been quite a bit that's changed with respect to transparency, which has very much changed the social landscape and what's acceptable.
View Annie Koutrakis Profile
Lib. (QC)
View Annie Koutrakis Profile
2021-05-06 16:41
Thank you, Mr. Chair.
Welcome to all our witnesses this afternoon.
Ms. Watson, I was very disturbed to listen to your testimony, because I've been employed in the financial services industry for more than 25 years. I don't know if my colleagues know, but I started in 1984 as an assistant stockbroker and went all the way up into a leadership role on the retail side, working for large firms owned by big banks and independent firms. I was employed in the industry in 2005, and when the story broke on Mount Real, Norshield and Cinar, I was supervising portfolio managers and financial advisers at the time. One of the primary roles and responsibilities I had as a professional registrant with IIROC was to make sure the people I was supervising were doing the right things.
Doing the right things meant that when new accounts were brought to my desk to be reviewed and opened, I had to make sure I knew who that account belonged to. It was removing the corporate veil. When I listened to the testimony today saying that we don't have a public registry to show the owners of some of these shell companies, I can tell you that through IIROC, we were doing that, so perhaps we can work directly with IIROC and the Autorité des marchés financiers in Quebec as a starting point.
With regard to KPMG, Ms. Iacovelli, I know in your testimony you said that you don't advise your clients—wealthy clients or any kinds of clients—to get into tax avoidance schemes, but I look to you for guidance and professional.... What kinds of checks and balances are in place for companies like KPMG when people approach you for tax information to make sure that they are not crossing the line or going beyond the spirit of the law? Are there any checks and balances when you are giving that type of advice to clients?
Lucia Iacovelli
View Lucia Iacovelli Profile
Lucia Iacovelli
2021-05-06 16:43
I expect that all my partners abide by our code of conduct with respect to our responsible tax.
Again, we provide legal tax advice. We act lawfully and with integrity, and I expect that of all my partners. We explain clearly and objectively the technical merits and sustainability of tax advice to our clients, and we also don't allow for any transactions that are contrary to any relevant legislation.
We also have a very robust mechanism of client acceptance to ensure that we're working with clients of the highest integrity as well. We also have processes in place so that if there is a transaction that's out of the ordinary, it's brought forward to our risk and reputation committee, which is made up of several partners, and it undergoes a GAAR committee review ahead of that. I'm quite proud of our organization, quite proud of the type of law and the type of planning we provide to clients.
View Gabriel Ste-Marie Profile
BQ (QC)
Thank you, Mr. Chair.
Ms. Watson, let me tell you that we are going to do everything we can to get to the bottom of this. We will not give up. You can count on us, no matter how long it takes, we will not give up.
Ms. Iacovelli, I want to tell you how disappointed I am with your answers. Mr. Julian asked you questions, and you say that you have nothing in the Panama Papers, because the list does not exist. It was reported by the International Consortium of Investigative Journalists. I can't believe the extent of your stonewalling. I have a hard time believing you because of your behaviour before this committee.
Ms. Watson mentioned this. You had Norshield and Mount Real as clients. They stole money from the little people, and when they were found guilty, poof, the money was gone. You are telling us that KPMG is not even remotely connected to the missing money. But the reports from CBC/Radio-Canada demonstrate that the sword companies were set up on the same day as the others, and that there is evidence that you set them up.
I don't believe you. I don't believe you.
I want to get to the bottom of this.
We will send you the questions, and we will ask you to answer them. Let me remind you that your code of conduct, which tells you not to answer, is not the law. Your code of conduct is not governed by legislation. I hope that we will have answers to our questions.
Also, Ms. Iacovelli, you say that everything you do is legal. Yes, and why? Because you are in Canada.
In the U.S., when KPMG did the same thing, the Internal Revenue Service (IRS), the equivalent of the Canada Revenue Agency, filed criminal charges against KPMG's executives and the company, even threatening to prosecute it as a criminal organization, which would have resulted in its dissolution.
The U.S. stood up, and that led to change. People paid money back and paid penalties. KPMG, in order not to be dissolved, agreed to dismantle three of its divisions, and to stop selling tax planning services. It paid nearly $500 million in damages to the government, and agreed to have an IRS agent with unlimited access to all of its records at all times for three years. That's what the Canada Revenue Agency should be doing here to get to the bottom of this.
Criminal charges were upheld against the nine executives: two were cleared, six were fined a total of $25 million, and one was imprisoned. That's what should be done here, if the Canada Revenue Agency and the Minister had any spine.
What do you have to say to that?
Lucia Iacovelli
View Lucia Iacovelli Profile
Lucia Iacovelli
2021-05-06 16:49
Thank you, Mr. Chair.
We have no connection to Cinar. We are not involved with Cinar. We have never provided audit or tax advice to Cinar. We are not connected in any way—
View Gabriel Ste-Marie Profile
BQ (QC)
Results: 61 - 75 of 174 | Page: 5 of 12

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