The probe into allegations of corruption inside the Canada Revenue Agency has grown to focus on retired officials who are now high-paid private-sector consultants, court documents and sources say.
Already rattled by six firings and three suspensions, the CRA is looking into the activities of former officials and their work on behalf of corporate and individual taxpayers.
The agency's investigations are part of a recent crackdown on companies in the Quebec construction industry that has included embarrassing allegations that corrupt CRA insiders conducted sham audits and helped companies evade taxes.
New details are emerging as part of a lawsuit against CRA by a former agency accountant who is now a consultant. In court filings obtained by Radio-Canada and The Globe and Mail, Madan Kehar said he and his spouse, retired CRA lawyer Josée Vigeant, are being wrongly and unfairly "linked to illegal activities" by the tax-collection agency.
Mr. Kehar says in his lawsuit he has been the subject of a tax audit for almost two years, that he is the victim of harassment and that he might have been denied his Charter rights to defend himself appropriately. In the court documents, Mr. Kehar said his reputation stands to be discredited, which would affect his ability to interact with CRA employees on behalf of his clients.
In an interview, Mr. Kehar said he has nothing to hide and has no ties to the controversy that has hit the CRA over the past two years.
"I retired in 2006, and all of the infractions that we're hearing about, they occurred afterward," Mr. Kehar said. "I have done absolutely nothing wrong."
Two CRA auditors were fired in 2009 after investigators alleged that they shared a bank account containing $1.7-million in the Bahamas with Francesco Bruno, owner of construction firm B.T. Céramique. At least seven other officials in the CRA's offices in Montreal have since been disciplined in relation to various files, including allegedly fraudulent R&D tax credits.
During the course of internal investigations, the CRA quizzed employees about their links to Mr. Kehar and Ms. Vigeant, who have more than four decades of combined experience at the CRA, court documents show.
According to Mr. Kehar's lawsuit, CRA investigators kept track of which employees suspected of wrongdoing had worked with him, and which ones audited the files of Ms. Vigeant's clients. After 12 years at the CRA, Ms. Vigeant began working in 2001 at Heenan Blaikie in Montreal, where she has done legal work for B.T. Céramique in civil matters that are distinct from CRA charges against the company.
According to guilty pleas in a tax-evasion case last year, shell companies belonging to Mr. Bruno supplied fake invoices to construction firms that were operated by industry magnate Antonio Accurso.
The CRA informed Mr. Kehar on April 7, 2009, that it was launching its tax audit. On the same day, it conducted a series of raids on Mr. Accurso's companies in the Montreal area.
Mr. Kehar started working as a tax consultant out of his home in the Laurentians in the summer of 2006, immediately after he retired from the CRA with almost 30 years of experience.
In his lawsuit, Mr. Kehar said the CRA might have tried to mislead him when it said it was conducting a tax audit. In effect, Mr. Kehar said he got the impression the agency is actually conducting a wide-ranging investigation with potential criminal implications.
"This systematic harassment of Mr. Kehar and his company seems to originate in a mean and envious desire to hit back at a former civil servant, because he is no longer a part of the organization or the brotherhood, and has high revenues," said one of the court documents.
Mr. Kehar added that some of the CRA officials who were quizzing him about his 2006 and 2007 tax filings were linked to the Special Enforcement Program, a program designed to look into "individuals suspected of earning income from illegal activities."
In the court documents, Mr. Kehar also complained that two pictures of his wife and him were posted on the CRA internal computer network with their heads cut out. Mr. Kehar's lawsuit said the pictures, which have been taken down, conveyed the impression that the CRA "was gunning for our heads."
Mr. Kehar said he has been called upon to provide reams of financial data to the CRA as part of the tax audit, including information on $420,000 in deposits in 2006 and 2008. In addition, the CRA has sought information on $1.3-million in withdrawals from a number of bank accounts between 2006 and 2008, as well as years' worth of credit card statements.
Mr. Kehar has provided explanations at every turn, including a statement that $90,000 of the bank deposits were made at the Montreal Casino.
According to records included in his suit, Mr. Kehar received a salary of $250,000 from his consulting firm in 2007. When he first met CRA officials in person, they set up two tape recorders to record the exchanges.
The CRA refused to comment on Mr. Kehar's lawsuit. Other details of the ongoing controversy at the CRA have been made public in search warrants that were executed by the CRA and the RCMP in 2009 and 2010.Report Typo/Error