Tony Merchant is used to taking on corporations, governments and other big institutions as one of Canada’s most prominent class action lawyers. But now Mr. Merchant is facing questions about media reports that he and his wife, Liberal Senator Pana Merchant, set up an offshore account with $1.7-million in the Cook Islands.
According to documents obtained by the Washington, D.C.-based International Consortium of Investigative Journalists, the Merchants were among 130,000 people from around the world to have stashed money in accounts in the Cook Islands, a self-governing New Zealand territory in the South Pacific.
There is nothing illegal about opening offshore accounts, unless the money has not been reported to the Canada Revenue Agency. There is no indication the Merchants did not report the holdings.
Mr. Merchant could not be reached for comment Thursday and Ms. Merchant also has not commented.
The Regina-based lawyer has been one of Canada’s most high-profile attorneys. In January he filed a suit against the federal government on behalf of grain farmers seeking more than $15-billion in compensation for the government’s decision to end the Canadian Wheat Board’s monopoly over the sale of wheat and barley grown in Western Canada. He has also taken on a number of cases alleging abuse within institutions, including residential schools, correctional facilities, and a school for the deaf.
The federal government has been cracking down on tax avoidance in recent years. In last month’s federal budget the government announced plans to pay people who snitch on international tax cheats with a commission worth up to 15 per cent of whatever is recovered. The CRA has also been given new powers to go after Canadians who participate in tax shelters that involve donations to charity.
Citing documents, the CBC has reported that the Merchants also opened an account in Bermuda at a brokerage called Lines Overseas Management and used it to buy mutual funds, including some in Luxembourg.
The CBC also reported that documents show Mr. Merchant wanted to keep the accounts private. One note in his account file read: “Keep correspondence to a minimum,” CBC reported. “Do not fax to client. He will have a stroke.” Added another note: “Received a letter from Mr. Merchant requesting that we do not disclose now or in the future any information to the authorities in Luxembourg, or anywhere.”
"Anyone with information on tax cheats has an obligation to bring it forward,” Revenue Minister Gail Shea said in a statement Thursday. “The release of this information is good news for the hard-working Canadians who pay their fair share. This is bad news for the tax evaders in this country.”