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HomeBusinessExclusive: Feds drop bizarre tax case against Basi and Virk

Exclusive: Feds drop bizarre tax case against Basi and Virk

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Bob Mackin

Dave Basi and Bob Virk aren’t going to Tax Court after all.

The former BC Liberal aides were scheduled to appear at a June 24 hearing in Victoria, to appeal the federal decision that deemed $6.2 million in payments to their lawyers a taxable benefit. theBreaker.news has learned that the federal government agreed June 10 to reverse the tax reassessments against Basi and Virk, in exchange for a waiver of costs.

Basi and Virk pleaded guilty in October 2010 to breach of trust. The province agreed to pay their legal bills, despite a 2005 agreement that stated defence costs were paid in the form of a loan that must be repaid in the event of conviction. The plea bargain suddenly halted their B.C. Supreme Court trial before former BC Liberal finance minister Gary Collins was to testify. Basi and Virk served two years of house arrest and probation.

Bob Virk (left) and Dave Basi (A-Channel)

In May 2012, the BC Liberal government issued T4A slips for Basi and Virk’s 2010 tax year to the Canada Revenue Agency. But Basi and Virk say they did not see the T4A slips until 2014 from CRA which, which reassessed their 2010 returns.

Tax Court filings by Ottawa called the provincial government’s payment of $3,236,933 to Virk’s lawyer Kevin McCullough and $2,945,672 for Basi’s lawyer Michael Bolton taxable benefits and unreported income.

Federal lawyers claimed Basi and Virk received a benefit in the 2010 taxation year by virtue of their employment with the B.C. government.

But they had been fired nearly seven years earlier.

Basi filed a notice of objection in June 2014, denying receipt of any benefit. But the CRA appeals division confirmed the reassessment in May 2015.

“There is no evidence that the province by this agreement in 2010 intended to confer a benefit nor that [Basi] intended to receive a benefit in relation to office or employment,” said Basi’s July 2016 amended notice of appeal by his lawyer, David Mulroney.

“The province was funding a very expensive trial and wanted out from under that cost, which was out of all proportion to any potential recovery and needed an acceptable outcome. Employment had long since ended and was not then relevant to the decision.”

Mulroney declined comment when contacted by theBreaker.news.

The Gordon Campbell-led BC Liberals won the 2001 election on a platform that included a promise not to privatize BC Rail. After gaining power, Campbell switched gears and put the railway on the block. The sale was fraught with controversy. Bidders CP and Burlington Northern Santa Fe both dropped out, both suggesting CN had the inside track. OmniTrax was the only other bidder, which had previously partnered with BNSF.

Basi, an aide to Collins, and Virk, an aide to transportation minister Judith Reid, admitted taking bribes from OmniTrax’s Liberal-aligned lobbyists in exchange for leaking information. Had the trial proceeded, the court would have heard whether Basi and Virk had been following orders from cabinet members. 

CN, chaired by BC Liberal bagman David McLean, eventually paid $1 billion for BC Rail in November 2003. In late December of that year, however, police raided offices at the Legislature and took away numerous banker’s boxes of evidence.

Campbell broke his promise to give British Columbians a full explanation and successor Christy Clark repeated the same line, blaming only Basi and Virk. The Adrian Dix-led NDP ran in 2013 with a promise of a public inquiry into the BC Rail scandal, but Clark and the BC Liberals won the election in an upset.

The promise was omitted from the NDP platform under John Horgan in 2017. As premier, Horgan did green light a public inquiry last month. But the topic is money laundering.

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