FactualHiding behind offshore companies is not without risk when it comes to proving ownership of assets, as three stories from OpenLux show.
Some hide their money in offshore companies. Others lose it. This was learned the hard way the former arms intermediary Arcadi Gaydamak, the“Man with five passports”. In the early 2000s, when French justice threatened to bring him down in the Angolagate affair, Arcadi Gaydamak entrusted a Luxembourg trust firm with the task of protecting part of his immense fortune – “365 million euros”, he says. For a few years he lost interest in money, which thrived in the accounts of a myriad of offshore companies registered in the British Virgin Islands under trustee nominees.
When his judicial horizon cleared up a bit, in 2010, Arcadi Gaydamak discovered that his Luxembourg advisers had appropriated his assets, and had unwittingly sold a piece of heavenly land in Cap d’Antibes, according to his story. “From the moment they are in the name of the fiduciary, and they are dishonest people, it is very complicated to recover them”, storm Mr. Gaydamak, who has been scouring Luxembourg courts since 2015 to try to find his nest egg. “He is quite blissfully confident to have entrusted several hundred million euros to third parties without being interested in them for years! “, quips one of his relatives.
Difficult to prove that you are the real owner
The oligarch Vitaly Malkin also paid the price for the opacity he had organized. Rather than buying his chalet in Courchevel directly, in 2011, the former Russian senator carried out the transaction with Crystal Vision Holdings, a Luxembourg company owned by bearer shares – an opaque instrument that makes it possible to hide the real owners. “It was at the time the most common form for Luxembourg companies”, justifies his lawyer, who specifies that Mr. Malkin was then a Luxembourg resident.
Bad luck: a year earlier, the French arsenal against opaque arrangements for holding real estate had been considerably strengthened to fight against wealth tax fraud (ISF). Considering that he did not have a clearly identified owner for two years, the French tax authorities therefore applied to Vitaly Malkin’s chalet a punitive tax amounting to 3% of its total value per year – a substantial sum for a property purchased 26 millions of euros.
Ten years after the purchase, while the chalet has meanwhile been sold, the businessman is still struggling in French courts to try to prove that he was the true beneficiary of the company and avoid the painful one. Confirmed at first instance then dismissed on appeal in 2020, he appealed to the Supreme Court.
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