The Dominion - Alain Deneault

War is Peace

Tim McSorley — Mon, 15 Oct 2012 14:26:04 +0000

Francophonie summit exposes Canada's hypocrisy towards the Congo

MONTREAL—Comforted by the contradictions befitting classic Orwellian “doublespeak,” Canadian Prime Minister Stephen Harper attended the Sommet de la Francophonie in Kinshasa, in the Democratic Republic of Congo, over the weekend.

Prior to the weekend, Harper had already indicated to the Congolese, with a straight face no less, that they should engage in actions that favour democracy and respect for human rights. Such a posture of talking down to the Congolese allows Ottawa to cut short all legitimate questions concerning the historic responsibility of Canadian businesses and the Canadian government in the Great Lakes area conflict in Africa that claimed millions of Congolese lives between 1996 and 2003.

In the early 1990s, the power hold of Joseph Mobutu's Congolese kleptocracy had begun to waiver. Mobutu, who had ruled the Congo, and before that Zaire, as absolute master, largely by supporting the country's social system with a nationalized mining infrastructure, suddenly found himself cut lose by his former supporters. These included most notably Belgium, France and the United States.

Under pressure from the World Bank, Mobutu opened the country's prized asset, its mining sector, up for privatization. Barrick Gold, the Canadian gold mining outfit, at the time received an exploration lease for a mind-boggling 82 000 km2. Justin Kanhwenda, former assistant to the special representative of the Great Lakes area to the Secretary General of the UN, has noted that the Barrick Gold deal officially signalled to the world that the Congo was open for business.

What followed was the triggering of a bloody and protracted conflict over the country's mineral resources. The High Commissioner on Human Rights, referring to the violation of fundamental rights during this period, summarized the conflict as a clash between armed rebel groups and militias representing the government's interests. Both sides made war to secure mining leases, which they would then concede to international, private enterprises, for the very purpose of continuing to finance their own war.

Yet another UN report on the war-torn Congo, this one published in 2002, highlighted the actions of nine mining Canadian companies in particular, including AMFI, Banro and First Quantum Minerals. The report found that their actions went against the guidelines for multinational enterprises of the France-based Organization for Economic Co-operation and Development, as their dealings in the Congo were considered unethical.

In the mid-2000s, the Congolese parliament had recovered slightly from the shock of years of mineral-driven civil war, and created a commission charged with studying the contracts signed between the government and private industry during war time. The commission, signed-off on by then president Christophe Lutundula, concluded that an impressive number of extremely unequal contracts had been signed between private companies and the government-at-war during the period of 1996 and 2003. These ultra-advantageous contracts involved numerous Canadian companies, notably Anvil and Emaxon. Some of these Canadian companies ratified these contracts via their subsidiaries located in tax-haven nations.

A commission to “revisit” these mining contracts was subsequently put in place to attempt to restructure their terms, at least superficially. Fear of reprisal from foreign investors has limited this commission's strength.

Amidst the UN sources already mentioned, the “expert” report mandated by the UN Security Council on the October 16, 2002 (S/2002/1146) recommended that home nations investigate the companies suspected of having profited from the pillage of resources in the Congo during the war. The report added in no uncertain terms:

“The Governments have the power to regulate and sanction those individuals and entities. They could adapt their national legislation as needed to effectively investigate and prosecute the illegal traffickers. In addition, the OECD Guidelines offer a mechanism for bringing violations of them by business enterprises to the attention of home Governments, that is, Governments of the countries where the enterprises are registered. Governments with jurisdiction over these enterprises are complicit themselves when they do not take remedial measures.”

The UN report mentioned that the experts themselves did not have the legal prerogative to carry out such investigations, or bring private companies to justice.

Canada never capitulated to these demands. It did perhaps win itself some points, and time, by organizing round table consultations with various concerned parties, all within the sterile, and legally-unbinding, environment of determining “good governance.” The “consensus” that came forth from these consultations amounted to nothing, except for Ottawa's nomination of a powerless “ethics counsellor.” For this continued inaction, Canada has assumed the global leadership role as the regulatory and judicial safe haven of choice for mining companies. Today, 75 per cent of mining companies choose to register themselves within the Canadian legislative framework, as the lax system of accountability assists them in their mining endeavours outside of Canadian soils.

Canadians driven by ethic convictions are today at the same point as were Europeans at the end of the 19th Century. All attempts are made by the government to hinder the identification of the individuals responsible for the grave suffering caused to the Congolese people. In the age of Belgian colonial domination in the Congo, the Brit Edward Dene Morel and the American author George Washington Williams, having gathered information from returning Europeans as to the atrocities being committed, drew grave hypotheses as to the true goings-on in the resource rich African nation. Diplomat Roger Casement confirmed these allegations in an investigation undertaken by the British government.

Today, Canada has still not undertaken a similar investigation. Instead, we find ourselves with a regressive government seeking, through any possible artificial means, to create colonial-inspired propaganda that allows Canada to assume the role of a democratic older brother to the Congo. All this, when in reality the pressure should be weighing on Canada.

Alain Deneault's most recent book, written with William Sacher, is Imperial Canada Inc.: Legal Haven of Choice for the World's Mining Industries (Talonbooks: 2012). He is a member ATTAC-Québec and the Réseau international pour la justice fiscale. Translation from the French by Miles Howe.

Mining and War

Dangerous Liaisons

Miles — Mon, 23 Jan 2012 13:13:30 +0000

Canada's shift towards becoming a tax haven

MONTREAL—While it did garner some national attention, it would appear no Canadian dailies have grasped the full measure of the news. It therefore went virtually unnoticed when the TMX Group Inc., which manages the Toronto/Montreal stock exchange and is at the heart of the process turning Canadian legislation into a regulatory and financial haven for the global extraction industry, became one of the principal shareholders of the Bermuda Stock Exchange (BSX), a well-known, and highly controversial, tax shelter.

The announcement revealed the contemporary tendency towards integration between so-called democratic political regimes and “states of convenience,” nations whose banking and fiscal regulations are linked to the process of global money laundering.

By acquiring 16 per cent of shares in the Bermuda exchange on December 21, 2011, “TMX Group is now one of the largest shareholders of the BSX, and Tom Kloet, CEO, TMX Group, will be joining the BSX board of directors,” according to a news release on the TMX website. This highly problematic alliance between Canada, which still prides itself as being governed by the rule of law, and one of the most criminally-appealing states of convenience in the world, is rooted in, according to TMX's own news release, agreement between the two states to share tax information. “The BSX gained recognition as a Designated Stock Exchange under Canada’s Income Tax Act, effective October 31, 2011,” adds the TMX release.

Double-edged Agreements

There are several elements of this agreement that should be unravelled. The Harper government, in 2011, announced several “tax information exchange agreements” (TIEA) with tax haven states. These agreements, signed in the maelstrom of steps taken towards international “cooperation” supported by the OECD (Organization for Economic Co-operation and Development), purport to tame the secret banking practices of these states of convenience, who welcome fraudulent types of every ilk.

But, all pretensions aside, these agreements actually blindly favour the function and development of offshore tax havens. They do so by allowing, among other things, for wealthy Canadians or Canadian corporations to register their assets and activities in any of these offshore signatory countries, and then return their assets to Canada without needing to pay taxes. Funds from Canadian business can now be rerouted to Bermuda, where they can stop-over and tie themselves into tax-evasion and avoidance strategies, like transfer pricing and mis-pricing.

It is now easier, and “legal,” for billions of dollars generated by the Canadian economy to hide behind these laws. The use of tax havens allows the financial class to avoid taxation, taxes which finance the very public institutions and services from which they benefit.

Skirting the Public Regulations

The TMX states that it is the Canadian Income Tax Act itself that recognizes the Bermuda Stock Exchange. Gregoire Duhamel, author and financial consultant, notes in his guide Les paradis fiscaux, “Bermuda's very advantageous fiscal policy allows non-resident investors to trade shares and form investment funds, without needing to pay any tax.” To some this does not appear to be a problem.

In addition, the Bermuda Stock Exchange is not responsible to any public institution, except perhaps the ludicrous Bermuda Monetary Authority (BMA) which, on its Internet site, appears more preoccupied with vaunting the merits of the different business entities that can be created within its tax haven than it is with explaining how it prevents possible misuse of its laws.

It is worth noting that it is the kind of liberal creation of investment funds and hedge funds which is allowed by the Bermuda exchange that helped provoke the economic crisis of 2008. So with these new agreements, the Canadian government recognizes an institution that is in fact dedicated to circumventing the very rules that the Canadian government itself put in place.

From Halifax to Bermuda

By considering both aspects from which the Toronto Stock Exchange stands to benefit from this context, we come to understand that the officers of the TSX, read:TMX,the principal centre of Canadian trade, will have every latitude to facilitate Canadian financial activity in the Bermudan tax haven.

There will be no financial framework to hamper investments or stock speculations, only the knowledge that those Canadians financially able to participate in this merry-go-round of investment and speculation will be able to repatriate their funds back to Canada at any time, tax free.

Perhaps the most glaring example of doing business in Canada while benefiting from the lax regulations of Bermuda comes from the government of Nova Scotia.

By handing over management responsibilities of its own agency, Nova Scotia Business Inc., exclusively to the private sector, the government of Nova Scotia has actually allowed for the creation of a satellite accounting agency with a direct link to Bermuda. Hedge funds and insurance companies are managed in Halifax, but are created and based out of Bermuda, and thus are able to circumvent Canadian laws and institutions.

Whitewashed Money

The pseudo “Tax Information Exchange Agreements” (TIEA) were signed in principle to allow Canadian political authorities to collect data from so-called "secret Bermudan banks" in the case where a Canadian is suspected of fraud. In reality, they do not risk upsetting to any degree the massive money laundering operations made possible by the existing opaque financial liaisons.

According to a report submitted to the Dutch Minister of Finance by Brigitte Unger from the Utrecht School of Economics, in 2006 Bermuda was the second most popular money laundering destination for funds coming from illicit or criminal activities. In the fight against money laundering, the Canadian government demonstrated in 2010 that its politics were nothing more than complicit, when it signed, on the sly, a free-trade agreement with Panama. Panama is the most important money laundering destination for drug money in the world.

By radically integrating its own politics and financial institutions with those of tax shelter states, Canada has transformed itself, without ambiguity, into a tax haven. France-Offshore.fr, a website for financial consultants who specialize in “creating offshore corporations,” ranks Canada among its “offshore jurisdictions.” The site also notes that “Canada is not an offshore country, but we know how to turn a corporation created in Canada into an offshore one.”

This is how.

***

Alain Deneault is the author of Offshore, Tax Havens and the Rule of Global Crime (New York : The New Press, 2011) and Faire l'économie de la haine (Écosociété, 2011) and a member of “Québec d'Attac” and the “Réseau international pour la justice fiscale”. Translation from the French by Miles Howe.

Toronto Stock Exchange

Pushing the Debate

dawn — Sun, 28 Dec 2008 10:39:58 +0000

<cite>Noir Canada</cite>’s critical perspective

The Toronto Stock Exchange (TSX) attracts half of the total investments made by mining companies worldwide and is lauded by financial papers around the globe for its favourable 'business climate.'

In Canada, our savings, RRSPs, pension plans and other investments are calibrated to financial flows, particularly to those of the TSX.

But what is the real cost of a share listed on the Toronto Stock Exchange? What is the ecological, political and human cost that allows the balance sheet of mining companies listed on the TSX to satisfy their institutional investors, to whom we entrust our savings?

We wrote Noir Canada to highlight a number of troubling cases of exploitation in Africa by Canadian mining companies, and to probe the stories around influence peddling, arms trafficking, fiscal evasion, organized pillaging and environmental destruction. The book is based in part on reports published by a wide range of groups - from the UN Security Council to international NGOs - which are as methodologically credible in their research as they are damning. Noir Canada explores the key roles Canadian mining and oil companies have played in multiple conflicts that, between 1998 and 2003, have left more than four million victims in the African Great Lakes region.

Canadian companies active in Africa and elsewhere are not required to divulge information related to their exploration methods, except where it is in the shareholders' interest to do so. Ontario’s financial regulators have not mandated the TSX to implement rules that would require strict reporting requirements for exploration companies. Popular uprisings, armed conflicts, looting of resources and acts of environmental destruction currently fall neatly under the moniker of “external risks.”

Responding to public pressure, the Canadian government organized the “National Roundtables on Corporate Social Responsibility (CSR) and the Canadian Extractive Industry Operating in Developing Countries,” initiating a series of consultations held across Canada in 2006. The consensus report that came out of the Roundtables, signed by experts, mining industry representatives and members of civil society, had some interesting recommendations (companies working overseas should comply with Canadian standards, for example), but they remain voluntary and not legally binding. The main watchdog within Canada was to be an “ombudsman,” who would gather data and information about complaints from communities around the world affected by Canadian mining companies. These minimal recommendations have yet to be adopted by the government of Canada.

This incentive-based approach gives special status to private companies, registered with or listed on the TSX, that operate overseas. Rather than demanding the companies follow laws as they do in Canada, they are cajoled, through subsidies and other advantages, to respect certain social, political and environmental practices, however minor. Canadian companies need not fear legal action for crimes committed overseas, particularly in dictatorships that are without functioning legal systems and are supported by Canada and other western powers.

Canada is a judicial paradise for the world’s mining and oil companies. Listing on the Toronto Stock Exchange is a way of seeking shelter in one of the more permissive stock exchanges in the world, while taking advantage of the reputation of the rule of law in Canada, all the while knowing that one is outside of state control and regulation when operating overseas.

This is how Canada subtly integrates itself into the global map of offshore banking, financial havens, free ports, and free-trade zones. Most of the world's mining companies keep their dollars in offshore accounts and take advantage of a legal framework in Canada that allows them to work all around the world under the Canadian flag without ever having to explain their actions to anybody.

The absolute necessity of public debate that the book Noir Canada raised this spring has resulted in the book becoming the object of two legal challenges for "defamation": a $6-million lawsuit launched by Barrick Gold in the Supreme Court of Quebec, and another by Banro, in Ontario, for $5 million. These Strategic Lawsuits Against Public Participation (SLAPP) attempt to make critical questioning illegal, while violating the principles of free expression and the public right to information.

By the very questions that it asks, Noir Canada is testing Canadian democracy.

Alain Deneault is a member of the Collectif Ressources d’Afrique and co-author, along with Delphine Abadie and William Sacher, of Noir Canada, Pillage, corruption et criminalité en Afrique, Écosociété, 2008.

Translated by Dawn Paley.

Noir Canada