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RCMP Launches Income Trust-Related Criminal Investigation; Goodale Will Not Step Down |
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Written by Staff
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Thursday, 29 December 2005 |
Royal Canadian Mounted Police Commissioner Giuliano Zaccardelli has notified NDP Finance critic Judy Wasylycia-Leis that the RCMP has launched a criminal investigation into the Liberal government, related to the income trust issue.
Mr. Zaccardelli confirmed that the RCMP has launched a criminal investigation "regarding a possible breach of security or illegal transfer of information in advance of the federal government's announcement of changes to the taxation of Canadian corporate dividends and income trusts November 23, 2005."
In light of this development, Wasylycia-Leis today called on Liberal Finance Minister Ralph Goodale to step aside from his Cabinet role, until the criminal investigation is complete.
"Mr. Goodale is personally responsible to ensure his office and his department protect average Canadians from the consequences of improper disclosures," Wasylycia-Leis said. "Mr. Goodale has stonewalled this issue for a month now, insisting without any qualification that there is nothing to this issue. There is now a criminal investigation underway. Since the conduct of Mr. Goodale's office and officials are likely to be directly involved, Mr. Goodale should step aside from his duties as Finance Minister today."
On November 23, Finance Minister Ralph Goodale announced that the Canadian government would not change the tax treatment for income trusts and would reduce the taxation of dividends from large public corporations. The timing of the announcement was unexpected coming as it did just before the call of the federal election. Many financial observers have noted unusual volumes of trading in affected stocks and income trusts immediately prior to the announcement.
Shares of BCE Inc., Canada’s biggest phone company and among the highest dividend-paying stocks, rose 3.3 per cent in the final two hours of trading Nov. 23 before the finance minister announced his plan to cut dividend taxes.
The Yellow Pages Income Fund rose 3.4 per cent ahead of the announcement, in which Goodale said he wouldn’t tax income trusts such as Yellow Pages.
The S&P/TSX Capped Income Trust Index rose 1.5 per cent on Nov. 23, and soared 4.4 per cent the following day, the biggest gain in at least eight years.
Wasylycia-Leis and Summerville noted that there was unusual trading in affected stocks on the New York Stock Exchange, making this an issue within the jurisdiction of the Securities Exchange Commission (SEC).
In a letter to SEC, Wasylycia-Leis wrote, “It is likely American investors sold their units in Canadian income trusts and Canadian dividend paying large corporations in the hours prior to the Minister Goodale announcement. There is evidence to suggest that they may have sold them to professional investors and others who may have received a tip on the pending Canadian government announcement that was not the subject of a Canadian government press release. The SEC, we believe, has an obligation to investigate and protect these investors."
Finance Minister Ralph Goodale said Thursday that he would not resign and told CTV News, "I am absolutely satisfied there has been no wrongdoing on my part." |
