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| James Love with Finance Minister Jim Flaherty |
James Love, who also advised Finance Minister Jim Flaherty on international taxation, acted on behalf of the family of Arthur Meighen, who served as prime minister of Canada from July 10, 1920 to December 29, 1921.
In a lawsuit, two Meighen granddaughters accused him of breach of trust over the offshore transactions they claimed were unlawful and negligent.
Court documents in the suit filed in 2008 and discreetly settled three years later say Love helped arrange the transfer of more than Can$8 million starting in 1996 to Bermuda, Barbados and Antigua.
Obtained by public broadcaster CBC, the documents show Tara and Alyssa Meighen had concerns about taxes, interest and penalties if the scheme was ever exposed.
The CBC said Love countered in sworn statements that the offshore transfers “resulted in significant savings of Canadian taxes” for Meighen’s heirs, estimated at Can$1 million.
He also denied any breach of trust.
Moving assets to offshore trusts is not inherently illegal, but Canada and other Western nations have moved to tighten the rules to prevent abuses.
Love reportedly acknowledged in an affidavit rules in the Canadian tax code “to prevent transfers of assets from Canada to avoid Canadian taxation.”
But he nevertheless advised trustees of the Meighen family fortune that “it might be possible to structure a transaction that would have the intended results.”
“Such a result might be obtained through a more complex transaction,” he said in the affidavit.
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| Former prime minister Arthur Meighen's great-granddaugthers Tarah Wright, right, and Alyssa Wright, centre, alleged that lawyer James Love, left, helped their grandfather effectively cut them off from their inheritance, in part using offshore investments. (CP/Farzin Photography/Dalhousie University) |
The trustee, Canada Trust, which has since been absorbed by TD Bank, agreed to what it described as a “tax avoidance scheme” in an internal memo filed with the court.
The money was routed through a dozen transfers involving numbered companies and bank accounts in Ontario, New York, Barbados, Bermuda and Antigua, as well as share transfers and loans.
Eventually the funds appeared to end up back in Canada. The Antigua holding companies that absorbed the funds reportedly hired Love’s Toronto-based financial firm, Legacy Private Trust, as an investment manager.
Love was appointed to the board of the Royal Canadian Mint in 2006 and was named chair in 2009.
Love, a close friend of Finance Minister Jim Flaherty who was appointed to the Mint’s board in 2006, was also a trustee for most of the last decade of the Arthur Meighen Trust, an entity set up by the former Conservative PM in 1949 to distribute his wealth to his family. Before taking on that formal role, documents show Love had been an adviser and “close” friend to several Meighen family members.
It was in that advisory role that Love, in the mid-1990s, informed the managers of the Meighen Trust that they could get “Canadian tax relief on the income from about 40 per cent of the [trust] assets” if they moved the money offshore, Meighen’s great-granddaughters say in their statement of claim.
The use of secret accounts in offshore jurisdictions like Switzerland or the Cayman Islands has been thrust into the media limelight in recent years, following a spate of data leaks — including from several Swiss banks — that exposed account-holders’ identities and information. The most recent large leak was made public in April, when CBC News teamed up with the U.S.-based International Consortium of Investigative Journalists to report on secret accounts linked to 130,000 people worldwide.
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