The Canada Revenue Agency (CRA) is chasing six Canadian families, well-known in the business world, for $1 billion allegedly hidden in Caribbean tax havens.
The revelation emerged in court documents obtained by QMI Agency.
For nearly six years, the CRA has tried to use the courts to compile a complete list of investors in two mysterious companies registered in the British Virgin Islands.
They are GAM Global Diversity and St. Lawrence Trading.
According to internal corporate documents obtained by the CRA and dated to August 2001, "six Canadian families prominent in the business world hold about $900 million U.S." in the two offshore companies.
The names of the six families cannot be found anywhere in the documents. But auditor Ginette Phisel, from the CRA's Montreal office, revealed in an affidavit that the taxman has already managed to identify some of the 101 Canadian investors in the offshore firms.
Thirty of the clients might be linked to the six families, documents say.
If Revenue Canada tracks them down, it could be the biggest tax-evasion case in Canadian history.
Offshore havens have proven difficult for the CRA to root out, and the agency has so far been unable to secure a single conviction in Canada for offshore tax evasion.
According to the documents, the CRA made repeated requests to the courts to verify if St. Lawrence Trading investors complied with Canadian tax law between 2001 and 2011, particularly their obligation to disclose foreign investment income.
An internal restructuring of GAM Global Diversity and St. Lawrence Trading in the early 2000s tipped tax investigators off to the extent of offshore investments by the six Canadian families.
At the time, investors were bracing for changes to Canadian tax law that would force them to pay annual taxes on their foreign holdings.
Investors responded by orchestrating a series of financial transactions involving offshore subsidiaries of Canadian banks, allowing them to continue to dodge taxes even after the changes came into force.
In a 2008 affidavit, CRA auditor Pierre Leduc said Scotiabank charged investors annual fees of more than $1 million for a series of transactions involving two of its overseas subsidiaries. The manoeuvrings allowed customers to circumvent provisions of the new law.
Revenue Canada contacted the Canadian subsidiary of the Swiss bank UBS last June for allegedly handling shares in St. Lawrence Trading on behalf of Canadian clients. The shares were listed on the Irish Stock Exchange.
Global Asset Management, an investment vehicle for six wealthy Canadian families according to the CRA, was founded by the late Gilbert de Botton.
The banker was considered a financial genius.
Chief manager of the French and English branches of the wealthy Rothschild family in Switzerland, de Botton was seen as the pioneer of "open architecture," an investment strategy that allows clients to spread their risk by focusing on multiple top fund managers.
His company was founded with $3.2 million and was sold to the Swiss bank UBS for $687 million upon his death in 1999.
Born in Alexandria, Egypt, de Botton spoke 12 languages and was an aficionado of literature and philosophy, who had a large personal library.
De Botton's companies currently have more than 1,500 shareholders and more than $2 billion in assets.