1. The Paradise Papers, Appleby, and Nova Scotia’s welcome to tax avoiders

Newly released documents reveal how the world’s wealthiest people and corporations are using dummy corporations and offshore accounts to avoid paying billions of dollars in taxes.

The documents are dubbed the “Paradise Papers.” They are millions of internal records, emails, and other documents from the Bermuda-based law firm Appleby, which specializes in helping the wealthy shield their assets. The Paradise Papers were leaked to the German newspaper Süddeutsche Zeitung, which provided them to the International Consortium of Investigative Journalists, the same group that worked on the Panama Papers.

Alex Boutilier

The Canadian branch of the Consortium consists of reporters at the CBC and the Toronto Star. (One of the three Star reporters is King’s College grad and former Metro Halifax reporter Alex Boutilier.) Their first article on the Paradise Papers, published Sunday evening, focused on Liberal fundraisers and Trudeau confidants Stephen Bronfman and retired senator Leo Kolber who parked $60 million in a Cayman Islands trust. “Internal email correspondence and financial records in the Kolber trusts appear to show evidence of bogus records to hide payments, false invoicing and six-figure gifts to avoid paying tax, raising red flags for experts consulted by the Star and CBC/Radio-Canada,” they report.

The reporters are following up with a steady stream of articles detailing the tax avoidance schemes of other wealthy Canadians. Yesterday, the Star reported on how Appleby explored looping Nova Scotia into the tax avoidance game:

It was to be a little tax haven in Nova Scotia.

The idea was simple: the companies would be registered in Bermuda but the people processing the paperwork would be in Halifax.

Appleby, the leading offshore law firm in the Paradise Papers leak, explored this vision for outsourcing its back office administrative functions in 2007.

With direct Bermuda-to-Halifax flights, “very reasonable operating costs” and “very significant payroll tax rebates,” the case for Halifax was strong.

That last paragraph sounds like Nova Scotia Business, Inc promotional material. I’m surprised they didn’t mention the world’s best time zone. The article continues:

But Appleby needed assurances that its clients, who had incorporated in a zero-tax jurisdiction, wouldn’t have to pay tax to Canada.

No problem, wrote Halifax lawyer Jim Cruickshank, who was hired to analyze the legal issues.

“We do not believe the activities of (Appleby) could in any way constitute your clients ‘carrying on business in Nova Scotia,’” Cruickshank wrote in a memo to Appleby.

What about extending offshore financial secrecy to the new office in Canada? For this, Cruickshank had a creative solution.

“We believe a ‘paperless office’ and ‘dummy terminals’ for (Appleby) would provide significant but not complete practical immunity from search and seizure by Canadian authorities.”

Jim Cruickshank

Cruickshank is a partner at Stewart Mckelvey, the gigantic Halifax law firm.

Appleby had good reason to think Nova Scotia would make a good tax haven. I refer to a 2015 article by reporter Rachel Ward in the Halifax Examiner:

Nova Scotia Business Inc. (NSBI) got quite the critique Friday by Université de Montréal professor Alain Deneault.

“It’s politically very surprising,” said Deneault. “It’s a concern to see that a Canadian province is so convenient (for) offshore entities that exist only to allow wealthy people and powerful corporations to circumvent the set of constraints society gives to itself to work properly.”

Deneault is about to publish a new book, “Canada, a New Tax Haven: how the country that shaped the Caribbean tax havens is becoming one itself.” NSBI funds, he argued in a presentation at Dalhousie University, subsidize offshore-based companies that avoid paying Canadian taxes.

NSBI, a “private sector-led business development agency,” uses provincial government money to encourage companies to expand or invest in the province. That’s done using payroll rebates, research and development tax credits, as well as offering accounting support…

Several offshore banks, said Deneault, have taken NSBI money in exchange for a few jobs — yet haven’t returned the favour by paying taxes.

“It’s all only about allowing offshore firms to get access to the skills of the people of Nova Scotia without participating to the public effort to give to Nova Scotia public institutions that work,” said Deneault, “and it’s a concern to have that kind of system here.”

I wrote about this back in 2010, in an article that suggested that catering to offshore banks was the driving force behind putting the new convention centre in the Nova Centre:

Pursuing the financial industry made sense in 2006 and still makes sense today, says NSBI’s Stephen Lund. “We need to raise the bar for everybody. We need to take university grads that are working in Tim Hortons and Wendy’s and get them better-paying jobs, and have everybody move up the food chain. The reason I’m saying financial services is, if we had new jobs that are below a certain level, then we’re not really growing the economy. We have to grow the top line of the economy — we really do. We’ve got to create more tax revenues, we’ve got to create more high-paying jobs, and we’ve got to be able to move everybody up the chain.”

This is, in a nutshell, the trickle-down theory of economics: Get enough high-income people, and the rest of the economy benefits. Whether this actually ever happens in the real world is an open question.

A series of NSBI press releases in November, 2006, trumpeted the successes: Butterfield Bank, in Bermuda, was promised $9.1 million in payroll rebates in return for 400 “full- and part-time jobs” coming to Halifax over seven years. Olympia Capital, a hedge fund administrator also based in Bermuda, would establish a local office with 150 workers over five years, in return for $1.5 million.

One of the big scores was Citco Fund Services, a Cayman Island-based firm that became a financial industry giant by developing, as The Hedge Fund Journal explains, “the ‘hedge fund model’ of using leverage and shorting securities which was prohibited under the US Securities Act.” NSBI promised Citco $7.35 million in return for 350 jobs over seven years.

Citco, incidentally, seemed to be playing Nova Scotia. While it had and still has offices in Halifax, the goal appears to have been to get Nova Scotia to offer up ever-increasing incentives and tax breaks that could be dangled in front of other cities competing for a new Citco headquarters, essentially saying, “hey, match this offer.” The race to the bottom was won by Charlotte, North Carolina. It’s hard to tell who was the bigger chump here, Halifax or Charlotte, but there’s enough chump-dom to spread around. See also: Amazon bid.

Stephen Lund

Lund, for his part, has his own interesting history:

About that NSBI job… the position used to be held by Stephen Lund, who before coming to work for NSBI worked at Butterfield Bank in Bermuda. At the helm of NSBI, he oversaw the extension of $9.1 million in payroll rebates for Butterfield Bank to expand in Halifax, but somehow neglected to mention he once worked for the bank. Lund left NSBI in August 2013, heading back to his old stomping grounds and took charge of the Bermuda Business Development Agency. But he abruptly left that job in April for unspecified personal reasons, and headed back to Nova Scotia. Lund was gobbled up by the Irvings and now works as Vice President of the Halifax Shipyard, where he uses his expertise in ladling out public funds to private corporations to design war ships, I guess.

Lund left Irving for a job as CEO of Opportunities New Brunswick, which is that province’s equivalent of NSBI. I can’t imagine how he reflects upon a career trajectory that took him from working for one of the world’s largest hedge fund banks in sunny Bermuda to an obscure posting in podunk and cold New Brunswick, but that’s his business. Still, there in New Brunswick, he’s managed to make himself the subject of a legislative controversy.

In any event, shouldn’t there be an ethical filter on these tax rebate offers? Back in 2015, I wrote about the missing ethical filter in the context of Origin BioMed, the purveyor of a quack homeopathic product that was promised nearly $8 million in tax incentives by NSBI. I guess no one cares when desperate sick people are tricked out of their money, but can we at least pay attention when catering to offshore companies that operate as tax shelters lowers our own tax receipts?

This morning, Toronto Star reporters Alex Boutilier and Robert Cribb describe how the Canada Revenue Agency refused to provide information to the Parliamentary Budget Office that would allow the PBO to calculate the “tax gap” — the difference between taxes due and taxes actually collected:

For more than 50 years, the U.S. has measured and publicly reported the country’s tax gap. The U.K. began doing the same in 2009, annually detailing the amount of taxes — from both domestic and offshore sources — that never make it into the country’s tax coffers.

In all, more than a dozen Western countries — including Australia, Sweden, Poland, Belgium, Portugal, Mexico and Denmark — measure their uncollected taxes in order to understand the size of their shortfalls and plot public policy strategies to address the problem.

Canada lags.

The reporters go on to say that the CRA has published reports about the relatively small underground economy built to avoid paying sales tax:

But those reports ignored the white elephant in the room: uncollected offshore taxes fuelled by the billions flowing out of the country and often into foreign tax havens.

That offshore chunk, say experts, should be the government’s tax gap focus.

“They’ve just gone for the low-hanging fruit and left the important matters alone,” says Liberal Senator Percy Downe, a vocal advocate for tax gap reporting in Canada.

The best guesses from credible sources place Canada’s tax losses to offshore havens at between $6 billion and $7.8 billion each year.

But those estimates are theoretical.

So, we don’t even know the real number. It could be $6 billion a year. Could be $20 billion. But whatever it is, that’s money that’s not being delivered to Ottawa, and therefore not being spent on federal services that could benefit Nova Scotians, and it’s money that is not part of equalization payments that go to the Nova Scotian government.

And that tax avoidance is being facilitated, in part, by the Nova Scotian government.

It’s true that if Nova Scotia didn’t cater to the offshore banks, some other jurisdiction would. It’s also true, well, pick your analogy: if your landlord doesn’t rent to the drug dealer, some other landlord will; if your convenience store doesn’t buy black market cigarettes, the store down the street will; if… well, you get the point.

For sure, it is primarily Ottawa’s responsibility to calculate the tax gap, identify the strategies for tax avoidance, and revise tax law to close those opportunities. But all of us, including the provincial governments, set the tone for what are legitimate business practices and what are not. When we simply accept that tax avoidance is a normal part of our economy, and when we cater to those companies that specialize in tax avoidance schemes, we’ve already sold our soul to the devil.

2. Bar Harbor

The Alakai. Photo: Halifax Examiner

Bay Ferries is investigating changing the American port for the Yarmouth ferry from Portland to Bar Harbor, reports Michael Gorman for the CBC.

3. Payday loans

“The amount of money Nova Scotians are borrowing from payday lenders has jumped nearly 50 per cent in the last five years — a statistic one credit counsellor finds worrying,” reports Zane Woodford for Metro:

Data posted on the Nova Scotia government’s website shows the value of loans granted by payday lenders has risen from about $62.8 million in 2011 to $94 million in 2016 — an increase of 49.8 per cent — far outpacing inflation.

Over the same time period, the number of loans granted by payday lenders also rose significantly, from 148,348 to 213,165 — 43.7 per cent.


Payday loans are short-term, high-cost loans. In Nova Scotia, payday lenders are allowed to charge $22 in interest on $100. The money is due whenever your next paycheque comes. If that’s biweekly, the interest rate works out to about 600 per cent…


1. Cranky letter of the day

To the Chronicle Herald:

Re: the doctor shortage in Nova Scotia. I recently lost my doctor, who simply retired without notice to patients, gave up their licence and moved back to Croatia.

The practice is Springview Family practice in Halifax. I started reviewing ads posted by the Nova Scotia Health Authority. Much to my surprise, most of the ads written by a hired consultant seem to put more emphasis on the fact that Nova Scotia is the home of Sidney Crosby and that we have the largest pumpkin around, as opposed to particulars that would be of interest to any doctor wishing to move here to open up a practice.

Does anyone really think that that any potential candidates care about whether or not we have the largest pumpkin around?

Deirdre Floyd, Halifax




No public meetings.


Local Street Bikeway Public Engagement Session (Wednesday, 12 pm and 6pm, St. Andrew’s United Church, 6036 Coburg Road, Halifax) — the public will be asked about the Vernon-Seymour and Allan-Oak corridors. Your opinions may or may not be considered; we’ll see.

Regional Watersheds Advisory Board (Wednesday, 5pm, Alderney Public Library) — the board will discuss beach monitoring.



No public meetings.


Public Accounts (Wednesday, 9am, Province House) — Auditor General Michael Pickup will be asked about his November report.

On campus



YouTube video

Die Unberührbare (Tuesday, 7pm, Room 1009, Kenneth Rowe Building) — a screening of Oskar Roehler’s 2000 film, in German with English subtitles.


Augmented Reality Workshop (Wednesday, 2pm, Dalhousie Art Gallery) — NiS+TS members and collaborators from the Graphics and Experiential Media Lab at Dalhousie will present their project about the debris field of the Halifax Explosion. From the event listing:

In this workshop, the artists, designers, and computer scientists who have worked with NiS+TS on the augmented reality project, The Psychogeographers Table, will provide information and insights into the creation of this experiential work about the debris field of the Halifax Explosion. This innovative project began in 2015 with the concept of a 3D contour (or topographic) map of the areas of Halifax and Dartmouth most affected by the Explosion. The body of the table was designed and created by Dalhousie University Architecture students who worked with NiS+TS in a Freelab course in the summer of 2016. Students and faculty from the Dalhousie Faculty of Computer Science collaborated on the Hololens and other projection components. This workshop provides interested gallery-goers with an in-depth session about this project.

Killer Cells (Wednesday, 4pm, Theatre A, Sir Charles Tupper Medical Building) — Andrew Makrigiannis will speak on “Class I MHC Receptors are Required for Immunological Memory Mediated by Natural Killer Cells.”

Saint Mary’s


A Ham-Like Substitute (Tuesday, 7pm, McNally Theatre) SMU Drama Society presents this locally-written parody of “Hamlet.” Tickets: $5 and $8.


A Ham-Like Substitute (Wednesday, 7pm, McNally Theatre) SMU Drama Society presents this locally-written parody of “Hamlet.” Tickets: $5 and $8.

In the harbour

6:30am: Siem Cicero, car carrier, arrives at Autoport from Emden, Germany
7am: Forte, heavy load carrier, arrives at anchorage from Rotterdam
7am: Oceanex Sanderling, ro-ro container, arrives at Pier 41 from St. John’s
8:30am: Macao Strait, container ship, arrives at Pier 42 from Lisbon, Portugal
4pm: Siem Cicero, car carrier, sails from Autoport for sea
6pm: Macao Strait, container ship, sails from Pier 42 for Mariel, Cuba
8pm: Sakura Express, oil tanker, sails from Imperial Oil for sea


Just felt the need to go off on tax avoidance today.

Tim Bousquet is the editor and publisher of the Halifax Examiner. Twitter @Tim_Bousquet Mastodon

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  1. Excellent article/commentary on tax havens. Nova Scotia must use ethical judgement in its economic development policy – facilitating tax haven activity is cutting off your nose to spite your face.

    But the main work to solve the tax haven problem must be done federally. Tax haven use has increased enormously in the last 15 years. Along with tax cuts, tax avoidance and tax evasion contribute to expanding inequality and to underfunded public services.

    The current federal government has taken some good steps on tax havens, re-funding some of the cuts to the CRA that the Harper government made. But there’s a long way to go. Decisive action on this will be a litmus test for the LIberals and their focus on tax fairness. Especially after the botched attempt with small business tax changes, which were a sound idea, poorly articulated and defended.

    Keep up your focus on tax havens.

  2. Reading Jim Cruickshank’s words brought Wordsworth’s immediately to mind: “The child is father of the man.” Continuing to read, the words extended – extend to Stephen Lund also. It’s not going to change anything, but wonder whether they were inherently deceitful growing up with, we assume, western values and ethics, or did they learn power confers legal, ethical and conscience immunity?

    1. Donna, you might find this post interesting:

      “It’s pretty perverse that our culture celebrates individualism and yet condones submission only to inhuman institutions like schools, companies, and governments. It’s a sort of inverse Confucianism – a system where authority can only be exercised by people who deliberately do not engage in one-on-one superior-inferior relationships. And while a principled liberal might dislike hierarchy in all its forms, if you’ve got to have one or the other, we’ve settled on the greater of the two evils. Both institutions and personal authority may have incentives imperfectly aligned with yours, but only personal leaders may disregard their incentives in the interests of their subordinates. And for the most part, institutional authority feels less human-shaped than personal authority – compare a visit to the DMV with filling out paperwork with a trusted secretary, or a minor pay raise compared to a minor pay raise with a handshake and word of thanks from a long-time boss and mentor.”

      I will point out that I do not agree with 100% of what is posted on that website, but I agree with most of it.

      1. Thank you, Nick.

        I not only find the piece interesting, I find it fascinating. It provokes so many thoughts and opinion that I’ve spent time trying to distill my response. In making principal points on principle, the piece touches upon an unstated but massive, inherent periphery.

        About the final sentence, I’d opt for AI governance if we could program in algorithms based upon a common acceptance of specific goals and equality, decisively moderated and determined by specific discrete and related factors. Take out the human factor entirely, especially greed and exploitation. Fantasy, of course. We’re a universe away from that. Our politicians – our governance – don’t even raise automation, its effects and potential.

        This sentence from the piece jumps out at me: “What individualism has bought us is not the end of servitude, but merely the cloaking of masters.”

        Indeed so, in my opinion, and until we examine how we’re conditioned from birth to unquestionably, punitively accept the cloaking – and with age, knowledge and greater wisdom, reject, develop and promote our own values and ethics, we’re doomed to have more Panama Papers, Paradise Papers, and characters like Cruickshank, Lund et al ripping us off societally, collectively.

        Yes, we need structure and hierarchy within collective living, but from birth we’re conditioned to recognize and accept authority and class. Education occupies a unique position within except it’s not universally accessible to all at post-secondary level, and for those who achieve it, they gain a perpetual passport to power and influence. From outside, to speak against any element within their sphere is to be struck down as specifically uneducated, without standing, credibility and justification. Tradition is often slung in as well. Shut up about sacred cows. In some ways, we’re more subjugated today than serfs were in yesteryear, and with our modern sophistication, we’ve rejected violence as a route to change. Our sophistication and conditioning create a maelstrom within us except for those who opt out, as 47% of the eligible Nova Scotia electorate did last election – just quit participating.

        A couple of other examples to end with:

        On values and ethics, childhood environment too often dictates – the conditioning I mention. Friend/neighbour during recent visit spoke of her now-adult son having summer overnight job as teenager to which he took his pillow and alarm clock. I bit my tongue because past objection to stated physical child punishment became pointless. That son now has children of his own; wonder if he advocates sleeping on the job, “sticking it to the man.” As adults, we get to choose or should – as the person in the linked piece felt inherently uncomfortable with a servant hovering. Nature vs nurture. It’s complicated.

        Someone I greatly respect, our soon-to-retire Chief Justice Beverley McLachlin, recently gave a speech in which she listed four areas of Canadian justice which continue to be of her and general concern. Her fourth is titled “Reconciling the Rights of the Accused and Complainants’ Expectations.” I take it to be a caution to those of us demanding fairness in sexual assault law and justice. She is the epitome of hierarchical justice in our system and reaffirms freedom, liberty as ultimate “precious thing.” No shades of gray, no complexity, no mention of another “precious thing,” human personal body sovereignty and intimacy invaded and taken by force, both from men and women. Authority, hierarchy, legal expertise speaks, warns, solidifies tradition and status quo.

        Last example returns to temporary foreign workers, mentioned in the piece and an issue in Canada, but I’ll use US President Trump and his “America First” mantra. Mar-a-Lago has applied for and received approval to recruit and employ 70 foreign workers. In a different article, the local employment office said they had 5,000 available for the jobs cited. Hierarchy again. Power and influence. And exploitation. Betrayal of mandate. Servants and Masters. Literally.

  3. As of December 31 2016 the HRM pension fund had investments valued at $$34.59 million in MacQuarie European Infrastructure Fund $ L.P :
    The fund is located in an offshore tax haven in Guernsey, Channel Islands :
    Other public sector pension funds have invested in the same fund and details are available by searching the ‘Filing history’. University of Victoria is also invested in the fund.