Bonanza for Canadian banks wooing investor immigrants
Ajit Jain in Toronto
Major Canadian banks and their consultants in foreign countries can earn up to Cdn$28,000 commission on each immigrant investor that they are able to bring into Canada.
In Quebec they can earn from $5,000 to $8,000 more and that is why Quebec is attracting up to 90 per cent of all investor immigrants, says senior immigration attorney Mendel Greene of Toronto-based lawyers Greene and Spiegel.
In a telephone interview August 10, he concurred with the report in the Globe and Mail that the Canadian government's decision to give a $28,000 commission for every person they bring in, banks would now be able to pay sizeable fees to consultants in foreign countries who 'sell' investor packages to affluent people seeking to emigrate to Canada.
This fee would be about $20,000 per person, Greene said and that means banks would only keep $8,000 for themselves.
The Immigration Department spokeswoman Julie Samson said the new commissions are offered 'to maximise the benefits for all provinces and territories and to provide more incentive for all provinces and territories to join'.
Former Canadian Minister of Citizenship and Immigration, Lucienne Robillard, had announced in April 1999 implementation of new immigrant investor programme.
The broad objectives in redesigning the new programme was to increase the economic benefit, further reduce the potential for abuse, reduce the level of government resources required to administer the programme, and to offer provinces the opportunity to use investor money according to the provincial economic priorities, Robillard had said.
The new programme sent a 'clear message that Canada continues to welcome immigrant investors', she said. "Conceived together with the provinces, it permits them to use the funds in the sectors of their choice in order to fulfill their own economic development objectives."
Under the new regulations Ottawa has provided a net worth of $800,000 for investors and an investment of Cdn$400,000 for each investor, regardless of the province where the capital is invested, for a period of five years to obtain landed immigrant (permanent residential visa) status, Greene said.
The report in the Canadian daily says once they receive their visa they can just walk away from the programme.
When asked if the minimum investment required is $400,000, how come these investors could get away by paying only between $120,000 to $140,000, Greene said they can get $400,000 loan from the bank.
According to Statistics Canada (Federal government agency that compiles all kinds of statistics) last year Quebec raised $623-million out of a total amount of $673-million through this investment-immigrant programme. It means Quebec enjoys almost a monopoly on this programme.
Quebec runs its programme under a federal-provincial agreement where licensed brokers organise investments in small businesses.
Because Quebec is offering much larger commission to consultants/brokers, and also the financing package for Quebec for investors is $120,000 with rest of Canada $140,000, they would continue to attract all this investors' money, Greene said.
"Money talks in the business world," he said. "Bureaucrats unfortunately do not have the business acumen necessary and so Quebec will still lead and still get 90 per cent of these funds," he argued.
In Quebec brokers pay usually about $30,000 to $32,000 a person - to consultants who promote the programme abroad, sign up investor immigrants and essentially "sell" their clienteles to broker (usually banks) who pays the highest commissions, Canadian daily reveals.
Eric Major of HSBC Bank Canada, says they offer the federal programme to clients who came into their foreign branch network because it could offer to finance the $400,000 investments and attract loyal clients in Canada.
With the new federal commissions, immigration lawyers and consultants are referring clients, he said.
What it comes to, in fact, is that Canada is "selling visas for $120,000 a pop," said Michael Greene, president of the Canadian Bar Association's immigration section.
He, however, agreed that the affluent investors bring a benefit to Canada, which must compete with other countries to get them.
When asked whether Greene and Spiegel could help these investors, Mendel Greene answered in the affirmative. "Yes, we can guide them and get them the loan."
However, anyone going into the Quebec programme must be destined to the province of Quebec, he added.