Šolak’s manipulations: An offshore network of one hundred companies, multi-million transactions and dozens of intermediaries to conceal true ownership
The founder of United Group, Dragan Šolak, has been followed from the very beginning of his career in business by controversies, bypassing the law, hiding ownership and bribing people... As the empire grew, so did the methods of unfair business practice, and at the peak of his power Šolak demonstrated his mechanism for destroying competition, which was in fact a vast network of connected politicians, instrumentalized media and non-governmental organizations. The goal was singular – to eliminate anyone who tried to jeopardize his monopolistic position on the market and his opportunity for further personal enrichment.
Hiding ownership is one of the key characteristics of Šolak’s business model. Although his financial, and indeed every other form of power predominantly stemmed from the income of cable operator SBB, his business empire consisted of more than one hundred companies. That number constantly changed over the years due to the establishment of new entities and the closure of those already used. Kurir has illuminated this complicated network in its series and explained how and why the companies within it regularly conducted mutual financial transactions. It turned out that it was precisely thanks to this that the then majority owner of United Group optimized the payment of tax and, via associated persons, partially concealed his ownership in certain companies.
Through numerous examples we showed that, more than the sheer number of companies in Šolak’s system, what speaks volumes is the structure and the manner in which they were organised, all with the aim of diverting money earned in Serbia into offshore zones, thereby avoiding paying tax to our state. In order to reduce corporation income tax to a minimum, the controversial businessman once bought a Maltese passport for €650,000 through the so-called Individual Investment Program (IIP). Kurir reported information from the Malta Today portal, which stated that Šolak’s name appeared in the documents of the “Malta Papers” project, where he was mentioned as one of the millionaires avoiding paying tax.
Although the Maltese authorities refused to disclose the names of those who had obtained citizenship via naturalization under the said program, journalists from Malta Today succeeded in identifying the name of Dragan Šolak, as well as the name of his wife Gordana, along with two other then-dependents N. and S. Šolak, with addresses at two different locations – one in Sliema and the other in the luxury residential zone Tigné Point. The “Malta Papers” project, led by the European Investigative Collaborations (EIC) and in which Malta Today participated, revealed the extent to which they used the Maltese tax system to transfer profit into the country and pay less tax than they would have paid in Serbia.
According to Malta Today, the payment of tax was avoided when various TV stations in the Balkans paid €6.7 million to Šolak’s media group for broadcasting rights to sports content, but that money ended up in Malta, Cyprus and Liechtenstein. Documents revealed that in 2014 the company United Media Malta was established. Despite the fact that this company had no employees, from August 2014 to August 2015 it received €6.7 million from Croatian Telekom, Iskon and VIPnet, and paid only €27,000 in tax in Malta. After the transaction was completed, the company was liquidated at the end of 2015.
Following the documents also led to the discovery that Šolak was, until 2015, the owner of the Maltese company Prestige Media, which, before liquidation, generated total revenue of €10 million. Thanks to the Maltese tax system, that company paid tax of only €400,000 on this amount. Malta Today pointed out at the time that Šolak’s media group was one of the largest telecommunications groups in the Balkans, providing internet, telephone and TV services to domestic and foreign users, and in 2016 it had revenue of around €440 million.
In its earlier investigations, Kurir cited the company’s official financial reports, so some figures may help give a sense of the scale, breadth and depth of Šolak’s business. For example, in the report for the first half of 2020 one can find the information that United Group had carried out more than 100 acquisitions in the previous 20 years, while in the same year it generated revenue of as much as €793 million. According to the same document, the shareholding structure included, in different proportions, funds BC Partners, Kohlberg Kravis Roberts & Co (KKR), EBRD and management, headed precisely by Šolak. His stake in Summer Parent (Luxembourg), the controlling company of United Group, was then 34 per cent, reaching 41 per cent at the beginning of 2021.
As we have often explained in our articles, Šolak controlled this and numerous other companies through firms established in offshore zones in which he hides. The current management crisis within United Group has brought to light many things that Šolak did behind the backs of the owners and partners of United Group. Kurir has on several occasions written about an entire hidden network of money flows that obscured dubious business, acquisitions and various transactions with one goal – Šolak’s personal enrichment.
Numerous investigations by Kurir have shown that his offshore companies most often appear as the ultimate owners in the network of his companies and are the holders of profit on which tax is not paid in Serbia. Among those companies are Gerrard Enterprises (Isle of Man), Gerrard MIP (Cayman Islands) and Gerrard Consultancy Service Limited (British Virgin Islands). Available reports and documents revealed to us that, alongside Šolak, his wife Gordana also appeared as an owner of companies, and she held a 4.99 per cent stake in United Media through the company BVI Cable Management Company Ltd. Indirectly, through Gerrard Enterprises, Šolak was or remained the beneficial owner of the companies Gerrard Aircraft (Austria), Gerrard Aircraft Two (Austria), Gerrard Estate Holdings (Isle of Man), Gerrard Investments (Isle of Man), Eligo Bled (Slovenia), Royal Bled Golf Club (Slovenia), Hiša Plus (Slovenia) and Hiša Plus (Serbia).
Dragan Šolak also held majority stakes of between 62 and 70 per cent in the following companies: Summer Parent (Luxembourg), EECF Istra (Luxembourg), Istra Cement (The Netherlands), Hotel Valkane (Croatia), MAX City (Croatia), Valbonaša Centre (Croatia), Camp Banjole (Croatia), Istra VAL MAX Real Estate (Croatia), Sava Golf Club (Serbia)...
In yesterday’s article we explained how the dense network of offshore companies and numerous intermediaries functioned in the transactions between Šolak and Dragan Đilas during the purchase of Direct Media and the building owned by Multikom.
Kurir Editorial Team
