The Uruguayan Footballer has pressed charges against the news website for defamation after Mediapart published an article describing certain fiscal optimisation practices, which he refutes.
Less than six months after their release, the “Malta Files” lead to a first trial in France. This extensive investigation, published in May by 13 major European media outlets (including Mediapart), in the context of the European Investigative Collaborations (EIC), has revealed numerous fiscal optimization and evasion practices, varying from laundering to corruption on the island of Malta.
But, on Tuesday November 7th, in one of the high courts in Nanterre (Paris), no rich tax evaders were amongst those issued warnings. The fourteenth criminal court were trying a journalist from Mediapart, as well as her director, Edwy Plenel for defamation, following a complaint filed by the Uruguayan Paris Saint-Germain striker Edinson Cavani.
To fully understand this affair, one must go back to May 22nd. On this day, Mediapart published an article entitled, “PSG: les millions maltais de la star Edinson Cavani” (PSG: Star Edinson Cavani’s Maltese millions). The author, Yann Philippin, explained how the current Ligue 1 top goal-scorer had created two Maltese companies: Edicavaniofficial and Rocha Holdings, to collect sponsorship revenues. These are important, as these six figure digits, correspond with the period in November 2014, when he switched sponsors, from Adidas to Nike.
As early as 2015, the body Edicavaniofficial collected €1.59m. Mr. Phillippin, who usually works on fiscal matters and who participated in the “Football Leaks” report a few months earlier, described a “fiscal optimisation mechanism.” He explained in detail how tax rebates in effect on the island allow Edinson Cavani’s Maltese companies to only pay €48,805 in taxes on these companies, instead of €530,847 in France. “In other words, €482,442 saved for the PSG star, and that much money lost for the State of France in 2015 alone,” ensued the journalist.
Mediapart’s article mentions Edinson Cavani’s defence who, in a short response sent by encrypted email, affirms that “these companies declared and are taxed in France,” and that they “perfectly abide by their fiscal obligations.” All this without responding to the journalist’s questions on why such a financial operation was put in place. It only took two days after the publication of the article for the footballer to press charges against Mediapart for defamation by direct filing, which targeted 10 paragraphs from said article.
It is known that Edinson Cavani has well and truly paid his taxes for sums earned for his image rights. Twice, rather than once. First in Malta, then in France. The French state has therefore not lost any money in this matter. To prove this, his lawyers presented the player’s 2015 assessment notice and his income tax from the same year. This financial operation is quite surprising seeing as, if he had simply cashed those sums in France, without creating those companies in Malta, the Uruguayan would have paid less money in taxes.
Arguing that those sums were paid and declared to French tax authorities, Hervé Lehman, the footballer’s lawyer, was outraged over Mediapart’s article, for whom, is “a considerable prejudice” and “a sizeable accusation towards Mr. Cavani, who is a player of a sizeable standing.” In the footballer’s absence, he spoke of a “foolish deduction,”, “sophisms” and of “a constant insinuation” of tax fraud, even though the term was never mentioned in the article.
The lawyer did not deny the existence of the Maltese companies. But, he argued that “it is not because one goes to Bois de Boulogne that he is going for the prostitutes.”
“While the image rights contracts of the richest footballers are often subject to fiscal concealments, Edinson Cavani did not create them for that reason,” assured Maître Lehman, who did not go on any further to explain the creation of these bodies. He maintained that the footballer did indeed pay the taxes that he owed in France.
“Do we know many athletes who consider tax optimization, but also pay their taxes twice?” appeared to ask Maître Emmanuel Tordjman. The Mediapart lawyer repeated to the judges that “There was a concrete attempt at tax optimization; the operation has been set up.”
His theory is that the Maltese operation was made in the goal of paying a minimal amount of taxes, but that article 155-A of the General Tax Code ultimately obliged Edinson Cavani to declare his earnings in France, to not violate any laws vis-à-vis French tax authorities.
Yet, it was impossible for the journalist to know whether Cavani actually paid his taxes in France due to his “fiscal secret.” When the player was approached by Mediapart, his initial response was too brief to bring about any doubt. However, Cavani’s lawyers deemed his response very clear.
Why create these two companies in the infamous tax haven of Malta? In his plea, Maître Lehman outlined the primary elements to describe his client’s intentions, whom he describes as “a simple, discreet and honest man.”
“He is a foreigner who has been around the world,” he explained. “There is nothing extraordinary in him creating a company in Malta (…) Tomorrow, he could maybe play in a country where an article 155-A in General tax code does not exist.”
Maître Tordjman has lamented this “diversion of justice (…) Is it not legitimate to know that Mr. Cavani has opened these two companies in Malta? Of course, it is. (…) This is fiscal optimisation, and that is wants to be kept quiet.”
Should Mediapart have waited a few days before publishing their article if Cavani’s response was too brief? Did the news site act rashly in the article? How can questions of fiscal optimisation be dealt with if there is the issue of a “fiscal secret”? Prosecutor Lionel Bounan did not wish to speak on the topics of a sentence, existence or the defamation in regards to this specific article. However, he considered that the conditions were met in “good faith,” most notably in regards to the serious matters of this case, and that “journalists’ freedom of press needed to be preserved”.
The four-hour hearing, which was often quite tense between the parties, highlighted the difficulty for the media to investigate into these fiscal matters. It also brought to light the magistrates’ unfamiliarity with the realities of professional journalism. The president, Florence Lasserre-Jeannin, allowed herself to say: “Sir, I am almost tempted to say that you are worse than a police investigator…”
She was alluding to the email containing factual questions sent by Mr. Philippin destined for Edinson Cavani, four days before the publication of the article. These questions, relating to financial operations, do not seem out of the ordinary for this kind of matter. One of the associate judges went as far as to suggest to the stunned journalist, “You could have written a general article on fiscal optimisation, and said “certain footballer,” without stating his name, right?”
Following the release of the Malta files, the European Union has launched an investigation into Malta’s fiscal policy. Once again, Valetta finds itself at the centre of the “Paradise Papers.” The verdict for Mediapart is expected on January 9th, 2018.