A Lithuanian shopping mall partly owned by U2 star Bono is under investigation for potential tax evasion, following a probe prompted by the Paradise Papers.
The mall allegedly avoided paying 47,000 euros (£41,500) in local taxes using an unlawful accounting technique.
The company running the mall, in the city of Utena, denies any wrongdoing.
The leaked documents show that Bono owned a stake in a Maltese holding company that bought the mall, via a Lithuanian holding company, in 2007.
A spokesperson for the Irish entertainer and anti-poverty campaigner, also known as Paul David Hewson, said he was a “passive, minority investor” in the Maltese entity, which was “voluntarily wound up in 2015”.
Paradise Papers – exposing the tax secrets of the ultra-rich
In recent years, Bono, one of the wealthiest musicians in the world, has received international recognition for his social justice activism and philanthropy, even receiving an honorary knighthood from the Queen in 2007.
In the wake of the Panama Papers leak, the ONE Campaign, a charitable organisation fronted by Bono, repeatedly called for more transparency on the ownership of “shell companies” and offshore trusts, and decried the effect of lost tax revenues on developing economies.
Utena, which has a population of roughly 27,000, is a growing city in north-east Lithuania which has recently attracted tens of millions of dollars in foreign investment, mostly in the manufacturing sector.
The 3,700-square-metre Ausra mall, which currently contains 20 food and clothing shops, was built by Eika, one of Lithuania’s leading developers, and opened its doors in 2006.
In April 2007, Eika announced it had sold the mall to an unnamed “foreign investor”.
The buyer was a Lithuanian company named UAB Nude Estates 2.
Records uncovered by the Lithuanian journalist Sarunas Cerniauskas, the International Consortium of Investigative Journalists and the Guardian show that the company was ultimately part-owned by Bono, via a series of companies in foreign jurisdictions.
Between 2007 and 2012, the Lithuanian firm UAB Nude Estates 2 was owned by a similarly named Maltese company, Nude Estates Malta Ltd.
Leaked registry documents reveal that the Maltese company was partly owned by Bono, along with two other businessmen.
In 2012 ownership of the Lithuanian company was transferred to another offshore company, named Nude Estates I Ltd, this time in the British Crown dependency of Guernsey.
In a written response to questions from the ICIJ, a spokeswoman for Bono, Kathy McKiernan, said the U2 frontman is currently “a passive, minority investor” in the Guernsey company, Nude Estates I, and had held a minority stake in Nude Estates Malta, which has since been wound down.
“Malta is a well established holding company jurisdiction within the EU,” Ms McKiernan added.
The Lithuanian company that runs Ausra mall, Nude Estates 2, declared a loss of more than 3 million euros (£2.6m) in 2010.
According to analysis by tax expert Ruta Bilkstyte, the loss was achieved by a write-down of the company’s fixed assets, the largest of which was the mall building itself.
The company carried that loss forward until 2016, paying no tax despite posting profits for five of those six years.
In a statement sent to news site 15min.lt, the Lithuanian tax office confirmed that Nude Estates 2 had not paid tax on its profits since at least 2011.
Ms Bilkstyte, who was not told of Bono’s connection to Nude Estates 2, estimated that the company likely avoided paying 47,000 euros in tax to date, and was set to avoid almost 400,000 euros (£353,000) more.
This, in her view, amounted to a deliberate and “crude violation” of the tax code.
After 15min.lt reporters brought Nude Estates 2’s filings to the attention of the Lithuanian State Tax Inspectorate, the agency said it was launching an investigation into the company.
A spokeswoman for the Inspectorate told the BBC it had “commenced control procedures”, and that such an action was usually undertaken on the “evaluation of risk of tax breaches”.
“Taxpayers having offshore transactions more often score higher points of risk,” she added.
Sigitas Jautakis, the Lithuanian director of Nude Estates 2, said he was unaware of Bono’s connection to the mall and denied his company had engaged in illegal activity.
He added that if found to have underpaid tax, the company would make up the shortfall – but cautioned that the authorities “hadn’t carried out any inspections or anything”.
“But they should, first of all, delve deeply into the entire situation,” he said.
The papers are a huge batch of leaked documents mostly from offshore law firm Appleby, along with corporate registries in 19 tax jurisdictions, which reveal the financial dealings of politicians, celebrities, corporate giants and business leaders.
The 13.4 million records were passed to German newspaper Süddeutsche Zeitung and then shared with the International Consortium of Investigative Journalists (ICIJ). Panorama has led research for the BBC as part of a global investigation involving nearly 100 other media organisations, including The Guardian, in 67 countries. The BBC does not know the identity of the source.
Paradise Papers: Full coverage; follow reaction on Twitter using #ParadisePapers; in the BBC News app, follow the tag “Paradise Papers”
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