Editor's note: Since we published this story early in 2016, Toronto Star investigative reporter Marco Chown Oved dug even deeper to find out more about the dealings of the Larco Corporation. Dealing with tax havens is complicated... but here is a simple question: Should a company that is known to use tax havens to reduce its tax committments to the people of Canada be allowed to get government contracts to supply office space, services or materials? How unfair is that to Canadian companies who don't employ these tax-dodging tactics?
Revenue Minister Diane Lebouthillier talked tough when she announced the government's plans to crack down on tax haven users earlier this spring
“We really want to put the axe into everything that touches tax evasion,” she said, adding “There are people today, I imagine, who must be nervous.”
Maybe. But it turns out the CRA pays rent to a serial tax haven user for CRA offices in Edmonton, Montreal and Calgary. Taxpayer money goes to Larco Investments. Then the privately held company owned by one of Canada's wealthiest families sends its profits offshore sites including British Virgin Islands, Liechtenstein, Luxembourg and the Isle of Jersey. And the CRA isn't the only federal agency involved. The RCMP, the Courts Administration Service, the Canadian Food Inspection Agency, and Employment and Social Development Canada all fork over money to Larco. This year's bill totals $74.3 Million.
"You can't make this stuff up," says Canadians for Tax Fairness executive director Dennis Howlett. "This is happening right under the government's nose. They should not be doing business with companies who use this kind of aggressive tax dodging. It is an insult to Canadian companies who are paying their share. It is bad fiscal management. And the tax dodgers are laughing all the way to their offshore bank."
Researchers at UniteHere, a Vancouver-based union representing hospitality workers, pored through the #PanamaLeaks database and found that Larco assets and its multitude of companies were handled by Mossack Fonseca and RBC Investment Solutions Ltd (Jersey). RBC has been under fire since the Panama Papers revealed that the bank allegedly registered 378 shell companies through Mossack Fonseca.
The researchers have created a website that details the complicated dealings.