KPMG tax exec to testify at Commons committee about alleged offshore 'sham'

A senior KPMG tax official is scheduled to appear before the Commons finance committee later today to face questions about the firm's Isle of Man tax scheme, which the Canada Revenue Agency has alleged "intended to deceive" the treasury.

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Greg Wiebe, tax partner and former global head of tax for the accounting firm, isn't named in any of the court documents filed by the CRA alleging KPMG itself earned a 15 per cent cutin an offshore tax dodge that promised multimillionaire clients they would pay "no tax" on their investment income.

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KPMGhas been fighting a judge's order since early 2013 to hand over the names of the wealthy clients involved in the controversial $130-million offshore scheme that launched more than 15 years ago.

Wayne Easter, Liberal chairman of the finance committee, says members passed a motion to call onKPMGofficials to explain their role in what the CRA has called a "sham."

"The pressure we're getting from the public is, 'Look,KPMGis the one named," Easter said. "That's why that decision was made."

But, Easter says, it was up to the firm to decide who would testify.

None of theKPMGofficials named in the court documents will appear before the committee today, but Easter didn't rule out calling on additional tax executives from the firm closer to the file at a later date.

"I don't know the partner coming forward forKPMG, but we'll hear what they have to say," he said. "If need be, there will be more meetings called. This is the initial brush."

• Send confidential tips on this story toinvestigations@cbc.ca, or contact Harvey Cashore at416-526-4704.

DennisHowlett, executive director of Canadians for Tax Fairness, says he would like to seeKPMGexecutives directly involved in the Isle of Man scheme to address the committee and is concerned about a possible "whitewash" if that doesn't happen.

He says he isn't convincedWiebehas enough knowledge about who all was involved and how the scheme was orchestrated within the firm.

"We're just hoping that the members of Parliament on the committee are sufficiently prepared to not let him use it as a PR opportunity for KPMG."

In a statement,KPMGnoted Wiebe's longstanding service with the firm in senior positions and says it is "extremely confident that Greg is the best person to respond to the committee's enquiries."

The decision to launch hearings came in Marchafter CBC News revealed the CRA offered a secret amnesty to wealthyKPMGclients involved in the firm's tax scheme based out of the Isle of Man, a small European island between Ireland and England.

The offer, leaked to CBC News in a brown envelope, allowed the wealthy clients to pay taxes on the income they previously had not declared, plus some modest interest, and promised no civil penalties and no criminal investigations. The agency's offer came with a strict condition that clientsnever talk about it in public.

"Right now, we need to get information," says GuyCaron, NDP finance critic and vice-chairman of the parliamentary group hosting Tuesday's meeting. "The finance committee is actually the perfect place to get that information."

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Today's committee hearing comes more than a decade after a U.S. Senate subcommittee held its own hearings into accounting firms and tax-avoidance schemes.

In the U.S. probe in 2003, politicians issued subpoenas for specificKPMGexecutives involved in an allegedscheme, which included the use of offshore companies. The Senate committee also issued subpoenas for KPMG's documents.

SixKPMGofficials would later testify, including the firm's partner in charge of the personal financial planning division and the vice-chair of tax services.

In 2005, the U.S. Internal Revenue Service (IRS) chargedKPMGand several senior executives in the case, alleging they helped hide billions in taxable income. ThreeKPMGexecutives were later convicted. As part of a plea bargain, the firm itself admitted to "criminal wrongdoing" and agreed to pay $456million in penalties.

The CanadianKPMGIsle of Man tax dodge hasn't been tested in court, and no one from the firm has publicly admitted to any wrongdoing.

Difference between IRS and CRA

Bay Street tax lawyer JonathanGarbuttsays there is a difference between how Canada and the U.S. investigate tax-avoidance cases.

"I always tell clients you don't mess around with the IRS," he told CBC News in an on-camera interview in February, noting their criminal investigations officers have firearms permits.

"IRS agents have badges and carry guns. CRA officials have calculators and carry pencils."

The Commons finance committee also plans to call justice department and CRA officials to testify in itsKPMGhearings. Agency officials include CRA commissioner AndrewTreusch, assistant commissioner TedGallivan, and StephanieHenderson, manager of offshore compliance.

Revenue Minister DianeLebouthillieris scheduled to testify on May 19.

For confidential tips on this story please emailinvestigations@cbc.caor contact Harvey Cashore at 416-526-4704, or visitCBC Secure Dropto send documents to the attention of Harvey Cashore.