Canadian tax authorities confirmed they knew about illicit foreign capital inflating real estate. They first found out over two decades ago, but only confirmed it to the South China Morning Post (SCMP) this week. A whistleblowing, retired auditor first told SCMP journalist Ian Young about the report in 2016. He waited half a decade for a response from the agency, which confirmed the study took place 25 years ago. The situation shares odd circumstances with an intelligence report mentioning foreign capital and real estate, called Sidewinder. Whistleblowers allege both reports, written one year apart, were suppressed for political reasons.
The Canadian Government Hid A Report On Immigrants Buying Mansions With Poverty-Level Incomes
In 1996, the Canada Revenue Agency (CRA) studied millionaire migrants and homeownership. The tax authority was looking into reports of mansion buyers with poverty-level incomes. Not one or two either, it was a systemic issue.
The secret report was unknown to the public until 2016, when a CRA whistleblower told the SCMP about it. At the time, he alleged the study was suppressed from above. Five years after SCMP filed a freedom of information request, the agency confirmed it does exist.
The volume of wealthy new immigrants declaring refugee amounts of income was impressive. Young’s analysis shows these buyers scooped 90% of high value homes in the Greater Vancouver suburbs of Burnaby and Coquitlam. He notes long-term residents making similar buys declared around 16x the income.
In one example, Young mentions a buyer of a $2.88 million home who declared just C$174 of income. Not C$174,000, but C$174 — about as much as a single-night stay at a Holiday Inn… for some of the world’s most expensive real estate… in 1996.
Greater Vancouver Real Estate Has A Very Long Relationship With Foreign Capital
Greater Vancouver real estate has long been a hub for foreign capital. Around the time of the study, using homes as a vault for foreign capital, was an open secret. The president of Vancouver’s largest developer would boast a year after the study, “No one really got out of Hong Kong… they just shifted their portfolio.” He himself is now Vancouver’s largest developer, for those curious.
Meanwhile, locals and politicians argued if the issue even existed. A study confirming that foreign capital was inflating home prices, may have been a game changer. Marginal buyers can, and did, have a big influence on home prices.
Instead of using this information to improve the lives of residents, it was hidden. Why it was hidden until today is still a mystery, and no one will likely ever discuss the real reason. However, it does bear a strange resemblance to another report on foreign capital and real estate, Operation Sidewinder.
A Canadian Intel Report Discussing Foreign Capital and Real Estate Was Also Suppressed
A joint task force of the RCMP and CSIS was created in 1997 to assess China’s influence on Canada. The result was a “Top Secret” report called Sidewinder: Chinese Intelligence Services and Triads Financial Links. The branding budget must have been really tiny at the time.
There were many allegations, but a big one was criminals exploiting the immigration system. Hiding amongst legitimate immigrants, organized crime infiltrated the same channels to do business. One goal they were accused of, is buying real estate to control local politicians.
“In itself real estate is not an obvious threat to the security of Canada but it becomes an excellent vehicle to gain access to local politicians and their influence and power,” reads the report.
The report concludes the joint task force should involve immigration for better screening. Instead, the project was shelved and discredited by CSIS. The RCMP claims the spy-agency “sanitized” the report. One agent even went so far as to file an obstruction complaint.
A report from the Security Intelligence Review Committee (SIRC) in 1999 concluded Sidewinder was “deeply flawed and unpersuasive.” A longer 22-page report was also released with it, which doesn’t once use the word “China.” Instead, they opt to call it “…a certain foreign country,” but they validate some of Sidewinder’s findings as correct. The details on which parts were correct are scarce, but this part gets air time from Canada’s top spy over a decade later.
“The triads, the tycoons, and ChIS [Chinese Intelligence] have learned the quick way to gain influence is to provide finance to the main political parties. Most of the companies identified in this research have contributed, sometimes several tens of thousands of dollars, to the two traditional parties, that is, the Liberal and Progressive-Conservative Parties.”— Operation Sidewinder, 1997
Despite the dismissal of the report, a few key allegations would surface again. US Congress wrote a report on organized crime in Canada originating from Asia. A US Congressman also made similar allegations to Sidewinder, but in regards to Panama, when testifying to the House Committee on Banking and Financial Services in 1999. It’s not just the Americans being paranoid though.
In 2010, the head of CSIS candidly told the CBC they were tracking BC public servants. He backtracked a few weeks later, saying it was nothing. It’s apparently a fun game Canada’s top spies play, where they mention threats and then add “jk.”
Let’s assume both reports within a year of each other weren’t the subject of malicious suppression. What we’re seeing here is a period where essential information was suppressed. Information that could have drastically altered Canada’s housing crisis, possibly avoiding it entirely.
Canada learned money laundering and tax evasion influenced home prices 25 years ago. Over that period, politicians and bureaucrats didn’t just hide the findings. They denied it, and often attacked anyone who made similar allegations over that time. All while housing affordability errored into a systemic issue, threatening economic stability. Now all parties acknowledge these issues exist. In fact, addressing them is a key part of every major political party’s election platform this year.
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