Tax havens: out of sight, out of mind

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At the root of the public fascination with the fate of Michael Bryant is a question that lies at the heart of democracy: Do the rich and powerful get special treatment?

Preventing the public from answering "yes" to that question will be a challenge for authorities, with the spotlight glaring down on every aspect of the prosecution of the former provincial attorney general for his deadly encounter with a cyclist.

How much easier for authorities to go easy on the rich and powerful when no one's really watching.

The lack of spotlight is certainly making things easier for officials in Ottawa as they deal with another very different investigation that raises the same question about favouritism toward the rich.

At issue here is the case of 100 wealthy Canadians who may have violated Canada's tax laws by hiding money in offshore bank accounts in the notorious tax haven Liechtenstein.

No one questions the zeal of Canadian authorities in ensuring that ordinary folks pay every cent of their taxes. Yet the government often doesn't appear to be equally zealous when it comes to the rich -- even though tax experts estimate Canada loses billions of dollars in revenues each year because well-to-do Canadians hide assets in offshore bank accounts.

The 100 wealthy Canadians with Liechtenstein bank accounts only came under investigation because the details of their offshore accounts were handed to Canadian authorities a year and a half ago by German police.

This amazing case -- an employee at the Liechtenstein bank provided records of wealthy clients from around the world to German authorities -- blew the lid off the usually impenetrable world of tax haven banking. It sparked an uproar in Germany, leading to the tax-evasion conviction of one of the nation's leading businessmen, 450 other tax-evasion investigations and the resignation of some high-ranking officials. In Italy, the case grabbed headlines when the names of wealthy tax evaders were released to the media.

But here in Canada it's been a much quieter affair. CRA spokesperson Caitlin Workman told me in an interview last week that CRA's reassessments of the 100 wealthy Canadians concluded they owed $17 million in taxes, interest and penalties, and that $3 million has so far been collected. She wasn't aware of any tax-evasion charges.

Ottawa's somewhat low-key approach to tax haven users has always been puzzling, but never more so than now, when the global financial crisis has toughened the resolve of other Western nations to clamp down on secret offshore banking.

In the U.S., the Internal Revenue Service and Senate investigators have been doggedly tracking down some 52,000 Americans who had offshore accounts with UBS, Switzerland's largest bank. UBS has been charged $780 million in U.S. fines for helping rich Americans hide assets.

Canadian authorities haven't shown quite the same energy in going after UBS -- even after U.S. investigators unearthed information last year showing that UBS's "Canada Desk" managed some $5.6 billion in offshore money. (Raoul Weil, who was in charge of the "Canada Desk" as UBS's head of global wealth management, was indicted in the U.S. last fall.)

The CRA's Workman said that the CRA met with UBS officials last Wednesday to discuss the bank providing information about offshore operations involving Canadians.

Perhaps the Harper government is working vigorously behind the scenes to make sure wealthy Canadians don't get away with hiding their money offshore. But, without the glare of the public spotlight, the pace seems rather sluggish.

Linda McQuaig is author of It's the Crude, Dude: War, Big Oil and the Fight for the Planet.

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