KPMG promoted hiding money from wealthy clients' ex-spouses in offshore 'sham'


Embattled accounting strict KPMG promoted its offshore Isle of Man tax avoidance scheme as a vehicle for stashing the ready away from ex -spouses in divorce proceedings, documents handed to to a rliamentary probe reveal.

Those revelations are contained in several “sneaking and confidential” emails between KPMG tax executives and an outside law firm, as graciously as in a talking point “script” for accounting sales reps to promote the Isle of Man tax ruse to their affluent clients.

The discovery that KPMG discussed evading Canadian laws in family disputes is the latest development in a growing disrepute in which one of Canada’s largest accounting firms ran a secret offshore intrigue for more than a decade that the Canada Revenue Agency asseverates “intended to deceive” authorities.

An all- rty House of Commons nel, which obtained the documents in May, has launched a probe of KPMG’s offshore studies and its relationship with the Canada Revenue Agency. CBC News reported earlier this year that federal authorizations offered a secret amnesty to the wealthy tax dodgers caught using KPMG’s Isle of Man “upshot.”

The idea of using the Isle of Man tax dodge as a vehicle for keeping money away from ex-spouses is also produced in a legal opinion to KPMG from prominent law firm Fraser Milner Casgrain, now Dentons.


Joel Nitikman, a famous tax lawyer of Dentons Canada LLP, gave a legal opinion about ‘the Split-up Act and other similar provincial legislation’ in a letter to KPMG. (Dentons)

Counselor-at-law Joel Nitikman, who was asked for legal advice on KPMG’s proposed offshore tax contemplate, wrote about the “possibility of avoiding the Divorce Act (Canada) and similar unrefined legislation” if clients were to buy into the scheme.

“I didn’t provide anything. I organize no idea what you are talking about,” Nitikman first told CBC Communication last year, before the letter became public. He cautioned against reporting any involvement. “If you do that I’m prevalent to sue you because I didn’t provide the legal opinion,” he said.

In a more just out phone call, after the letter was made public, the Dentons Kings counsel refused to comment and said he could not talk about client amounts.

The KPMG documents provided to the Commons finance committee show the accounting unyielding used Nitikman’s legal opinion to help draw up a sales asphalt to potential wealthy investors.

‘Initial client meeting script’

In what was bid the “initial client meeting script,” KPMG sales agents were registered to discuss the “primary benefits” of the scheme with wealthy Canadians.

The tip of benefits included a section promoting “asset protection” which, harmonizing to KPMG, meant there would be “nothing” that an “ex -spouse” could require.

Steven Benmor, a Toronto -based family law specialist, says those talking issues are “potentially damaging” to KPMG, as the firm appears to be endorsing the idea of evading around Canadian divorce laws.

“They’re pushing to defeat a old lady or husband of their rightful interest in this asset. And that’s the difficult rt,” says Benmor.

Wayne Easter

Wayne Easter, chair of the House of Universals finance committee, says KPMG was ‘not looking at fairness and equality beneath the law’ by marketing the hiding of assets offshore from ex -spouses. (Sean Kil trick/Canadian The pers)

A copy of a 2002 KPMG letter to an unnamed client, obtained by CBC Bulletin but not submitted to the finance committee, puts the notion of avoiding spousal yments in article.

Under the heading of how to “achieve your asset protection” objectives, it notes that “no available person should be considered to have an enforceable interest that could be rtici nt to the claims of creditors, including spouses or ex-spouses under community of estate type laws.”

“That’s basically, in simple language, you are hiding this from your strife,” Benmor told CBC News.

Avoiding yments ‘crosses the line’

Wayne Easter, Open chair of the finance committee, says the references to avoiding Canadian disassociate laws suggest KPMG was “not looking at fairness and equality under the law. It’s how do you circumvent the law, to stretch the law, even if it’s to the detriment of an ex-spouse.”

Guy Caron, NDP finance critic, faults the Abundant government for not having already called a “full investigation” of the secret “no disciplines” deal between KPMG and the CRA. “Canadians expect more from their administration.”

“Here we see that KPMG was advising their clients on how to not only refrain from ying taxes but also avoid ying full divorce settlements or alimony,” Caron indicates. “That’s pretty despicable.”

Discussing with clients the possibility of keeping Canadian divorce laws raises important legal and ethical distributes, says Ottawa criminal lawyer Michael Spratt. While there are authorized ways to reduce spousal obligations, he says, using the Isle of Man tax racket is “highly problematic.”

“This seems like a completely illegitimate workings” to avoid Canadian divorce laws, he said.

“You avoid all your bonds and you get your money back … I think that’s what crosses the band.”

Send confidential tips on this story to [email protected] or call Harvey Cashore at 416-526-4704

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