Civil servants' pension assets routed through complex web of corporations in Luxembourg
The federal agency that invests civil servants' pensions set up a complex scheme of European shell companies and exploited loopholes that helped it avoid paying foreign taxes — a move that could undermine Canada's standing internationally as its allies try to mount a crackdown on corporate tax avoidance.
The arrangement involved two dozen entities, half of them based in the financial secrecy haven of Luxembourg, and all of them set up in order to invest money in real estate in Berlin by a Crown corporation called thePublic Sector Pension Investment Board.
The blueprint for the tax-avoidance plan was obtained by the Washington-based International Consortium of Investigative Journalists and shared with CBC News as part of a larger leak of records exposing hundreds of corporate offshore schemes set up to capitalize on advantageous tax and secrecy rules in Luxembourg.
Juergen Kentenich, director of the regional tax office in Trier, Germany, said the pension board's tax dealings amounted to 'a very aggressive way to avoid taxes.' (Harvey Cashore/CBC)
Some of those leaked documents were first reported on in 2012 by Edouard Perrin for France 2 public television and by the BBC, but most of them have never before been analyzed by reporters.
While the Canadian government corporation's transactions were not illegal, a senior German tax official who reviewed them said the pension investment board had used "a very aggressive way to avoid taxes."
"The only goal is to avoid taxes," Juergen Kentenich, director of the regional tax office in Trier, Germany, said of the tangle of Luxembourg companies.
The loopholes that were exploited were legal, he says. "But is this fair? Should a reputable and decent businessman do something like that? That's another question."
THIS IS WHY WE NEED SHAREHOLDER CONTROL OF OUR PENSION FUND BOARDS IN ORDER TO DIRECT INVESTMENT POLICY INTO ETHICAL SUSTAINABLE AND SOCIALLY USEFUL SOCIAL IMPACT INVESTMENTS THAT I DOCUMENT ON THIS BLOG
UNIONS NEED TO DEMAND TRANSPARENCY, AND SEATS ON THE PENSION BOARDS THAT INVEST THEIR FUNDS
UNIONS NEED TO DEMAND SEATS ON THE BOARDS FOR ENVIRONMENTALISTS, CONSUMER ADVOCATES, AND OTHER APPROPRIATE NGO REPRESENTATION OF CIVIL SOCIETY ON THESE PENSION BOARDS AS WELL TO BETTER DIRECT INVESTMENTS INTO SOCIAL IMPACT PROJECTS
EUGENE PLAWIUK
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