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17.01.2003, Cash
FRÉDÉRIC BLASSEL
Crown Resources AG, the charterer of the sunken tanker «Prestige» disappears and leaves behind suspicious traces.
Crown Resources, the Zug-based charterer of the sunken oil tanker, changed name and owner. The company is confronted in the United States with serious accusations. Originally Crown seeked refuge inSwitzerland from the U.K. Inland revenue.
Quietly and surreptitiously six managers bought on Christmas Eve the Swiss charterer of the sunken oil tanker «Prestige», the Zug-based Crown Resources AG. They changed its name to «Energy Resources and Commodities Trading».
The origin of the funds needed to purchase an equity of 90.8 millions Swiss francs (65 Mio. USD) from the Russian Alfa Group remains unveiled. Alfa Group became in the 90-s a giant of the Russian economy, an era marked with dubious privatizations. The conglomerate owns one of the most important bank in the country, controls a supermarket chain and a telecommunication company, holds significant particpations in tea and sugar trading, as well as in the Russian oil producer TNK. In 2000 Crown Resources AG traded for the Alfa Group 6 billion dollars TNK oil products. Alfa is now getting divorced from Crown.
Only one of the buyers has been named. Jost E. Villiger, President of Crown Resources' Board is a businessman and a former Director of the oil trader Phibro Energy. As a member of the well-reputed Lucerne guild «Zunft zu Safran» he is a local notability. Further information on Crown's Management Buy Out is not available.
But the fact that the charterer of the «Prestige» suddenly tries to cover up its traces is no coino;cidBoth in France and Spain Prosecutors showed interest in Crown. The chess maneuver consisting in selling the company is nothing new for Crown. «CASH» is in possession of confidential documents that explain Crown's former diversion.
At the end of 1999 Alfa founded Crown Resources AG in Zug, in fear of a 30 fold increase of its taxes by the British Inland revenue. At that time Crown runned most of it’s business from London, even though its UK Branch was declared as purely acting as an «agent» of a parent company in Gibraltar. Crown used to pay in this Tax heaven only 1 % tax on its worldwide revenue. The fact that the parent company had only six employees while its affiliate had 60 experts and their bosses all working in London, did not escape to the Inland revenue attention. It started a re-examination.
That's why during 1999 plans were made to concentrate all Alfa's and Crown's commodities trading activities in a Swiss based company, aiming at tax optimization. Detailed instruction by advisors from Switzerland and the USA did not forget to point out the possibility of tax free commissions to offshore company.
On December 21, 1999, the foundation of the company took place. In spite of considerable commitments (one billion dollars in 2000, 1.7 billion dollars in 2001 according to Alfa’s annual report), it hardly paid any taxes in Zug. According to Joseph Lang, a member of the regional parliament of Zug, Crown Resources paid between 200,000 and 300,000 Swiss francs local and regional taxes in three years (150'000 to 220'000 USD). And this should have been perfectly legal.
Legal proceedings in America are like dynamite for Crown
In the meantime serious allegations have been raised by Norex a Canadian-Russian oil venture. In a civil lawsuit filed nearly one year ago in New York, Norex accuses Crown and the Alfa-Group of illegal activities. For example, the Plaintiff provided evidence based on internal invoices that in 2000 alone Crown Trade & Finance Ltd transferred 61 million dollars from Gibraltar to a company in the Bahamas.
With this complaint pending, one can better understand why Alfa Crown dropped Crown. According to the Russian Alfa Group Director Alexey Kuzmichev, the negotiations on the separation «already strated in August». His statement has been rounded off by an Alfa employee in an unusually open manner in the Russian financial newspaper Vodomosti: «They [Crown] were plagued with constant mistakes, which finally had a negative influence on the entire group».
Neither the president of the Crown Resources AG, Jost E. Villiger, nor the former CEO of the Crown Group, Elliot Spitz, answered our questions. The latter quitted his job two weeks before the «Prestige» sank. He is now working for another Commodity Trader in Lausanne, Switzerland.
Disclaimer: This report is a translation of an article written in German. The German version prevails if the German and English versions differ.
THE BIRTH OF CROWN RESOURCES AG IN 1999
[Abstracts of a Crown internal memorandum dated May 9, 1999]
- Addressees: Spitz and Kuzmitchov of the Alfa group, appointed as Board of Directors members of Crown Resources AG at Zug.
- «Sooner or later (and probably, sooner) Inland revenue will become aware of the size of, and gamut of activities conducted by Crown Commodities and will seek to subject to U.K. corporate income tax all or a significant par of the trading profits «booked« by Crown Trade in Gibraltar.»
- «Indeed, one of the most significant benefits that would result from our proposed restructuring plan is that it would make available, if necessary, the assisatnce of the Swiss federal tax authorities in resisting attemps by other juridictions to tax a disproportionate share of Crown Group global trading profits by the virtue of Switzerland's extensive tax treaty network».
- «The presence of senior traders in Zug (when contrasted with the total lack of trading expertise in Gibraltar) would significantly reduce the ability of Inland revenue to maintain that the approval and conclusion of London-negociated contracts outside of the U.k. is nothing more than a «rubber-stamp» that should be disregarded».
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