Leo's Secret Society The Shady World of Messi's Charitable Foundation
Documents from the Football Leaks whistleblowing platform have raised serious questions about Lionel Messi's charitable foundations -- from annual reports filed years after the fact to the granting of possibly illegal tax exemptions to donors. By DER SPIEGEL Staff
The security guard is sitting at his desk and staring at a half-dozen monitors, his back ramrod straight. On the wall next to him hangs a sign bearing the names of 13 companies. One of them has to be the foundation belonging to Lionel Messi -- this, after all, is the address that the Argentinian football star's charity group puts in its contracts. But the foundation's name seems to be missing from the sign all the same. Only the well-informed are able to figure out where to go: Limecu, a company belonging to Messi's father Jorge.
The elevator creaks and groans its way up to the 11th floor, where the company is located. It is only here, where Limecu is headquartered, that one finds silver letters stuck to a wooden wall reading: "Fundación Leo Messi - elegí creer," or "Leo Messi Foundation - I chose to believe."
This, then, is supposed to be the nerve center of Messi's charitable impulses, in a high-rise in the center of Rosario, Sante Fe Province, Argentina. The football magician grew up in straitened circumstances not far from the office building. Today, though, he is the highest paid player in the world, earning more than 100 million euros per year and presenting himself as someone who shares his wealth with those who haven't been quite so lucky in life: the sick, the poor, the needy and, especially, disadvantaged children.
The foundation in Argentina is something like Messi's bank of good conscience. Sponsors pay in millions of dollars so that the superstar can use their money to make the world a bit better. It's a nice thought. But is it real?
No one answers the foundation buzzer. A crack next to the door provides a view of completely empty desks: no papers, no coffee cups, no family photos. The only indication of the man for whom the foundation is named is a plastic, life-sized model of Messi next to the entrance, wearing the national team uniform.
Foundations belonging to Lionel Messi are not unknown to the tax authorities. Last week, DER SPIEGEL and its partners in the group European Investigative Collaborations (EIC) revealed that the football professional paid 12 million euros in back taxes in 2016. One of the reasons for that back payment had to do with the around 7.5 million euros paid by his employer, FC Barcelona, to Messi's Spanish foundation. The tax authorities were of the opinion that the player should have paid taxes on that money as though it had been part of his salary.
'Hasn't Been Back Since'
The elevator beeps and the security guard steps out looking none too pleased. In a deep voice, he says that it is prohibited to loiter on this floor. It's private, he says, and orders us to come with him. Once he's back at his desk on the ground floor, though, the guard becomes a bit chattier. "Sometimes someone is here for a couple of hours, but very infrequently." The security guard taps on a monitor displaying the parking garage. "That's the parking spot belonging to Messi's father Jorge. He only rarely shows up and he goes to the foundation offices even less often. Usually he just parks his large BMW with tinted windows and walks into the city," the security guard says.
Has Lionel Messi ever been here as well? "Oh yes! But that was many years ago. He didn't even know back then what floor the foundation was on and he took the elevator to the 10th floor by accident instead of the 11th. When he got out, the women in the offices there went nuts and they all surrounded him asking for autographs and photos. He hasn't been back since." The security guard laughs.
Charitable institutions collect money from donors and distribute it further to those in need. It is a noble calling, and the success of the model depends on transparency. Donors, after all, are given generous tax exemptions while the foundations themselves are dependent on the trust placed in them by their benefactors.
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But a closer look at the foundations and companies associated with the Messis reveals a web of organizations and companies in Spain, Argentina and Britain in addition to cash flows involving tax havens. It is a complex empire hidden behind a thick veil -- and one that is managed by Lionel Messi's brother Rodrigo and his father Jorge.
DER SPIEGEL spent months reporting this story and has examined thousands of documents pertaining to Messi's foundations, a huge number of which come from the whistleblowing platform Football Leaks.
The story of Messi, the presumed philanthropist, begins in April 2007, when he founded the Fundación Leo Messi in Barcelona in the presence of a notary public. The player himself was listed as president, his father Jorge and brother Rodrigo were registered as assessors and the lawyer Iñigo Juárez assumed the post of director.
At the time, Juárez was one of the very few members of Messi's inner circle who wasn't actually a relative. Through his law firm, he helped Lionel and Jorge Messi in 2006 set up an illegal web of front companies in tax havens which were used to hide the player's marketing revenues from the authorities. That is according to the May 2017 ruling by Spain's highest court, which found Lionel Messi guilty of evading taxes on more than 4 million euros and Jorge Messi guilty of aiding and abetting his son.
When the foundation was set up, the notary public informed those present of their legal obligations, including that of registering the foundation with the Protectorado, the agency responsible for charitable institutions in the Spanish state of Catalonia. But Fundación Leo Messi wouldn't actually be registered until June 6, 2013.
Which means it was under the radar for six years. How is such a thing possible?
Questionable Tax Exemptions
In response to a query from DER SPIEGEL, the Protectorado answered that the Messis lacked the necessary documentation when they first tried to register the foundation in 2007. After that, they simply ignored deadlines. According to Spanish law, the failure to register a foundation isn't necessarily illegal. Foundations don't have to adhere to laws governing charitable organizations until they are registered. Unregistered foundations, for example, aren't required to spend 70 percent of their revenues on charitable projects, as Spanish law otherwise requires.
The failure to register only becomes legally relevant if the foundation takes advantage of tax exemptions or provides tax exemptions to others, by issuing donation certificates, for example.
"A Spanish foundation that is not registered can't issue donation certificates," says Javier Martín Cavanna, an expert in Spanish law pertaining to charitable foundations. In such cases, donors "can't benefit from tax exemptions," Martín says. "Issuing donation certificates without authorization could constitute a crime of document forgery." Albert Sanchez-Graells, an economic law expert at the University of Bristol Law School, reached a similar conclusion. "By issuing tax-deductible certificates prior to 2013, Messi's foundation would have breached Spanish tax law."
But it looks as though that is exactly what Fundación Leo Messi did. In the Football Leaks documents, there are numerous indications that the foundation began operating long before it was officially registered -- and that it proved quite successful when it came to raising money.
Parallel to the contracts that Lionel Messi signed with FC Barcelona, the team agreed to pay millions of euros to the player's Spanish foundation. The Agencia Tributaria, the tax authority in Barcelona, has calculated the total to be slightly over 7.5 million euros just for the years from 2010 to 2013.
The Fundación apparently finally filed its annual reports for the years 2010-2012 in summer 2016 -- and only after auditors requested that FC Barcelona file documents pertaining to the taxation of the millions of euros it paid out to Messi's foundation. In its contract with FC Barcelona, the foundation had committed itself to providing the club with reports each year.
It is peculiar that aside from FC Barcelona, Messi's Spanish foundation hardly has any other donor worthy of mention. Since 2013, it has taken in around 7 million euros in donations, with just under 6 million of that coming from the club. In 2016, FC Barcelona was the only donor. Were it interested in making money available to charity, the club could just as easily have done so directly through its own foundation.
A Risk Analysis
In April 2016, auditors once again had an appointment with FC Barcelona representatives. They were looking for detailed information about the payments made by the club to Messi's foundation in the years prior to the foundation's official registration.
In order to assess exactly what the public officials might have in store for them, club executives commissioned a risk analysis from an external lawyer. The attorney delivered his assessment in mid-June; DER SPIEGEL is in possession of a draft of the document. It notes that in its tax declaration, FC Barcelona had declared the millions of euros paid to the Messi foundation as donations -- and took advantage of the tax benefit made available for such donations. The lawyer's report notes that the Fundación issued donation certificates to the club in exchange.
The foundation wasn't legally allowed to issue such certificates until 2013. The Protectorado, the Catalonian oversight agency, noted to DER SPIEGEL that an unregistered foundation "is not allowed to take advantage of special tax provisions."
An internal club document sheds light on FC Barcelona's role in the affair. It is the compliance report for the months of July to September 2016. It reads: "An examination of the foundation would have enabled us to discover that the Fundación Leo Messi ... had not been properly registered." Because of the ongoing audit, the report notes, the club faces a "real tax risk." If FC Barcelona wrote off the millions it donated to the Messi foundation prior to 2013, which the Football Leaks documents seem to indicate, then the club violated Spanish tax law. The tax authority's audit of FC Barcelona continues to this day.
Belated annual reports, possibly illegal donation certificates leading to potentially unlawful tax exemptions for benefactors: Such were the questionable methods employed by the Messi foundation in Spain until 2013.
A look to South America reveals an additional foundation belonging to the superstar -- one that was apparently designed to deceive. It is called Fundación Leo Messi Argentina and was founded as an independent organization in Rosario in summer 2011. The foundation in Barcelona, which the Messi's hadn't yet officially registered at the time, provided start-up funding of 560,000 euros.
But why does Lionel Messi need two different foundations bearing essentially the same name?
- Part 1: The Shady World of Messi's Charitable Foundation
- Part 2: Where Does the Money Go?