BAE uses Irish Homeless charity in $2bn tax scheme

[Yammitor]

Cluster bomb firm uses Irish charity in $2bn tax scheme
Charitable trust for Irish homeless was used to shift assets
http://www.independent.ie/business/irish/cluster-bomb-firm-uses-irish-charity-in-2bn-tax-scheme-1773343.html
By Nick Webb
Sunday June 14 2009

BRITAIN'S largest arms and defence company, BAe Systems, has been using an Irish- registered homeless charitable trust as a lawful device to shift assets off balance sheet and to lower its tax bill, the Sunday Independent has learned.

Former cluster-bomb manufacturer BAe -- which has developed the F35 fighter bomber, the Challenger tank and the Queen Elizabeth Class Aircraft carrier -- has a subsidiary in Ireland called Trident Aviation Holdings (Ireland). The firm was used in a complex $2bn refinancing scheme related to the company's regional aircraft business.
"I would like to make it clear that BAe Systems has set up a financing rather than a complex tax scheme in Ireland," according to a spokeswoman. However, the corporate entity is now exposed to Ireland's low tax rate. Ireland's 12.5 per cent tax rate is less than half the UK rate.

However, BAe documents seen by the Sunday Independent indicate that all the shares in this firm are held by the Arbutus Homeless Person's Trust, "a charitable trust established under the laws of the Republic of Ireland, and which does not prepare consolidated accounts".

The Arbutus trust is a charity registered with the Revenue Commissioners. It is administered by an Irish commercial law firm.

"Arbutus Homeless Person's Trust is run by Goodbody Trustees Limited, a company set up by A&L Goodbody, a well-known law firm in Dublin. The trust was set up in 1997," according to BAe.

BAe, which had sales of nearly €22bn last year, was unable to provide details about the charitable trust's activities, pointing out that it was administered by an Irish legal firm. However, it confirmed that it had not made any donations to the charity.

"When dividend payments are due, or when residual funds become available under this financing (or other similar financings in which it may have an interest), those funds will be paid to Arbutus Homeless Person's Trust, which will then distribute them to its chosen charities," according to the arms company.

However, BAe also confirmed that -- to date -- no dividends had been paid.

"The charitable trust allows its name to be used and for the shares to be held in trust on its behalf for the duration of the structure on the basis that it will be the beneficiary of any residual funds at the point the structure is wound up," the arms company added.

BAe told the Sunday Independent that the Arbutus Homeless Person's Trust was used to satisfy US investors' requirements as it did not have recourse back to the group structure. It needed to be "bankruptcy remote", according to BAe. Essentially, the trust was used to keep the refinancing off balance sheet, accountancy experts have told the Sunday Independent.

Off-balance sheet transactions were a widespread practice in the 1990s and early 2000s. But the collapse of Enron brought these devices under closer scrutiny and many schemes have now been scrapped. In line with new accountancy rules, BAe has shifted the Trident assets back on to its balance sheet.

"This form of structure is often used in aviation and by almost all other forms of international structured finance throughout the world. This is because investors and lenders increasingly focus on developing structures which give them recourse to pools of assets without exposure to credit or other risks on the entity providing the assets. There is nothing unusual about a charitable trust holding shares in this manner," according to BAe.

BAe has been boycotted by ethical protesters citing its involvement with nuclear weapons and nuclear submarines. Norway bans its national pension fund from investing in BAe over these links. The company has also been embroiled in controversy over a major Saudi Arabian arms deal involving the purchase of Tornado bombers.

- Nick Webb

[Anonymous]

Sounds like another Berny Made-off scam as depicted in the post here:

Jewish Charities and the Bernie Made Off's