Calls for investigation into alleged tax avoidance by investment company

Stephen Donnelly

Calls have been made for an investigation into alleged tax avoidance by an investment company that took over loans from IBRC.

The US investment firm, which bought more than 1,500 mortgages from IBRC at a discount, is now evicting struggling families from their homes while at the same time avoiding tax here, it has been claimed in the Dáil.

Calling for a probe into Mars Capital, Social Democrats TD Stephen Donnelly described the company’s accounts as “a masterclass in tax avoidance”.

Mr Donnelly told the Dáil that in 2014 Mars Capital — whose parent company Oaktree Capital is one of the largest specialist investment funds in the world — paid €155m for a mortgage book with a face value of €363m, which is 43% of estimated value.

He highlighted the case of “Sarah and Dominic” and their family who are now facing eviction form their home in Kilkenny.

Mr Donnelly said: “Two years ago, the minister’s Government sold Sarah and Dominic’s mortgage to a US investment firm, which is now evicting Sarah, Dominic, and their two children.”

This discount meant the company would have bought the couple’s €350,000 mortgage for approximately €140,000, Mr Donnelly said.

He added that at the time of the sale, the Government refused to allow Sarah and Dominic, or any of the Irish mortgage holders, to bid on their own mortgages.

“Mars Capital structured the deal in such a way that the real discount it got was closer to 70%, which would have brought Sarah’s mortgage down from €350,000 to approximately €100,000. Its accounts indicate that for its €80m investment, it will get a return of €400m,” he said.

Mr Donnelly then questioned the tax paid by the company. He claimed finances were structured “to ensure all interest payments and mortgage payments from Sarah and Dominic and everybody else, as well as all capital gains, can be offset against costs, ensuring there are no taxes owed”.

Mr Donnelly said: “The accounts indicate that the interest income minus the interest costs for the year come to €4,559,904. Astoundingly, the figure for administrative expenses against that is €4,558,904, leaving exactly €1,000 in taxable profit.”

Responding to the issue which was raised at Leaders’ Questions, Education and Skills Minister Richard Bruton recommended that Mr Donnelly bring any relevant information to the attention of the Revenue Commissioners which operate under the Finance Acts on anti-avoidance measures.


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