A substantial leak of confidential financial documents appears to link the Czech Prime Minister, Andrej Babis to a 15 million euro offshore deal to finance a property purchase in the south of France.
Leaked documents from the Panama Papers show how Babis in 2009 funneled 15 million euros via a series of secret loans to three offshore companies he himself had established. The funds were then used to purchase a chateau and neighbouring villa in Mougins, France, barely 20 minutes’ drive from Cannes on the Côte d’Azur.
The loans were made from the British Virgin Islands-based firm Blakey Finance Limited through a company called Boyne Holding LLC in Washington DC, ending up in a subsidiary SCP Bigaud in Monaco.
At present, there is no evidence that Prime Minister Babis did anything illegal except failing to list shares from companies in tax havens. If convicted, Babis could face a fine of up to 50,000 koruna, or just under 2,000 euros. The source of the funds has not yet been confirmed.
During a televised election debate on the weekend, Babis denied any wrongdoing.
“The money left a Czech bank, was taxed, it was my money, and was returned to a Czech bank,” he said.
Even so, financial experts argue that the transaction raises red flags for money laundering.
For one thing, the loan agreement between Blakey Finance Limited and Boyne Holding LLC is riddled with errors, and omits essential information. Moreover, no one is liable for the loan, nor is there any other mechanism in the loan agreement to guarantee repayment.
In the contract, the loan is defined as repayable with interest by 17 September 2019. Both the creditor and borrower expired without any successor before the maturity of the loan- Blakey Finance in 2015, and Boyne Holding in 2018. When lawyers liquidated Blakey Finance in 2015, they wrote in documents that the company had no debts or assets.
“No normal business transaction would ever look like this,” says Kamil Kouba, a former anti-money laundering investigator turned anti-money laundering consultant.
The British Virgin Islands is an overseas territory of the United Kingdom with roughly 30,000 inhabitants. More than 300,000 active companies were registered in the territory in 2019, and there was a nearly three-fold increase in the registration of limited partnerships between 2020 and 2021.
In other countries, information about the owners and addresses of companies is often readily available via a business register. The same is not true for the British Virgin Islands, where instead international journalists are routinely turned away and financial fraud investigations brought to a halt.
The Czech Republic is set to hold a general election on 8 October 2021.
Image via Pixabay
