Last week Swedish Radio News revealed that the chairman of one of the country’s biggest pension funds had evaded taxes by sheltering nearly US$ 4 million of his own company’s money in Peru. There, under a controversial tax agreement between the two countries, he only had to pay 4 percent in taxes, much lower than here in Sweden. He saved something like US$ 1.5 million.
Now come reports that more high-level lawyers have exploited the same tax shelter.
At the time, Bertil Villard claimed that what he did was completely legal, it had happened several years previously, and he had told the board of the AMF Pension Fund about it when they hired him.
This last was disputed by the board’s representatives from the Swedish Trade Union Confederation. And the argument that the transactions were legal have also been questioned by the tax authorities, who are investigating. Finally the pressure was too great and Villard resigned as the head of the pension fund.
But he kept his position as a lawyer at a high profile Stockholm law firm. That company has done some serious legal work for the government, including for the privatization of the Vin och Sprit liquor distributing company a few years ago.
Now Swedish Radio News and the magazine Fokus report that four other lawyers at that same firm have also been taking advantage of the Peruvian tax shelter. One of them, Swedish Radio News says, like Villard funnelled nearly 4 million dollars to Peru.
The law firm’s head of information says they did the transactions on their own, without involving the company.
Anne Ramberg, president of the Swedish Bar Association, says lawyers have standards to maintain if the profession is to maintain public trust. ut, she tells Swedish Radio News that if the law-makers set up a system, then it’s dangerous to mix in moral issues with the legal ones.
On the other hand, she says, if someone is guilty of serious violations of the tax laws, that’s something else, but we aren’t there yet.
The tax treaty with Peru was originally set up to encourage investments there. But those exploiting the system have set up subsidiaries with apparently no purpose other than to funnel money back and forth. The tax authorities are investigating around 100 cases of this kind which they say they may involve around 350 million US dollars in lost revenues.
The two countries have since re-negotiated the agreement to close the loophole.