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Ottawa lent $1 billion to a mining company that allegedly avoided nearly $700 million in Canadian taxes
The Canadian government provided more than $1 billion in loans to a mining company that used a complex offshore business structure to allegedly avoid nearly $700 million in Canadian tax.
Turquoise Hill Resources, a Canadian company headquartered in Vancouver and listed on the Toronto and New York stock exchanges, received a loan of $750 million (U.S.) in 2015 from Export Development Canada, a Crown corporation that supports Canadian businesses abroad.
The loan is worth more than $1 billion Canadian, according to EDC’s disclosure database.
Between 2010 and 2016, Turquoise Hill ran the finances for its massive Oyu Tolgoi mine in Mongolia through shell companies in Netherlands and Luxembourg, The arrangement allowed it to avoid paying $559 million (U.S.) in Canadian corporate income tax, worth $694 million Canadian at current exchange rates, according to a report put out by the Dutch NGO SOMO this week.
“There does seem to be a contradiction there,” said Karyn Keenan, director of Above Ground, an Ottawa-based NGO that advocates for corporate accountability.
“Should EDC be providing over a billion dollars of financing to a company that’s engaging in tax avoidance?” she asked. “EDC is a public institution. It’s an arm of the state. It should operate in a way that’s coherent with the policies and the stated aims of the government.”
“If the government of Canada is trying to impose a progressive tax regime to sustain the social contract with Canadians, then it’s surprising this kind of deal could happen,” Keenan said.
The loan was Canada’s portion of a $4.4-billion (U.S.) finance deal to expand the Oyu Tolgoi’s open pit with a second underground mine. The other sources of funds are EDC’s U.S. and Australian counterparts and 15 commercial banks, including CIBC and HSBC.
