From: AlanBaggett@volcanomail.com   
      
   Secret tax deal for wealthy KPMG clients sparked anger inside Canada Revenue   
   Agency :CRA SOTW   
      
   Canada Revenue Agency offered amnesty in $130 million offshore 'sham'   
      
   By Harvey Cashore, Dave Seglins, Frederic Zalac, Kimberly Ivany, CBC News   
      
   A high-level decision to offer amnesty to wealthy KPMG clients caught using an   
   offshore tax-avoidance scheme on the Isle of Man sparked anger inside the   
   Canada Revenue Agency, a CBC News/Radio-Canada investigation has found.   
      
   Several officials felt the CRA should have at least tried to impose large   
   penalties on these wealthy clients of the accounting firm, CBC News has   
   learned.     
      
   Some felt the agency should also have pursued a criminal investigation into   
   the KPMG tax plan, which, in court documents, the CRA has alleged is a "sham."   
      
   "No one is happy about that decision, no one," a source told CBC News.   
      
   The offer, which was dated May 1, 2015, means at least 15 wealthy KPMG clients   
   will avoid any "gross negligence" penalties, fines or criminal investigations   
   as long as they pay back taxes and some modest interest on the income they had   
   failed to report    
   on their tax returns over many years.   
      
   Court records indicate that at least 26 clients parked more than $130 million   
   offshore in the KPMG scheme.   
      
      
   CRA violated own guidelines   
      
   CRA has what is called a voluntary disclosure program, which provides an   
   amnesty for taxpayers who come forward on their own initiative to report past   
   income and pay back taxes without penalty.   
      
   But the program is only valid if the taxpayer is not already on CRA's radar.   
      
   Tax experts told CBC News that KPMG clients should not have qualified as the   
   agency was already auditing the Isle of Man tax-avoidance scheme as part of an   
   investigation that dated to 2012.   
      
   "If CRA knows what you've done it's too late already," Laval University tax   
   professor Andre Lareau told CBC News. "The CRA violated its own guidelines of   
   voluntary disclosure," he said.   
      
   Laval University tax law professor Andre Lareau said it looks like the CRA   
   violated its own guidelines in offering amnesty to potential tax avoiders who   
   were already under investigation. (CBC)   
      
   *	Send confidential tips on this story to INVESTIGATIONS@CBC.CA, or contact   
   Harvey Cashore at 416-526-4704    
      
   One of the biggest mysteries is who exactly at CRA made the amnesty offer.   
      
   The secret deal, leaked to CBC News in a brown envelope, was signed by CRA's   
   manager of offshore enforcement, Stephanie Henderson, and sent to the   
   accounting firm KPMG on May 1, 2015.     
      
   But there are conflicting stories as to whether Henderson, or her bosses, made   
   the decision.   
      
   Sources tell CBC News that discussions about the KPMG case, which has been in   
   operation for more than 10 years, went high up the line at CRA, far beyond   
   Henderson.     
      
   The manager in the offshore division was reportedly holding almost daily   
   briefings for a time in 2015 with high-level officials at the CRA.    
      
   "She was pissed that senior leadership backed off and a deal was struck," one   
   source said.   
      
   The CRA confidentiality clause in the amnesty offer to KPMG clients. Who at   
   CRA knew what about the details in the offer is not entirely clear. (CBC)   
      
   When contacted at work by CBC News, Henderson referred a reporter to the media   
   relations office.   
      
   CRA spokesperson Philippe Brideau echoed what assistant commissioner Ted   
   Gallivan told CBC News on Friday -- that there was no interference on the file   
   from higher-ups, including from then assistant commissioner Richard Montroy,   
   who was in charge of    
   compliance.   
      
   "Officials responsible for the file have confirmed that there was no instance   
   where Mr. Montroy provided direction," Brideau said in an email.     
      
   In his own email to CBC News Montroy said: "There were no instances where I   
   failed to support the recommendations and actions of the people who worked in   
   my branch."   
      
   Gallivan, the current head of compliance also disputes that there was any   
   internal disagreement prior to the amnesty offer being made.   
      
   "We found no evidence of internal disorder or debate," he said.   
      
      
   Montroy 'approved' correspondence   
      
   Brideau also said the decision to make the settlement offer to KPMG and its   
   clients was made strictly in the CRA's offshore compliance division, which   
   reported to Montroy.   
      
   "Mr. Montroy, as assistant commissioner, was appropriately briefed and, in   
   accordance with his responsibilities, approved any formal communications to   
   KPMG," Brideau said in an email.   
      
   Montroy, who retired from the CRA last fall, declined to be interviewed by CBC   
   News.   
      
   In an email he wrote, "I have not, nor have I ever, made any settlement offer   
   in the KPMG case that you refer to."   
      
   "What I did do," he went on, "was provide appropriate oversight, when   
   required, that compliance approaches were based on the facts and merits of the   
   case and in keeping with CRA policies and the legal framework under which my   
   branch operated."   
      
   Montroy also told CBC News he took no part in the discussions between KPMG and   
   CRA on the audit into the Isle of Man offshore structure.   
      
   "I have never met anyone from KPMG, their legal representatives, or even our   
   own counsel on this file for that matter. I let people do their job, and I was   
   briefed on the progress of the file, as appropriate," Montroy said.   
      
   "I take great pride in the work I accomplished throughout my career. It was   
   one built on integrity and honesty."   
      
      
   CRA commissioner played 'normal and required' oversight role   
      
   In an email to the CBC, the CRA's top executive, commissioner Andrew Treusch   
   said: "I note in the strongest possible terms that, as the commissioner of the   
   Canada Revenue Agency, I have never provided direction to CRA officials on the   
   approach to be    
   taken in the management of KPMG litigation or negotiations."    
      
   Rather, he wrote, "I have played my normal and required oversight role, which   
   is to assure myself that the CRA's operational approach is grounded firmly by   
   the facts and merits of each case and the legal framework within which the   
   agency operates."   
      
   Treusch also said he has "never discussed the KPMG litigation, including any   
   negotiations that may have occurred" with anyone at KPMG at any time.   
      
   CBC News had asked the commissioner whether he knew about the CRA's secret   
   settlement offer before it was sent to KPMG.   
      
   Brideau, the CRA media spokesman replied: "The commissioner would not review   
   or approve this type of letter as this task is the responsibility of   
   operations managers at the agency."   
      
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