Dublin law firm and corporate tax adviser Matheson has abandoned the use of three registered charities that helped its clients, including some so-called "vulture funds", to avoid tax on billions of euro of high-risk assets.
Matheson routinely used the charitable trusts – Eurydice, Medb and Badb – to provide shareholder services for corporate clients such as Mars Capital, linked to US fund Oaktree Capital, which owns swathes of distressed Irish mortgages.
Others to avail of the charities include Lambay Capital Securities, which previously pursued the State for a payout on old Anglo Irish Bank debts.
The charities were also used to set up Burlington Loan Management, a Dublin company linked to US fund Davidson Kempner, which mopped up Irish and European property loans including debts linked to the Titanic Quarter in Belfast. Burlington no longer uses the charities.
Following political and media pressure, Matheson in November initiated a review of the charities, which collectively operate as the Matheson Foundation. The first stage of that review is complete.
It is understood Matheson applied to Revenue to relinquish the charitable status of Eurydice, Medb and Badb, which were originally registered with the Charities Regulatory Authority (CRA) to “relieve poverty and distress”.
Revenue confirmed it accepts the application and the CRA has now removed the three entities from its published register of charities.
They held cash of about €1.4 million, including trustee fees earned from “vulture funds” and other clients such as insurers who used the charities to set up structures for “catastrophe bonds” linked to hurricanes and earthquakes. This cash has been disbursed to external charities.
Eurydice, Medb and Badb – originally named after Greek and Irish mythological figures – have also in recent days been renamed, and their change to non-charitable status notified to the Companies Registration Office.
The second stage of the review – to devise a new charity-giving programme for Matheson staff separate to its trustee shareholder service – is under way. Matheson has committed to maintaining its support of charitable causes.
The use of the three charities to help funds avoid tax and house risky assets “off balance sheet” was legal, and rival law firms also offer trustee services. Matheson drew most criticism because it used high-profile registered charities.
The firm was criticised in the Dáil by Independent TD Stephen Donnelly last July, who referred to a series of reports in The Irish Times on Matheson. The reports were also discussed in emails between Revenue and the Department of Finance, released under Freedom of Information to Sinn Féin TD Pearse Doherty.