A Liberal senator says he wants his caucus colleague, Senator Pana Merchant, to explain herself following the revelation by CBC News yesterday that she has been the beneficiary of a secret offshore trust set up by her husband.
"We're all innocent until proven guilty in this country, but I want to hear her explanation," Senator Percy Downe, who has campaigned for years against the abuse of offshore tax havens, told CBC News in an interview.
"For all I know, my colleague may have been filing this with Revenue Canada. I'll wait to hear from her."
CBC News divulged Wednesday that Merchant's husband, high-profile Canadian lawyer Tony Merchant, moved nearly $2 million to secretive financial havens while he was locked in battle with the Canada Revenue Agency over his taxes, according to documents in a massive leak of offshore financial data.
READ: Senator's husband put $1.7 million in offshore havens
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MAP: Where Canada's offshore account-holders live
Tony Merchant, dubbed Canada's "class-action king" for the numerous and high-profile class-action lawsuits he's orchestrated, transferred the money to the Cook Islands in the South Pacific and then onward to an account in Bermuda, according to the files.
Pana Merchant and the couple's three sons are named in the documents as beneficiaries of the funds.
Asked for his reaction to the news, Downe said, "I'm not surprised at all. This is a massive problem."
He added, "The House of Commons and Senate are a cross-section of Canadians. Some of them are very rich, and rich Canadians across the country are moving their money offshore because it’s a tax holiday from the government."
Pana and Tony Merchant have rejected several requests from CBC News to discuss the offshore accounts.
Most recently, a CBC reporter approached Tony Merchant on Thursday at the Edmonton courthouse and asked for an interview. "Not going to happen. Not going to happen," he replied.
It's not illegal to hold money offshore. But a tax expert consulted by CBC News said Merchant's offshore dealings raised "some serious red flags."
Tax-court filings obtained by CBC News show that on Tony Merchant's income tax return for 1999, the year after he established the offshore trust and put $1.7 million into it, he didn't tick off the box declaring ownership of more than $100,000 in "foreign property."
Under Senate rules put in place in 2005, Pana Merchant would have been required to confidentially declare that she was a beneficiary of the trust to the Senate's ethics commissioner. But unless the commissioner deemed the information relevant to her parliamentary work, the public has no access to it.
The revelations about the Merchants are contained in a trove of 2.5 million leaked files obtained by the Washington-based International Consortium of Investigative Journalists, or ICIJ. The documents contain information on more than 120,000 offshore corporations and trusts. At least 450 Canadian names appear in the records, and CBC News has partnered with the ICIJ to gain exclusive Canadian access.
EDITOR'S NOTE: Why CBC News isn't publishing all the names
Federal Revenue Minister Gail Shea said Thursday that the government doesn't have the list but definitely wants it.
"I am certainly calling on this group to produce the list and give it to CRA so we can follow up on the information that's in it," she said.
The German government also asked the media on Thursday to hand over the files.
Shea had said earlier, in response to CBC's reports, that while she couldn't comment on specific cases, she expects the Canada Revenue Agency to "review any information they receive and aggressively pursue all suspected cases of tax evasion."
"We have since 2006 assessed more than $4.6 billion in unpaid tax from offshore accounts, so that's significant," Shea said.
But Senator Downe says assessing unpaid tax from offshore accounts and actually taking steps to collect it are two different matters entirely.
"The government is not taking any action," he asserted. "You go on the CRA website and you'll see all kinds of examples of Canadians from coast to coast to coast charged and convicted with domestic tax evasion. You'll see carpenters in Eastern Canada, doctors in Western Canada. What you will not see is one person charged with overseas tax evasion….
"Domestically, Canadians are treated one way, and people who hide money overseas — very rich Canadians trying to avoid taxes — are treated completely different. It’s grossly unfair."