Tax adviser to revenue minister attended KPMG-sponsored Madrid conference, parties

A Liberal government appointee named to crack down on offshore tax avoidance in the wake of the KPMG scandal attended a Madrid conference and social events where the embattled accounting firm was a top financial sponsor, a Fifth Estate/Enquête investigation has found.

Western University law professor Colin Campbell was appointed by the Liberal government in the spring of 2016 to head an "independent" review of offshore tax schemes following revelations that accounting giant KPMG had run a massive tax dodge for multimillionaire Canadians in the Isle of Man.

In late September 2016, Campbell travelled to Spain to attend a tax conference — with KPMG as the top "diamond" sponsor. At the event, delegates were treated to evenings of cocktails, flamenco dancing and Spanish cuisine.

"This is just another example of the Liberal government being too close to KPMG and to the accounting industry overall," says Duff Conacher of Democracy Watch, an Ottawa-based watchdog group.

The Madrid trip revelations follow the resignations in October 2016 of two members of Campbell's offshore panel, after one raised concerns the committee was not arms-length from the Canada Revenue Agency — the agency whose policies it was supposed to examine.

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In her letter of resignation dated Oct. 4, 2016, obtained by The Fifth Estate and Enquête, Sherbrooke University professor Marie-Pierre Allard wrote directly to Revenue Minister Diane Lebouthillier. She told the minister that the offshore compliance advisory committee "cannot be regarded as independent" and that there was only "superficial discussion" of issues.

The offshore committee was not permitted to probe the KPMG affair.

When asked about the optics of attending a conference where KPMG was a top sponsor, Campbell said he was unaware of the accounting firm's financial relationship with the event organizers.

"I have no knowledge of what KPMG's involvement was," he said. "There was a lot of advertising."

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Video recorded by CBC's The Fifth Estate shows KPMG's advertisements throughout the Madrid conference, including signage close to where Campbell and other delegates were provided hors d'oeuvres and refreshments.

"Never have tax leaders faced a more challenging time," KPMG advertised. "Your tax business is now everyone's business." 

'Diamond' sponsors

Several other Canadian tax professors attended the Madrid conference, as well as judges from the Tax Court of Canada and the Federal Court of Appeal.

Justice Randall Bocock eventually recused himself from a KPMG-related tax court case after The Fifth Estate and Enquête reported in March that the judge had attended a private party in Madrid hosted by a law firm linked to the KPMG affair.

Documents show KPMG and accounting giant PwC each paid 65,000 euros — or $98,000 Cdn — to be the top "diamond" sponsors of the conference. Other sponsors included major tax law and accounting firms, many with offshore operations in places like Gibraltar, Malta and the British Virgin Islands.

The International Fiscal Association, the tax industry group that ran the conference, promised on its website that the paid sponsors would receive "tremendous brand recognition and opportunity to leverage their marketing initiatives."

Organizers of the conference told The Fifth Estate that the social events, alcohol and entertainment venues were paid for by delegates' fees and the paid sponsorships.

The conference was attended by global tax accounting firms as well as regulators from dozens of countries. Its brochures promised delegates "an abundance of leisure activities" and "social events."

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Video footage shows Campbell attending a "cultural evening" at the Plaza de Toros, including flamenco dancers, music, cocktails and local cuisine.

Campbell told CBC News he attended only the social events that were part of the official conference program.

Prem Sikka, emeritus professor of accounting at the University of Essex in the United Kingdom, says there's a reason firms like KPMG sponsor these kinds of conferences and social events.

'No such thing as a free lunch'

"There is no such thing as a free lunch and a drink from these people," said Sikka.

"This is a part of their business strategy, simply expanding their influence," he said. "Before you know, someone is trying to talk you into something."

Democracy Watch's Duff Conacher says government advisers must avoid even the appearance of conflict.

"[They] are not allowed to accept any gift that has the appearance that it's been given to influence them," he said.

In an email to The Fifth Estate, the CRA said its employee policy governing outside hospitality does not apply to Campbell as he is considered a volunteer.

The revenue agency added that its appointees to the offshore compliance advisory committee "are expected to act honestly, in good faith and only in public interest."

Campbell attended the week-long conference after being asked to chair a panel discussion on the taxation of criminal activities. A senior KPMG official was part of that panel discussion in Madrid.

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In Canada, two members of Campbell's offshore compliance advisory committee resigned in October 2016 — after raising concerns that it was not arms-length from the CRA.

Tax professor Allard from Sherbrooke University and retired tax accountant Allan Lanthier both resigned before the committee had issued its first report. 

Raising concerns

The Fifth Estate has also learned the KPMG tax dodge and the agency's decision to offer KPMG clients a "no penalties" amnesty were off limits for the committee.

Allard raised concerns that senior CRA officials, together with Campbell, set the committee's agenda.

"What is expected of the members of the committee is that they approve, after superficial discussion, many of the recommendations decided by the chair in agreement with the leaders of the CRA," Allard wrote.

Campbell told CBC News that investigating the KPMG scandal was not part of the mandate of the offshore compliance advisory committee. He said the terms of reference did not allow the committee to look at "individual taxpayer matters" such as the KPMG scandal.  

Campbell also told Allard in an email dated Sept. 6, that the committee was "never intended to function as an independent inquiry." Several government media releases refer to the committee as an "independent" panel of experts.

For her part, Allard told the minister she no longer believed the committee would be effective in helping to crack down on offshore tax evasion.

"I heard your sincere desire that this committee be able to make a fundamental change in the practices of the CRA and make a real difference. That's what I wanted," Allard wrote. "I regret to say that I do not think that will be the case."

In an email to The Fifth Estate, the CRA said it was "natural" for members of a committee like this to come and go. 

The offshore compliance advisory committee made its first recommendations last fall and continues to meet.