Ever since Liberty Media arrived on the scene in September with its audacious $8bn takeover of Formula One it has stressed that it marks a fresh start for the sport. It seems that in some respects at least, this is far from the case as today's cover story of Scotland's Herald newspaper by Christian Sylt and David Leask reveals.
Liberty made much of its intention to put fans first but instead of addressing one of their biggest gripes - the increasing need to pay to watch F1 - it has signalled that it intends to carry on down that very path. Likewise, it hasn't shaken off the controversial comments that F1's former boss Bernie Ecclestone was famous for. Worryingly, as Pitpass recently reported, the incendiary outbursts are now directed at some of F1's biggest spenders.
As we also reported, Liberty has repeatedly boasted about how "brilliant" F1's tax structure is. That's the structure by which F1 avoids paying hundreds of millions of Pounds which would otherwise be going to the British public through taxes.
In 2015, the latest year for which records are available, it paid just $6.5m of corporation tax on underlying profits of $463.6m thanks to a scheme which was put in place by F1's previous owners, the investment firm CVC. The fact that Liberty has heaped praise on it seems to blow out of the water the theory that the motives of F1's new owners in this respect are significantly different to those of its predecessors.
Indeed, unlike CVC, Liberty has crowed about this so much that it has attracted attention from politicians who are demanding an investigation and will be quizzing Britain's tax authority H.M. Revenue & Customs (HMRC) about it next month as we reported last week.
Now comes news that Liberty has gone even further than CVC and appears to have scoured a copy of 'Tax Shelters of the World'. It has set up several tax-efficient companies in the most unlikely of places. It's somewhere that even CVC didn't seek out and its reputation leaves a lot to be desired when it comes to these types of company structures. Strange as it may sound, it's Scotland.
Over the years, the F1 Group's owners and the companies in the group. have been located in many of the world's major tax havens including Jersey, Switzerland, Luxembourg and the British Virgin Islands. Liberty has upped the ante. It is famous for being floated on America's Nasdaq stock exchange but as Pitpass has reported, in fact the company Liberty used to actually buy F1 is based in another tax haven - the Cayman Islands. That was just the start.
The Herald has today reported that Liberty has also set up what is known as a Scottish Limited Partnership (SLP) which appears to be at the heart of its takeover of F1. SLPs are far from common.
Sylt discovered that Liberty had set up two SLPs and took the news to the Herald as it specialises in reporting on them. As its article states, they are "once obscure structures now popular among both legitimate businesses, for lawful tax planning, and international criminals, for money-laundering."
There is no suggestion of any wrongdoing or illegality by Liberty as the SLPs are understood to have simply been set up for tax purposes rather than to hide anything. In fact, the Herald believes it "marks the highest profile lawful use of SLPs in recent years."
Liberty's filings list two SLPs amongst its subsidiaries. One, called Liberty GR Foreign Holding Company I LP, has almost exactly the same capital value in cash and shares as the $8bn purchase price of F1. Another SLP, Liberty GR Foreign Holding Company II LP, is one of the partners in the first. Both are ultimate owned by other firms which are listed as being subsidiaries of Liberty.
The SLPs were registered by the respected law firm Pinsent Masons on August 24 and 25, 2016, and are formally based at its office in Aberdeen. The Herald quotes accountant Gary Deans, who advises Oxfam, and said: "This is a typical private equity structure." In contrast, Pinsent Masons did not comment to the paper.
When Liberty announced its takeover of F1 in September last year it said that it and its wholly owned subsidiary in the Caymans would buy all of the shares in F1's parent company Delta Topco. The Cayman company, called Liberty GR Cayman Acquisition Company, owns a business based in Bristol called Liberty GR Holding Company, and in turn it owns another Bristol-based firm, Liberty GR Acquisition Company. Both companies were incorporated the day after the SLPs.
The Herald said it had asked Liberty which company is the immediate owner of F1 but it declined to comment. An official spokeswoman said "We have no comment."
Right about now you're probably asking why Liberty has gone out of its way to set up companies in Scotland. After all, it's not a tax haven. Is it?
In most senses SLPs act like companies. They can enter into contracts, can buy and sell shares and other assets. However, there is one crucial difference - SLPs have no direct tax obligations because the partners are responsible for taxation, not the firm itself. It means that no tax is paid by the SLP in the UK if none of its partners are UK resident.
It means that if F1's profits flow through the SLP it could give one heck of a tax saving. It is perhaps no wonder that Liberty has been so gushing about F1's tax position.
What's more, according to the Herald, owners of SLPs can legally remain secret, pay no tax and even file no accounts provided their official partners are located in a traditional tax haven.
All of this explains why the Herald says SLPs are marketed, especially in the former Soviet Union, as "zero-tax offshore companies." It adds that the lawful, if controversial, use of SLPs as tax-avoidance structures is "far outnumbered" by completely opaque SLPs. Testimony to this, despite being highly uncommon and little-known, most of the media coverage of SLPs is about the latter.
For example, in 2015 the BBC reported that SLPs were linked to a $1bn fraud in the ex-Soviet republic of Moldova. The swindle is reported to have allegedly emptied three of Moldova's leading banks of almost all their funds. Likewise, just last week The Herald revealed that more than 130 SLPs had been used as part of the £16bn Russian laundromat, the biggest and most elaborate money-laundering scheme in history.
In January it was reported that the government's Department of Business, Energy & Industrial Strategy (BEIS) will undertake an official review focusing particularly on alleged "criminal" exploitation of SLPs. BEIS said that the call for evidence will help inform what further action, if any, is required to prevent limited partnerships being used as a front for unlawful activities such as money laundering and tax evasion, while also ensuring that the limited partnership business model continues to provide an efficient and flexible vehicle for legitimate business use.
The Herald says that SLPs have the dubious honour of being a subject that politicians from all five main Scottish parties agree on. They have all called for reform to stop criminals abusing SLPs but the Herald adds that Scottish law firms are concerned their lawful tax planning businesses could be damaged by any crackdown on criminality.
A familiar name has been added to the call for a crackdown. It is that of Anneliese Dodds, the politician who has been investigating alleged anti-competition in F1 since 2014 when two teams based in her region - Manor and Caterham - went into administration. Coincidentally, Dodds also happens to be a tax specialist and is from Aberdeen.
"This is yet another example of a loophole in the tax system that can be abused by companies and individuals looking to avoid their contributions. These shadowy SLPs are another tax instrument that, like trusts, need to be made transparent to crackdown on those avoiding tax," she told the Herald.
"Any time that tax avoidance occurs, that limits investment in schools, hospitals and vital infrastructure. We must make sure that all companies pay their fair share. We've already seen Formula One's previous owners setting up special tax deals with HMRC to pay just $6.5m on nearly $500m profit. I have called on the European Commission to investigate whether that deal constituted state aid and I will continue to call for these Partnerships to be reformed or brought to an end."
It raises the question of why a floated American company has gone to the trouble of setting up such an elaborate tax structure that even its financially-minded predecessors didn't touch. Whatever next from Liberty? Time will surely tell.