Paul Martin's former company one of offshore firm's 'largest clients,' Paradise Papers show

The offshore holdings of former prime minister Paul Martin's family have proliferated in the years since he left public office, documents from the Paradise Papers show.

In fact, Canada Steamship Lines, Martin's former shipping empire that he left to his sons in 2003, is one of the "largest clients" of the offshore law firm at the heart of the huge leak, according to an email exchange between firm managers in 2015.

The use of tax havens by CSL was well-documented while Martin served as finance minister from 1993-2002 and then as prime minister from 2003-06.

But the Paradise Papers leak, first made public Sunday, shows that in recent years the CSL group of companies has spawned numerous new offshore entities, shifted several subsidiaries from very-low-tax Barbados to no-tax Bermuda, and urged its offshore administrators to send little or no documentation back to Canada.

• CBC'sfull coverage of the Paradise Papers

The leaked files were obtained by German newspaper Sueddeutsche Zeitung and shared with global media partners, including CBC/Radio-Canada and the Toronto Star in Canada, via the Washington-based International Consortium of Investigative Journalists. The records come largely from offshore law firm Appleby, which was founded in Bermuda but has branches in eight tax havens around the world.

The documents include spreadsheets, corporate contracts, emails and a client database that contain references to at least 20 CSL subsidiaries incorporated in tax havens:

• A series of companies under the title FB Shipping, including Barbados-incorporated FB Shipping (III) Inc., FB Shipping (VI) Inc. and FB Shipping (X) Inc., which appear to own and register individual CSL vessels.
• CSL Management Ltd., incorporated in Bermuda in 2012.
• CSL Africa SL Ltd., incorporated in Bermuda in 2013.
• CSL Tecumseh LP, formed in Bermuda in 2013.
• IC Holding Ltd., incorporated in Barbados in 2004 but moved to Bermuda in 2012.

CSL wanted 'little or no correspondence'

Another CSL offshore subsidiary, Ocean Lines Ltd., shows up in internal Appleby records profiling some of the firm's clients. The document specifies that the contact address for Bermuda-incorporated Ocean Lines is in fact CSL's headquarters in Old Montreal, and it includes details on the subsidiary's bank accounts in Bermuda and Toronto.

Then it says: "CSL wants little or no correspondence sent to them. Prefer telephone contact" with one of two employees.

CSL did not directly reply to questions about the purpose of these offshore entities and what tax advantages they provide, nor did it respond to a question about the "no correspondence" note.

Spokesperson Brigitte Hbert said via email: "CSL and its affiliates have always conducted their business according to the highest ethical standards and in full compliance with all laws, rules and regulations ...

"As a private company, CSL does not share proprietary information publicly."

Shifted to zero-tax Bermuda

It was widely reported going back to the mid-1990s that while under Martin's ownership, CSL used the offshore haven of Liberia as a flag-of-convenience country for many of its globally operating vessels. It also conducted much of its international business through Barbados, where the general income tax rate on foreign-owned companies is capped at 2.5 per cent.

The Paradise Papers reveal that between January 2012 and February 2013, CSL moved a half-dozen of its Barbados-registered subsidiaries to Bermuda, where the income tax rate is zero for international companies.

Martin didn't respond to multiple inquiries sent through contacts at his Montreal-based foundation.

Lucie Santoro, the director of operations at the Martin Family Initiative, said Martin was not in a position to comment, having had no direct involvement in CSL's affairs for years.

The former prime minister did address the issue in his 2008autobiography, Hell or High Water, however.

"And how could I be involved with a company that had ships flying foreign flags?" he wrote. "The answer is that if Canadians are going to succeed in an international business such as shipping, they will have to be involved with foreign markets and foreign unions.

"If you are operating in the coastal waters off Australia or Indonesia, it makes no sense to be a Canadian-flagged ship."

• CBC's full coverage of the Paradise Papers