Paradise Papers tell a troubling story about money and power

Posted on November 10, 2017 in Governance Debates – Opinion/Editorial – The latest revelations out of the Paradise Papers leak raise troubling questions not only about government’s failure to collect what’s owed, but also about the power of money to subvert our democracy.
Nov. 8, 2017.   By

The latest revelations from the leak of the Paradise Papers raise troubling questions, not only about government’s failure to collect what’s owed, but also about the power of money to subvert our democracy.

They serve as a reminder that those who can afford to hide income from the taxman can also afford to hire the very best lobbyists to help ensure that, whatever the public interest, governments don’t close the loopholes that allow tax avoiders to get away with it.

In 2013, the leaks reveal, as G8 countries prepared to launch a regulatory overhaul seeking finally to put an end to the secrecy in which offshore tax schemes flourish, a powerful lobby group got to work. The International Financial Centres Forum, funded by 11 of the world’s biggest offshore law firms, achieved what it called “superb penetration” into the highest ranks of government, managing to water down significantly the transparency rules that were eventually adopted.

While the group’s campaign focused largely on the United Kingdom, where then-prime minister David Cameron was leading the push for reform, Canada was apparently not immune.

As Marco Chown Oved reported in the Star on Wednesday, not only did senior Canadian public servants meet with representatives of the lobby group, but one actually seems to have provided advice on how it might advance its anti-regulatory agenda.

Duane McMullen, a director general at Global Affairs Canada, “participated as a lunch speaker” at the IFC Forum’s monthly meeting in March 2014, according to a leaked document. During the lunch, it seems, he advised the group to “disseminate the idea that [tax havens] lubricate global commerce which helps poverty reduction.”

There’s nothing unusual about civil servants meeting with lobbyists, but a few details about the case are cause for concern. For instance, civil servants are prohibited from publicly sharing their personal views on matters of public policy. If that’s in fact what happened in this case, McMullen should be held to account.

If, on the other hand, he was advancing the government’s position rather than his own, the case poses another, more serious problem. At the time McMullen spoke to the lobby group, then-prime minister Stephen Harper was touting his commitment to Britain’s campaign for greater transparency on offshore tax havens. Was that not in fact the government’s position?

A public servant’s providing advice inconsistent with the government’s public stance is highly problematic. If true, the story suggests that McMullen was either acting against the government’s wishes or in service of a lie.

Asked by the Star for a response, the Global Affairs department effectively dodged. “Mr. McMullen’s involvement with IFC Forum at the time was fully in line with the spirit of Canada’s Trade Commissioner Service role and mandate,” the department wrote in an email.

That plainly does not answer the question. What was the extent of his involvement with the group and how did it come about? What was “the spirit” of McMullen’s role? The government will have to explain what happened here – and if it can’t, the integrity commissioner may well have to intervene.

More disturbing, however, than the case of this single civil servant is the larger narrative that these latest revelations and the Paradise Papers as a whole feed.

Earlier this week it was revealed that the Liberal Party’s top fundraiser, Stephen Bronfman, has made extensive use of offshore tax havens. The prime minister was quick to come to Bronfman’s defence, just as he has done for Finance Minister Bill Morneau, keeper of the public purse, who has been mired in controversy over his own finances. Now we learn of the “superb penetration” into the senior ranks of government of lobbyists working on behalf of the ultra-rich.

The Paradise Papers are doing nothing to soothe those who worry about the unseemly intertwining of money and power in politics or about the extent to which the economy is rigged by the few against the many. The government can do something about that. It can, for instance, close unfair and ineffective tax loopholes and collect what’s owed. Or it can sit back, defend the current arrangements and watch the cynicism grow.

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