KPMG revelations bring ethics guidelines into question

The Fifth Estate is delivering body blows to the government when it comes to their response to the offshore tax avoidance scheme developed by the accounting firm KPMG.  Despite the work of the investigative program, much of the damage appears to be self-inflicted and only looks worse when framed by promises made during the election and while in government that appear to be going un-fulfilled.

If you will recall the KPMG saga began in the autumn of 2015 with revelations that wealthy Canadians had used a shell company on the Isle of Mann along with tax exemptions available for monetary gifts as a way to avoid paying taxes on large sums of money.   At the time Revenue Canada called the scheme a sham but eventually the tax agency came up with an amnesty deal for the scheme’s participants.

By May of 2016, as more details of the KPMG scandal were coming to light, the Minister of National Revenue said the government’s position on tax evasion and tax avoidance schemes was unequivocal , and that  all participants must be identified and brought into full compliance with all their tax obligations.   This happened at the same time as the Panama Papers leak exposed tax cheats all around the world and there was an appetite for tough talk on the subject.

Somewhere along the line the Minister’s commitment went missing in action and last year Liberal MPs voted to kill the investigation into KPMG.  Later that same month a director from KPMG was appointed as Treasurer of the Liberal Party.  In the words of Tom Mulcair, "Ending the KPMG investigation and then hiring somebody from KPMG — that's called a conflict of interest."

Now the Fifth Estate is revealing that a Liberal government appointee who was named to lead a panel that is supposed to crack down on offshore tax avoidance attended an overseas conference which included social events where KPMG was a top financial sponsor.  In addition to that, the program also revealed that two members of the panel resigned in the autumn after one raised concerns that the committee was not arms-length from the Canada Revenue Agency.

No matter which way you look at it, the government looks less interested in chasing tax cheats than it does in protecting them.  It might explain why they have not implemented specific measures to support tax fairness like ending secret, penalty-free amnesty deals for tax evaders.   Worse there is little interest in even appearing to be free from conflict.  The close relationship between KPMG and the governing party should invite the kind of scrutiny the Fifth Estate is undertaking.

The Liberals were elected on the promise of defending the middle class, but they have gone to the wall to protect the interests of well-to-do Canadians.  The ethics guidelines that were supposed to protect the government from influence have been cast aside for the interests of the Liberal Party.  Whether that be through the appointment of party officials from companies that should be under investigation or selling access to government officials at expensive party fundraisers, these guidelines are not doing the job they were supposed to.