Portugal’s “golden boy” denies tax fraud claims

While Britain is being shocked daily by shameful revelations of soccer world paedophilia, Portugal has woken up to news that some of its best-loved players and ‘poster-boy’ exports are implicated in a multi-million euro tax evasion scandal.

Golden boy Cristiano Ronaldo, “Special One” José Mourinho and Midas-touch sports promoter Jorge Mendes are just three of the high-profile names being splashed across TV screens and newspapers.

If this wasn’t galling enough, sources leaking the story claim it was initiated by a “fervent Portuguese football fan who despairs of the corruption and avarice in his sport”.

For a country that glorifies football above almost anything else, this is one scandal in which very few Portuguese will be delighting.

Investigations have been ongoing for months, and were being kept more or less ‘under wraps’ by legal embargoes in Spain until last week when El Confidencial carried ‘an exclusive’ suggesting Portugal’s all-star Ronaldo was under investigation for hiding up to €150 million in image-rights earnings.

CR7’s promotional company immediately issued a statement to the effect that it was “all lies” and that Ronaldo’s tax affairs were “completely in order”, but the story snowballed to the point that Gestifute’s protestations have been constantly relegated to the last few paragraphs.

In fact, Gestifute’s Portuguese boss Jorge Mendes is now just as implicated as his players in what has become the football world’s Panama Papers – a 1.9 terabyte leak of data containing 17 million documents in eight portable hard drives that were delivered by a “football fan from Portugal” to the offices of German magazine Der Spiegel.

Der Spiegel has since teamed up with media partners from all over Europe to create European Investigative Collaborations – and now no amount of court embargoes seems able to keep up with them.

The Sunday Times splashed the story over the front page of its last edition, concentrating on “Mourinho’s millions”, and taking four pages to expose the massive sums of money that have allegedly been “bouncing around the globe tax free”.

Three pages covering Mourinho’s tax affairs moved on to those of ‘three-times world player of the year’ Ronaldo, who has been raking in image-rights earnings over and above his regular salary and taking advantage of “extraordinarily complex financial engineering” to ensure he pays the absolute minimum in tax.

According to José Maria Mollinedo, secretary general of the tax syndicate in Spain investigating Spanish earnings in this rapidly developing scandal, Portugal’s soccer hero “risks six years in jail” if found guilty of ‘highly-aggressive tax avoidance’ – while elsewhere El Mundo has turned the heat on to national team players Fábio Coentrão and Pepe, who between them appear to have hidden €7.2 million in image-rights earnings via companies offshore.

Ricardo Carvalho – currently unsigned but a former darling of the national team – is also in the hotseat, claim reports in Portugal which led on Wednesday with a major new shock: “Public money” is tied up in the scandal.

National tabloid Correio da Manhã ran with this particular ‘exclusive’, alleging that Turismo de Portugal had ploughed money into the scheme during promotional campaigns run outside Portugal in 2008 and 2009.

According to CM, Turismo de Portugal paid a total of €300,000 to use the images of both Ronaldo and Mourinho.

The public company paid the money into the Irish company under investigation which channelled funds to offshore shell companies in the British Virgin Islands.

BES will have done the same, adds CM, when it hired Ronaldo for a series of commercials saying he knew where his money would be “in three years time”. Sadly, this was a catchphrase that is now haunting everyone involved.

Whether Football Leaks will result in any arrests, let alone convictions, is unclear. Certainly, the ‘outrage’ following the leak of the Panama Papers has seen very few heads roll. Repercussions have been more centred on trying to ‘fix’ tax loopholes, which is no doubt what will happen here – irrespective of the Spanish taxman’s position on individual players.

CM suggests “players are in panic” over whatever lies ahead, but with Jorge Mendes and his multi-million empire lawyered up to the hilt, panic is very possibly sitting on a nice comfortable chair.

As for the “whistle-blower from Portugal”, other than insisting on anonymity, he is reported to have issued the following message: “It is time to finally clean up football. The fans have to understand that every ticket, every jersey they buy, and with every television subscription, they are feeding an extremely corrupt system that is only in it for itself.”

How money bounced around the globe tax free

At risk of eyes glazing over, Mendes’ scheme, say reports, hinged on using companies set up in Ireland (where tax levels are low) to seal multi-million euro image-rights deals that in the countries where players and clients are registered for tax purposes would have resulted in far higher levies.

To give a simple example, of CR7’s €150 million in image-rights earnings under suspicion, the tax payable in Spain – where he is taxed on his Real Madrid salary – would have been over €65 million. According to El Mundo, Ronaldo actually paid only €5.6 million – whereas other news sources say he skipped paying tax altogether.

The ‘scheme’ allegedly involved two companies set up in Ireland which then channelled money to ‘shell companies’ in offshore havens before moving it on to accounts held in Swiss banks.

Through the years, tax laws in Spain have changed, which saw Mourinho, for example, paying €4.4 million to “straighten his accounts” after being caught in an investigation into €12 million discovered in a Swiss bank account, and Ronaldo announcing in June last year that he had sold his future rights to a Singaporean businessman.

According to the Sunday Times, this latter move was all done “to protect Ronaldo’s millions from the taxman”.

Needless to say, Jorge Mendes – said to be the brains behind the many issues in the public eye – has either been unavailable for comment, or given statements to the effect that he is not a tax adviser and has never recommended any image-rights structures to his famous clients.

Mendes’ company Gestifute has also lambasted the leaks as being “insidious, disrespectful, threatening and far from the most elementary good practices of journalism”.

By NATASHA DONN natasha.donn@algarveresident.com