https://www.thestar.com/news/paradi...eau-bronfman-kolber-offshore-trust-taxes.html
Liberal fundraisers held family millions in offshore trust, leaked documents reveal
A massive new leak of offshore financial records contains more than 5,000 documents that reveal how two generations of Liberal fundraisers amassed $60 million (U.S.) in a tax haven beyond the reach of tax collectors.
The rich need to pay their fare share says Justin.
It was Labour Day weekend in 2012.
Canada’s future prime minister, Justin Trudeau, was vacationing with his family in the picturesque mountain village of Mont Tremblant, Que., with a lot on his mind.
After years of speculation, he had decided he was going to make a play for the country’s top political office.
With him that weekend was longtime family friend Stephen Bronfman, 53, a third-generation descendant of one of Canada’s wealthiest families that had founded such iconic brands as Seagram, the Montreal Expos and the Eaton Centre.
“(Trudeau) came to me and said, ‘You know, I’ve made a decision. I’m going to run for the leadership,’” Bronfman recalled in a 2013 interview. “I’d always told him, especially since he’d gotten in politics and was first elected, ‘Justin, anything I can do to help, just let me know.’”
The well-connected Bronfman, a known philanthropist and environmentalist, took the reins of the party fundraising machine in late 2013, significantly boosting annual donations.
“The goal is raise a lot of money and to help Justin become the next prime minister,” Bronfman said. “Simple, simple goal.”
Two years later, Trudeau and the Liberals swept into power, in part, on a promise to fight for the little guy, lower taxes on the middle class and raise them on the rich — a populist plank that remains a central theme for his government today.
“Our government has long known — indeed we got elected — on a promise to make sure that people were paying their fair share of taxes,” Trudeau said shortly after his election victory. “Tax avoidance, tax evasion is something we take very seriously.”
Two generations of Liberal fundraisers — Stephen Bronfman and his godfather, 88-year-old retired senator Leo Kolber — are tied together in a complex offshore structure that amassed $60 million (U.S.) in a tax haven beyond the reach of tax collectors in Canada, Israel and the U.S., a newly leaked trove of documents reveals.
Buried in the Paradise Papers, a massive leak to the German newspaper Süddeutsche Zeitung and the International Consortium of Investigative Journalists, which includes the Toronto Star and CBC/Radio-Canada, are more than 5,000 pages of internal records detailing how the Bronfmans and Kolbers invested in Israel through two offshore trust funds in the Cayman Islands.
It was a two-family affair: Stephen Bronfman personally lent millions to the Cayman trust that handled his family’s investments in Israel, run by Leo Kolber’s son, Jonathan, 55.
Offshore trusts are perfectly legal. Wealthy Canadians have long used them as estate-planning tools for moving wealth that has already been taxed in Canada to offshore jurisdictions with far lower — or even zero — taxation. If that wealth were left in Canada, tax would have to be paid on its investment returns every year.
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.
To remedy tax concerns over the years, the Bronfman and Kolber advisers kept two sets of books, opened shell companies in tax havens including Nevada and the British Virgin Islands and created other offshore trusts, working the laws of three different countries to circumvent taxes, the records appear to show.
“This definitely merits an audit by the Canada Revenue Agency,” says Denis Meunier, former director general of compliance at the CRA.
“What strikes me is the multi-jurisdictional location of the trusts and implications for the tax authorities that are involved, creating over time, with changing legislation, a more complex arrangement. Whether in the end, all tax obligations for all jurisdictions have been met is a matter for tax authorities to decipher,” said Meunier, who also served as assistant director of financial analysis at Fintrac, Canada’s money-laundering watchdog.
The allegations are vigorously denied by Montreal lawyer William Brock, representing the Kolber and Bronfman families.
“My clients have always acted properly and ethically, including fully complying with all applicable laws and requirements,” he wrote in a statement to the Star and the CBC. “Suggestion of false documentation, fraud, ‘disguised’ conduct, tax evasion or similar conduct is false and a distortion of the facts.”
Jonathan Kolber established the trust in 1991 because he was leaving Canada permanently for Israel and the country recommended new residents establish trusts to hold assets amid Middle East volatility, reads Brock’s written statement to the Star and CBC.
Brock’s statement says the Kolber trusts were never subject to Canadian taxation because they were always managed and controlled in the Cayman Islands — beyond the reach of Canadian tax law.
The Toronto Star and CBC/Radio-Canada took the documents to three leading tax experts in Canada and the U.S. who each spent days reviewing them before offering their assessments.
Grayson McCouch, a trust expert at the University of Florida, said managers of the Kolber trusts attempted to “circumvent” tax liability and entered into “abusive transactions” that appear to have violated U.S. tax law.
“When you see a pattern of intentional recharacterizations or mischaracterizations, or intentional concealments of where funds are coming from or where they’re going to ... there are lots of red flags and I would expect tax authorities specifically to be very interested in following up,” he said in an interview.
The documents were leaked from the internal records of Appleby, a law firm founded in Bermuda that specializes in facilitating offshore incorporation, and corporate services provider Estera, which operated as part of Appleby until last year.
In a written statement, Appleby said it “has thoroughly and vigorously investigated the allegations and we are satisfied that there is no evidence of any wrongdoing, either on the part of ourselves or our clients.”
The story of the Kolber trusts also raises a larger question about potential conflict of interest at the intersection of wealth and political power at the highest levels in Canada.
Leo Kolber chaired the Senate’s powerful banking committee in the early 2000s while it was considering legislation to crack down on the types of offshore trusts in which he and his family were invested.
The proposed legislation languished for 14 years before a version of it finally passed in 2013.
In the meantime, the Kolber trusts were financing lavish lifestyles beyond the imagination of most Canadians, including $1 million in “living expenses” in 2012, $6 million for “lifestyle” in 2013 and $3.3 million for a Manhattan apartment in 2007. In total, Jonathan Kolber received more than $16.5 million from the trust.
“Our (tax) system is progressive to a point,” said Geoffrey Loomer, a tax professor at Dalhousie University who spent two days reviewing documents with the Star and the CBC. But for the most wealthy people in Canada, “the effective tax rate you are paying is less than people who are making a middle income because so much of your earnings come in the form of investment income through offshore trusts.”
Prime Minister Justin Trudeau did not respond to interview requests for this story.
A written statement from a Liberal party spokesperson says Bronfman’s role with the party consists of “fundraising support, not policy decisions.”
The Bronfman/Kolber Connection
The ties that bind the Kolbers and Bronfmans run deep.
Starting in the 1950s, Leo Kolber went from trusted friend and confidant to business partner to self-described “consigliere” to three generations of Bronfmans. Kolber was seen as a Bronfman in everything but name.
Kolber’s professional accomplishments, while considerable on their own, always remained hidden in the Bronfman shadows. Canadian author Mordecai Richler, with whom Kolber spent nights dishing about Montreal’s upper caste, worked a thinly veiled portrait of Kolber into his novel Solomon Gursky Was Here: Harvey Schwartz, a social climber and sycophant attached to a more storied and powerful business family.
“Harvey Schwartz, the guy with the argyle socks, that was me,” Kolber wrote in his autobiography, Leo: A Life.
Leo Kolber was closest to Stephen’s father, Charles Bronfman, whom he met when they were students at McGill University in the 1950s. They spent nights at the Montreal Forum, watching Maurice (Rocket) Richard lead the Canadiens, and took in Montreal’s nightlife on the weekends.
They once travelled to Cuba, a trip Kolber called a “rite of passage,” and described dancing at the Copacabana with prostitutes.
“You had dinner with them, you danced with them, you had sex with them,” Kolber wrote in his autobiography, Leo: A Life.
As young parents, they named each other godfathers to their first-born sons — Stephen Bronfman and Jonathan Kolber.
As business partners, Charles and Leo became Canadian corporate giants. Together, they made hundreds of millions founding the company that became Cadillac Fairview and building the TD Centre, one of Canada’s first modern skyscrapers, the Toronto Eaton Centre and malls in Montreal and across the country.
Through it all, Kolber worked under the Bronfman name and corporate identity. Until, that is, he achieved something the Bronfmans never did: political office.
It began with a chance meeting with Pierre Elliott Trudeau at Montreal’s Grey Cup Week in 1969.
Kolber and Trudeau would become close friends who eventually travelled the Silk Road and rode the Trans-Siberian Railway together.
In the late 1970s, Marc Lalonde, Trudeau’s Quebec lieutenant, asked Kolber to fundraise for the Liberals in Montreal’s Jewish community. Lalonde told Kolber the Liberals needed $50,000.
“Tell you what,” Kolber responded. “You get Trudeau to come to my house for a fundraiser, and I’ll get you a hundred.”
Kolber may not have invented the cash-for-access game in Canadian politics, but he took it to a new level. He hosted intimate dinner parties for Trudeau at his home on Summit Circle at $1,000 a couple, growing to $10,000 per couple for Jean Chrétien and Paul Martin. He founded the Laurier Club, the organization of Liberal supporters who donated considerable funds to the party, and held garden parties at 24 Sussex Dr.
“Near the end of the Trudeau years, I got a call one day from two high-powered financiers who wanted an appointment with Marc Lalonde, then the minister of finance . . . It turned out Lalonde didn’t do what they wanted, but at least they got to make their case,” Kolber wrote in his autobiography.
“Three months later, I wrote one of them asking for a $1,000 donation, and he called me back, swearing he would ‘never give the Liberals another goddamn cent.’ ‘Did you get your appointment?’ I yelled back into the phone. ‘Did you get it fast?’ ‘We couldn’t believe how powerful you were,’ he replied. ‘Do you think I’m powerful because of my good looks or because I raise money for the party — which? — just take a guess!’ ”
“The guy couriered me a cheque the next day.”
Kolber was rewarded with a Senate appointment in 1983, just before Pierre Trudeau took his famous walk in the snow. He would serve two decades, culminating in his chairmanship of the Senate banking and finance committee. While in that chair, he took credit for convincing then prime minister Jean Chrétien and finance minister Paul Martin to cut the amount of capital gains subject to tax to 50 per cent from 75 per cent.
“I can count on the fingers of one hand the number of speeches I’ve made in caucus over a 20-year period,” Kolber wrote. “(But when you cut capital gains) most of it gets reinvested. Canada desperately needs more working capital. And somewhat to my amazement, when I sat down I got a big ovation. After I spoke, (Chrétien) told the caucus ‘I want you guys to listen to Leo on this, because he is right.’”
And when a piece of legislation involving offshore trusts appeared on the Senate agenda in 2001, Kolber chaired the committee hearing. What few in Canada knew at the time is that Kolber’s name was on thousands of pages of records related to an offshore trust worth tens of millions of dollars.
Liberal fundraisers held family millions in offshore trust, leaked documents reveal
A massive new leak of offshore financial records contains more than 5,000 documents that reveal how two generations of Liberal fundraisers amassed $60 million (U.S.) in a tax haven beyond the reach of tax collectors.
The rich need to pay their fare share says Justin.
It was Labour Day weekend in 2012.
Canada’s future prime minister, Justin Trudeau, was vacationing with his family in the picturesque mountain village of Mont Tremblant, Que., with a lot on his mind.
After years of speculation, he had decided he was going to make a play for the country’s top political office.
With him that weekend was longtime family friend Stephen Bronfman, 53, a third-generation descendant of one of Canada’s wealthiest families that had founded such iconic brands as Seagram, the Montreal Expos and the Eaton Centre.
“(Trudeau) came to me and said, ‘You know, I’ve made a decision. I’m going to run for the leadership,’” Bronfman recalled in a 2013 interview. “I’d always told him, especially since he’d gotten in politics and was first elected, ‘Justin, anything I can do to help, just let me know.’”
The well-connected Bronfman, a known philanthropist and environmentalist, took the reins of the party fundraising machine in late 2013, significantly boosting annual donations.
“The goal is raise a lot of money and to help Justin become the next prime minister,” Bronfman said. “Simple, simple goal.”
Two years later, Trudeau and the Liberals swept into power, in part, on a promise to fight for the little guy, lower taxes on the middle class and raise them on the rich — a populist plank that remains a central theme for his government today.
“Our government has long known — indeed we got elected — on a promise to make sure that people were paying their fair share of taxes,” Trudeau said shortly after his election victory. “Tax avoidance, tax evasion is something we take very seriously.”
Two generations of Liberal fundraisers — Stephen Bronfman and his godfather, 88-year-old retired senator Leo Kolber — are tied together in a complex offshore structure that amassed $60 million (U.S.) in a tax haven beyond the reach of tax collectors in Canada, Israel and the U.S., a newly leaked trove of documents reveals.
Buried in the Paradise Papers, a massive leak to the German newspaper Süddeutsche Zeitung and the International Consortium of Investigative Journalists, which includes the Toronto Star and CBC/Radio-Canada, are more than 5,000 pages of internal records detailing how the Bronfmans and Kolbers invested in Israel through two offshore trust funds in the Cayman Islands.
It was a two-family affair: Stephen Bronfman personally lent millions to the Cayman trust that handled his family’s investments in Israel, run by Leo Kolber’s son, Jonathan, 55.
Offshore trusts are perfectly legal. Wealthy Canadians have long used them as estate-planning tools for moving wealth that has already been taxed in Canada to offshore jurisdictions with far lower — or even zero — taxation. If that wealth were left in Canada, tax would have to be paid on its investment returns every year.
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.
To remedy tax concerns over the years, the Bronfman and Kolber advisers kept two sets of books, opened shell companies in tax havens including Nevada and the British Virgin Islands and created other offshore trusts, working the laws of three different countries to circumvent taxes, the records appear to show.
“This definitely merits an audit by the Canada Revenue Agency,” says Denis Meunier, former director general of compliance at the CRA.
“What strikes me is the multi-jurisdictional location of the trusts and implications for the tax authorities that are involved, creating over time, with changing legislation, a more complex arrangement. Whether in the end, all tax obligations for all jurisdictions have been met is a matter for tax authorities to decipher,” said Meunier, who also served as assistant director of financial analysis at Fintrac, Canada’s money-laundering watchdog.
The allegations are vigorously denied by Montreal lawyer William Brock, representing the Kolber and Bronfman families.
“My clients have always acted properly and ethically, including fully complying with all applicable laws and requirements,” he wrote in a statement to the Star and the CBC. “Suggestion of false documentation, fraud, ‘disguised’ conduct, tax evasion or similar conduct is false and a distortion of the facts.”
Jonathan Kolber established the trust in 1991 because he was leaving Canada permanently for Israel and the country recommended new residents establish trusts to hold assets amid Middle East volatility, reads Brock’s written statement to the Star and CBC.
Brock’s statement says the Kolber trusts were never subject to Canadian taxation because they were always managed and controlled in the Cayman Islands — beyond the reach of Canadian tax law.
The Toronto Star and CBC/Radio-Canada took the documents to three leading tax experts in Canada and the U.S. who each spent days reviewing them before offering their assessments.
Grayson McCouch, a trust expert at the University of Florida, said managers of the Kolber trusts attempted to “circumvent” tax liability and entered into “abusive transactions” that appear to have violated U.S. tax law.
“When you see a pattern of intentional recharacterizations or mischaracterizations, or intentional concealments of where funds are coming from or where they’re going to ... there are lots of red flags and I would expect tax authorities specifically to be very interested in following up,” he said in an interview.
The documents were leaked from the internal records of Appleby, a law firm founded in Bermuda that specializes in facilitating offshore incorporation, and corporate services provider Estera, which operated as part of Appleby until last year.
In a written statement, Appleby said it “has thoroughly and vigorously investigated the allegations and we are satisfied that there is no evidence of any wrongdoing, either on the part of ourselves or our clients.”
The story of the Kolber trusts also raises a larger question about potential conflict of interest at the intersection of wealth and political power at the highest levels in Canada.
Leo Kolber chaired the Senate’s powerful banking committee in the early 2000s while it was considering legislation to crack down on the types of offshore trusts in which he and his family were invested.
The proposed legislation languished for 14 years before a version of it finally passed in 2013.
In the meantime, the Kolber trusts were financing lavish lifestyles beyond the imagination of most Canadians, including $1 million in “living expenses” in 2012, $6 million for “lifestyle” in 2013 and $3.3 million for a Manhattan apartment in 2007. In total, Jonathan Kolber received more than $16.5 million from the trust.
“Our (tax) system is progressive to a point,” said Geoffrey Loomer, a tax professor at Dalhousie University who spent two days reviewing documents with the Star and the CBC. But for the most wealthy people in Canada, “the effective tax rate you are paying is less than people who are making a middle income because so much of your earnings come in the form of investment income through offshore trusts.”
Prime Minister Justin Trudeau did not respond to interview requests for this story.
A written statement from a Liberal party spokesperson says Bronfman’s role with the party consists of “fundraising support, not policy decisions.”
The Bronfman/Kolber Connection
The ties that bind the Kolbers and Bronfmans run deep.
Starting in the 1950s, Leo Kolber went from trusted friend and confidant to business partner to self-described “consigliere” to three generations of Bronfmans. Kolber was seen as a Bronfman in everything but name.
Kolber’s professional accomplishments, while considerable on their own, always remained hidden in the Bronfman shadows. Canadian author Mordecai Richler, with whom Kolber spent nights dishing about Montreal’s upper caste, worked a thinly veiled portrait of Kolber into his novel Solomon Gursky Was Here: Harvey Schwartz, a social climber and sycophant attached to a more storied and powerful business family.
“Harvey Schwartz, the guy with the argyle socks, that was me,” Kolber wrote in his autobiography, Leo: A Life.
Leo Kolber was closest to Stephen’s father, Charles Bronfman, whom he met when they were students at McGill University in the 1950s. They spent nights at the Montreal Forum, watching Maurice (Rocket) Richard lead the Canadiens, and took in Montreal’s nightlife on the weekends.
They once travelled to Cuba, a trip Kolber called a “rite of passage,” and described dancing at the Copacabana with prostitutes.
“You had dinner with them, you danced with them, you had sex with them,” Kolber wrote in his autobiography, Leo: A Life.
As young parents, they named each other godfathers to their first-born sons — Stephen Bronfman and Jonathan Kolber.
As business partners, Charles and Leo became Canadian corporate giants. Together, they made hundreds of millions founding the company that became Cadillac Fairview and building the TD Centre, one of Canada’s first modern skyscrapers, the Toronto Eaton Centre and malls in Montreal and across the country.
Through it all, Kolber worked under the Bronfman name and corporate identity. Until, that is, he achieved something the Bronfmans never did: political office.
It began with a chance meeting with Pierre Elliott Trudeau at Montreal’s Grey Cup Week in 1969.
Kolber and Trudeau would become close friends who eventually travelled the Silk Road and rode the Trans-Siberian Railway together.
In the late 1970s, Marc Lalonde, Trudeau’s Quebec lieutenant, asked Kolber to fundraise for the Liberals in Montreal’s Jewish community. Lalonde told Kolber the Liberals needed $50,000.
“Tell you what,” Kolber responded. “You get Trudeau to come to my house for a fundraiser, and I’ll get you a hundred.”
Kolber may not have invented the cash-for-access game in Canadian politics, but he took it to a new level. He hosted intimate dinner parties for Trudeau at his home on Summit Circle at $1,000 a couple, growing to $10,000 per couple for Jean Chrétien and Paul Martin. He founded the Laurier Club, the organization of Liberal supporters who donated considerable funds to the party, and held garden parties at 24 Sussex Dr.
“Near the end of the Trudeau years, I got a call one day from two high-powered financiers who wanted an appointment with Marc Lalonde, then the minister of finance . . . It turned out Lalonde didn’t do what they wanted, but at least they got to make their case,” Kolber wrote in his autobiography.
“Three months later, I wrote one of them asking for a $1,000 donation, and he called me back, swearing he would ‘never give the Liberals another goddamn cent.’ ‘Did you get your appointment?’ I yelled back into the phone. ‘Did you get it fast?’ ‘We couldn’t believe how powerful you were,’ he replied. ‘Do you think I’m powerful because of my good looks or because I raise money for the party — which? — just take a guess!’ ”
“The guy couriered me a cheque the next day.”
Kolber was rewarded with a Senate appointment in 1983, just before Pierre Trudeau took his famous walk in the snow. He would serve two decades, culminating in his chairmanship of the Senate banking and finance committee. While in that chair, he took credit for convincing then prime minister Jean Chrétien and finance minister Paul Martin to cut the amount of capital gains subject to tax to 50 per cent from 75 per cent.
“I can count on the fingers of one hand the number of speeches I’ve made in caucus over a 20-year period,” Kolber wrote. “(But when you cut capital gains) most of it gets reinvested. Canada desperately needs more working capital. And somewhat to my amazement, when I sat down I got a big ovation. After I spoke, (Chrétien) told the caucus ‘I want you guys to listen to Leo on this, because he is right.’”
And when a piece of legislation involving offshore trusts appeared on the Senate agenda in 2001, Kolber chaired the committee hearing. What few in Canada knew at the time is that Kolber’s name was on thousands of pages of records related to an offshore trust worth tens of millions of dollars.
