A close friend of Canadian Prime Minister Justin Trudeau who was instrumental in his rise to power was involved in moving millions of dollars into an offshore tax haven, it has been reported.
Documents suggest Stephen Bronfman, the heir to the Seagram distillery fortune, used his family investment firm to move large sums of money to an offshore trust he helped manage for fellow businessman Leo Kolber.
The 20-year scheme may have cost Canadians millions in unpaid taxes, according to broadcaster CBC which spent two days analysing the documents with tax lawyers.
Stephen Bronfman (left), a Canadian businessman who is a close friend of Justin Trudeau and helped him rise to power, has been linked to an offshore tax scheme
Mr Kolber is Mr Bronfman’s godfather and also has close ties to the Trudeaus, having been appointed to the Canadian senate by Justin Trudeau’s father, Pierre.
Mr Bronfman helped to raise funds for Mr Trudeau’s bid for leadership of the Liberal Party in 2013 and was then tasked with turning around the party’s finances before Mr Trudeau became Prime Minister two years later.
The revelations, which come from a leak of millions of documents from offshore law firm Appleby, will bring renewed attention to Mr Trudeau who pledged to crack down on tax avoidance when he won power.
Last year Mr Trudeau faced scrutiny after the Panama Papers leak when his family inheritance was called into question.
Mr Bonfman (pictured with father Charles) helped to pay tens of millions of dollars into a trust fund in the Cayman Islands
The new document leak – led by CBC and the International Consortium of Investigative Journalists – concerns the Kolber Trust.
The trust was set up in the Cayman Islands in 1991 and lists Mr Kolber’s son Jonathan and his ‘legitimate issue’ as beneficiaries, according to the BBC.
It is managed by Claridge, the investment firm of the Bronfman family. Stephen Bronfman is its executive director.
Documents show that millions of dollars were transferred into the trust and marked down as loans from the Bronfmans.
But accompanying emails call into question the legitimacy of some of the loans and suggest that others should have been liable for interest payments under US tax law.
Other emails call into question the nature of the trust, which is supposed to have most decisions about its management made offshore.
If too many decisions about the trust were being made in Canada then it would be liable to pay tax in that country, legal experts said.
The leak will put pressure on Mr Trudeau who campaigned on a platform of curbing tax avoidance and evasion when he won power in 2015
CBC said it had found a number of instances of attempts to reduce the Canada link.
Lawyers for Mr Bronfman and Mr Kolber said no deals had tried to evade tax and all were legal.
The Bronfman family are one of Canada’s most illustrious and derive their fortune from the Seagram alcohol distillery, once the world’s largest.
It was founded by Stephen’s grandfather, Samuel, and is currently run by his father Charles, who is worth $2.3billion according to Forbes.
Meanwhile Leo Kolber is a lawyer who made a large portion of his fortune helping to arrange two major Bronfman deals – Seagram’s purchase of a stake in DuPont and the sale of the Cadillac-Fairview real estate company.
Kolber also served on the board of Seagram, among others.
For many years he was the chief fundraiser of the Liberal Party, earning the nickname ‘Bagman’ for his efforts.