Companies Linked to KPMG Allegedly Ordered Documents Destroyed Amid CRA Investigation

    Jun 13, 2017

    Just weeks after the federal government demanded KPMG maintain all records in a tax probe, a group of offshore shell companies set up by the accounting giant held an "extraordinary" meeting and voted to destroy documents related to the probe, an investigation by CBC's The Fifth Estate and Radio-Canada's Enquête has learned.

    In October 2012, the Department of Justice sent KPMG a "Notice to Preserve Documents" as part of a federal probe into allegations KPMG and several of its wealthy clients were involved in a tax dodge that "intended to deceive" the Canadian treasury. 

    In November 2012, four Isle of Man shell companies caught up in the Canada Revenue Agency probe passed a resolution that "books, documents and all papers" be "destroyed," according to records in the Isle of Man obtained by CBC/Radio-Canada.

    The DOJ notice did not specifically mention maintaining records outside of Canada.

    Retired RCMP investigator Jeff Filliter said it is unclear what legal weight a DOJ letter might have in this instance. "The difficulty here is that you are dealing with two distinctly different and separate jurisdictions," he said.

    A Toronto lawyer told The Fifth Estate it was indeed a gray area for enforcement. "You're dealing with a jurisdiction that may not co-operate, and people hide behind that,” said Jeffrey Kaufman.

    Kaufman also said KPMG may not be legally obligated to tell the Isle of Man companies of the request to preserve documents. "All KPMG is required to do is to comply with laws in Canada and act in the best interests of their clients."

    In a statement to The Fifth Estate, KPMG said it "understands and has complied with its obligations in terms of preserving documents." 

    The statement said the Isle of Man companies are not owned by KPMG, and nobody at the firm "was asked about destroying documents" or "counselled such destruction."

    Corporate records show the four shell companies — Plantation Island, General Island, Sandy Point, and First Land — were set up by KPMG in 2002.

    Paul Dougherty, the Isle of Man lawyer who advised KPMG from the beginning, was a director of the four companies and was a longtime director of 23 other shell companies linked to the KPMG tax dodge.

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