Maltese companies involved in energy network tax avoidance scheme

Continental Wind Partners is a complex network of energy development companies almost exclusively made up of offshore firms – some of which are Maltese – with no employees, the Malta Files documents have revealed.

The revelation also implicates the Prime Minister of Serbia Ana Brnabic in the network which appears to have been set up to facilitate tax avoidance and hide ownership.

Brnabic was the director of daughter company Continental Wind Serbia before she entered state administration.

The company had a part in the incorporation of another Serbian subsidiary of the parent company from Malta, which received a €200,000 interest-free loan, documents from the Malta Files project by the European Investigative Collaborations (EIC) show.

This, in itself, violates Serbian law on the minimum interest rates between affiliate companies.

The parent company, Continental Wind, appears to be a shell company in Delaware, USA – itself a tax haven.

Although the company does not develop wind farms in Malta, it nonetheless accumulated revenue from renewable energy projects on the island and other offshore jurisdictions.

Brbanic’s former boss and parent company partner Mark W Crandall – an American citizen living in Serbia – established a Maltese trust in order to obscure the true ownership of the companies, Croatian newspaper Nacional reported.

The complex corporate structure of Continental Wind Partners is clearly optimised for tax avoidance and hidden ownership, with offshore jurisdictions in Monaco, Singapore, Cyprus, Luxembourg, and Malta.

A Maltese company in the network, River Power Solutions, although without employees, gave a €198,000 interest-free loan to Serbia in 2015. This loan was partially repaid in 2016, amounting to €140,000. But the Serbian Ministry of Finance set the minimum interest rate for long-term loans between affiliate companies to be 5.07% a year in the meantime.

This means that the Serbian company was left with at least €10,000 in possible gains due to unpaid interest, but the loans from Malta to Belgrade appear to be €298,000 – meaning that the Serbian subsidiary of the Maltese company had additional gains, as reported by Nacional.

The purpose of the loan was a failed project to build district heating in Serbia by extracting heat from the Sava river in Belgrade, according to Crandall back in 2015.

Therefore, the Maltese company – controlled by Crandall – served as the middleman for channeling money from Luxembourg and Monaco to Serbia.

Crandall was also referred to as a politically exposed person (PEP) by the Organisation for Economic Co-Operation and Development (OECD) in 2014, when his wife’s sister became a minister in the Serbian government.

When questioned about Continental Wind Partners, Brnabic said that she was not involved in creating the ownership structure, and that she doesn’t know anything about it. Curiously, she did not disclose her opinion on offshore companies set up to hide ownership and allow for tax avoidance.

In a statement last week, Serbian President Aleksandar Vucic said that it “seems Brbanic is guilty” because “she was director of a firm which existed and operated in accordance with Serbian law,” while “shareholders had other firms which were dealing suspiciously.”

The network of offshore companies was surveyed in silence by Vucic.

The Malta Files is a collection of documents published by the EIC network, made up of journalists and media outlets, including Nacional and MaltaToday. The documents reveal the ways in which Malta works as a base for tax avoidance in Europe.