Money manager for ultra-rich has almost $5M tax bill, but CRA can't get its hands on assets

He's a self-described money manager for the ultra-rich, with a penchant for pricey champagne and a personal wealth in the eight figures.

But Charles Shaker also has a penchant for not paying his taxes, the Canada Revenue Agency (CRA) claims. And thanks to a lack of transparency — in tax havens but also in Canada — around who owns certain kinds of assets, it's proving hard for the CRA to do anything about it.

Shaker, a British-Canadian financial adviser, made tabloid headlines in 2013 when he ordered a $500,000 round of choice bubbly for revellers at a Formula One party in Monaco. The incident was later featured in a CNBC show called The Filthy Rich Guide.

What the news stories didn't reveal is that around the same time, auditors in Ottawa were poring over his finances — in large part because his name was on a whistleblower's list of 130,000 people and entities with ties to confidential accounts at HSBC's private bank in Geneva.

Shaker already had a relatively modest balance owing of $32,797 at that point, court records show. But after CRA accountants went back over his file, they issued the multimillionaire an updated tax bill for the hefty sum of $3.8 million in 2017.

• HSBC's private Swiss bank used by several Canadian billionaires

Five years later, Shaker — who moved from the Ottawa area to England in 2009 and took up residency in Monaco around 2015 — hasn't paid, the CRA says in court filings. With interest, his bill now sits at more than $4.8 million.

He says this is the first he's hearing of it, and he will contest the amount.

"The CRA has not been in contact with me since the creation of the alleged reassessments giving rise to the purported tax debt," the 42-year-old said in a sworn statement filed in court.

"The CRA has repeatedly made mistakes in sending out correspondence over the course of a number of years."

CRA fails to nab penthouse proceeds

The dispute is playing out in Federal Court.

In early November, the government filed a motion to force Shaker's sometime lawyer, Chadwick Boyd of Ottawa, to provide information about a luxury downtown Toronto penthouse that had Boyd's, Shaker's and another man's name on the land title.

If Shaker actually owned part of the condo, the CRA could go after it to recoup his tax debt.

Weeks after the CRA tried, so far unsuccessfully, to get the records from Boyd, the penthouse and another one in downtown Toronto were put on the market. They both sold around New Year's — one went for $2.5 million, the other for $1.8 million — and closed two weeks ago.

The CRA once again went to court, this time to get a cut of sale proceeds, arguing that Shaker had an interest in both properties that could be used toward his alleged $4.8 million in tax debts.

But the government hit a snag — the penthouses were owned in trust, an arrangement where one or several people have legal ownership of an asset but only for the benefit of third parties. One of the condos was held by Shaker, Boyd and another man for the "Richie Rich Holdings Trust," the other for an entity called the "Vinyl Spin Investment Trust."

Court records show the CRA had been trying to get Shaker and others to provide information about the trusts, and who the real beneficiaries were, since at least 2015, to no avail. Without that information, the agency couldn't prove Shaker was a beneficiary, and he himself said in a sworn statement he had no "personal interest whatsoever" in either property. So a judge refused to allow the CRA to touch the proceeds.

"Mr. Shaker is a judgment debtor in his personal capacity and not in his capacity as a trustee of the RRH Trust," Federal Court Judge Elizabeth Walker ruled on March 24. "Trust property is not available to the creditors of a trustee where the debt in question is the trustee's personal debt."

Ironically, she ordered the government to pay Shaker $12,000 for his legal costs.

Pandora Papers leak reveals $4M flat in London

The federal treasury will now have to look elsewhere for assets it can seize. But that could prove even more difficult than the government's doomed attempt to go after the Toronto condos.

Records from a number of leaks of tax-haven financial data, shared with CBC News through its collaboration with the Washington-based International Consortium of Investigative Journalists, show Shaker at one point owned or was a director of several offshore companies in the British Virgin Islands and Barbados.

He's in the Pandora Papers leak from last fall, where CBC News found his name on a BVI company called Branstead Ltd. 

Officially, that company has other people apparently serving as "nominees," or stand-ins who sign their names on paper as the directors and shareholders — as fronts for the real owner, essentially. The sole shareholder, on paper, is another corporation called Monet Investment Ltd., with an address in the Seychelles, according to the files in the Pandora Papers.

But one of the leaked documents is a form dated 2017 from an offshore services provider called Trident Trust, declaring Shaker is the "beneficial," or actual, owner of Branstead Ltd. The company's declared activity is "property holding."

It is legal in most jurisdictions, including Canada, to use nominee directors and shareholders, but it's often a tactic — especially in tax havens — to hide the people who truly control a company and its assets.

Branstead Ltd., in turn, owns a penthouse apartment in the Canary Wharf area in London that was purchased in 2010 for the equivalent of $4 million, U.K. property records show.

The CRA told CBC News that, in general, it could potentially use terms in Canada's tax treaty with Britain to try to recover a tax debt from someone living in England.

Without access to the Pandora Papers leak, though, the CRA would almost certainly not be able to make the link between Shaker and the multimillion-dollar London apartment. 

That's because Britain, like most of Canada, does not record the identities of the beneficial owners of property — the real owners behind layers of corporations or trusts — in its land registry. And the British Virgin Islands, like most of the world, doesn't require corporations to disclose who their real shareholders are.

"[The CRA's] hands are tied because they simply don't have the tools to be following those assets around the world," said Kevin Comeau, a lawyer and expert on corporate transparency. 

Public registries would help CRA, lawyer says

Comeau, alongside numerous transparency groups, has been advocating for years for countries and Canada's provinces to adopt beneficial-ownership registries that publicly record who the real owners are of land and of significant shareholdings in private companies.

Not only would that help crack down on money-laundering, by potentially exposing where criminals or their known associates park ill-gotten gains, but in the tax arena, it could give revenue agencies like the CRA "much more information and an ability to trace those funds" of people who might not be paying their fair share, he said.

British Columbia is the only jurisdiction in Canada with a beneficial ownership registry for property, implemented in the wake of findings of significant money-laundering in the province's real estate sector.

Meanwhile, the federal government has pledged to implement one for corporations by the end of 2023, as part of the deal between the minority Liberals and the NDP.

Shaker 'denies any allegation or implication'

The CRA wouldn't comment on its legal spat with financial adviser Shaker, citing strict taxpayer confidentiality rules.

But it said that in general, initiatives to promote transparency are "a positive step" to help enforce tax laws. 

"Having access to information on the true owners, beneficiaries, directing minds or related parties of an entity or asset better positions tax administrations around the world to tightening the net on those high net-worth individuals, corporations and entities who try to avoid paying their fair share of taxes," the CRA said in a statement. 

CBC News sent a list of questions and preliminary research findings to Shaker and his lawyers — among them, the fact that his offshore company Branstead Ltd. appears to make use of nominee directors and shareholders, and that this would tend to frustrate the CRA's ability to collect on any tax debt he owes.

They did not answer specific queries, but one of those lawyers replied broadly last week that Shaker "denies any allegation or implication set out in your list of questions" and that "he will continue to legally establish his case in the courts."

Send tips on this or any other story to zach.dubinsky@cbc.ca or call 416-205-7553.