We Need to Investigate of IBRC Fund Tax Avoidance

July 7, 2016

Today Stephen Donnelly called on the government to launch an investigation into the tax avoidance undertaken by investment firms as part of their dealings with IBRC.

Speaking earlier today, Stephen Donnelly, Social Democrat TD commented:

“Mars Capital are owned by Oaktree Capital, one of the largest specialist investment funds in world, with almost $100bn in assets under management. In 2014, they paid €155m for a mortgage book with face value of €363m, which is 43% of estimated value. They financed the €155m needed to make the purchase with a €75m Citibank Loan and €80m from own funds, but structured this €80m as Loan Notes for tax purposes.”

“An examination of Mars Capital’s accounts showcases a masterclass in tax avoidance. The accounts show that the interest income minus interest expenses on loans comes to €4,559,904. Astoundingly, the figure for ‘Administrative Expenses’ comes to €4,558,904., leaving exactly €1,000 in taxable profit. The company has issued just three shares, to three ‘Charitable Trusts’. The finances are also structured to ensure that all mortgage interest payments and capital gains can be written down, with no tax therefore owed.”

“The deal is clearly structured to avoid paying taxes on these windfall profits. We don’t know where Mars Capital money ultimately flows to – but we do know from SEC filings in the US that Oaktree Capital holds numerous funds in the Cayman Islands.
“We need an investigation to ascertain whether the Department of Finance, directly or indirectly, was shown this structure by the bidder, and if it was, if they gave their blessing to this arrangement. Was this incompetence, or a deliberate policy by NAMA to support structures which would avoid bidders like Oaktree paying any Irish taxes?”