Liberal fundraiser uses tax havens, but how much power over the party does he have?

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Prime Minister Justin Trudeau speaks in the House of Commons. Photo: Adam Scotti/PMO

One of the facts to emerge from the just released multi-country journalistic investigation into the use of offshore tax havens is that Prime Minister Justin Trudeau’s chief fundraiser has links to one such scheme.

CBC reports that the chief revenue officer of the Liberal Party of Canada, Stephen Bronfman, “and his Montreal-based investment company, Claridge Inc., were key players linked to a $60-million U.S. offshore trust in the Cayman Islands that may have cost Canadians millions in unpaid taxes.”

That is just one of a vast multiplicity of revelations the German newspaper Sueddeutsche Zeitung shared with the International Consortium of Investigative Journalists, which includes both the CBC and the Toronto Star. The whole package is called the Paradise Papers; the tax havens tend to be on sun-baked, tropical islands.

Bronfmans lobbied furiously to prevent taxation of offshore earnings

On Bronfman’s involvement, the official response from the Liberal Party, so far, is that he is a mere volunteer, with no role in policy. That’s a relief, because for nearly two decades Bronfman family interests have been lobbying the Canadian government not to legislate against offshore tax havens. Senator Leo Kolber, who liked to call himself the wealthy Bronfman family’s consigliere, wielded significant influence as chair of the Senate banking and finance committee, until his retirement in 2004. After that, lawyers for Bronfman business interests continued a determined lobbying effort to block any new laws that would be detrimental to offshore tax havens.  As CBC reports,  when, in 2007, the House of Commons finally passed a law that would have taxed earnings on Canadian funds sheltered offshore, the Bronfman legal team worked overtime to make sure the Senate killed it. 

Bronfman may not get paid by the Liberal Party, but he is a highly visible face of its fundraising.  Here’s what he said in an email blast to potential donors, about six weeks ago:

“It's probably not a surprise to you, [name of recipient], but I'm a pretty ambitious guy. I'm always challenging our team to do better, to think bigger, and reach for higher and higher goals … You've (sic) have placed your trust in our movement, and we need to show you that we are worthy of that trust.”

Interesting words those, about being worthy of trust and a “pretty ambitious guy.”  Bronfman is not just a happy helper at Liberal Party headquarters, chipping in a bit, in his spare time. He is a key part of the Liberals’ brand.

If the party does not pay Bronfman, it is, frankly and without putting too fine a point on it, because he does not need the money. While as a fundraiser he may have no official role in policy-making, what of an unofficial de facto role? The question for citizens is: What happens when a party chooses to entrust a key role to a rich and well-connected individual, who is closely associated with concerted and persistent lobbying operations — operations that have had significant public policy consequences?

Echoes of the Gagnier scandal at the end of the 2015 campaign

For this writer, these most recent revelations provide further evidence that Canadians who consider themselves to be progressives would be unwise to put all their eggs in the Trudeau Liberal basket.

Toward the very end of the last election campaign, there came a revelation that, had it come earlier, might have seriously damaged the Liberals — and thrown something of a lifeline to the floundering NDP. A few days before the election, a story broke about the Liberals’ campaign co-chair, Dan Gagnier, a one-time senior public servant in both Ontario and Quebec who was, at the time, a policy consultant, i.e. lobbyist. The story revealed that Gagnier had written an email to senior executives of TransCanada Pipelines advising them how to convince a new Canadian government to approve the Energy East project. It appears that while Gagnier was working to elect Trudeau by day, by night he was advising at least one corporation how to wield influence on the Liberal leader if and when he was elected.

Trudeau’s first reaction was to defend Gagnier. He argued that his campaign co-chair was only a volunteer and had no role in policy. In less than a day, however, the Liberal leader changed his mind. He decided Gagnier’s activities on behalf of TransCanada had been inappropriate and asked him to step away from the campaign.

The affair did not seem to hurt the Liberals at the polls. It happened so late in the day that it is likely most voters had never heard about it.

The Gagnier affair raised red flags. I had been hearing a lot from voters who said they planned to desert the NDP in 2015. They were going to put their faith in Trudeau, because, they reasoned, he was as the one and only leader who had a plausible chance of ending the Harper regime for good.

When the Gagnier story broke on the eve of the 2015 election, this is what I wrote in this space, as a kind of warning:

In many ways, the lobbyists' favourite party is the Liberal Party. Lobbyists appreciate the chameleon-like nature of a party that will change its colours in a minute. They find it easy to deal with a party of the so-called centre, whose chief ideology is a kind of light-on-principles pragmatism.

As we have said in this space on a number of occasions, in the well-appointed offices of "government policy consulting" firms around Ottawa, the mood, these days, is, as they say in New Orleans: "Laissez les bons temps rouler!” Many progressive voters have convinced themselves that Trudeau represents hope and change and fresh air. And, in any case, polls say he is the only one with a chance to defeat Harper, so, what the heck, anyone would be better than Harper, after all. Right?

Trudeau says he will reform Parliament, bring in a fairer electoral system, deal respectfully with First Nations, make the environment a priority and tax the rich. That's what progressive voters who are shifting to the Liberals think they will be voting for. But that is not what attracts Gagnier and the many others like him to the Liberal campaign. Gagnier and his colleagues see a party that promises to spend billions of taxpayer dollars, especially on all kinds of infrastructure. More important, the Liberals pledge to undertake that spending on what is called the P3 model: public-private partnerships — and here the key word is private.

What will the Trudeau government now do about tax havens?

Today, two years later, we have the federal Infrastructure Bank, based on the recommendation of a key, corporate-dominated advisory body, not a parliamentary committee that heard open and recorded testimony from Canadians. The Trudeau government has blithely ignored numerous recommendations from committees of elected MPs, most famously the one on electoral reform, but it is very attentive to the views of its corporate economic policy council.

When the question of limiting the massive tax losses from offshore havens comes back on the agenda, who will have the most decisive influence on the Trudeau government?

Voters who care about such matters as social justice and equality, and who put so much faith in the good intentions of the Liberals last time, should pay close attention, starting now, to the government’s response to the offshore tax haven issue. 

Photo: Adam Scotti/PMO

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