Politically-connected RCI helps rich foreigners get Canadian residency
PETER O?NEIL
The Vancouver Sun
OTTAWA — A B.C.-based company says it has brought $2 billion to Canada under the Quebec government’s cash-for-visa program, a scheme that some say is a factor in Vancouver’s housing affordability crisis.
Vancouver-based RCI Capital Group, which helps resource companies develop strategies and raise money in Asia, has a Montreal-based subsidiary that has been active for years in the Quebec Immigrant Investor Program.
The Quebec program has become increasingly controversial in Metro Vancouver as critics point to it as one of the drivers of sky-high housing prices, since the vast majority of successful Quebec applicants immediately establish themselves in Toronto and Vancouver.
RCI’s Montreal subsidiary is Renaissance Capital, one of the companies recognized by the Quebec government as an “intermediary” for rich foreigners who want to use the Quebec investor program to become a permanent resident of Canada.
“We can take care of all the details to maximize the chances of success of your immigration process,” the company website advises potential clients, who must prove a net worth of $1.6 million and be willing to invest $800,000 of their wealth in government five-year bonds.
The applicants get the $800,000 back after five years, but forgo the interest, pay various fees and pay the commissions to companies like Renaissance.
Vancouver immigration lawyer Richard Kurland estimates the total cost to get a permanent resident status through the Quebec program is around $125,000, though others say the costs are higher.
RCI is headed by John Park, an entrepreneur who likes to recruit former politicians to help him pitch business deals in Asia.
Ex-Conservative cabinet minister Stockwell Day is RCI’s lead director, while prominent B.C. Tory John Reynolds was for years involved with the company after he retired from politics.
Day, who retired from politics before the 2011 election, delivered speeches and gave media interviews during the 2013 election to help the B.C. Liberals. Since then he’s remained chummy with Premier Christy Clark and the Liberals. He contributed $11,850 since late 2014, mostly through the law firm McMillan LLP, where he is a senior strategic adviser. Clark tweeted a photo of her and Day together at a Kelowna event earlier this month.
Park has also had links to the premier, briefly hiring her to head an RCI subsidiary in 2007 when she was out of politics, though the premier said she never did anything for the company and wasn’t paid.
Park worked hard to build contacts with the former Conservative government as a founding member of the Canada Korea Foundation, which was launched in Vancouver in 20111 at an event where then prime minister Stephen Harper was guest speaker. The foundation promoted bilateral trade ties but was also used as a vehicle to garner Tory support in Canada’s South Korean community, according to evidence at a 2014 B.C. Supreme Court trial relating to a dispute among the Foundation’s founding members, including Park.
Twice, in 2012 and 2013, Park was part of business delegations with the premier on Asia trade missions.
Park, who specializes in mergers and acquisitions, said political links are necessary because he deals frequently with executives from state-owned enterprises in China and South Korea, who are most comfortable dealing with government officials.
“If I was selling T-shirts, I wouldn’t need politicians,” Park, who contributed $14,825 directly or through RCI to the Liberals since 2011, said in an interview.
The Park-Day connection to the premier has raised eyebrows among some of those questioning why B.C. hasn’t aggressively challenged the Quebec investor program.
Earlier this month, Kurland, who regularly briefs federal MPs on policy matters, said Ottawa could take direct and indirect measures to slow down or terminate the Quebec program, which admitted a record number of applicants in 2015.
“(But) the feds won’t risk a loss of political capital in the Quebec region when it is only B.C. being hurt and B.C. does not ask them to fix it,” Kurland said in an email exchange. “There is no appetite politically in Victoria to go near any of this.”
New Democratic Party MLA David Eby speculates the Clark government’s lack of aggressiveness on the issue is connected to her party’s connection to people like Park and Day, and her close relationship with those who are getting wealthy off Vancouver’s housing boom.
“The obvious reason for the premier’s silence is I think her relationship with firms like RCI, and her relationship with developers and people in the real estate industry who are benefiting from what’s going on,” said Eby. “I haven’t heard the premier contradict that and her actions are entirely consistent with supporting this program indefinitely into the future.”
Democracy Watch spokesman Duff Conacher cited research suggesting that “reciprocity” — the sense of obligation to return the favour after a gift is received — is a key motivation in decision-making.
“There is a conflict of interest created when anyone or any business donates large amounts.”
Ben Chin, Clark’s communications director, said he wouldn’t “dignify” Eby’s conflict allegation with a response.
He said B.C. has spoken to Quebec about problems with the program, and also pointed to B.C. Jobs Minister Shirley Bond’s recent statement that she has pushed Ottawa to provide B.C. with extra settlement funding to offset the arrivals from other provinces.
Day, who last week posted comments on social media critical of those suggesting foreign money is behind Vancouver’s housing affordability crisis, said in an email exchange that he has no involvement in the RCI subsidiary’s work attracting millionaire migrants to Quebec’s program.
“My focus is advisory on cross-border trade-related issues, principally in the natural resource space.”
Park doesn’t accept the criticism of the Quebec investor program from people like Kenney, who in 2013 called the program a “fraud” that hurts B.C.
He called Kenney’s comment “political” and cited a 2010 study by Canadian economists Pierre Fortin, Pierre Emmanuel Paradis and Roger Ware saying Canada’s economy gains about $2 billion a year for every 2,500 investor immigrant families, with that gain “clearly” outweighing extra costs such as health care.
The paper was written long before the former Conservative government, in 2014, shut down the national program because it concluded that there is “little evidence” the investors, who pay roughly $125,000 for a Canadian visa, are providing a “positive economic contribution” to the economy.
But there have been conflicting academic studies. In 2014 the Migration Policy Institute, a Washington, D.C.-based think-tank funded in part by George Soros’s Open Society Foundation, concluded that Canada is among many countries struggling to come up with investor-luring programs that have integrity and clearly demonstrate their economic value.
The Institute’s president emeritus, Demetrios Papademetriou, said Canada’s problems with the now-defunct federal program, and the continuing Quebec program, are typical of western countries.
He said all countries have run into problems with fraud, public hostility to the notion of people buying citizenship that others have to earn, the inflationary effects of the program, and questions about the economic benefits.
“For those people who think these are generators a significant amount of economic activity, (we say) that’s not the case,” he said in an interview.
But Park said he believes the studies that favour the Quebec investor program.
“I can’t say ‘B.C. benefits’ or ‘Quebec benefits at the expense of B.C.,’” said Park.
The bottom line is that “Canada benefits.”
Park said his Montreal subsidiary has participated in Quebec investor program-related investments totalling around $2 billion, though he acknowledges that most of the money, $800,000 per investor, is later returned to the investor, who may or may not live and pay taxes in Canada.
Criticism, he added, shouldn’t be directed at the owners of the Quebec government-approved financial intermediaries involved in the program, like Renaissance, a variety of Quebec firms, several subsidiaries of Toronto-based financial institutions and the Montreal office of Vancouver-based HSBC Canada, part of the U.K.-based global financial services giant.
“If we want to equal out the costs and benefits more, it’s up to policy-makers in Canada to do that. It’s not up to businesses to do that. It’s not up to businesses who are working hard to bring in foreign direct investment into Canada.”
Park said that as a Canadian taxpayer he is among those who don’t appreciate foreign investors settling their families in Canada but not paying income tax because they continue to work offshore and don’t declare their global income.
He also noted that the mobility rights in Canada’s Charter of Rights and Freedoms prevents Quebec from forcing successful immigrations applicants to stay in that province.
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