DANIEL LEBLANC
From Thursday's Globe and Mail
April 8, 2009
{A Revenue Canada employee falsified a tax audit to help an inactive company hide a multi-million-dollar fraud scheme involving major construction firms in Quebec, federal officials alleged Wednesday.
Revenue Canada alleged that the employee – a “team leader” – and a colleague collaborated with the company's owner, Francesco Bruno, enabling him to send $1.7-million to Switzerland and the Bahamas over a two-year period.
The two Revenue Canada employees were suspended without pay Wednesday, one day after being arrested and interviewed by the RCMP. No charges have been laid, and none of the allegations have been proven in court.
The agency also revealed that the number of employees under suspicion has now grown to four. Two other employees were suspended without pay Wednesday for the duration of an internal investigation, which included six raids at construction firms this week.
At a news conference on Wednesday in Montreal, Revenue Canada alleged that between 2005 and 2007, three companies owned by construction magnate Tony Accurso “funnelled close to $4.5-million” to Mr. Bruno's numbered company, 3703436 Canada Inc., and another firm co-owned by Mr. Bruno, Entretien Torrelli Inc.
“The two companies have no commercial activities, are inactive, and we believe that they are part of a convenience invoice scheme,” said Revenue Canada spokesman Patrice Chouinard.
Revenue Canada said fake invoices were used to artificially reduce the revenues of Mr. Accurso's companies.
“The resulting tax savings are shared by the scheme's participants to use as payoffs or for personal gain,” the agency said in a statement.
Regarding the money allegedly sent to Switzerland and the Bahamas by Mr. Bruno, Mr. Chouinard did not disclose how the funds were used, but he said investigators are working to determine that the money consisted of “undeclared revenues.”
The massive Revenue Canada operation – dubbed Project Legaux – started as a routine tax audit.
Red lights started flashing last year, when Revenue officials discovered some of their own internal documents in the hands of an accountant working for a firm called B.T. Céramiques Inc., owned by Mr. Bruno.
The government investigated the matter, and came to suspect that one of its officials had worked behind the scenes to protect the inactive numbered company also owned by Mr. Bruno.
In February, the agency laid five fraud-related charges against B.T. Céramiques, in relation to its dealings with a company called Parox, Marble & Granite Inc.
Revenue Minister Jean-Pierre Blackburn, who attended Wednesday's news conference, said he is taking the matter seriously. The large majority of the 45,000 Revenue Canada officials behave honestly, he said, and the tax-collection agency has systems in place to detect wrongdoing.
“Fiscal fraud is a serious crime that has serious consequences,” Mr. Blackburn said.
Revenue officials refused to put an exact number on the tax losses related to the alleged fake invoices involving Mr. Accurso's firms, but insisted it was at least in the hundreds of thousands of dollars.
There have been a number of calls for a public inquiry into the construction industry in Quebec. Last week, the Quebec provincial police raided 18 companies in connection with allegations of tax fraud and money laundering.
Mr. Accurso is one of the biggest players in Quebec's construction industry. He has been under fire in recent weeks for his close ties to major union officials and municipal politicians, a number of whom have vacationed on his luxury yacht.
In 2007 and 2008, Montreal councillor Frank Zampino went on trips to the Caribbean with Mr. Accurso. At the time, Mr. Zampino was chairman of the city's executive committee, and was involved in the awarding of a $355-million water-meter contract to a consortium that included one of Mr. Accurso's firms.
Officials at Mr. Accurso and Mr. Bruno's firms did not return calls Wednesday.
With files from Ingrid Peritz} http://www.theglobeandmail.com/servlet/story/RTGAM.20090408.wraids0408/BNStory/National/?page=rss&id=RTGAM.20090408.wraids0408
