Last October saw the resurfacing of the case of Hochtief and the AIA: the German company until 2013 was a minority shareholder in the Athens International Airport but by law it had its management. Litigation between the Greek state and AIA concerned the alleged non-payment of hundreds of millions of euros in taxes by Hochtief.
In response to a TPPI report at the time, the media spokesman at AIA had admonished us because we had referred to Hochtief while the management of the airport had already changed hands.
Although the change in management does not exonerate the German company for everything that occured while it ran the airport, the AIA representative was right in one thing: The airport had indeed come under the control of Canada’s PSP (Public Sector Pension Investment Board).
Unfortunately, ICIJ’s research has now revealed that the new owners are not too keen on paying taxes either, at least whenever they can avoid to.
The documents released by ICIJ show that, in 2009, the PSP had used PwC to set up an unbelievably complex tax avoidance mechanism consisting of 24 subsidiaries, half of which were based in Luxembourg. PSP invests the capital of Canadian pension funds and is audited by a board of directors appointed by the federal government of Canada.
According to the organisation’s website it handles €94 bln (including a stake in another Greece-related entity, Canadian multinational Eldorado Gold Corporation (EGO), known from the Skouries gold mining case).
Confidential documents that were made public, between 2008 and 20123 show that PSP had made real estate investments in Germany, France, Spain, Norway, Holland, Britain and Belgium.
According to a CBC report, PSP invested roughly $390 million to purchase 4,500 properties in Berlin alone in 2008 and with the help of PwC it managed to avoid taxes of up to €20 million in Germany. This was facilitated by a German law that imposes taxes on those who own more than 95% of a property. With the help of PwC, PSP purchased 94.4% of properties through a subsidiary based in Luxembourg while it kept the management by purchasing just 5.6%.
CBC – which began its investigation of tax avoidance before ICIJ – had requested PwC’s documents (PSP is a state-related organisation), in accordance with Canadian law.
PwC was forced to comply with the request made by CBC but it did so, as the inset photo on the left shows, with a little bit of censorship.
PSP limited its response to the Luxleaks revelations with the following statement: “No significant tax advantage resulted from using companies based in Luxembourg”.
LuxLeaks tax rulings about PSP