(translated from: “Los abogados de Cristiano Ronaldo: ‘Esta estructura es un problema muy serio para el jugador'”, El Mundo, Sunday 4 December 2016, Paula Guisado and Javier Sanchez, http://www.elmundo.es/deportes/football-leaks/2016/12/04/58434d17468aeb68028b465f.html)

 

– “They should be crapping themselves. They didn’t want to listen to us back then, let’s see how this turns out now.”

– Cristiano diverted at least 150 million to tax havens to hide revenues for image rights

– Cristiano Ronaldo does not clarify if he is still under investigation

Ronaldo, Mourinho, Falcao, James, Coentrao… The information from Football Leaks that EL MUNDO started to publish on Saturday reveal that the clients of Jorge Mendes diverted tens of millions of euros to Ireland, tax havens like the British Virgin Islands and Switzerland. They did so for many years without being investigated the tax authorities of several countries. But when the Spanish Tax Agency started to inquire, the successful system became “a huge problem” for the representative’s clients. While the tax authorities continued to open inquiries into players from Mendes, the tension between his lawyers in Spain – the Senn Ferrero law firm – and his partners at the Gestifute company increased.

“Let’s see, gentlemen, the scheme you created is a very serious problem for the player,” summarized tax lawyer Julio Senn, founding partner of the Senn Ferrero law firm and former director general of Real Madrid, in an email to the Portuguese. His role was complicated: to defend a tax scheme created by someone else and on which he had no control or full knowledge. But even so he agreed to defend Mendes‘ method against the Spanish tax inspectors with all that it entailed. His repeated warnings to the agent’s entourage about the risks of offshore companies mingled with strategies to receive the lowest sanctions possible. And in the whole process, there were constant discussions.

The difference of opinions started already in 2014 when the Tax Agency began their first inspections of players like Ricardo Carvalho, Fabio Coentrao and Pepe (Kepler Laverán Lima). Big shots like Ronaldo and Mourinho felt threatened. At that time, Mendes’s usual representative in Spain, Julio Senn, explained the situation to three of the Portuguese’s closest partners: “Their focus [of the tax authorities] is global, but they are especially looking for schemes of image rights that have not been taxed in Spain.”

Investigations into Spanish national team players

Both parties began to talk nervously about the cases already opened and the well-known precedents. In previous months, the tax authorities had investigated Spanish players such as Sergio Ramos, Iker Casillas, Xabi Alonso, Andrés Iniesta, Xavi Hernández, Gerard Piqué, Carles Puyol and David Villa. They had imposed important fines, considering that all their income, including image rights, was salary and had to be taxed as such. For the players linked to Gestifute, the penalties could be a lot higher because of their offshore scheme.

The Mourinho case was the first headache for both Spanish lawyers and Portuguese agents. “They are shitting their pants,” wrote Julio Senn in an email to an external advisor, D.R., in September 2014. And the latter, aware of the problem, replied: “They should be”.

The Football Leaks research shows that the coach was at that point not yet aware of all the details of the inspection the tax authorities had just started. Moreover, as becomes clear from the communication between the lawyers, the information that had been declared might not have been totally correct. It was time to face Mourinho. The situation, Senn said, was “a false calm that will explode if they tell MOU the truth”.

The truth was, according to the same advisors, that the figures they had included in the income tax return of the coach were “a little inflated”. As EL MUNDO reveals, the solution would, months later, require extreme measures by the legal representatives of the coach.

But there was an issue that worried them more. The ongoing inspections could eventually reach Ronaldo and, if that happened, tax authorities could uncover the player’s offshore stcheme. As EL MUNDO published on Saturday, the Portuguese diverted at least 150 million of his advertising revenues to the British Virgin Islands.

Before the case reached the star of the Mendes clan, his legal advisors in Spain had already warned about the risks of the tax structures. But they had not listened to them.

“My hope remains that, based on transparency, on the fact that this already existed before he came to Spain and that it still exists, and on the fact that that we are willing to collaborate and willing to pay (authorities need cash at all costs), the matter will be closed without sending the file to the prosecutor’s office”, commented D.R., the external adviser. It would cost the players “a fortune”, the adviser said. But in order not to end up in court, it was crucial to avoid a war with the tax authorities: “I think we wouldn’t gain anything and the press would be all over it. We would all lose.”

Hand over the documents or not

Carlos Osorio, one of the main associates of Mendes and his legal representative, did not have the same opinion regarding the attitude towards the Tax Agency. His intention was to shield the documents and, with them, the tax scheme. That is why he resisted handing over Cristiano Ronaldo’s image rights contracts when the inspectors began to inquire on 3 December 2015. “Some license agreements (not to say all of them) have confidentiality clauses so we should not hand them over that easily”, argued the Portuguese lawyer. “Confidentiality clauses or not, the Spanish Public Treasury wants to look into them,” Senn retorted sternly.

By that time, the other cases of Mendes’ players investigated by the Spanish tax authorities had become bigger. The conversations between Julio Senn and the associates of the agent reached a peak of tension when the Spaniard wrote that his clients faced a “very serious problem”.

“If the scheme meant serious trouble, why didn’t you warn us before we handed over the contracts to the tax authorities?”, Osorio complained. Julio Senn’s reply was an explosive message with a copy to Mendes himself and a clear conclusion: you had been warned. “Hopefully this doesn’t go further and they’t don’t consider the structure of Jorge in Ireland to be an essential cooperator to avoid paying taxes in Spain,” said the tax lawyer.

Confronted with this danger, Osorio answered in a pacifying tone. And given the importance of the matter, he invited his Spanish colleague to discuss this in person on his next visit to Madrid.

Ahead of that meeting, he clarified his position and suggested an issue that would be key, especially in the case of José Mourinho: “It’s not about not handing over the documents, but about handing them over as they are now. Weren’t we still on time to change them?”.

Read also other translations :

– Cristiano diverted at least 150 million to a tax haven to hide image rights revenue

– Cristiano Ronaldo got paid by Nike, KFC, Toyota and Konami through a company in Ireland

 

(translated from: “Los abogados de Cristiano Ronaldo: ‘Esta estructura es un problema muy serio para el jugador'”, El Mundo, Sunday 4 December 2016, Paula Guisado and Javier Sanchez, http://www.elmundo.es/deportes/football-leaks/2016/12/04/58434d17468aeb68028b465f.html)