Double dipping Arrivescam contractor turns up in Pandora Papers, denies illicit activity

The documents show David Yeo, former head of IT firm Dalian Enterprises, incorporated ISBN Inc. in the British Virgin Islands in September 2011. He also had a company by the same name in Curaçao, a Caribbean island.

  • By Alex Dhaliwal
  • March 24, 2024
  • News Analysis
Double dipping Arrivescam contractor turns up in Pandora Papers, denies illicit activity
The Canadian Press / Adrian Wyld
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The founder of a company linked to ArriveCan denied committing any illicit activity in his operation of separate ventures more than a decade ago in two tax havens.

According to the Pandora Papers database, David Yeo, an IT contractor formerly of Dalian Enterprises, incorporated the company ISBN Inc. in the British Virgin Islands in September 2011. On February 27, La Presse reported that Yeo also had a company by the same name in Curaçao, a Caribbean island.

On Tuesday, the Commons public accounts committee asked the contractor about his company operating out of offshore tax havens.

“According to what La Presse has found, you opened accounts in your name in tax havens on two occasions since 2011,” said Bloc Québécois MP Nathalie Sinclair-Desgagné. “How much money did you put into tax havens, Mr. Yeo?”

He dodged the question, claiming that ISBN Inc. amounted to an “exercise” in entrepreneurship.

“As an entrepreneur, I’m very interested in international business,” he told the committee. “When I came back from Afghanistan, I looked into … international business, and that’s what led me to figuring out how to do international bank accounts and things like that. 

“There’s no smoking gun there, there’s nothing down there,” said Yeo. “It was just purely an exercise on my own entrepreneurship and trying to figure out stuff.”

Following the disclosure of the Pandora Papers in October 2021, the Canada Revenue Agency (CRA) acknowledged that “merely holding offshore assets does not automatically imply tax non-compliance from a Canadian tax perspective.”

Over 60% of Canadian taxpayers identified in the Panama Papers complied with the law and paid their dues, they said.

The 2016 Panama Papers featured prominent Canadian firms in its latest iteration of offshore data. 

Although the Pandora Papers do not have as many Canadian entities listed, at least 500 Canadian citizens or residents, including Yeo, have been identified.

The International Consortium of Investigative Journalists (ICIJ) on its website clarified that mention of a person or firm in their Offshore Leaks Database does not imply illicit conduct.

“Offshoring essentially means moving your money offshore to another jurisdiction,” explained Aaron Wudrick, director of the Domestic Policy Programme at the Macdonald-Laurier Institute. “And the main purpose of doing that is because there are tax benefits to it.”

As long as entrepreneurs properly document their affairs and report their earnings, they will not enter into a legal quagmire.

Wudrick stressed there are legitimate reasons for firms to move money or assets to other jurisdictions.

“For example, if you're a person who's in a very unstable country, it's not safe for you to keep your money there so you want people in some places that have the ability to move money,” he said. “Another example is where if you are a company that legitimately does business in a number of countries, it makes sense for you to have your sort of capital spread out into different places.” 

But the anonymity afforded to offshore firms, alongside lax taxation where havens commingle, has been widely used to facilitate crime, including money laundering and tax evasion.

"Every time we hear that a company is trying to get rid of its tax obligations, it is certainly shocking, and I can assure you that we have teams that work very hard to identify them and to do what it takes to bring the money home," said National Revenue Minister Marie-Claude Bibeau, without referring directly to any file. 

"This is an important question in the sense that it must be part of the Canadian government's conversations and actions," she added.

"The provision of accounts in tax havens is not in itself illegal," recalled Bloc Québécois leader Yves-François Blanchet. “But it would be very, very appropriate for the government to systematically refuse any public contract with any company that would have money in tax havens.”

Also on Tuesday, Yeo vehemently denied using subcontractors to blur nefarious contracting while with Dalian. "I am not aware," he told MPs before a committee hearing.

"We are the general contractor and the prime contractor for the government," Yeo explained via videoconference. "We hire subcontractors to do the work. So, what we do is contract management, not the actual work [on the app]."

Indigenous Affairs Minister Patty Hajdu had not been informed of Dalian's account in tax havens when La Presse interviewed her before a Cabinet meeting last month.

"I think that [the people behind] the contract fraud must be held responsible if that's what it's about," she said. The IT firm has won many federal contracts in recent years, including ArriveCan, courtesy of being an Indigenous company with status.

"Sometimes it is difficult to determine who is indigenous," Hajdu said. Yeo is a member of the First Nation in Alderville, Ontario and meets at least one of the criteria to receive contracts as an Indigenous-owned company.

However, "There are sometimes people on the list that other Aboriginal people can dispute," she added. “We are therefore trying to determine how to proceed to achieve the goal of helping departments achieve the procurement goal.”

The RCMP earlier launched a criminal investigation into Dalian after allegations by a Montreal firm surfaced regarding irregularities in a computer contract received by Yeo’s then-company.

“People must also be responsible for their actions, people are responsible,” said Industry Minister François-Philippe Champagne. “Listening to the investigation will determine it, but if people were aware, if they were aware of the facts, the wrongdoing, there must be consequences.”

“That's why we have to get to the bottom of things,” he added.

The Globe and Mail confirmed Dalian has received $95.5 million in federal contracts from Ottawa since 2016. Public Services and Procurement Canada has restricted the two-employee firm from further contracts pending the results of the investigation.

Any information obtained by the CRA pertaining to a criminal inquiry remains confidential until its conclusion. The federal tax agency then publishes results to its website for public consumption.

The House public accounts committee is currently reviewing a report by Auditor General Karen Hogan, released last month, which details ArriveCan’s whopping $59.5 million cost. "It did not deliver the best value for taxpayer dollars spent," she said. 

Of that amount, Hogan reported Dalian received $7.9 million for its work on the ArriveCan app. Yeo continues to dispute the dollar figure.

Canada Government Waste News Analysis ArriveCan David Yeo Dalian
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