In a previous career as a banker, a Tory MP from B.C. approved a transfer of funds on behalf of a Canadian taxpayer to an account in Switzerland, an account the taxpayer ultimately set up to help evade taxes, CBC News and the Globe and Mail have learned.
A joint investigation by CBC News and the Globe and Mail has uncovered court documents that show Andrew Saxton, the Conservative MP from North Vancouver, instructing the transfer of $199,975 into a Swiss bank account in 1994 on behalf of a Canadian RBC Dominion Securities client in Victoria.
Saxton was the head of private banking for the Vancouver branch of Credit Suisse Canada from 1992 until 1994, when he left for a series of HSBC banking posts across Asia. He is now the parliamentary secretary to the Treasury Board after having been elected to Parliament in 2008.
The revelations came to light in an affidavit by Russell Lyon, an auditor with the Canada Revenue Agency who investigates Canadians suspected of using offshore tax havens.
Under an ongoing probe, the CRA is investigating a number of clients at RBC Dominion Securities Inc. and other banks who have set up offshore entities at banks in Liechtenstein. While that is not an offence, many Canadians who had these offshore entities have made voluntary disclosures admitting to using the structures to evade taxes.
If you have more information on this story, or other investigative tips to pass on, please email firstname.lastname@example.org
"Canadian residents are using structures involving Liechtenstein-entity account holders and offshore accounts, allowing them to masquerade as non-residents, hiding their investments and other income from the CRA and neglecting their obligation to pay Canadian tax," the affidavit reads.
Lyon's affidavit speaks of Taxpayer X, a client of RBC Dominion Securities in Victoria. While inquiring about offshore investments, his RBCDS investment adviser told him of the existence of foundations known as Stiftungs or Anstalts in Liechtenstein that can be used to evade paying Canadian taxes.
The advisor later travelled to Europe to set up the foundation, and told him to visit the Credit Suisse Vancouver office to convey funds to an account in Switzerland, the affidavit said.
Credit Suisse ended its Canadian operations in 1998.
The court documents reveal that while heading up Credit Suisse, Saxton processed the transaction that moved the money from Canada to Switzerland. The funds were later transferred to an RBCDS account controlled by the Liechtenstein foundation. His signature can be found on two documents authorizing the internal transfer of funds within Credit Suisse branches.
On Monday, the CRA asked a federal court judge in Vancouver to grant it access to the entire archive of Credit Suisse Canada's private banking division records to see if there are other cases.
In its application for the order, Lyon wrote: "…I believe there are other as yet unidentified Canadian residents who, in an effort to hide their investments and other income from the CRA, have used Credit Suisse Canada to facilitate the movement of funds offshore."
The judge granted that order, forcing the bank to hand over 500 boxes of documents covering the years 1993 through 1998.
The CRA does not allege that Saxton knew Taxpayer X was trying to evade taxes. But the tax agency believes the documents will reveal that's exactly what many Credit Suisse account holders were doing.
When asked for comment by CBC and the Globe, Saxton said his primary function at Credit Suisse was to build the bank's Canadian wealth management business.
"There were requests from time to time by clients of Credit Suisse worldwide for assistance in liaising with other branches, which in some cases required transferring funds between branches," Saxton said.
"All such transfers were subject to certain financial controls including verification that the required funds were available prior to transfer. I was one of the people who could perform this function," he said, noting that he left the bank in 1994.
"With respect to Taxpayer X, I did not open his account and I do not know his identity. Opening accounts with other branches was not a part of my regular duties … I strongly condemn any Canadian who does not pay his or her taxes," Saxton said.
According to Lyon's affidavit, Bruce Wetherly, principal officer at the Toronto Branch of the Swiss Bank's parent company, Credit Suisse AG, says Credit Suisse's main business is with Swiss people in Canada.
"…the Private Banking Operations was a service provided by Credit Suisse Canada to Swiss nationals who have moved to and become resident in Canada, but wanted to continue to deal with a Swiss bank," he is quoted as saying.
When asked to comment, Credit Suisse AG told CBC News and the Globe and Mail: "As a matter of policy, we do not comment on discussions with government agencies."
When asked to comment, RBC told CBC News and the Globe and Mail: "We have never instructed our investment advisers to recommend the practice of setting up entities in Liechtenstein … as a firm, we have never had any contact or arrangement with any Liechtenstein financial institution about the creation or promotion of entities in that country."
The CRA confirmed to CBC News and the Globe and Mail that no investment advisers have been charged since the agency began its probe.
The main reason a Canadian resident with no personal or business ties to Switzerland would have for opening up a Swiss bank account would probably be to get around taxation, said U.S. tax lawyer Jack Blum, who has advised the Internal Revenue Service and Congress on similar cases.
"When the very wealthy hide their money offshore, it's the ordinary Canadian taxpayer that has to come up with the money to cover the expenses of government. And that's fundamentally unfair," Blum said.