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Paradise Papers: Bono linked to tax probe in Lithuania

From BBC - November 6, 2017

A Lithuanian shopping mall partly owned by U2's Bono is under investigation for potential tax avoidance, following a probe prompted by the Paradise Papers.

The mall allegedly avoided paying 47,000 euros (41,500) in local taxes using an unlawful accounting technique.

The company running the mall, in the city of Utena, denies any wrongdoing.

The leaked documents show that Bono owned a stake in a Maltese holding company that bought the mall, via a Lithuanian holding company, in 2007.

In a statement, the Irish entertainer and anti-poverty campaigner, also known as Paul David Hewson, said he had been "assured by those running the company that it is fully tax compliant".

He emphasised that he had previously campaigned for more transparency surrounding the ownership of offshore companies, and was in favour of public registries.

Earlier, a spokeswoman told reporters at the International Consortium of Investigative Journalists that Bono was a "passive, minority investor" in the Maltese entity, which was "voluntarily wound up in 2015".

Paradise Papers - exposing the tax secrets of the ultra-rich

In recent years, Bono, one of the wealthiest musicians in the world, has received international recognition for his social justice activism and philanthropy, even receiving an honorary knighthood from the Queen in 2007.

In the wake of the Panama Papers leak, the ONE Campaign, a charitable organisation fronted by Bono, repeatedly called for more transparency on the ownership of "shell companies" and offshore trusts, and decried the effect of lost tax revenues on developing economies.

Utena, which has a population of roughly 27,000, is a growing city in north-east Lithuania which has recently attracted tens of millions of dollars in foreign investment, mostly in the manufacturing sector.

The 3,700-square-metre Ausra mall, which currently contains 20 food and clothing shops, was built by Eika, one of Lithuania's leading developers, and opened its doors in 2006.

In April 2007, Eika announced it had sold the mall to an unnamed "foreign investor".

The buyer was a Lithuanian company named UAB Nude Estates 2.

Records uncovered by the Lithuanian journalist Sarunas Cerniauskas, the International Consortium of Investigative Journalists and the Guardian show that the company was ultimately part-owned by Bono, via a series of companies in foreign jurisdictions.

Between 2007 and 2012, the Lithuanian firm UAB Nude Estates 2 was owned by a similarly named Maltese company, Nude Estates Malta Ltd.

Leaked registry documents reveal that the Maltese company was partly owned by Bono, along with two other businessmen.

In 2012 ownership of the Lithuanian company was transferred to another offshore company, named Nude Estates I Ltd, this time in the British Crown dependency of Guernsey.

In a written response to questions from the ICIJ, a spokeswoman for Bono, Kathy McKiernan, said the U2 frontman is currently "a passive, minority investor" in the Guernsey company, Nude Estates I, and had held a minority stake in Nude Estates Malta, which has since been wound down.

"Malta is a well established holding company jurisdiction within the EU,"Ms McKiernan added.

'Crude violation'

The Lithuanian company that runs Ausra mall, Nude Estates 2, declared a loss of more than 3 million euros (2.6m) in 2010.

According to analysis by tax expert Ruta Bilkstyte, the loss was achieved by a write-down of the company's fixed assets, the largest of which was the mall building itself.

Bono's statement in full:

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