The government of Canadian Prime Minister Justin Trudeau was under fire Monday after recently leaked documents showed a close Trudeau confidant and Liberal Party fundraiser had ties to an offshore trust established in the Cayman Islands.
The link has fueled criticism of Mr. Trudeau as he pushes a new tax policy that would crack down on loopholes used by small businesses and the self-employed to reduce their tax bills.
The revelation is the latest headache for Mr. Trudeau's Liberal government, whose popularity has taken a hit in public-opinion polls due to opposition over the tax measures.
Mr. Trudeau's political rivals have said the proposal targets small firms and the self-employed, not maneuvers used by Canada's wealthiest families to minimize tax.
The link between the fundraiser, Stephen Bronfman, and the trust was revealed over the weekend in a trove of internal documents from Appleby, a Bermuda firm specializing in offshore legal advice for corporations and high net-worth individuals. Those documents were leaked to a German newspaper and then shared with a consortium of media organizations.
According the International Consortium of Investigative Journalists, and a person familiar with the documents, the Bronfman family lent millions of dollars to help fund the offshore trust, set up in 1991 by Leo Kolber for the benefit of Mr. Kolber's son, Jonathan. At the time, Mr. Kolber was chairman of the Bronfman family's investment arm, Claridge Inc.
According to his autobiography, Mr. Kolber describes himself as a Bronfman family "consigliere." He first advised Seagram's Co. owner Samuel Bronfman and later his sons Edgar and Charles, Stephen's father. Mr. Kolber is a longstanding Liberal Party supporter and former senator.
In a statement Monday, Mr. Bronfman denied wrongdoing. He said he has "always fully complied" with tax laws, and he has "never funded nor used offshore trusts." Any trusts "have paid all taxes on all their income to the Canadian government."
The money moved to the Kolber trust, Mr. Bronfman said, involved a single loan made over a quarter-century ago, and was repaid five months later "in full compliance with all legal requirements."
The use of offshore trusts by Canadians is legal, although legislation over the past two decades has tried to limit their tax benefits.
The link nevertheless prompted further criticism of Mr. Trudeau's tax reform proposal on Monday.
Mr. Trudeau "has accused small-business owners of using tax loopholes of saving money on taxes, but what will he do now that close Liberal advisers are the ones that allegedly used tax loopholes to shelter their fortunes?" asked Andrew Scheer, leader of Canada's Conservative Party, during the question-period session Monday in the country's parliament.
Guy Caron, a lawmaker with the left-wing New Democratic Party, added the latest revelations suggest the Liberal government "always let the big fish go" when it comes to tax evasion.
Mr. Trudeau told parliament the government "is fully committed to fighting tax avoidance and tax evasion, and we will continue to ensure [authorities] pursue all [tax] infringes on many years to come."
When asked about Mr. Bronfman, the Canadian leader said he would let individuals "comment on their own situation."
A spokesman for the minister in charge of Canada's tax-enforcement agency said authorities would take "appropriate action" in regards to the transactions unveiled over the weekend.
Canada Broadcasting Corp., part of the media consortium granted access to the documents, said the Appleby data leak revealed about 3,300 Canadian individuals and entities with accounts in 19 tax havens. A handful of account holders named by the CBC included National Hockey League franchise the Montreal Canadiens, businesses and former politicians, all of whom denied any wrongdoing.
Write to Paul Vieira at firstname.lastname@example.org and Jacquie McNish at Jacquie.McNish@wsj.com
(END) Dow Jones Newswires
November 06, 2017 17:04 ET (22:04 GMT)