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Mauritius, an African island east of Madagascar and smaller than Ottawa, may seem like a little fish in a big sea. However, for the international business community, including companies as notorious as SNC-Lavalin, it is anything but insignificant.

The growing republic is a tax haven, a self-titled “gateway” to the third-world, with a maximum corporate tax rate of 3%. 

For the world’s business class, saving taxes through places like Mauritius presents itself as a good idea—however much many starry-eyed nations might nag about the necessity for public funds. 

Indeed, this appears to be the dynamic. An American multi-billion dollar corporation like Pegasus erects mock companies through which it funnels management income and fees for the use of their logo. Countries like Senegal cite losses of $257 million in tax dollars from CEO’s taking money to Mauritius. 

These revelations come in a recent report by the International Consortium of Investigative Journalists. The selling point for the report is the claim that “54 journalists from 18 countries” could “provid[e] an inside look at how the former French colony has transformed itself into a thriving financial center, at least partly at the expense of its African neighbours and other less-developed countries.”

Since the agglomerations work was published early Tuesday morning, Canadians for Tax Fairness have advised Canadians not to be smug. Our own home-grown industries have $2.5 billion invested in Mauritius.  

On the island there is, for instance, the innocent-sounding Canada Pension Plan Investment Board that, according to the recent leaks, has used Mauritius as a tax haven for a while now. They also employed Conyers law firm when the investment board bought Tomkins engineering, the engineering company’s subsidiary in Mauritius, and the multi-billion dollar investment management company, Onex. 

What makes Conyers law firm worth mentioning in these purchases is its centrepiece position in the recent report. It has a special record of handling businesses looking to skip taxes in Mauritius. The firm once noted its average client as someone “who would rather spend $10,000 on legal bills than pay $5,000 to Uncle Sam.” 

Other investment giants, like Sun Life Financial insurance, garnered a mention. They had a similar love-story with Mauritius.

Looking back in 2018, SNC-Lavalin was also the victim of a report by the International Consortium of Investigative Journalists. Their dealings with Mauritius meant saving of up to $8 million for the construction powerhouse. The tax dollars they saved would have otherwise gone to Senegal, where infant mortality rates touch 5%, and over a third of the country earns less than $2 a day

True to their charitable nature, SNC-Lavalin exploited a tax treaty between Senegal and Mauritius, allowing them to be absolutely tax-free in Mauritius while they took on a large contract in Senegal. Senegal has admitted their intent to withdraw from the treaty which at first they believe could have been a “win-win” for both nations. 

One tax researcher at Mcgill University commented on the case, “It’s a redesign of neocolonialism. In the 1800s, in the 1900s, they came with violence. Now, they come with sophisticated accounting systems and the lure of investment. But no country needs investment if it’s not going to be rewarded.”

Indeed, practices of co-opting foreign countries as tax-havens have always proven profitable for businesses albeit dreadful for countries. Staying in Canada, of the 60 largest companies detailed by the Toronto Stock Exchange, a flattering 4 do not have subsidiaries in notorious tax-havens. 

Despite claims to the legitimacy and necessity of these subsidiaries, one can take Bermuda as the example of a nation where Canadian majority-owned affiliates report $31 billion in assets but only 35 employees.  

The Canadian government loses anywhere between 10 to 15 billion because of the systematic abuse of offshore accounts. These several billion are no small amount, and could otherwise serve a tremendous amount of good, that gets harder and harder to imagine as we become used to seeing figures this large. 

Instead, the amounts are turned into profits that enrich an already well-fed few. 

The practices which allow for money to be re-routed from coffers to profits, are often perfectly legal, however immoral they may be. Moreover, there are numerous solutions to relenting these widespread practices. 

Yet, as businesses receive a similar pampering domestically through tax giveaways and subsidies launched by the Federal Liberals and by Provincial Conservatives, the future looks grim. 

It is not that the people heading corporations lack humanity, but they have a mandate in this economic system. With respect to their mandate, one can say with some certainty that it is unlikely that these mechanisms which allow rapid unfettered growth of corporations will see an end—despite their deleterious effects on the public’s wealth. 

The more likely alternative is that as these companies continue to grow, they will only hold more political power, larger shares of the world’s resources, and will find more clever and secretive ways of hiding their money from the poor and greedy masses.