Bob Kraft’s shady Bermuda tax-dodging comes to light in Paradise Papers

 
Bob Kraft got another reminder recently that being an NFL means living in a fishbowl.

The Guardian recently published the so-called “Paradise Papers,” pointing out that dozens of investors from around the world were legally shielding their fortunes in accounts in Bermuda.

The list includes Queen Elizabeth and her son Charles and celebrities like Madonna, Nicole Kidman and Martha Stewart, companies like Facebook, Twitter, Nike and Walmart and several Ivy League universities.

But Kraft’s name on the list got a lot of attention because he owns the New England Patriots.

And Kraft has tried to cultivate a down-to-earth image by saying he buys coffee at Dunkin’ Donuts, not Starbucks, and pays for the people in line behind him.

Donald Trump has said that Kraft has told him to “tax the rich people’’ and take care of the poor. Kraft donated $1 million to Trump’s inaugural celebrations.

But it turns out that Kraft, like many businessmen, does his best to shield his fortune from taxes.

The Paradise Papers contain more than 13 million files spanning 19 offshore locales and provide insight into the financial lives of some of the richest people on Earth. Bermuda is a popular tax haven because it imposes no income, capital gains or estate taxes.

According to the Guardian, in exchange for an annual fee, the company — which a June 2012 file lists Kraft as the sole owner of — paid no taxes on its income, profits or dividends.

A spokesperson for Kraft said the Bermuda company had been established to do business with certain customers, which the spokesperson declined to identify. The spokesperson insisted the offshore vehicle dealt with relatively small sums.

“These entities are not organized or maintained for any reason other than to facilitate doing business in any particular location, and decisions are not income-tax motivated,” said the spokesperson.

Kraft’s Bermuda firm was incorporated as a branch of International Forest Products, a wood and paper exporting division in his privately held Kraft Group. The Bermuda vehicle is an investment holding company, meaning it collects returns on investments or property rather than trading in goods or services.

The June 2012 document was produced by Appleby, a corporate services company that handles administration for Kraft’s firm. Internal communications show that Appleby’s executives classed Kraft as a “PEP” client – a politically exposed person whose affairs should be handled with particular care.

Kraft’s firm’s classification under Bermuda law means that in return for an annual fee it pays no tax on profits, income or dividends. It is not allowed to do business in Bermuda itself.

Kraft is listed in the document as the owner of all 12,000 shares of the Bermuda company. His ownership would have been declared to Bermuda authorities, who promise to hold this information in strict secrecy.

Kraft was also listed as authorized to sign for transactions involving two bank accounts on Bermuda: one at HSBC that holds U.S. dollars and another at the island’s Butterfield bank that contains British pounds.

The value of the offshore company’s holdings was not disclosed in the files. Separate Appleby documents from 2013 said Kraft and his fellow directors had decided – as Bermuda law allows – that on an indefinite basis they would not be holding annual meetings, appointing an auditor or presenting audited financial statements.

While Bermuda imposes no income tax, capital gains tax or estate tax, it warns American investors that they may incur some U.S. taxes on money they earn through companies incorporated on the island.

Kraft has not personally commented on his investments in Bermuda, but it is a safe bet that he never expected them to be publicly reported.

If Kraft  was just a Boston businessman, his name in the Paradise Papers probably wouldn’t have gotten much attention. But since he owns the Patriots, it’s a different story altogether.

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