Gildan’s reinstated CEO embroiled in tax dispute over Forex trades

Glenn Chamandy, the executive who fought the board of apparel maker Gildan Activewear Inc. and won his old job back, has another opponent now: tax authorities in Canada. 

Chamandy and his lawyers are tangling with Revenu Québec, a provincial tax collection agency, over tax filings he made years ago. The agency is after about C$47 million ($34.1 million), including a C$6.4 million penalty on one of Chamandy’s numbered companies. 

At issue are so-called “straddle” trades, a strategy that used forward foreign exchange contracts to generate tax losses in one year, with offsetting gains the following year. 

The contracts have been used by some Canadian taxpayers as a strategy to reduce or defer income taxes, but the practice was challenged by tax authorities. In Chamandy’s case, Revenu Québec disallowed trading losses booked by one of his companies on the grounds that the foreign exchange contracts were “shams,” according to documents. 

In a 2022 decision in a separate case, the Federal Court of Appeal ruled in the government’s favor, stating that straddle transactions that are done solely to generate tax losses aren’t legitimate. 

“I’m going to sit down with them and review everything, and we’ll see the result. I’m not running away,” Chamandy told the La Presse news site in May when asked about the tax dispute. 

Chamandy did not respond to requests for comment from Bloomberg. One of his lawyers, Marie-France Dompierre, declined to comment when reached by phone.

“Revenu Québec and the CRA are more and more aggressive on these types of transactions,” said Yves Picard, a lawyer specializing in Quebec business law, referring to Canada Revenue Agency. 

Another issue in the case are large transactions between numbered companies operated by Chamandy in Canada and three companies domiciled in the Bahamas, according to documents. Chamandy owns a luxury golf course in the latter country. 

Chamandy was ousted in December by the board of Gildan in a battle over succession and corporate strategy. But a number of large shareholders led by Browning West LP rallied to Chamandy’s side and started a successful campaign to elect their own slate of directors and bring him back as CEO.