Bono ‘extremely distressed’ if investment broke tax laws
Paradise Papers: Lithuanian authorities examining property that U2 front man was a ‘passive investor’ in
U2 front man Bono has said he would be “extremely distressed” if a property investment he made in Lithuania via offshore entities falls foul of tax laws after the authorities there said an inspection was underway.
The wealthy singer - under his real name Paul Hewson - has an interest in a shopping centre in Utena, a town with a population of approximately 30,000 in the north east of the Baltic state.
The shareholding in the Lithuanian property has come to light following publication of the Paradise Papers, which refer to millions of records obtained by the International Consortium of Investigative Journalists, which includes The Irish Times.
The records are from two offshore services firms based in Bermuda and Singapore as well as from 19 corporate registries maintained by governments in jurisdictions that serve as waystations in the global shadow economy.
The Lithuanian property connected to Bono was at one stage owned by way of a company in Malta but more recently has been held by way of a company in the British crown dependency of Guernsey.
Bono and the Irish property investor Paddy McKillen were shareholders in Nude Estates Malta Ltd, which in turn owned a company in Lithuania called UAB Nude Estates 2. UAB owns the shopping centre in Utena.
Following the disclosures in the Paradise Papers, Lithuania’s State Tax Inspectorate said it had “commenced control procedures with regard to the mentioned company”.
“It should be noted that State Tax Inspectorate commences an inspection on taxpayers based on the evaluation of risk of tax breaches,” it said. “Taxpayers having offshore transactions more often score higher points of risk.”
In a statement following the launch of the investigation, Bono said he would be “extremely distressed if even as a passive minority investor in UAB2 in Lithuania anything less than exemplary was done with my name anywhere near it”.
“I’ve been assured by those running the company that it is fully tax compliant, but if that is not the case I want to know as much as the tax office does, and so I also welcome the audit they have said they will undertake,” he said.
“I take this stuff very seriously. I have campaigned for the beneficial ownership of offshore companies to be made transparent. Indeed this is why my name is on documents rather than in a trust.
“The fact is, I welcome this reporting. It shouldn’t take leaks to understand what’s going on where. There should be public registries so that the press and public can see what governments, like Guernsey, already know.”
Bono is also a well-known activist and has campaigned on issues such Aids and extreme poverty in Africa.
Offshore locations such as Guernsey facilitate the creation of companies that will be difficult, or impossible, to trace back to their owners. While having an offshore entity is legal, the built-in secrecy attracts those want to operate in the shadows.
Offshore companies, often a “shell” with no employees or office space, are also used in complex tax avoidance structures that drain billions from national treasuries, often from some of the world poorest countries.
The offshore industry makes “the poor poorer” and is “deepening wealth inequality,” said Brooke Harrington, a certified wealth manager and Copenhagen Business School professor who is the author of “Capital without Borders: Wealth Managers and the One Percent”.
“There is this small group of people who are not equally subject to the laws as the rest of us, and that’s on purpose,” Ms Harrington said. These people “live the dream” of enjoying “the benefits of society without being subject to any of its constraints.”