Above: Nenad Popovic Credit: SNP

A data leak from Appleby, a law firm based in Bermuda, sheds light on the business and real estate empire of Nenad Popovic, a Serbian minister found to be worth at least US$ 100 million – and possibly more.

Appleby declared Popovic and Politically Exposed Person or PEP and a “high risk.” The firm also dug deeper into his backround and noted his connections to notorious financier Marc Rich and his companies’ activities in Russia. The request was never completed after being scuttled at some point by one of the parties.

The minister is widely known in Serbia as “Russia’s man” in the government. In fact, according to media, one of his first meetings after being named to his post last June was with Russia’s ambassador to Serbia, Alexander Chepurin.

The Serbian People’s Party, which he founded in 2014, advocates closer relations between Belgrade and Moscow and opposes Serbia’s plans to join the European Union. Moreover, he built his business empire, controlled by his company, ABS Electro, in Russia.

Popovic’s Russia ties go back years. In 2008, he supported selling Serbia’s public oil company, NIS, to Gazprom, the Russian state-owned oil giant. According to his biography, he lectured at two universities in Moscow. And he recently told an interviewer that he is “proud” of the support he receives from United Russia, Russia’s ruling political party.

Popovic is minister-without-portfolio in charge of innovation and technology. It is not clear how he got the post, given that the Serbian government calls the country’s integration into the European Union (EU) a priority.

Paradise Papers

The Paradise Papers is a set of millions of internal documents and emails from Appleby, an offshore law firm, that were leaked to the German newspaper Süddeutsche Zeitung and shared with the International Consortium of Investigative Journalists (ICIJ), the Organized Crime and Corruption Reporting Project (OCCRP), Serbia’s KRIK, and 92 other media partners from 67 countries.

The papers relating to Popovic show that, despite his admiration for Russia and his career as a Serbian politician, he has been a legal resident and taxpayer in Switzerland since 2008.

They also show that he is very rich. Popovic has made no secret of his wealth, but the leak has, for the first time, made its extent clear. An audit by the accounting firm PricewaterhouseCoopers AG (PwC) discussed in the papers estimates his worth at least $75 million.

The documents show that he controls offshore companies registered in Cyprus and the British Virgin Islands (BVI), companies in Russia, and property in at least three countries.

They also indicate that, while Appleby was initially eager to help Popovic manage his empire, it appeared to stall and delay finishing the job after discovering more about his history and his associates. It is unclear from the leaked documents which side backed away although Popovic has claimed it was him.

According to the leaked documents:

Popovic hired PwC to help him comply with Swiss tax requirements.

While serving as vice president of Serbia’s legislature in 2012, Popovic planned to reorganize his wealth using a web of offshore companies. The structure would be controlled by a Hong Kong trust and two companies registered on the Isle of Man.

PwC reached out to Appleby on his behalf in late 2012. Sergey Bezborodov, the firm’s senior manager in Zurich, emailed Appleby and pointed out that Popovic’s was an emergency case. “We have a new client case for you, which will need to be handled in early January (2013) with a view to set up the structure and transfer the assets by the end of January,” he wrote.

But Appleby never finished the job. The leaked emails show that, after digging deeper into Popovic’s background, the firm found Russian media reports tying his businesses to shady characters and a famous corruption case. He was marked as “high risk” in Appleby’s records and, in 2015, expunged from a list of clients.

Mr. P

Credit: SNP Nenad Popovic

Popovic was vice-president of the National Parliament of Serbia when the first approach to Appleby was made on his behalf.

In an initial email correspondence, PwC’s Bezborodov didn’t name Popovic. Later they would identify him as “Mr. P,” though it’s clear from the emails that Appleby knew who their client was.

“Our client, of Eastern European origin but living and tax resident in Switzerland for many years, intends to transfer his wealth (operating companies and private real estate) into an asset protection structure,” Bezborodov explained.

A document he sent to Appleby, titled “Reorganization of Private Wealth Structure,” showed Popovic’s intention to create two offshore companies through which he would control his businesses and real estate assets.

Popovic wanted Appleby’s expertise in setting up companies on the Isle of Man.

According to the plan, one Isle of Man company, to be called Gluna, would work through a series of Cyprus-based companies to control his businesses, most of which are in Russia. Another Isle of Man company, Salastrains, would use companies registered in Cyprus and the British Virgin Islands to control Popovic’s real estate in Serbia, Montenegro, and Russia.

Popovic also wanted to register a trust in Hong Kong that would hold the two Isle of Man companies, but only become active and take control of them after he and his wife died. The trust would ensure that his family members would inherit his wealth after his death.

“The client dislikes trusts, as during lifetime he wants to actively run the business and is not ready to give up control to a trustee,” Bezborodov wrote. “We therefore came up with a combined structure” to meet his needs.

According to Andres Knobel, an analyst for the Tax Justice Network, these structures could be useful for two reasons: protecting assets from creditors and maintaining secrecy.

“Trusts are even better for asset protection purposes than the other types of entities such as companies”, Knobel said. “A protector can be used to ‘control’ the trustee’s discretion”, he said.

The trusts are useful for secrecy, too. “No one may know who owns a trust or what assets the trust holds, because trusts are hardly ever registered,” Knobel said. “Another part is that authorities or anyone else will never know [who] is behind the trust or other structures, in case the persons are involved in any illegal activity.”

In its emails to Appleby, PwC described the wealth of “Mr. P.”.

“For Swiss tax purposes, we assessed the overall value of the business assets at approx. 65 million [Swiss francs] (US$ 65 million),” one of the employees wrote. “The true and fair market value is probably considerably higher. [Popovic] is currently negotiating a sale of a division of the business and the base negotiation price was assessed at US$ 100 million.”

The company also estimated the value of his real estate in Russia, Serbia and Montenegro as at least 10-15 million Swiss francs ($10.7 - $16 million).