Bono's Lithuania shopping mall investment draws flak from local tax authority

Bono's Lithuania shopping mall investment draws flak from local tax authority
From CBC - November 7, 2017

In four decades of touring the world, the Irish rock band U2 has never played in Utena, a sleepy place in northeast Lithuania.

With just 26,000 people, Utena's population could fit into one of U2's stadium concerts twice over. But unbeknownst to the locals, the band's front man, Bono, has long had a stake in their town.

Leaked documents reveal that for more than a decade, Bono, whose real name is Paul David Hewson, has secretly been a part-owner of a shopping mall in Utena. After receiving reporters' questions, local officials launched a probe into the mall for tax arrangements that one expert described as "a crude violation of the tax code."

Evidence of Bono's stake in the mall is found in the Paradise Papers, a set of leaked documents obtained by Sddeutsche Zeitung and the International Consortium of Investigative Journalists (ICIJ) and shared with an international team of investigative reporters, including the Organized Crime and Corruption Reporting Project (OCCRP).Documents from Malta's business registry spell out Bono's hidden stake in Utena's Ausra (Dawn) shopping mall.

The 3,700-square-metre mall, which opened in 2006, was built by Eika, one of Lithuania's leading developers. In April 2007, the developer announced that it had sold the mall to an unnamed "foreign investor."

The buyer was UAB Nude Estates 2, a Lithuanian company. Records show that the company was ultimately part-owned by Bono, via a series of confusingly-named offshore companies.

Between 2007 and 2012, UAB Nude Estates 2 was owned by a similarly named Maltese offshore company, Nude Estates Malta Ltd. Leaked registry documents show that Bono is listed as one of three owners of Nude Estates Malta, along with a man named Robin Andrew Barnes and Patrick Gerard McKillen.

McKillen is an Irish businessman who also co-owns a luxury Dublin hotel with Bono and U2 guitarist David Howell Evans, also known as The Edge.

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

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

"Malta is a well-established holding company jurisdiction within the EU," McKiernan said.

It is unclear how large Bono's investment in the Utena mall is, or how much it has earned him. In its 2007 financial records, the Lithuanian company, Nude Estates 2, stated that its fixed assets were valued at 19.6 million Lithuanian Litas, then worth about $7.7 million US.

Robertas Dargis, the founder and former CEO of developer Eika, said he had no idea he had sold the mall to a Bono-linked company back in 2007.

"No way!" Dargis exclaimed when told of the connection.

"Nobody told us anything about [Bono] back then," he said. "I knew it was some Irish investors. Or maybe it was Great Britain, something like that."

Nude Estates 2, which is under Lithuanian management, may have dodged tens of thousands of euros in tax, according to an independent analysis of its financial records.

In 2010, the company declared a loss of more than 3 million (then about $4.1 million Cdn), while booking less than 500,000 in revenue ($685,000 Cdn). The loss was achieved via a revaluation of the company's fixed assets, the largest of which was the mall itself.

Records show the company then carried that loss forward, paying no tax on profits until the end of 2016despite booking profits for five of those six years.

In a statement sent to the Lithuanian news website, the Lithuanian tax office confirmed the company had not paid tax on its profits since at least 2011.

Rta Bilktyt, a Lithuanian tax expert and the director of Lithuanian consultancy company Fidexperta, was shown Nude Estates 2's records by

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