Canadian firm names pop up in Panama Papers revelations

A number of Canadian law firms are mentioned in the Panama Papers, the massive leak from a Panamanian law firm showing the offshore financial dealings of prominent figures worldwide.

The documents, which became available for wider public scrutiny this week, list Bennett Jones LLP, Aird & Berlis LLP,, and Macleod Dixon LLP as intermediaries for various offshore companies and trusts.

The law firms are listed as intermediaries for trust accounts incorporated as far back as the 1980s. Aird & Berlis is listed as an intermediary for Blue Trust, The Merril International Trust, Harrison Trust, Chavid Trust, Coppi Trust, and two other accounts with details that have been temporarily withheld.

Bennett Jones is listed as an intermediary for FROBISHER S.A., which was incorporated in 1982 and struck off in 2013, according to the documents.

Meanwhile, Macleod Dixon, which merged with the Norton Rose Group to open its first Latin America offices in 2012, is listed as an intermediary for Continental-GeoPetro (Yapen) Ltd., a company engaged in oil and gas exploration in Indonesia.

Vitaly Timokhov, a tax lawyer at Tax Chambers LLP, says the law firms could have been involved to incorporate the Canadian side of these companies, act as advisers for beneficiaries, or settlors of trusts, or help set up an offshore financial structure for companies to create “tax efficiencies.”

When law firms create foreign financial structures, it’s usually after the structures have been approved by Canada Revenue Agency, says Timokhov.

“Usually, these kind of structures, they’re all vetted by Canada Revenue Agency as part of the setup,” he says.

Asked about the impact of the revelations, Aird & Berlis’ managing partner Steven Zakem said, as acknowledged by the International Consortium of Investigative Journalists, which made the documents available on its web site, there are legitimate uses of for offshore companies and trusts.

“. . . Off shore companies and trusts are legitimate tax planning vehicles which are recognized by Canada and many other jurisdictions,” Zakem said in an e-mail to Legal Feeds.

“Aird & Berlis LLP does not respond to outside enquiries concerning the identity of its clients or legal advice it may or may not have provided to its clients. As such, we must decline to answer the questions posed,” Zakem also said.

Recently, RBC was forced to hand over its clients’ records to the CRA after names of the bank’s clients turned up in the Panama Papers. If tax auditors similarly ask Canadian law firms to surrender their records, Timokhov says it’s debatable whether the law firms can argue the information is protected by solicitor-client privilege.

The extent to which tax advice is privileged is “an extremely complex” question, he says.

“The CRA position is . . . that all information which is relevant in the computation of income tax liability is not privileged. It’s confidential, but not privileged,” he says. “Canada Revenue Agency can, under the Income Tax Act, request information from all third parties including lawyers in respect of all information relevant to income tax computation.”

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