De Caisse “cleans up” tax havens

Charles Emond and the rest of Caisse de Depot’s senior management recently thought it was a good idea to invest $3.1 billion to own 22% of Jebel Ali Port and its free zone, where companies don’t have to pay taxes.

By buying and holding shares in companies and subsidiaries of companies registered in tax havens, the Caisse de depot et placement du Québec “clears” this type of investment.

DP World is a subsidiary of Dubai World, a joint venture owned by the Government of Dubai. And Jebel Ali is the 9th busiest port in the world, the largest man-made port and the largest and by far the busiest port in the Middle East.

Why is this Caisse investment in the United Arab Emirates sparking controversy?

  • First, because the Jebel Ali Free Zone is the equivalent of a tax haven.
  • Two, because the United Arab Emirates refused to condemn the Russian invasion of Ukraine, and also welcomed Russian oligarchs with open arms.

The refuge of the Russians

Here’s what Andreas Krieg, an associate professor in the School of Security Studies at King’s College London, said in the magazine last week Time on Dubai, statement displayed in The Globe Mail

“Dubai is one of the world’s leading centers of black money, a key hub in illicit financial networks that provide a safe financial haven for warlords, fraudsters, terrorist organizations and mobsters. Unsurprisingly, the Kremlin’s kleptocrats have recently washed up on the shores of the Emirates. By allowing Putin and his entourage to evade sanctions, the UAE becomes a major catalyst for the interests of Russia’s power elites. †

Interviewed by The newspaperFranck Jovanovic, professor of economics and finance at TÉLUQ University, also paints a sombre portrait of the United Arab Emirates.

“It is clearly a tax haven, that is well known. Also, the UAE is often singled out for money laundering issues and is not transparent. The Fund’s decision is surprising, I am perplexed. †

The same goes for financial critics of opposition parties in the National Assembly.

“It does not make any sense. It’s a total deviation. It is totally unacceptable,” said PQ MP Martin Ouellet.

Ruba Ghazal, from Québec Solidaire, for her part, believes that “it is shameful that a public institution of this importance [la Caisse] buys shares in a free zone that encourages tax havens.”

The Caisse doesn’t care about criticism

But at the Caisse, we don’t care about these kinds of convictions.

We are hiding behind the classic answer, as the Caisse respects “Canadian sanctions” on all of its investment decisions and its transaction with DP World was executed “after an exhaustive and meticulous process”.

“Our partner, the Fund specifies to the canadian press, assured us it meets the highest standards. DP World has no assets in Russia. †

The Caisse had Russian assets worth $1.13 billion. It liquidated them in early March last year. We expected nothing less from him!

bad example

Regardless of the CEO, Charles Emond, the Caisse sets a bad example when it invests through companies registered in tax havens.

The Caisse can confirm “that it respects all laws and fulfills its tax obligations” and that it is “against all forms of tax evasion”, it is certainly not by keeping subsidiaries in tax havens that it will set an example.

In the Cayman Islands, the Caisse subsidiaries registered there are Apollo Hercules Partners, KKR-CDP Partners, GMAC ASO Fund. It also includes the Kiwi Holdco Cayo joint venture, in which the Caisse owns 69% of the shares.

Einn Volant Aircraft Lessing Holding (in which the Fund owns 90.5% of the shares) was established in Bermuda.

The 45%-owned DP World Caucedo joint venture is registered in the British Virgin Islands.

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