Thursday, 7 December 2017

Police raid council's Belgian bankers


The offices of the Belgian state bank which holds six separate loans taken out by Scottish Borders Council over a decade ago was raided by police this week as part of an investigation into allegations of tax avoidance by companies exposed in the so-called Panama Papers.

Belfius Bank - formerly known as Dexia until the institution had to be rescued by Belgian taxpayers in 2008 - has its headquarters in Brussels.

Six out of eleven LOBO (lender option borrower option) loans drawn down by SBC during 2004 and 2005 are with Dexia Bank. Three were for £3 million each while the three others were for £5 million each. Full details of the controversial transactions were revealed in Freedom of Information requests during 2015 and 2017.

The Dexia portfolio is now valued at over £38 million with the council not due to clear this aspect of its outstanding debt until 2054 and 2065 respectively. Interest rates on the loans range from 3.75% to 4.5%. Critics of LOBO loans claim councils throughout the UK were wrongly advised to borrow from foreign banks by treasury consultants who collected fat bonuses for arranging the credit.

Dexia was one of the "banks of choice" when LOBO loans were being set up in the early years of the Twenty-first Century.

Reports in the Belgian press and media this week say that the Dec.5th raid on the bank followed last year’s revelations that Belfius’former subsidiary, Experta Corporate and Fund Services, had been a prominent client of Mossack Fonseca, the Panamanian law firm at the centre of the Panama Papers probe based on 11.5 million leaked files.

Last year we revealed SBC's other links to Mossack Fonseca. The company in control of the council's bankrupt waste management contractors New Earth Solutions was registered at the law firm's offices in British Virgin Islands.

Experta, a tax consulting firm, helped to establish hundreds of offshore companies on its clients’ behalf, allegedly taking advantage of lax reporting requirements for foreign accounts, according to the Belgian news organisations.

The Panama Papers revealed that Experta requested the Panamanian law firm set up 1,659 offshore entities for clients in Belgium, France and Germany. Most of the companies have since closed.

Experta, whose services range from accounting and tax advice to financial planning was a unit of Dexia Group — the Franco-Belgian bank later renamed Belfius — until 2011. That year Experta was sold to Banque Internationale à Luxembourg.

Directors of Dexia, the former parent bank, included Belgium’s ex-Prime Minister Jean-Luc Dehaene, and authorities are now investigating what role the bank’s managers played in the tax avoidance schemes.

Media commentators claim the raid at the Brussels headquarters of Belfius signals that, after months of investigation by the federal police anti-fraud unit, Belgian authorities have begun to close in on the most active players in the offshore advisory business. 

On Tuesday Belgian officers seized computers and files documenting Dexia and Experta’s business operations, the Belgian press reported.

A Belfius spokeswoman told local media that the bank is cooperating with the investigation.

In the aftermath of the Panama Papers revelations, politicians criticised Experta for enabling tax avoidance, and possibly helping clients hide funds, even after its former parent Dexia had been rescued by the $3.7 billion government bailout in 2008.

“It is inconceivable for a financial institution, which has been supported by taxpayers money, to become involved, actively or passively, in tax evasion on such a scale,” said Finance Minister Johan Van Overtveldt last year, according to Belgian media.

No comments:

Post a Comment