Politics CBC Investigates

Tax-haven lobbyist held private meetings and got advice from top federal officials, Paradise Papers reveal

Leaked documents from group of offshore law firms show concerted campaign to buck G8 transparency agenda

CBC News

November 09, 2017

A photo illustration shows Richard Hay, a Canadian lawyer in the U.K. who has represented the interests of a pro-tax-haven lobby group since 2009. A number of his emails and the group's files show up in the Paradise Papers. (Jersey Finance/Radio-Canada)

Top federal bureaucrats held private meetings with a lobbyist for the interests of the world's tax havens, and one of them even provided talking points that went against Canada's official stance on greater transparency of corporate ownership, records in the Paradise Papers reveal.  

The meetings with London-based Canadian lawyer Richard Hay were not reported to the federal lobbying registry and Hay himself was not registered to lobby in Canada — potentially violating the law depending on what exactly was said, an investigation by Radio-Canada and the Toronto Star has found.

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The meetings took place starting in summer 2013, two months after the world's first big leak of offshore financial records, a predecessor to the Panama Papers and now the Paradise Papers.

The 2013 leak had shown how the anonymity provided by tax havens allowed people to set up offshore companies and hide billions of dollars in assets. In light of the leak, a number of world leaders, particularly the U.K.'s David Cameron, were ratcheting up calls to make ownership of private corporations more transparent — potentially even public.

At the 2013 G8 summit in Northern Ireland, hosted by Britain's then-PM David Cameron, second from left, one of the major agenda items was how to boost the transparency of who really owns private corporations. (Bertrand Langlois/AFP/Getty)

When Cameron made the issue a major agenda item at the G8 meeting in Northern Ireland that June, the world's tax havens sensed a possible crackdown on their livelihood.

Up stepped a lobbying group called the International Financial Centres Forum, whose very name uses a euphemism for tax havens.

Comprising the planet's major offshore law firms — which help set up and administer offshore companies — the IFC Forum mounted a broad communications and PR campaign involving elected officials and civil servants from both sides of the Atlantic.

And Richard Hay, from the Montreal-founded firm Stikeman Elliott, was its point man.

'Annihilation' of tax havens feared

In a May 2013 email marked "urgent," Hay told IFC Forum members that "with media and political support," various NGOs were seeking "annihilation for British IFCs" — a reference to tax-haven jurisdictions like the Cayman Islands, British Virgin Islands and Bermuda.

Simon Kennedy, deputy trade minister at the time, was at two meetings with Hay that don't show up in federal lobbying records. (Canada2020.ca)

So Hay headed out to meet government officials from the G8 countries, hoping to drum up resistance to some of Cameron's proposals. According to the confidential minutes of a July 2013 IFC Forum meeting, Hay landed a meeting with Russian officials in London. The same minutes say that he also met with "Canada's G20 sherpa and deputy minister of international trade," Simon Kennedy.

The minutes and emails are part of the Paradise Papers, the huge leak of tax-haven records made public Sunday by the U.S.-based International Consortium of Investigative Journalists, in which CBC/Radio-Canada and the Toronto Star are partners.

Hay's first meeting with Canada's deputy trade minister led to another one six months later, in January 2014 — this time in Ottawa. The IFC Forum minutes say Hay met Kennedy as well as another high-ranking civil servant from the same department, Duane McMullen, head of Canada's Trade Commissioner Service.

Experts say the substance of those meetings could be ethically or legally problematic.

Duane McMullen, another senior public servant, appears to have advised Hay's group on how to counter the U.K.'s tax-haven action plan. (Travel.sohu.com)

When David Cameron, then chair of the G8, came out with his transparency agenda for private corporations, Canada had publicly declared its support. "This​ ​is​ ​a​ ​very​ ​important​ ​initiative​ ​by​ ​Prime​ ​Minister​ ​Cameron,"​ said Stephen ​Harper, Canadian prime minister at the time.​ ​"It​ ​is​ ​important​ ​that we​ ​do​ ​it​ ​and​ ​that​ ​we​ ​do​ ​it​ ​together."

But according to the IFC's notes, at the meeting with Hay, Canadian civil servant McMullen "expressed concerns" about the U.K.'s proposals and "noted NGO influence" on them. Hay was impressed enough with McMullen to invite him to speak at the pro-tax-haven lobby group's next meeting.

He did. And he appears to have provided the group with some valuable advice on how to counter the U.K.'s tax haven action plan. "Implement ideas provided by Duane McMullen… i.e. disseminate the idea that IFCs lubricate global commerce which helps poverty reduction. IFCs are friction-reducing, contributing to this process. Anything that is friction-increasing impairs such process," said the IFC minutes.

Department backs bureaucrat

McMullen would not answer a detailed list of questions from Radio-Canada and the Star about his interactions with the IFC Forum, referring queries to spokespeople at Global Affairs Canada, as the department is now known.

In an emailed statement, the department said: "Mr.​ ​McMullen's​ ​involvement​ ​with​ ​IFC​ ​Forum​ ​at​ t​he​ ​time​ ​was​ ​fully​ ​in​ l​ine​ ​with​ ​the​ ​spirit​ ​of Canada's​​ Trade ​​Commissioner ​Service ​​role ​​and ​​mandate … Trade​ ​commissioners​ ​talk​ ​to​ ​people​ ​on​ ​all​ ​sides​ ​of​ ​an​ ​issue​ ​and​ ​in​ ​doing​ ​so,​ ​try​ ​to​ ​understand their​ ​positions,​ ​point​ ​out​ ​their​ ​weaknesses​ ​and​ ​identify​ ​areas​ ​of​ ​common​ ​ground."

Experts point to several problems, however.

"If the facts are as reported, [McMullen] was crossing​ ​two​ ​lines​ ​that​ ​a​ ​public​ ​servant​ ​shouldn't​ ​cross,"​ said Ralph Heintzman, a former​ ​senior​ ​civil servant​ ​and a​ ​professor​ at the University of Ottawa's public affairs school, in an interview with the Toronto Star.

"The​ ​first​ ​was​ ​that​ ​he​ ​was​ ​publicly​ ​expressing​ ​his​ ​own personal​ ​policy​ ​views,​ ​which​ ​he​ ​ought​ ​not​ ​to​ ​have​ ​been​ ​doing.​ ​But​ ​the​ ​second,​ ​which​ ​makes​ ​it worse,​ ​is​ ​that​ ​they​ ​were​ ​contrary​ ​to​ ​the​ ​policies​ ​of​ ​the​ ​government​ ​of​ ​Canada​ ​at​ ​that​ ​time."

Another issue: Richard Hay is registered as a lobbyist in Britain, but not in Canada — which he needed to be if he discussed anything to do with the "development or amendment" of any Canadian legislation, regulations or policies with civil servants Kennedy or McMullen, according to the Lobbying Act (the only exception would be if the discussions were "restricted to a request for information" by Hay).

There is no record of Hay's London and Ottawa meetings with Kennedy in the federal lobbying registry.

That would be "​a​ ​serious​ ​breach"​ ​of​ ​the​ act,​ ​said​ ​Ian​ ​Greene,​ ​a​ ​retired​ ​professor​ ​of​ ​public policy​ ​and​ ​administration​ ​at​ ​York​ ​University. Penalties can include up to $200,000 in fines and two years in jail.

In a brief email to Radio-Canada, Hay confirmed that he has worked for the IFC Forum since 2009, but did not address questions about lobbying Canadian officials, saying his work for clients is confidential.

Another IFC Forum spokesperson, Tony Langham of the U.K. PR firm Lansons, asserted in an email that the group "doesn't have – and has never had – the objective of influencing Canadian government policy."

The internal IFC records, however, are full of mentions of Canada and discussions with Canadian officials, and specifically  efforts to "advance the purpose of" the group through "meetings with representatives from Canada."

"What bothers me is that there's a senior civil servant falling under the spell of a lobbyist," said Marwah Rizqy, a tax law professor at the management school of the University of Sherbrooke in Quebec.

"The Canadian government clearly said at the G8 meeting that it was going to take on tax havens, that it was going to fight for greater transparency. But clearly, the public statements differed substantially from the private discussions."

With files from Radio-Canada's Gaétan Pouliot, Gino Harel and Gil Shochat and the Toronto Star's Marco Oved.


Send tips on this or any other Paradise Papers story to zach.dubinsky@cbc.ca, call 416-205-7553, or contact us anonymously and securely using SecureDrop


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