Canadian tax authorities recover C$82 million from Kitco in fraud case

Canadian tax authorities recover C$82 million from Kitco in fraud case

This news report, translated from the original French, is 2 years old but seems to have escaped notice outside Quebec.

Revenu Quebec Concludes a Secret Agreement with a Gold Merchant

From The Journal of Montreal
Wednesday, April 25, 2018

https://www.journaldemontreal.com/2018/04/25/revenu-quebec-conclut-un-ac…

Revenu Quebec has just concluded a secret agreement with the Montreal firm Metaux Kitco, accused of multi-million-dollar tax evasion in the gold sector.

Revenu Quebec argued that Kitco owed it at least C$284 million for claiming and obtaining tax refunds to which the company was not entitled. According to publicly available information, the taxman ultimately receive only $50 million of this amount.

According to the government agency, Kitco produced false invoices to carry out “artificial transactions” making it possible to transform pure gold (zero-rated) into scrap gold (taxable), then again into pure gold (zero-rated).

Kitco’s business partners include security firms GardaWorld and G4S, as well as the Royal Canadian Mint, a federal Crown corporation, to which Kitco entrusts the refining of its scrap gold. Nothing indicates that these entities participated in the scheme denounced by the tax authorities.

Revenu Quebec requested that a confidentiality clause be added to the agreement to prevent its disclosure. In a document filed in court, however, it was stated that the agency is entitled to C$49.9 million as “full and final payment” for its claim of C$284 million.

Revenue Canada, for its part, will receive $ 31.7 million. The total of C$81.7 million represents the amount that the tax authorities had withheld from tax-refund claims submitted by Kitco.

The agreement will allow Kitco to get out of the judicial restructuring process in which the company was placed in 2011 in reaction to the notices of assessment filed by Revenu Quebec. The Superior Court is to ratify the agreement next month.

Revenu Quebec refused to answer questions from the Journal yesterday, except to indicate that “the Court of Quebec remains seized of criminal files” concerning Metaux Kitco and its founding president, Bart Kitner. According to spokesperson Geneviève Laurier, procedures must resume on May 24.

However, a document filed in court stipulates that the agreement concluded with the taxman “settles” all disputes with Kitco, including “criminal offenses.”

The taxman demanded fines totaling more than $454 million from Kitco and Mr. Kitner as well as a prison sentence for the latter.

Since 2011 the amount of gold held by Kitco has decreased by 20 percent. Despite everything the company still has 77,000 ounces of this precious metal for a market value of C$127 million, accounting firm Richter told the court.

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Chris Powell

The Gold Anti-Trust Action Committee was organized in the fall of 1998 to expose, oppose, and litigate against collusion to control the price and supply of gold and related financial instruments. The committee arose from essays by Bill Murphy, a financial commentator on the Internet (LeMetropoleCafe.com), and by Chris Powell, a newspaper editor in Connecticut. Murphy's essays reported evidence of collusion among financial institutions to suppress the price of gold. Powell, whose newspaper had been involved in antitrust litigation, replied with an essay proposing that gold mining and investor interests should act on Murphy's essays by bringing antitrust lawsuits against financial institutions involved in the collusion against gold. The response to these essays was so favorable that the committee was formed and formally incorporated in Delaware in January 1999. Murphy became chairman and Powell secretary and treasurer.