Issue link: https://maltatoday.uberflip.com/i/826629
maltatoday, SUNDAY, 21 MAY 2017 17 News sidiary there on the grounds of unlawful credit granting practices – stating that a €2,010 credit could balloon into €4,145 in just six months over late payments. The Lithuanian Central Bank has accused a 4Finance subsidiary of multiple legal viola- tions. In Denmark, 4Finance subsidiary Vi- vus violated consumer laws by stating on the website that interest rates on loans was 19%. The Danish ombudsman says the correct figure should be 730%. Vivus paid a €40,000 fine for incorrect marketing. And yet, while such fast loan deals prey on Europe's vulnerable citizens, the actual com- pany itself is avoiding as much tax as possi- ble thanks to its complex set-up across Lux- embourg, Cyprus, Panama, the Bahamas, and also Malta. The fat cats of Malta You have to give it to the owners of 4Fi- nance: its original owners joined forces in a company called Fatcat Investments (later FCI) before they sold off the whole operation to Boyko. They could have hardly chosen a better company name for what they claim is Europe's largest and fastest-growing online loan group, having dished a total of €4 billion in 11.5 consumer loans. So what do the Malta Files reveal about the way Boyko controls his business empire through a network of offshore companies? One of the major centres of his business empire is Cyprus company Tirona Limited, whose trustee is hidden in Nassau, Bahamas. According to documents obtained by the European Investigative Collaborations, the trustee is controlled by Feldmans Services, which is ultimately owned by Oleg Vik- torovich Boyko. Tirona is actually part of Boyko's Finstar Financial Group, but it is Feldmans Services Limited that controls the company. And it is through Tirona that Boyko acquired 4Fi- nance in Malta. Originally, 4Finance was set up in 2008 in Latvia, establishing itself later with eight owners with strong ties to the political elite, notably among them, Edgars Dupats, son-in- law of former Latvia prime minister Andris Skele (a sort of 'Berlusconi of the Baltics'). 4Finance was owned by the Malta com- pany Fatcat Investment Ltd, whose eight owners were themselves individually hidden behind companies all registered at the same Belize City address: Estimate Investing, Sommer Invest, Summit Finance, Walsden Invest, Verveks Invest, Wealth Investments, and Prosperity Financing. Another share- holder had his ownership vested in Cypiot company Vertice Consulting. Then in December 2011, the Belize com- panies acting as shareholders in Fatcat, were replaced by Maltese companies G-Interac- tive, ABS Holding, Nessa Limited, Merclia Partners, AJG Partners, VS Ventrues, and LVS Limited. That month Boyko started his acquisition of a 75% stake in 4Finance, using Tirona Limited to pay Fatcat €55 million. An up- front €12 million payment pushed Fatcat profits that year to €26 million: taxes paid in Malta were just €2 million, a 7% rate. In 2012, the additional €43 million was transferred to Maltese bank accounts. The Latvian shareholders who sold their shares enjoyed the benefits of Malta's tax system, with Fatcat paying just €366,762 in tax on €43 million profits. This is thanks to Malta's imputation tax system, which charges companies the high- est income tax rate of 35%, but then refunds up to 6/7ths of this tax if the company's ac- tivities and shareholders are mainly based abroad. Additionally, in Malta there is no withholding tax on dividends, interests and royalties. And Maltese tax on capital gains for non-residents, which should include Boyko's purchase of shares in 4Finance, is a whopping zero per cent. In 2013, Fatcat was restructured into FCI Investments, and Boyko's Tirona proceeded to buy the rest of the 25% shareholding in 4Finance at €51.6 million, according to an "option deed" signed in December. That year, FCI shareholders received €57 million in "interim dividends" and on 1 Janu- ary, 2014 took an additional €57 million in dividends – €114 million. And then they used shareholder loans to take the money out of Malta. As revealed in the FCI trial balance of 2013, a €57 million tranche was paid to sharehold- ers in December in the form of loans from the company to them. On 12 December, FCI shareholders – companies like ABS Holding and G-Interactive – started receiving their cash in their Sparkasse Bank Malta accounts. The signed financial statements for 2013 shows FCI paid just €512,000 in taxes that year, a year that registered €57 million in profits and €106 million net cash flow from financing. The other €57 million in divi- dends was carried forward to 2014. On 1 January 2014, the shareholders to whom the FCI paid out the loans, set-off the 'debt' with the share transfer, basically the dividends they were now forgoing since they had already been paid with the loan. CONTINUED PAGE 18 graphic 5 Aldis Urnicans MALTA G-Interactive Ltd. LATVIA AS 4finance LUXEMBOURG 4finance S.A. MALTA 4finance Malta Ltd. Maris Keiss MALTA VS Ventures Ltd. Maris Martinsons Marcis Martinsons MALTA Nessa Ltd. Aigars Kesenfelds MALTA ABS Holding Ltd. Kristaps Ozols MALTA LVS Ltd. Albert Pole MALTA AJG Partners Ltd. Ilya Nikulin CYPRUS VC Vertice Ltd. 19.5% 100% 100% 19.5% 5% 19.5% 5% 5% 19.5% MALTA G-Interactive Ltd. SHAREHOLDERS' LOANS BEFORE LIQUIDATION 1 Ultimate beneficial owner LATVIA / MONACO 100% owner Uldis Arnicans EL MUNDO GRÁFICOS SHAREHOLDERS' LOANS BEFORE LIQUIDATION 1 Ultimate beneficial owner LATVIA / MONACO Uldis Arnicans MALTA Fatcat Investments Limited/ FCI Investments Limited CYPRUS Oleg Boyko Tirona Limited 25% 75% Edgars Dupats MALTA Mercalia Partners Ltd. 7% LATVIA AS 4finance LUXEMBOURG 4finance S.A. MALTA 4finance Malta Ltd. 100 Datos en % 100 EL MUNDO GRÁFICOS MALTA Fatcat Investments Limited/ FCI Investments Limited CYPRUS Oleg Boyko Tirona Limited 25 75 Aldis Urnicans MALTA G-Interactive Ltd. Maris Keiss MALTA VS Ventures Ltd. Maris Martinsons Marcis Martinsons MALTA Nessa Ltd. Aigars Kesenfelds MALTA ABS Holding Ltd. Kristaps Ozols MALTA LVS Ltd. Albert Pole MALTA AJG Partners Ltd. Ilya Nikulin CYPRUS VC Vertice Ltd. 19.5 19.5 5 19.5 5 19.5 19.5 Edgars Dupats MALTA Mercalia Partners Ltd. 7 Datos en millones OWNERSHIP STRUCTURE OF AS 4FINANCE (SEPTEMBER 2013) OWNERSHIP STRUCTURE OF AS 4FINANCE (SEPTEMBER 2013) INTEREST PAYMENTS Vivus Finance Sp. z.o.o. POLAND 4finance AB SWEDEN Malta branch Ltd MUNDO GRÁFICOS 4FINANCE GROUP CHART AS OF APRIL 2013 LOANS TO AFFILIATES 1 ATTRIBUTION OF THE LOAN RECEIVABLES TO THE BRANCH 2 INTEREST PAYMENTS 3 Vivus Finance Ltd CANADA 4 finance Oy FINLAND 4 finance UAB LITHUANIA 4 finance Ltd the UK Vivus Finance Sp. z.o.o. POLAND 4 finance ApS DENMARK Vivus finance SL SPAIN 4 finance AB SWEDEN Tirona Limited CYPRUS 4finance AS LATVIA 4finance S.A. LUX. Fatcat Investments Ltd MALTA 75% 100% 100% 25% EL MUNDO GRÁFICOS Data in % Illustrations: Sorina Vazelina and Timi Nicky