Imperial Canada Inc.. Alain Deneault
actions around the world, there has been little if any open discussion, scrutiny, or critical analysis of this country’s role in the ongoing rapacious practices of the extractive industry, either at home or abroad. Critical information about the mining industry rarely makes the headlines, but fortunately, the authors of this book by no means stand alone. Yves Engler’s The Black Book on Canadian Foreign Policy30 and Joan Baxter’s Dust from Our Eyes31 have added their voices to Amnesty International, Halifax Initiative, MiningWatch Canada, and The Dominion Newspaper Cooperative to alert public opinion and foster critical thinking about Canada’s role abroad. Moreover, in 2009, after evaluating Barrick Gold’s environmental and social performance in Papua New Guinea, the Norwegian government publicly announced that its sovereign investment fund would divest its shares in Barrick Gold.32
Hence the opening line in the introduction to this new book: “How did it come to this?” This book tries to answer that question in two ways. First, we provide a history that shows Canada could not have become what it is – a legal haven for the extractive sector – if it had not allowed the establishment of stock exchanges that orchestrate irresponsible financial speculation on real or imagined resources, leading many small investors to lose their savings in numerous cases of fraud. Since the nineteenth century, Canadian stock exchanges have based the capitalization of shares on financial speculation rather than on the real economy, diverting financial institutions from their original goal of raising capital. Financial speculation is not unique to Canadian stock exchanges: London, Paris, and New York have all had their share of speculative frenzies, leading to appalling social dislocation and global economic decline. The history of Canadian stock exchanges, however, and specifically that of the Toronto Stock Exchange, has been singularly shaped by dubious practices of speculation, primarily on natural resources.
Second, we offer a case study that demonstrates the crucial influence of Canada’s origins as a colony of the British Empire. The British North America Act of 186733 did not liberate Canada from its colonial past. The federal and provincial governments of this country have continued to support practices inherited from their colonial origins. Colonial elites and foreign investors have made immense profits from the ongoing exploitation of natural resources in the “Northwest Territories” (a huge land mass consisting of all of the North American continent that drains into the Hudson Bay), and they have shaped Canada according to their interests, making it a country based on mineral extraction and the exploitation of natural resources. The practices of the extractive industry in Canada from the late-nineteenth century onward, which include exploiting natural resources without any concern other than that of rapid profits, dispossessing first Aboriginal and then any other populations that might have a legitimate interest in and therefore a say on the issues, and continuing to fight for highly accommodating legislation to the benefit of their industry, have driven their economic growth in Canada.
This is not unique to Canada: other colonies and ex-colonies around the world have also channelled their economic activity into one core sector, be it bananas, rubber, or coca. What is specifically Canadian is the fact that practices related to the development of the mining industry, which took shape under colonial conditions in Canada, have been exported abroad. This systemic approach has provided Canada’s mining companies with a clear advantage at the highest level of international competition. Now they claim for themselves, wherever they go – in Africa, Asia, Latin America, or elsewhere – the same extralegal status from which they profited so outrageously in their original domestic colonial environment. Our case study unravels the ultra-permissive character of Quebec legislation covering the extractive sector, then discusses the impact of these deficient regulatory measures on democracy and the environment, both at home and abroad.
In this context, it is worth recalling the fact that the Canadian banking sector played a key role in encouraging the development of tax havens in the Caribbean throughout the twentieth century.34 It would have been logical for Canada, as an advocate of sound legal principles, to oppose such structures. And yet, with the support of the Canadian government, Canadian banks have played a key part in setting up systems to circumvent public taxation or even eliminate it in some Caribbean countries. As a result, the prosperous Canadian extractive industry pays almost no taxes, either in Canada or abroad.35 Astonishingly, Canada has supported and continues to support a banking industry whose actions are contrary to the financial interest of its own citizens (and usually the interests of the citizens of the Caribbean tax havens as well).
Our country is linked to the tax havens of the Caribbean via Barbados, which as a rule allows companies registered there to access an entire network of offshore jurisdictions providing financial, legal, and fiscal shelters for their profits. There are no unpleasant consequences in Canada for companies that follow this course. The profits they record in jurisdictions of convenience never end up in any bank account opened in Canada, much less as tax revenue in the treasury of Canadian governments. Secrecy is the rule.36 The fact that these tax havens contradict the fundamental principles of the legal state has never stopped Canada from considering these countries as friends and allies. In fact, Canada formally shares its seat at international institutions such as the World Bank and the IMF with such countries and has even signed a free-trade agreement with Panama.37
In Canada, critical thinkers face a political conundrum: their government, which in theory is responsible for looking after the common good and the rule of law, is in cahoots with the extractive industry, which means that it is now part of the problem. As for “civil society,” it is led by “experts” who sometimes fail to make clear what position they are defending in woolly discussions about “governance,” while citizens see that they have no control over their savings as soon as institutional investors and public fund managers take charge of them.
This book is intended to provide Canadian and international public opinion with tools to help it ask critical questions about Canadian activities in the South and in Eastern Europe, as well as about the role of the Canadian government in relation to these activities. It is hoped that the evidence presented here will encourage Canadians to enter public debate about how the mining industry is regulated in Canada and to form an opinion on this topic independent from the one suggested by official agencies or media that belong to large Canadian financial conglomerates and tend to espouse their interests. Our goal is to deepen understanding of an aspect brought up in Noir Canada: the harmful consequences of our ultra-permissive laws regarding the extractive industry, both for countries in the South, and indirectly, for all of us in Canada.
As a state wedded to the interests of mining companies, Canada recently has behaved in ways we may find unrecognizable, doing everything in its power – at the legislative, judicial, economic, financial, and diplomatic levels – to make itself into a legal paradise for the world’s extractive industry. Canadian citizens are concerned in this matter. We help fund the extractive industry through their savings, channelled toward the Toronto Stock Exchange by pension funds, insurance companies, and other institutions. We need to talk about the fact that our economy is still shaped by our colonial past. Public debate cannot be stifled forever, and the reality is that we are responsible for how the mining industry is regulated in Canada and how the world extractive industry is regulated here from now on, whether the companies involved were born in our country or have only recently become our guests.
THE ARGUMENT
Canada: Tax Haven for the World’s Extractive Sector
Canada promotes stock-market speculation on the mining industry’s controversial activities throughout the world – and makes sure the industry is legally protected. The Toronto Stock Exchange, the government of Ontario that supervises its operations, and the government of Canada have spared no effort to transform the capital of Canada’s largest province into the extractive industry’s world administrative, financial, and legislative nerve centre. Naturally enough, a swarm of professionals concentrated in Toronto