In a special series, Kurir reveals how exactly this controversial billionaire fulfilled his 'American dream' in the murky waters of the Balkan transition
In order to avoid paying income tax to the Serbian tax authorities, the controversial billionaire Dragan Šolak fictitiously sold the cable operator SBB to himself no fewer than three times.
Following a well-developed arrangement, Šolak completed the fake sales in 2007, 2012, and 2014. As the owner of SBB, he would sell a stake in this cable operator to the companies in which he would still show up as the actual ultimate owner even though he had covered his tracks. On all three occasions, cable operator SBB ended up funding its own purchase, which pulled millions from the company without paying any taxes to the Serbian state.
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Scheme to pull money out of Serbia
According to the documents obtained by the Kurir editorial staff, it is evident that SBB shares were fictitiously sold as many as three times – in 2007, 2012, and 2014. According to these documents, the same entities, which invariably featured as sellers and buyers, were the actual ultimate owners – roles played by Gerrard Enterprises LLC, a company based on the Isle of Man whose majority stake was owned by Dragan Šolak.
Each company in the structure of both the seller and the buyer was founded with the sole purpose of misusing the Agreement on the Avoidance of Double Taxation, concluded between the Republic of Serbia and the Kingdom of the Netherlands (UIDO) without a principal purpose (the so-called Principal Purpose Test; hereinafter: PPT). In this way, the companies controlled by Šolak were in breach of the provisions of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI).
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It is clear from the available documentation that all the companies that played the role of buyer were tendentiously founded with the aim of incurring debt beforehand and transferring the burden of financing the purchase to SBB through changes of their status, which effectively resulted in the biggest Serbian cable operator financing its own purchase. Engaging in this activity, which was free of all taxation, meant pulling money from SBB and out of Serbia, and transferring it into a tax haven. As a rule, in all these operations the owners of the alleged buyers of SBB were immediately liquidated once each purchase was completed.
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Šolak in the role of a hidden owner
In June 2007, SBB was sold to a company within United Group. The Dutch company Sabaline Investments BV sold a 100-percent stake in SBB to the Serbian company Adria Cable d.o.o., based in Belgrade. The seller's ownership structure was as follows: Serbia Broadband Sarl from Luxembourg, registered under No. B 87372.1, had a 100-percent ownership stake in Sabaline Investments BV Holandija.
The owners of Serbia Broadband Sarl were Gerrard Enterprises LLC from the Isle of Man, registered under No. 000543L, whose majority owner was Dragan Šolak; SEEF Holding LLC from the Cayman Islands; and the EBRD, which emerged as the third co-owner.
As the owner of the majority stake in Gerrard Enterprises LLC, Dragan Šolak was at the same time one of the managers of Serbia Broadband Sarl.
On the other end, Adria Cable BV from the Netherlands had a 100-percent stake in Adria Cable d.o.o., a company that purchased a 100-percent stake in SBB. Adria Cable BV was owned by Adria Cable Sarl (Luxembourg), registered under No. B128082, and the owner of this company was EECF Adria Sarl – a company founded by Emerging Europe Convergence Fund II. Following this, stakes in EECF Adria Sarl were bought by SEEF (also a company indirectly owned by the seller), Gerrard Enterprises (Dragan Šolak's company, which was also an indirect owner of the seller), and Cable Management Company.
This data clearly indicates that the actual ultimate owners of both the buyer and the seller are one and the same person – Dragan Šolak.
System of phantom firms for evading taxes
The fact that the seller company – Sabaline Investments BV – and its sole owner, Serbia Broadband Sarl, were liquidated immediately after the ownership share in SBB had been transferred to the buyer – Adria Cable d.o.o. – perhaps best illustrates the speculative nature of this operation.
In both cases, SEEF Holding Limited from the Cayman Islands, which is also a co-owner of Serbia Broadband Sarl – alongside Šolak's company Gerrard Enterprises LLC from the Isle and Man – shows up as the liquidator. In addition, both companies – Serbia Broadband Lux and Sabaline Investments BV – had no assets and had had no turnover of goods and services, and were only registered for holding activity.
Once the status change was completed, Adria Cable BV from the Netherlands was the sole owner of SBB. Foreign companies that took part in these transactions had no other role except to effect the sale and purchase of SBB and abuse the taxation legislation of the Republic of Serbia.
Some of the "foreign" actors included Adria Cable B, Adria Serbia HoldCo BV, and Sabaline Investments BV from the Netherlands, as well as Serbia Broadband Sarl from Luxembourg. What all these companies have in common is that they have no employees or any registered assets, which indicates that they were fronts that only served to conceal the behind-the-scenes story of this fictitious sale.
COMING UP NEXT: A scheme to pull out money and evade taxes – How the fictitious sales of SBB were financed
