The Indelible Bonobo Experience

This is very different from the response of prosecutors in earlier banking crises, such as the meltdown of Savings & Loans institutions in America in the 1980s (PDF). In that case more than 1,000 bankers were convicted for their misdeeds.

“Keep correspondence to a minimum,” reads a note placed on his Cook Islands account that warned only to communicate with Merchant by airmail. “Do not fax to client. He will have a stroke.” Another note discusses Merchant’s reaction when told his holdings in Luxembourg would require him to either cough up his identity to officials there, or have all transactions on the mutual funds frozen. “Received a letter from Mr. Merchant requesting that we do not disclose now or in the future any information to the authorities in Luxembourg, or anywhere,” the note on the account reads. “And the [mutual funds] will just remain on a freeze for the foreseeable future.” (via Senator’s husband put $1.7M in offshore tax havens - Canada - CBC News)

• Tony Merchant of Regina, dubbed Canada’s class-action king because of the large settlements he has won for his clients, transferred money to a tax haven in the South Pacific and then onward to an account in the Caribbean, according to the files. His wife, Senator Pana Merchant, as well as their three sons are named in the documents as beneficiaries of the funds.
• The transactions are detailed in a huge leak of offshore financial information received by the Washington, D.C.-based International Consortium of Investigative Journalists, a non-profit group that has shared the records with CBC News and media outlets in 35 other countries. It is thought to be one of the biggest ever leaks of financial data.
• The files shed light on secret accounts linked to more than 130,000 residents of everywhere from Argentina and Australia to Japan and the United States, as well as 450 Canadians. Laid bare are details on the anonymous shell companies many of them set up, how they moved millions of dollars out of the eye of the taxman and, in several cases, the lengths to which they went to safeguard their secrecy.
• Merchant didn’t heed the warning, though. Documents show he mailed cash and traveller’s cheques in ensuing years to pay the roughly $2,000 in annual charges.
• “If you want to move money around the world without onshore regulators or officials understanding that you’re behind the wire transfer, you set up a bank, you set up an account at Lines Overseas Management — they use very strict standards of confidentiality,” said lawyer Martin Kenney, a specialist in tracing international assets who runs a firm in another offshore haven, the British Virgin Islands.
• Merchant is one of Canada’s most prominent class-action lawyers. His crowning achievement is the $1.9-billion settlement for survivors of aboriginal residential schools, from which his Regina-based national firm, Merchant Law Group, was slated to earn $25 million. He has also gone after cellphone companies for their system-access fees, drugmakers behind the withdrawn arthritis pill Vioxx, various automakers, the Canadian Standards Association, and universities over late-payment charges.
• The former Saskatchewan MLA’s legal manoeuvrings have sometimes landed him in hot water, though. He’s been disciplined by the Law Society of Saskatchewan five times (the most recent case is under appeal), and in 2008 a B.C. court ordered him to pay a former client $273,000 for excessive billing.
• Since the late 1970s, the litigator has repeatedly locked horns with the CRA, taking a dozen cases to tax court and a handful as high as the Federal Court of Appeal. Some of the disagreements centred on tens of thousands of dollars Merchant booked as business expenses, such as costs for his Jaguar or Regina social functions he attended. In one case, he failed to report $75,592 in income, which a judge ruled was “grossly negligent, if not deliberate.”
• None of the court records from those cases mention Merchant’s offshore investments. Those have only come to light in the leaked documents, which show that he created an entity called the Merchant (2000) US Trust in 1998 and then put the $1.7 million into it.
• Normally when someone sets up a trust, they give away control of the assets in it. But in Merchant’s case, the leaked records show that at the time, he was a beneficiary of his offshore trust, as well as its “protector” — a role giving him significant power, according to experts in trust law. (He ceased being a beneficiary in 2002.)
• The files also show the people handling the trust’s investments were told Merchant “is to retain an active involvement on this account” and to “please revert directly to Mr. Merchant” for any “problems or queries.” As well, Merchant had trading authorization for the funds in Bermuda, according to the records.
• Tax-court filings obtained by CBC News show that on his income tax return for 1999, the year after he established the trust, Merchant didn’t tick off the box declaring ownership of more than $100,000 in “foreign property.”
• Under Senate rules, Pana Merchant was required to declare she was a beneficiary of the Merchant (2000) US Trust to the Senate’s ethics commissioner, but confidentially. There is no public access to the information.
• In a 2006 interview with the CBC, Tony Merchant said: “Money has always motivated me. But it’s not really that it motivates me to spend it, in particular. But I guess it motivates me to have it. And I’m sure my children will spend it well.”

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