Irish companies part of Berlusconi fraud case

Two Irish companies were part of the scheme that led to the successful prosecution for tax fraud last August of the former Italian prime minister, Silvio Berlusconi (77), it emerged this week. It has also emerged that a request for information about the companies, made by an investigator in Milan back in 2007, was held up for years in the High Court after a business associate of Berlusconi, a film producer in Los Angeles called Frank Agrama, sought judicial review in the Irish courts. That application was finally refused in April of this year and has not been appealed.

The Milanese public prosecutor, Fabio De Pasquale, complained some time ago about the length of time it took for the information request to be processed. A spokesman for the Department of Justice and Equality could not say if the information sought had been forwarded to Milan.

Berlusconi, prime minister of Italy from 1994 to 1995, 2001 to 2006 and 2008 to 2011, was convicted of tax fraud arising from a scheme where Agrama bought the rights to US TV shows which were then passed through a number of “dummy companies” before eventually being sold to Berlusconi’s Italian TV group. By selling the rights at inflated prices to the group, its tax bill was reduced, while at the same time offshore slush funds were created for Berlusconi’s use, according to the Italian prosecution.

Two Hong Kong-based women, Paddy Chan Mei Yu and Katherine Hsu May Chun, acted as shareholders and directors of some of the intermediate companies, including Dublin-based Meadowview Overseas Ltd and Olympus Trading Ltd.

It was alleged that the scheme had been running for two decades and that the amounts involved could have been as much as $200 million. However, the statute of limitations limited the scale of the case taken against the controversial Italian politician and billionaire.

When De Pasquale's request for a police raid on the women's homes in Hong Kong was granted in 2007, the material the police were charged with looking for included documents concerning the two Dublin companies as well as documents linked with National Irish Bank, according to a court judgment from Hong Kong handed down last year, refusing one of a number of appeals against the evidence being handed to the Italian authorities.

When warrants were issued to the FBI in California in November 2006, to raid the Bel-Air home and Sunset Boulevard offices of Agrama, the documents seized indicated that between 1988 and 2002, Agrama’s companies purchased TV and film rights for about $130 million. It sold essentially the same rights to Berlusconi companies for about $315 million.

The scheme "appears to have continued past 2002 into at least 2005" through another Agrama company called Olympus Trading, an FBI affidavit alleged, according to a 2006 report in the Los Angeles Times.

Agrama, a long-time Hollywood producer, established Harmony Gold USA, a television production, acquisition and distribution company, in 1983. His credits include producing the miniseries Heidi, which aired on the Disney Channel, the horror film Dawn of the Mummy and the film Robotech, the Shadow Chronicles.

Agrama and the two Hong Kong women said the sales to the Berlusconi group were a bona fide commercial arrangement.

Roberto Pisano, a reporter who represented the women in Milan, told the South China Morning Post last month that Chan met the Egyptian-born Agrama in Cannes, France, in the late 1970s and they formed a partnership and traded movie rights internationally.

Companies Registration Office
Files in the Companies Registration Office show that Meadowview Overseas, with an address at Clanwilliam Terrace, Dublin 2, was incorporated in 1990 and dissolved 10 years later.

The two Hong Kong women were the company’s directors: Chan and a Hong Kong company called Harmony Gold were the owners.

The last filed accounts were for the year to March 1998 and showed accumulated profits of $477,781 and stock of $3.37 million. The company was involved in buying and selling films for television and was not tax resident here, according to the accounts.

Olympus Trading (Ireland) Ltd, with an address at Earlsfort Terrace, Dublin 2, was incorporated in December 1995 and dissolved in November 2008. Chan and Chun were the company’s shareholders while Chan was its director along with two Irish individuals.

The last filed set of accounts are for 2005 when pre-tax profits were €535,654. The company was tax resident here and involved in film and TV programme distribution. It banked with National Irish Bank.

In the Hong Kong judgment, it was stated that the request from Italy for the Hong Kong warrants arose from the Milan investigation into the then suspected tax fraud by Berlusconi.

Funds generated by "criminal activities" had gone into the accounts of companies under the control of Berlusconi, while more had gone into the accounts of companies controlled by Agrama including Wiltshire Trading Ltd (of Hong Kong) and Melchers Ltd (of the Netherlands), in banks in Los Angeles and New York, the Italians told the Hong Kong authorities.

“It was alleged that Agrama had also set up other companies to facilitate the laundering of the criminal proceeds. They included Harmony Gold Ltd (Hong Kong), Meadowview Overseas Ltd and Olympus Trading Ltd (domiciled in Ireland).”

A number of companies traceable to Agrama had approximately 150 million Swiss francs on deposit with UBS Bank in Lugano, the Italians said in making their request for the warrant.

Notes to the 2005 accounts for Olympus Trading (Ireland) show that it bought products worth more than €10 million from a related Dutch company that year (€15 million the previous year) and also had dealings with Wiltshire Trading and Melchers.

Chan (57) and Chun (60) were also directors and shareholders of Olympus Trading Ltd, a Dublin company incorporated in 1992 and dissolved in 2000.

According to the South China Morning Post, a former Italian senator, Sergio De Gregorio, has alleged that the Hong Kong administration of then-chief executive of the island's executive council, Donald Tsang Yam-kuen, was asked in 2008 to delay the transfer to Italy of the evidence seized in Hong Kong, in return for help in securing a private audience with Pope Benedict. An audience was arranged, but Tsang pulled out due to opposition from Beijing, De Gregorio said.

Chan and Chun spent almost seven years trying to stop the documentation seized in Hong Kong from reaching Italian prosecutors but in August of this year, their court appeals were exhausted and the documents dispatched. The last court to consider the matter noted that the material was needed immediately in Italy where a trial was under way.

Earlier this week, the Milan investigator, De Pasquale, told The Irish Times he had complained about the length of time his request for information from Ireland was taking. The Department of Justice, in a statement, said it was a matter for the courts.

Although the order refusing the application from Agrama was made in April this year, the Department of Justice said it was still awaiting the “perfection” of the order and would not be able to comment until that had occurred.

How much documentation linked to the companies affairs still exists is not clear.

Courts service records show that Agrama sought a judicial review in the matter in April 2008, in a case where the defendants were the department and two judges of the lower courts. Agrama filed four affidavits between April 2008 and March of this year. De Pasquale filed an affidavit in April 2008. A number of other parties filed affidavits over the years, mostly solicitors acting for the State or Agrama, with 21 affidavits in all being filed. The records indicate the matter was mentioned before the court more than 40 times before the review was denied.

De Pasquale said he had raised the matter of the Irish delay with Eurojust, the EU body established to facilitate and co-ordinate dealings between the legal authorities in member states. A spokeswoman for Eurojust said she had no comment to make on the matter.

On Wednesday, Berlusconi was expelled from the Italian senate arising from his conviction. The expulsion means he no longer has immunity from being imprisoned.

Berlusconi's woes Trials, appeals and convictions
The Italian Senate expelled Silvio Berlusconi over a tax fraud conviction on Wednesday, stripping him of parliamentary immunity and opening the possibility of his arrest in other cases. His lawyers say an arrest is unlikely.

The Mediaset Case is at the heart of the Berlusconi’s woes. In August Italy’s supreme court confirmed a conviction and jail sentence against Berlusconi for tax fraud, his first definitive conviction. He was found guilty of falsely recording the price paid for television rights by his Mediaset media empire to pay less tax and of using offshore accounts to create a slush fund network.

He was sentenced to four years in jail, commuted to one year under an amnesty. He has asked to serve the sentence in community service and will probably begin this in 2014.

The Milan court banned him from holding public office but this has not yet become effective. However, it triggered his expulsion from the senate.

But the Mediaset case is not the least of the former prime minister’s woes.

He is also appealing a June conviction for abuse of office and paying Moroccan nightclub dancer Karima “Ruby” El Mahroug for sex in 2010, when she was 17, below the legal age for prostitution in the now infamous “bunga bunga” parties.

Separately, in March, a Milan court sentenced Berlusconi to a year in jail after his family’s newspaper Il Giornale published a transcript of a leaked wiretap connected to a banking scandal in 2006.

Berlusconi remains free pending an appeal.

In the Mondadori case, the supreme court in September ordered Berlusconi’s family holding company to pay €494 million in damages over the disputed purchase of publisher Mondadori following a 1991 battle for control of the group.

Prosecutors in the southern city of Bari have accused Berlusconi of “inducement to give false testimony” over money he allegedly paid to businessman Gianpaolo Tarantini, his wife and a former political associate to buy their silence over his use of prostitutes in the Tarantini case. Berlusconi denies wrongdoing.

Finally, Berlusconi has been ordered to stand trial for corruption, accused of bribing a senator to change sides in parliament to help to topple the former government of Romano Prodi.