Companies in tax havens | “A red flag”

One of the consultants who received the most public money for the development of the controversial application ArriveCAN has opened two companies since 2011 in tax havens which are recognized by experts as favoring the camouflage of fund transfers and tax evasion, reveal confidential documents obtained by The Press and its partners. The same consultant is currently at the heart of a police investigation into the awarding of federal IT contracts.

David Yeo is the president of Dalian Enterprises, a two-employee consulting firm that received $7.9 million from Ottawa as part of the development ofArriveCAN.

In parliamentary committee, his partner revealed that 99% of Dalian’s contracts have come from the federal government since 2007. And these contracts are numerous. THE Globe and Mail recently calculated that the firm received $95.5 million from Ottawa, only for the period from 2016 to 2023.

The Royal Canadian Mounted Police (RCMP) has already confirmed that it has launched a criminal investigation following allegations from a Montreal firm specializing in artificial intelligence, which denounced irregularities in an IT contract which had been awarded to Dalian and then subcontracted to other actors.

However, combing through all the finances of Dalian and its president could prove tedious. Years before the recent controversies erupted, when his firm was already working almost exclusively for the federal government, David Yeo created companies in two tax havens known for their opacity, according to confidential documents obtained by two consortiums of journalists from investigation to which The Press collaborates. The information had never been publicly reported before Monday.

Mr. Yeo first opened a business in the British Virgin Islands on September 13, 2011, according to documents contained in the leaked Pandora Papers and obtained by the International Consortium of Investigative Journalists. The company was named iSBN inc. It does not appear to have left any public traces of any economic activity. Given the opacity of the British Virgin Islands’ financial system, it was impossible for us to verify what has happened to it today.

In Curaçao too

In 2012, Mr. Yeo also opened a company of the same name in Curacao, he noted. The Press in another leak of documents obtained by the Organized Crime and Corruption Reporting Project, another journalism consortium.

Company documents filed in the small tax haven off the coast of Venezuela indicate that the company was to operate online casinos or sports betting, a very popular activity in Curacao. The Press was unable to find any visible trace of activities in this area.

In 2016, in an email viewed by The PressDavid Yeo used his email address and signature from Dalian to organize with his offshore finance consultant from Curaçao the opening of an account with the payments processor Wirecard, an online transactions giant which would go bankrupt four years later after finding himself at the heart of a financial embezzlement scandal.

“It is very urgent to put this in place, because currently we are not able to make deposits or bank transfers,” Mr. Yeo wrote in an email to his financial advisor in Curaçao on August 30, 2016.

Mr Yeo did not respond to any questions sent by The Press to his cell phone, his professional email and the general address in Dalian regarding his off-shore activities.

Red flags

“Your research suggests problematic trends. Although there is nothing illegal about operating in these jurisdictions, people often use them to hide their money and avoid paying taxes,” observes Christian Leuprecht, full professor at the Royal Military College of Canada, where he studies financial crime in particular.

“Your findings should prompt the Canada Revenue Agency to launch an audit of Dalian and Mr. Yeo’s accounts to ensure that he has adhered to the Canadian tax regime,” says Mr. Leuprecht, who also heads the Institute of Intergovernmental Relations at Queen’s University in Kingston.

“It is certain that these are jurisdictions at risk which should lead to more verifications. It is common in my career to meet companies registered in the British Virgin Islands as part of arrangements for cases of money laundering, fraud, tax evasion or international corruption. It is one of the jurisdictions most often encountered, in the top three,” says Jonathan Légaré, CEO of the private investigation firm Vidocq and former civilian investigator within the RCMP and the Charbonneau commission.

“Absolutely nothing prevents a Canadian company from setting up companies in the Virgin Islands or Curaçao. It can be completely legitimate, to benefit from beneficial tax treatment. On the other hand, everyone knows, in the British Virgin Islands in particular, it is a place where, in the past, there are many people who went looking for straw men, administrators who were only faces. We couldn’t really know who the beneficial owners were,” explains Denis Meunier, anti-money laundering consultant, former deputy director of the Financial Transactions and Reports Analysis Center of Canada and former federal tax investigation executive. .

Work to do

Curaçao and the British Virgin Islands have made efforts to improve their reputation for financial transparency in recent years, but they still appear on the European Union’s list of jurisdictions that have commitments to fulfill for the future on financial transparency. good tax governance, underlines Professor Lyne Latulippe, principal researcher at the Research Chair in Taxation and Public Finance at the University of Sherbrooke.

The presence of a Canadian company in these countries, however, is not proof of anything, she warns. “Without the financial statements, we can only make assumptions. »

The OECD has already criticized Curaçao for the difficulty of obtaining information on the real owners of companies. The British Virgin Islands recently agreed to make information on business owners available, after years of relying on business secrecy. An investigation by the Transparency International organization revealed in 2018 that 1,107 companies incorporated in the small island state had been involved in 213 corruption cases, thanks to the opacity which made it possible to hide the identity of the parties in a transaction.

With the collaboration of Mylène Crête and Joel-Denis Bellavance, The Press