James Love, Chairman of the Board of Directors of the Royal Canadian Mint, speaks about the new Rider Centennial Dollar Coin unveiled on Thursday, Sept. 2, 2010, in Regina, Sask. The Royal Canadian Mint, in co-operation with the Saskatchewan Roughrider Football Club, are producing three million coins to celebrate the 100th anniversary of the team. THE CANADIAN PRESS/ Troy Fleece/Canadian Press
A spokesperson for Jim Flaherty says the finance minister was unaware that his good friend and law school classmate Jim Love, who was picked by the government to chair the Canadian Mint and who Flaherty himself appointed to two advisory panels, had helped some wealthy clients move money through offshore havens to avoid taxes.
CBC News revealed Tuesday that Love, a tax lawyer, helped heirs of former Tory prime minister Arthur Meighen shift $8 million through offshore havens in the Caribbean starting in 1996. Love said in court documents that the move "resulted in significant savings of Canadian tax"— an amount he estimated at $1 million.
- Ex-PM Meighen's multimillion-dollar estate embroiled in court fight
The government of Prime Minister Stephen Harper has declared numerous times over the past year that they are cracking down on the use of offshore havens. Following his budget speech last March, Flaherty railed against “people hiding their money offshore and avoiding Canadian taxes.”
That same budget promised to introduce a snitch line for taxpayers to report anyone who has stashed funds offshore in an attempt to thwart the Canada Revenue Agency. "The CRA will target high-income taxpayers who attempt to evade or avoid tax using complex international legal arrangements," the budget said.
But Flaherty's press secretary said Tuesday that the finance minister didn't know the extent of Love's offshore dealings, particularly when he was appointed in 2007 to a panel advising the government on international taxation.
"The minister would not have been aware of details or specifics of Mr. Love’s international tax practice," Marie Prentice wrote in an email to CBC News.
She said Love "made valuable contributions" to the panel's deliberations and was chosen for his expertise in international tax.
Friends since university
Love and Flaherty have been friends since they were classmates at York University's Osgoode Hall law school in the 1970s. But their links — professional and personal — go deeper than that.
Love’s son worked in Flaherty’s office, and Flaherty’s wife sits on the board of the trust company run by Love.
The ties between the two men are sometimes financial, as well. When Flaherty ran for the leadership of Ontario’s Progressive Conservative Party twice in the early 2000s, Love donated a total of $63,100 to his campaigns.
Those contributions raised questions in Ottawa several years later, after Love was appointed by the federal Conservatives to three posts:
- In 2006, he joined the board of the Royal Canadian Mint.
- Also in 2006, Flaherty named Love to chair an expert panel on what would eventually become the registered disability savings plan.
- In 2007, Flaherty named Love to the tax panel.
“Can you confirm whether his personal and political connections have anything to do with his appointment?” Liberal finance critic and former revenue minister John McCallum asked Flaherty at a House of Commons committee.
Flaherty retorted, “Mr. Love is one of Canada's leading tax experts. He knows a lot more about tax than you could ever hope to know. ...
“You should think twice before you go after much respected Canadians, greatly respected Canadians.”
Flaherty's wife on company's board
Love’s final appointment from the federal Tories came in 2009, when he was elevated to chair of the Mint’s board. The same year, when Flaherty’s wife, Ontario politician Christine Elliott, ran for the provincial PC Party leadership, Love’s wife and three of his colleagues at his trust company donated $10,000 each to her campaign.
Elliott sits on the board of that company, called Legacy Private Trust, and on its audit committee. She also owns shares in the firm, according to Elliott’s and Flaherty’s public disclosures.
She said earlier this month that she has been on the board since Legacy Private Trust’s inception and has known Love “for many, many years.”
“I worked for Scotiabank from '84 to '88, and I worked in their international audit department, so I was familiar with the auditing of trust companies and internal controls, having visited many tax havens during my tenure. I spent a lot of time in Nassau, Cayman Islands, Channel Islands,” she said.
“It was because of my involvement and my experience with that that he asked me to become involved as a director.”
CBC News asked Elliott how much offshore business is done by Love and Legacy Private Trust. She said the firm has "not very many" clients involved in the offshore world but that she didn't know the precise breakdown. Confidentiality prevented her from speaking about the details, she added.
Denies company does offshore work
Flaherty was asked, as well, to comment on his relationship with Love. The finance minister did not agree to an interview but his press secretary, Prentice, responded to emailed questions.
She said Legacy Private Trust "doesn’t have offshore issues.”
In several communications with CBC News, Love has affirmed much the same: that his trust company is not involved in any dealings in the offshore world.
“Legacy Private Trust would have no reason to, because it deals only in domestic matters,” he said in a phone call earlier this month.
Numerous court documents from the Meighen family lawsuit suggest otherwise.
In its own statements of defence, Legacy Private Trust says it was the investment manager for four Antigua-based holding companies through which the family's offshore wealth passed. Those companies kept their securities accounts at Legacy. Just two of them held $1.7 million in international stocks.
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