Jean-Raymond Boulle has tangled with African rebels, disgruntled business partners and even his own brother. But he's now facing what could be his toughest opponent yet, the Canada Revenue Agency.
The CRA has slapped Mr. Boulle with a staggering $190-million tax bill. And the amount could go higher.
The tax is based on the windfall Mr. Boulle and his partner, Robert Friedland, made off the Voisey's Bay nickel deposit in Newfoundland. The pair co-chaired Diamond Fields Resources Inc., which discovered the find in the early 1990s. Inco Ltd. bought Diamond Fields in 1996 for $4.3-billion and Mr. Boulle pocketed $425.9-million on the deal, according to tax records.
The CRA has been pursuing him ever since over unpaid taxes. Mr. Boulle, who lives in Monaco, argues he doesn't owe anything in Canada because he made the investment through a company he incorporated in Luxembourg. He's taken his case to the Tax Court of Canada.
Mr. Boulle, 55, is no stranger to controversy. Born in Mauritius, an island off the southeast coast of Africa, Mr. Boulle has had a long career in the diamond trade that has included brushes with rebel leaders during the civil war in the Democratic Republic of Congo and complaints about his business practices by a United Nations panel.
Mr. Boulle got his start in the business working in Africa for De Beers Consolidated Mines Ltd. He moved to Texas in 1980 and began exploring for diamonds in Arkansas. Along the way, he had numerous legal battles, including one with his brother that was resolved.
In the early 1990s, he hooked up with Mr. Friedland, a Vancouver mining promoter who was also busy with a project in the United States at the time. They launched Vancouver-based Diamond Fields in 1992 and initially started looking for diamonds off the coast of Namibia. Within a couple of years they turned their attention to Labrador and stumbled across the Voisey's Bay deposit, one of the largest nickel finds in the world.
After selling Diamond Fields to Inco, Mr. Boulle went off to other ventures, mainly in Africa. His ties to Canada are tenuous. While he still has some business interests here, he spends most of his time in Monaco and has British citizenship. Nonetheless, CRA has insisted that he owes taxes on the Diamond Fields takeover.
Mr. Boulle reported the gain he made on the sale to CRA in 1997, according to court filings. He argued that under a tax treaty between Luxembourg and Canada, his profit was exempt from tax in this country.
The CRA rejected that explanation and alleged he set up the arrangement to avoid taxes. Mr. Boulle incorporated MIL in the Cayman Islands in 1993 and "purportedly" transferred it to Luxembourg in 1995 to take advantage of the tax treaty, the CRA alleged. However, the CRA alleged the money flowed back to another Cayman Islands company controlled by Mr. Boulle.
"Most of the money was then either paid to Mr. Boulle by way of a dividend from the new Cayman Islands company or invested in Mr. Boulle's interests in companies outside of Luxembourg," the CRA alleged in court filings.
In July, 2003, the CRA sent Mr. Boulle a "notice of reassessment" which calculated that he owed about $180-million in taxes, interest and penalties. The amount keeps climbing because of interest charges and it now stands at $190-million.
Mr. Boulle appealed the CRA's assessment to the Tax Court. In court filings, he denied any attempt to avoid taxes and said the transaction conformed to the tax treaty.
The case has gone on for nearly two years. A five-day hearing on the case is scheduled to start on July 17.