![]() ![]() "We have robust governance in place for our subsidiaries, including strategic oversight of the business by their respective boards as well as oversight to ensure compliance with tax and all other laws," the bank said.īMO also wouldn't say why it felt the need to change LGM's accounting to book more of its profits in Hong Kong, and in particular, whether the previous practice was flawed. ![]() In a statement to CBC and the Toronto Star, BMO acknowledged that its LGM Bermuda operation has "no active clients." The bank did not directly address questions about why, then, it keeps the island shell corporation going or what tax advantages it derives. They resolved to take a wait-and-see approach. "No news is good news," another unidentified board member chimed in. "Hopefully, we just let these things run off and times run out," a BMO executive said. "I think it's six years," the board member said. "How long are we possibly liable?" asked one of them, whose identity is not clear from the transcript.Īnother board member mentioned that Hong Kong has a statute of limitations to reassess old tax returns. Hopefully, we just let these things run off and times run out. LGM had recently scaled back its profit shifting, and board members were worried the Hong Kong tax authorities might notice and go back and scrutinize previous fiscal years - possibly demanding more tax be paid. Commerce Secretary Wilbur Ross benefited from ties to Putin's inner circle, offshore tax leak shows Much of the material comes from Appleby, a law firm that offers offshore legal and administration services in eight tax havens around the world. It contains thousands of documents relating to all five of Canada's big banks, most of them to do with the mundane, daily details of operating a globe-spanning financial conglomerate. The leak was obtained by German newspaper Suddeutsche Zeitung and shared exclusively in Canada with CBC/Radio-Canada and the Toronto Star via the International Consortium of Investigative Journalists. This unprecedented glimpse behind the scenes as a big Canadian bank struggled with running one of its offshore subsidiaries comes from the Paradise Papers, the huge leak of tax-haven financial records that was made public Sunday. Now only four directors would have to attend in person in Bermuda in order to "have fulfilled the tax guidelines," Cooper said. The solution? They cut the number of people on the board from 11 to seven. "We were having trouble getting six people to attend the meeting every time in Bermuda," said the executive, Barry Cooper, according to a transcript of the meeting. If not, there would be a risk the company could be deemed to reside elsewhere, possibly in Canada, where it may have to pay tax.Īnd there was the catch: It was proving tough to get enough people to jet down to Bermuda for the board meetings, according to the BMO executive chairing the gathering. To keep up the legal appearance of the company's Bermuda residency, a majority of LGM's board of directors - made up mostly of BMO senior managers - had to meet in person on the island at least twice a year. BMO ran $ 288M 'abusive' tax dodge: CRA.But its parent company was incorporated in zero-tax Bermuda - despite having nothing more there than a mailbox at a law firm specializing in offshore financial services. LGM, as it's known, had most of its staff at two subsidiaries in Hong Kong and London. ![]() Two years earlier, BMO had acquired Lloyd George Management, an investment firm focused on Asia. Top of the agenda for the March 2013 meeting: how to lessen the burden of flying six executives to the palm-fringed island a couple times a year - the bare bones required for tax purposes to officially keep a subsidiary there with no staff, no desks, no phones and no premises. It was a blustery, grey day in Bermuda, and a clutch of Bank of Montreal executives who had flown in were huddled in a board room. ![]()
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