Carney is all in for Canada, but not for Canadian taxes

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Mark Carney says that he’s all in and elbows up for Canada, but it seems the firm Carney used to oversee liked foreign countries better. Not only did Brookfield Asset Management move its headquarters from Toronto to New York when Carney was its chairman, he set up $25 billion worth of Brookfield funds in a Caribbean tax haven.

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Brookfield Asset Management says in their defence that they are a major investor in Canada, that they are listed on the TSX and that their parent company is still located in Toronto. All of that is true, but none of that negates the move nor the potential tax changes.

The company’s moves could mean Brookfield will pay less tax in Canada.

On Wednesday morning, Radio-Canada, CBC’s French arm reported that two funds co-chaired and founded by Carney, raised (US)$25 billion over two funds that were registered in Bermuda.

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“Those funds were registered in Bermuda, among other locations, allowing investors to benefit from significant tax advantages, according to information obtained by Radio-Canada,” Radio-Canada reported.

Bermuda is one of the world’s leading tax havens that allows investors to escape higher taxed jurisdictions like Canada. In fact, Radio-Canada reported that between 2011 and 2023, the amount of money from Canada “invested” in Bermuda rose from $10 billion to $130 billion.

Asked about this apparent tax avoidance scheme that Carney set up at his former firm, Carney was dismissive.

“I understand how the world works,” Carney said when asked about the funds being set up to avoid taxes in Canada.

The way the world works is apparently to allow rich Liberals like Carney to avoid paying taxes while the rest of us pay our fair share. His dismissive stance in the face of questions follows the same dismissive tone Carney has taken when asked about his assets and any conflict of interest.

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He tried to say that these funds, set up in a tax haven, have investors like Canadian pension funds who then take the profits that they earn – while escaping Canadian taxes – and disperse the money to retirees, who pay taxes. Carney and his rich friends won’t pay the taxes on these funds, but retirees here in Canada and elsewhere will.

The NDP has already accused Carney and Brookfield of dodging corporate taxes, pointing to past reports saying the company is avoiding taxes in several jurisdictions. The company, of course, says it is playing by all the rules in each jurisdiction.

Given that Carney now leads a party intent on increasing taxes on companies here in Canada, a party that regularly says the wealthy have to pay their fair share, it is fair to question if that is how he has been living in the corporate world. The easy answer would appear to be no.

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Even moving Brookfield’s corporate head office from Toronto to New York City could see the company paying more tax to Washington and less to Ottawa.

How is that for all in for Canada and elbows up?

Meanwhile, Carney could end up being paid handsomely for setting up these funds. A Bay St. investor said that typical compensation would be between half a percentage point to a full percentage point in the value of the fund that Carney set up.

That means that over the time of the fund’s existence, of about eight years or so, he could have been paid between (US)$12.5 million and (US)$25 million, perhaps more if the fund performance rises. While Carney has said he has put all of his assets in a blind trust and that he has “divested” his assets, these “carried interest” payments will continue, if he is entitled to compensation as a co-founder of the funds.

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Carney cannot sell off these payments or do away with them, as one of the founders of the funds, they will continue.

On Wednesday, Carney was asked three times about any future payments that he could receive from Brookfield or other companies he was on the board of like Stripe. Carney interrupted the reporter asking the questions, not letting him finish and then used very careful language to say he owns nothing.

That doesn’t mean those payments stop and given that those funds are all about clean energy, something Carney wants the government to invest in heavily, and if Carney is entitled to compensation form the funds, then he is clearly in a conflict of interest.

Any time he is asked about his assets, his corporate ties, Carney is evasive and testy. There is clearly an issue here that he doesn’t want to talk about.

The next question reporters put to Carney should be to ask whether he has filed personal income tax in Canada since returning from Britain.

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