The presumptive GOP presidential nominee Donald Trump has come under fire for a questionable real estate deal with an Icelandic investment company FL Group. FL Group, which went bankrupt in the wake of the 2008 collapse of the Icelandic financial system, was one of the most prominent, and controversial, Icelandic investment company. The details of the deal between Trump and FL Group were exposed by the UK Newspaper The Telegraph.
Read more: Failed Donald Trump Tower included busted Icelandic Investment Company FL Group as key partner
Tax experts The Telegraph contacted argued the 2007 deal, in which FL Group invested 50 million US dollars in a Trump real-estate project, was structured to skirt vast tax liabilities. All in all the deal cheated the American taxpayers out of tens of millions of dollars, according to the Guardian. Trump personally signed off on the deal.
At the heart of the case is a 2007 investment by FL Group in four projects handled by Bayrock Group, a property company which was building Trump SoHo, and two other projects which bore the name of the US mogul. The Icelandic investment in the project was shortly thereafter relabelled as a loan. Relabelling the investment as a loan drastically cut the tax liability of all parties to the deal. According to the Telegraph the transaction lowered the total tax bill of the project by as much as 100 million USD.
Read more: Icelandic travel agency claims GOP frontrunner Donald Trump makes America look stupid
The Telegraph cites Jack Blum, the chairman of the Tax Justice Network and a financial crime attorney, as describing Trump as a poster child for tax avoidance property schemes. “Experts say that the effect of this move was to skirt vast tax liabilities, and court papers seen by the Telegraph allege that the deal amounted to fraud.“
The investment by FL Group in the Trump projects received significant attention in Iceland at the time, being hailed as an example of the prestige of FL Group and the international success of Icelandic businessmen, the so-called “Corporate Vikings” of the pre-crash financial miracle.
One of the most controversial pre-crash investment companies
FL Group was created in 2005 when Hannes Smárason, a prominent “corporate viking” acquired Flugleiðir, the holding company of the airline Icelandair. Hannes Smárason proceeded to sell off assets, including the airplanes of Icelandair and other assets in the travel industry, redefining the company as a leveraged investment company with stakes in various travel companies, as well as renaming it FL Group. FL Group worked closely with Jón Ásgeir Jóhannesson, one of the most prominent Corporate Vikings, and various investment companies tied to Jón Ásgeir. Jón Ásgeir, and his companies, were also among the largest shareholders in FL Group.
Among the investments of FL Group was a major stake in the failed bank Glitnir. When Glitnir collapsed with the rest of the Icelandic banking system in 2008, it took FL Group down with it.
The reorganization of Flugleiðir, the former holding company of Icelandair, has been described as little more than a corporate raid. Questions have also been raised about the role of FL Group in the financial dealings surrounding Glitnr in the months leading up to the 2008 crash. In 2013 Hannes Smárason, the CEO of FL Group, was indicted for having embezzled nearly 50 million USD from the company. He was acquitted of the charges by the Reykjavík District Court. The ruling was appealed by the prosecution to thhe Supreme Court.
The presumptive GOP presidential nominee Donald Trump has come under fire for a questionable real estate deal with an Icelandic investment company FL Group. FL Group, which went bankrupt in the wake of the 2008 collapse of the Icelandic financial system, was one of the most prominent, and controversial, Icelandic investment company. The details of the deal between Trump and FL Group were exposed by the UK Newspaper The Telegraph.
Read more: Failed Donald Trump Tower included busted Icelandic Investment Company FL Group as key partner
Tax experts The Telegraph contacted argued the 2007 deal, in which FL Group invested 50 million US dollars in a Trump real-estate project, was structured to skirt vast tax liabilities. All in all the deal cheated the American taxpayers out of tens of millions of dollars, according to the Guardian. Trump personally signed off on the deal.
At the heart of the case is a 2007 investment by FL Group in four projects handled by Bayrock Group, a property company which was building Trump SoHo, and two other projects which bore the name of the US mogul. The Icelandic investment in the project was shortly thereafter relabelled as a loan. Relabelling the investment as a loan drastically cut the tax liability of all parties to the deal. According to the Telegraph the transaction lowered the total tax bill of the project by as much as 100 million USD.
Read more: Icelandic travel agency claims GOP frontrunner Donald Trump makes America look stupid
The Telegraph cites Jack Blum, the chairman of the Tax Justice Network and a financial crime attorney, as describing Trump as a poster child for tax avoidance property schemes. “Experts say that the effect of this move was to skirt vast tax liabilities, and court papers seen by the Telegraph allege that the deal amounted to fraud.“
The investment by FL Group in the Trump projects received significant attention in Iceland at the time, being hailed as an example of the prestige of FL Group and the international success of Icelandic businessmen, the so-called “Corporate Vikings” of the pre-crash financial miracle.
One of the most controversial pre-crash investment companies
FL Group was created in 2005 when Hannes Smárason, a prominent “corporate viking” acquired Flugleiðir, the holding company of the airline Icelandair. Hannes Smárason proceeded to sell off assets, including the airplanes of Icelandair and other assets in the travel industry, redefining the company as a leveraged investment company with stakes in various travel companies, as well as renaming it FL Group. FL Group worked closely with Jón Ásgeir Jóhannesson, one of the most prominent Corporate Vikings, and various investment companies tied to Jón Ásgeir. Jón Ásgeir, and his companies, were also among the largest shareholders in FL Group.
Among the investments of FL Group was a major stake in the failed bank Glitnir. When Glitnir collapsed with the rest of the Icelandic banking system in 2008, it took FL Group down with it.
The reorganization of Flugleiðir, the former holding company of Icelandair, has been described as little more than a corporate raid. Questions have also been raised about the role of FL Group in the financial dealings surrounding Glitnr in the months leading up to the 2008 crash. In 2013 Hannes Smárason, the CEO of FL Group, was indicted for having embezzled nearly 50 million USD from the company. He was acquitted of the charges by the Reykjavík District Court. The ruling was appealed by the prosecution to thhe Supreme Court.
