Corruption is Everywhere > Even in the Canada Revenue Agency; Mexico's former security chief sentenced to 38 year in NY for corruption

 

CRA says 330 employees fired for inappropriately claiming CERB

More than 300 employees of the Canada Revenue Agency have been terminated in the past year for inappropriately receiving the Canada Emergency Response Benefit (CERB) during the COVID-19 pandemic, with the final round of firings having occurred in the past three months.

In total, 330 people have lost their jobs at the federal agency after receiving a benefit they were ineligible to receive, the CRA told Global News in its final update.

The CRA said last year they were launching an internal review to determine if employees had received CERB, and identified approximately 600 people for further investigation.

The $2,000-per-month CERB was rolled out by the CRA between March and September 2020 in the early months of the pandemic.

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Seniors strapped for cash after CERB payments affect pensions

Not everyone who has been investigated was terminated, however. The CRA said 185 were looked into, but not fired, though 40 faced disciplinary actions, such as suspension. The remainder of the cases saw administrative actions taken, such as the end of review as the employee was no longer with the agency at the time of review, or were found to be a victim of identity theft.

Another 135 faced no consequences as they were eligible for CERB, with the CRA telling Global News some of their employees could receive the benefit because they were students or on temporary contracts.

Those that did access CERB inappropriately will be required to pay back the money if they have not already done so, the CRA said.

“The actions of some should in no way undermine the honesty and integrity of the tens of thousands of CRA employees who work every day in an exemplary manner to serve Canadians,” a spokesperson for the CRA said in an email.

The CRA added that there were still a small number of cases, such as those on medical or extended unpaid leave, who are still being reviewed and will take additional time to complete.

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US sentences Mexico's ex-security chief

to 38 years for aiding cartels

Americas

Genaro Garcia Luna, the former security chief behind former Mexican President Felipe Calderon's crackdown on drug trafficking between 2006 and 2012, was sentenced to 38 years in a US prison on Wednesday for taking millions in bribes from drug cartels as their "partner in crime".

Mexico's former top security official Genaro Garcia Luna was sentenced to more than 38 years in a US prison on Wednesday for aiding the very drug cartels he was tasked with dismantling.

Garcia Luna, 56, was convicted at a high-profile trial in New York last year of taking millions of dollars in bribes to allow the Sinaloa Cartel to smuggle tons of cocaine.

District Judge Brian Cogan sentenced Garcia Luna, who served as secretary of public security under president Felipe Calderon from 2006 to 2012, to 460 months in prison and a $2 million fine at a hearing in federal court in Brooklyn.

Prosecutors had sought a life sentence.

"Today's sentencing of Genaro Garcia Luna is a critical step in upholding justice and the rule of law," US Attorney Breon Peace said in a statement.

"His betrayal of the public trust and the people he was sworn to protect resulted in more than one million kilograms of lethal narcotics imported into our communities and unleashed untold violence here and in Mexico," Peace said.

Garcia Luna's month-long trial shone a spotlight on the corruption of the highest-ranking Mexican government figure ever to face trial in the United States.

It also opened a window on the vast resources of the Sinaloa Cartel under Joaquin "El Chapo" Guzman, who is now serving a life sentence in a US penitentiary.

At his trial, prosecutors said Garcia Luna, who held high-ranking security positions in Mexico from 2001 until 2012, was the cartel's "partner in crime."

That included his time as the architect of Calderon's crackdown on Mexico's drug gangs between 2006 and 2012.

But instead of stopping the smuggling, Garcia Luna took millions of dollars in bribes from the Sinaloa Cartel to allow safe passage of narcotics shipments.

According to prosecutors, he tipped off drug traffickers about law enforcement operations, targeted rival cartel members for arrest and placed other corrupt officials in positions of power.

Garcia Luna served as chief of the Mexican equivalent of the FBI from 2001 until 2006, when he was elevated to secretary of public security, essentially running the federal police force and most counter-drug operations.

Calderon said after the sentencing that he never had "verifiable evidence" or information from Mexican or foreign intelligence agencies implicating Garcia Luna in illegal activities.

"I am in favor of those who break the law assuming the consequences of their actions," the ex-president wrote on social media.

'Supercop'

Nine of the 26 witnesses who testified against Garcia Luna, once known as "supercop," were accused drug traffickers extradited from Mexico and collaborating with US prosecutors in exchange for possible leniency in their own trials.

They included high-level cartel bosses Jesus "Rey" Zambada, Sergio Villarreal Barragan and Oscar "Lobo" Valencia.

They claimed to have paid millions of dollars to Garcia Luna collectively, and through Arturo Beltran Leyva, who ran his own drug cartel and served as a go-between with Garcia Luna in exchange for protection.

Garcia Luna, a mechanical engineer by trade, moved to the United States in 2012 and was detained in Texas in December 2019.

He was convicted of multiple charges including engaging in a criminal enterprise that involved conspiracy to import and distribute cocaine.

US Drug Enforcement Administration chief Anne Milgram said Garcia Luna's sentencing "sends a clear message to corrupt leaders around the world who use their positions of power to help the cartels: no amount of power will shield you from justice."

The world's biggest narcotics organization at one time, the Sinaloa Cartel moved multi-ton loads of cocaine each month from producing countries in the Andean region up through Mexico and on to streets in Europe and North America.

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Corruption is Everywhere - Yes, Even in Canada, eh!

CRA signs secret settlement with wealthy KPMG clients involved in offshore tax scheme

Watchdog group accuses the Liberals of covering up the KPMG affair

Harvey Cashore · CBC News 

The Canada Revenue Agency has made an out-of-court settlement with wealthy KPMG clients caught using an offshore tax scheme that it previously said was 'intended to deceive' tax authorities. (Peter Scobie/CBC)

The Canada Revenue Agency has once again made a secret out-of-court settlement with wealthy KPMG clients caught using what the CRA itself had alleged was a "grossly negligent" offshore "sham" set up to avoid detection by tax authorities, CBC's The Fifth Estate and Radio-Canada's Enquête have learned.

This, despite the Liberal government's vow to crack down on high-net-worth taxpayers who used the now-infamous Isle of Man scheme. The scheme orchestrated by accounting giant KPMG enabled clients to dodge tens of millions of dollars in taxes in Canada by making it look as if multimillionaires had given away their fortunes to anonymous overseas shell companies and get their investment income back as tax-free gifts.

KPMG is a global network of accounting and auditing firms headquartered out of the Netherlands and is one of the top firms in Canada.

"Tax cheats can no longer hide," National Revenue Minister Diane Lebouthillier promised in 2017.

Now, tax court documents obtained by CBC News/Radio-Canada show two members of the Cooper family in Victoria, as well as the estate of the late patriarch Peter Cooper, reached an out-of-court settlement on May 24 over their involvement in the scheme.

Details of the settlement and even minutes of the meetings discussing it are under wraps. A CBC News/Radio-Canada reporter who showed up to one such meeting this spring left after realizing it was closed to the public.

Journalists discovered references to the final settlement agreement in tax court documents only by chance.

CRA cites privacy in keeping settlement details secret

The Canada Revenue Agency says strict privacy provisions of Canadian tax law make it difficult to disclose minutes describing individual taxpayer information.

The Isle of Man tax dodge had been active as far back as 1999 and, according to documents filed in court by the CRA in 2015, had "intended to deceive" federal regulators.

Still, significant details of the scheme remain a mystery, including the role played by the KPMG's senior executives. With no public trial, those details may continue to remain secret.

Toby Sanger, executive director of the advocacy group Canadians for Tax Fairness, says the CRA should never have agreed to settle the case. 

"I think it's outrageous," he said. "We've had a lot of tough talk and promises from this minister about how they will crack down on tax evasion by the wealthy and corporations, but unfortunately we've seen no evidence of this so far."

National Revenue Minister Diane Lebouthillier called out tax cheats in 2017 and stated her intention to clamp down on the KPMG scheme. (Adrian Wyld/The Canadian Press)

Revenue Minister Diane Lebouthlier said in an email statement to The Fifth Estate/Enquête that while she cannot comment on specific cases, she finds the lack of transparency about settlements brokered by her agency "problematic."

"I have instructed the CRA to review its processes to allow for more transparency with respect to the reasons for which a settlement is reached," she said.

KPMG took 15% cut of taxes dodged

One member of the Cooper family, Marshall Cooper, previously told The Fifth Estate that he was unaware of Canadian tax laws when he emigrated from South Africa in the mid-1990s and that it was KPMG that came up with the offshore tax plan.

Documents show KPMG planned to take a 15 per cent cut of the taxes dodged, including $300,000 from the Cooper family. Internal records show the scheme was marketed across the country, with successful KPMG sales agents and accountants referred to as product "champions." 

In all, more than 20 wealthy families participated in the offshore scheme.

Two years ago, Lebouthillier issued a news release on her intention to clamp down on the KPMG scheme, publicly stating that those involved could even face criminal charges over possible "tax fraud."

"The case of KPMG is before the courts right now, and we continue to pursue action against KPMG," Lebouthillier said in 2017. We will see this to the end as Canadians have asked us to do."

She said at the time that her government took the matter "very seriously." "Those who choose to participate in these schemes must face the consequences of their actions," she said.

Yet more than two years after that pledge, participants in the KPMG scheme, namely, members of the Cooper family, were offered a secret out-of-court settlement.

In her statement to The Fifth Estate/Enquête this week, Lebouthillier said the decision to settle was not hers to make and that she had instructed the CRA to review its settlements to "allow for more transparency."

'We will continue to make systemic changes': minister

To "ensure integrity of our tax system," Lebouthillier said, out-of-court settlements are made by the CRA and the Department of Justice "at arm's length" from the minister and the minister's office.

"Canadians deserve a fair and equitable tax system, and we will continue to make systemic changes within the CRA to make sure that this is the case," she said in her statement.

CBC News/Radio-Canada first revealed four years ago that KPMG, one of the largest accounting firms in Canada, with tens of millions in federal contracts, had for years been running a massive offshore tax dodge for wealthy clients it had kept hidden from federal investigators.

The Trudeau government's previous tough talk on the so-called KPMG sham had come after a document leaked to The Fifth Estate/Enquête showed the CRA itself had offered a secret "no penalties" amnesty in May 2015 to many of the other KPMG clients involved in the scheme.

The CRA offered to have them simply pay the back taxes owed — but with the condition they not tell the public about the offer.

The Isle of Man, pictured, is at the centre of a tax-dodging scheme that, according to documents filed in court

by the CRA in 2015, was "intended to deceive" federal regulators. (CBC)

Stung by those revelations, Prime Minister Justin Trudeau said in 2017 that the government had learned a lesson from the KPMG affair and promised to do a "better job of getting tax avoiders and tax frauders."

Since then, the Liberal government vowed to make sure those kinds of offshore tax dodges were in the past.

In fact, it was concerns over future KPMG court cases that prompted the Liberal-dominated Commons finance committee to shut down its own investigation into the embattled accounting firm back in 2016.

Documents had already begun to emerge detailing the extent to which KPMG was helping clients not only dodge taxes but also hide money from potential creditors, including circumventing the Canadian Divorce Act by "protecting" assets from ex-spouses.

Lawyers for KPMG had argued that the ongoing finance committee investigation could prejudice cases before the court.

Several KPMG executives had been named to testify in the spring of 2016, but Liberal MPs voted to shut down the inquiry, arguing that any more testimony and documents should be produced in court and not in Parliament.

Now, it appears that those future court cases cited as a reason for shutting down the investigation might never materialize.

The Fifth Estate and Enquête also later revealed that in June 2016, around the same time the Liberal MPs shut down their investigation into the accounting giant, a former senior KPMG executive was appointed to the Liberal Party's national board of directors.

"There is no reason why the finance committee shouldn't restart their hearings," Canadians for Tax Fairness's Sanger said.

Settlements offer 'substantial savings to the public'

Sanger said it all seems like a Liberal "coverup" to close down the KPMG investigation.

Canadians still do not know who were the key people at KPMG involved in running the investigation, for example, how high up it went within the organization, or all the names of the wealthy clients who participated.

Tax court documents obtained by CBC News/Radio-Canada show members of the Cooper family in Victoria reached an out-of-court settlement with CRA. Marshall Cooper, pictured, previously told The Fifth Estate that he was unaware of Canadian tax laws when he emigrated from South Africa in the mid-1990s. (Facebook)

Max Weder, the lawyer for the wealthy Cooper family, said he "can't comment on the settlement."

Documents show the family paid virtually no tax over a span of eight years — and even obtained federal and provincial tax credits — despite receiving nearly $6 million from an offshore company worth $26 million that KPMG helped set up.

KPMG has always maintained the scheme was legal. The firm's lawyers claimed any money the Coopers received were gifts and therefore non-taxable. Nevertheless, KPMG now says it would not set up this type of offshore structure anymore.

For its part, the CRA said that the settlement was made in accordance with the law and is "supported by the facts of this particular case." The agency also said it "maximized revenue" by making a decision to settle out of court, instead of facing an uncertain ruling in tax court.

"There is generally substantial savings to the public and a benefit to the justice system when cases are resolved through a settlement," a CRA spokesperson said in a statement.