Remember when the Conservative government okayed CNOOC Ltd.'s takeover of the Calgary-based energy producer Nexen Inc., despite lots of red flags raised by the Opposition?
Well, the state-owned Chinese corporation is back in the news. New leaks of secret financial data suggest CNOOC is a big fan of tax havens.
Along with China's other big oil companies, Petro China and Sinopec, CNOOC runs offshore subsidiaries registered in the British Virgin Islands, a notorious tax haven.
The leaks list over 22,000 names of individuals and companies, many linked to top Chinese political and business elites. It is estimated that up to $4 trillion has left China untraced since 2000.
"The chief executive of CNOOC, Yang Hua, was similarly listed as the only director and shareholder of a BVI entity called Garland International Trading Company Limited. His colleague, Fang Zhi, vice-president of CNOOC International, was the director and shareholder of Xin Yue Lianping Company Limited and Xin Yue (BVI) Company Limited," the Guardian explains.
"None of the three companies, nor the executives, responded to repeated requests for comment from ICIJ reporters in China and overseas." (The International Consortium of Investigative Journalists and the Guardian also report that their websites have been blocked by Chinese censors.)
The leaks list at least 10 CNOOC subsidiaries operating in the British Virgin Islands.
They include: CNOOC INTERNATIONAL LTD.; CNOOC (BVI) Limited; CNOOC Myanmar Ltd.; CNOOC Myanmar Holding Ltd.; CNOOC Kazakhstan Limited; CNOOC North Caspian Sea Limited; CNOOC Africa LTD.; CNOOC AFRICA HOLDING LTD.; CNOOC Muturi Holding Ltd.; and CNOOC Wiriagar Holding Ltd.
Wait, so you’re telling me there’s oil in the British Virgin Islands? You might find tanning oil, but that’s about it
In the last few years, it’s become common practice for multinationals to set up elaborate networks of offshore subsidiaries in dozens of countries. The multinationals then sell their own assets back and forth between dummy companies they control to shift where profits are reported and lower their taxes.
The international Tax Justice Network estimates that half of global trade flows through tax havens and between $21 and $32 trillion is currently being hoarded in offshore bank accounts.
Canadians for Tax Fairness, a member of the Tax Justice Network, says that Canadian money in tax havens is at an all-time high. Using Statistics Canada data, the group says $170 billion has been moved into the top-5 tax havens alone and estimates (conservatively) that Canada could be losing at least $7.8 billion per year.
For example, the Canada Revenue Agency has accused Saskatchewan uranium miner Cameco of dodging nearly a billion dollars in taxes — at least $300 million to the province of Saskatchewan alone — by digging up uranium in Saskatchewan and turning around and selling it to a dummy corporation in Zug, Switzerland.
Knowing the scale of the problem, you'd think the CRA would be boosting — not cutting — its capacity to crack down on tax havens. But cutting is exactly what the Conservative government is doing.
By 2017-18, 3,100 auditor positions will be eliminated as part of a $313 million cut to CRA's budget, even as the agency "acknowledges difficulty in tracking and collecting billions of dollars in unreported income from domestic and international tax evasion."
Photo: premierofalberta. Used under a Creative Commons BY 2.0 licence.