Newly discovered documents from the Paradise Papers show the Liberal Party's top fundraiser, Stephen Bronfman, was directly linked to companies that were owed millions by an offshore Cayman Islands trust well into the 2000s — despite his strong denials he had any involvement in the trust after 1998.
The documents show how a Delaware-based company closely connected to the Montreal-based financier was owed $8 million from the Kolber Trust, set up for former Liberal Sen. Leo Kolber and his family in the no-tax Cayman Islands.
In a statement immediately after the release of the Paradise Papers leak and its revelation that key Liberal Party fundraisers were tied to offshore tax schemes in the Cayman Islands, Bronfman said his only connection to the Kolber Trust was a $5-million loan in 1997 that was quickly repaid within months.
"Stephen Bronfman had no other direct or indirect involvement whatsoever in the Kolber Trust," the statement said.
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Prime Minister Justin Trudeau quickly came to the defence of Bronfman, a longtime family friend who led the fundraising efforts for Trudeau's leadership bid and the financially and politically successful 2015 federal election campaign.
"We have received assurances that all rules were followed … and we are satisfied with those assurances," Trudeau told reporters during an overseas news conference last week.
Still, newly discovered documents from corporate registries, the Securities and Exchange Commission in the United States and the Paradise Papers database show that Bronfman was a key "member/shareholder" of Claridge Israel LLC— a Delaware company that was owed more than $8 million by the Kolber Trust.
One Paradise Papers document shows that as late as 2005, the "borrower" — the Kolber Trust — still owed Claridge Israel more than $7 million.
The documents show that the initial loan was provided by a Canadian numbered company and that the debt was later acquired by Claridge Israel LLC.
'Always acted properly'
Claridge Israel was set up as part of the Bronfman family's expansion into Israel, acquiring shares in the telecommunications and agriculture sectors. It is closely connected to Claridge Inc., the Montreal investment arm of the Bronfman family run by Stephen Bronfman as its executive chairman.
Bronfman's lawyer, William Brock, did not respond to a specific question about Bronfman's connection to Claridge Israel and the loan to the Kolber Trust.
"We reiterate that our client has always acted properly and ethically, including fully complying with all applicable laws and requirements, and any assertion to the contrary is simply not true," he said. "No further comment is necessary."
The Paradise Papers documents also show that the Claridge Israel loan was later transferred to two U.S.-based trusts, including the Charles R. Bronfman Trust, also directly linked to Stephen Bronfman.
"This trust is primarily for the benefit of Charles R. Bronfman, and Stephen R. Bronfman and his descendants," a document filed with the Securities and Exchange Commission says.
The Kolber Trust was set up in 1991 when Leo Kolber — Stephen Bronfman's godfather and at that time a Canadian senator — was head of Claridge in Montreal.
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It was part of a larger network of companies that helped expand the Bronfman empire into Israel in the 1990s. Companies were set up in Nevada, Delaware and New York state and entered into financial agreements with the Cayman Islands trust.
The leaked documents show the Bronfman family loaned millions of dollars to the trust that would then be used to finance investments in Israel.
Massive document leak
Revelations that Trudeau's chief Liberal fundraiser was linked to an offshore trust rippled through Ottawa two weeks ago, after several national and international media outlets reported Stephen Bronfman was linked to the Cayman Islands tax scheme.
The story was part of the Paradise Papers, the massive leak of offshore financial data obtained by German newspaper Süddeutsche Zeitung and shared with the International Consortium of Investigative Journalists.
For several days in Ottawa, the Conservatives and NDP repeatedly grilled the Trudeau government on the revelations.
"If the prime minister wants to restore any credibility on the issue of tax fairness, will he immediately order the Liberal Party to give back all the money that Stephen Bronfman raised for the Liberals?" Conservative finance critic Pierre Poilievre asked in the House of Commons.
Conservative Leader Andrew Scheer said the revelations point to Liberal hypocrisy around tax fairness.
"What will he do now that close Liberal advisers have been named in the Paradise Papers and that they are the ones who allegedly used tax loopholes to shelter their fortunes?" Scheer asked in the House of Commons.
Trudeau said his government has committed significant resources to the Canada Revenue Agency to combat offshore tax dodging.
"You can rest assured that the Canada Revenue Agency will take very seriously its responsibility to go after everyone and anyone involved in tax avoidance and tax evasion."
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