How Fashion TV investor and Russian billionaire Oleg Boyko and his Latvian partners use Malta as a tax haven for operations in Europe and the USA, while earning vast profits from emergency loans to Europe's poorest and most vulnerable citizens, the #MaltaFiles can reveal









Romania. Late 2015. Despite only being in his 30s, Daniel is following a complicated treatment for lymphatic cancer. In theory, Romania offers its citizens free healthcare. In practice, patients have to pay for essential drugs and bribe doctors, nurses and orderlies for medical services. These costs can cripple a family's finances. And Daniel is no exception. He borrowed money from relatives and friends, and took loans out from banks to by drugs to treat his cancer. But now he has run out of options.

So he turns online. To a fast loans company Zaplo. On TV and on the Internet if offers “no interest rate or commission” for the first loan. And immediate money transfer. It seems too good to be true.

Daniel makes a contract online in his wife's name, because she has a better credit history than him. That day in November 2015, 800 RON (175 Euro) flashed up in her account.

Although Daniel already had cancer, this was when his nightmare began.

Daniel was hit by bills from every direction and could not pay back the 175 Euro in time. In two months, the amount doubled to 350 Euro. Zaplo customer centers - manned by real people and robot callers - contacted him every day. They sent him emails. Letters. They wanted their money back.

They reached a deal. He would pay the 350 Euro in two tranches. At first, Daniel paid back the initial amount.

“But after you tie yourself up, you cannot get rid of them,” he says now.

When he could not pay the second part, Zaplo took the case to court. Daniel says that his family was not told about the trial.

In late February 2017, the court imposed a foreclosure for 2,647 RON (approx. 585 Euro), which included penalties of 1,598 lei (353 Euro) and commissions - which doesn’t mention the sum that was already paid. The effective annual interest rate became 1,989 per cent.

“Without any warning, after several months, my wife received a notice from a bailiff that her account would be blocked,” Daniel says. The amount they needed to pay also included about 100 Euro for the bailiff. His wife's entire monthly income was frozen, although Romanian law states that, in such cases, only a third of the monthly income is subject to such action.

“They deprived a family of its food,” Daniel argues.

Meanwhile, he finished the treatment for cancer. But to cover his debts, he had to migrate to Germany for work.

“I had to leave Romania because of some thieves who deceived me and lied to me,” he says.

Daniel’s case is far from singular. Zaplo IFN started to offer fast small loans in Romania in June 2015 and by April 2017 the company was involved in 1,570 cases in Romanian courts against clients - the vast majority foreclosures. The business benefits from customers not paying their loans back in time.

Other Romanian clients told us the same story of ballooning interest rates after the first month. Take 62 year-old Ana Kosa. She needed 132 Euro to cover basic expenses to supplement her 88 Euro a month pension. After failing to pay back the amount after 30 days, the costs swelled to 308 Euro, forcing the pensioner to move to Austria to work as an elderly carer.

“They [Zaplo] kept calling me and saying they will come to recover the amount,“ she says. “But for 1,400 lei (308 Euro) what can they take from me?”

Romanian lawyer Adrian Cuculis says clients of fast loans constitute one third of his cases - a number in the high hundreds.

Zaplo IFN is not a standalone Romanian company. It is subsidiary of Latvian based AS 4finance which operates in 17 European and American countries.

4finance claims to be “Europe’s largest and fastest growing online and mobile consumer lending group”. Since establishing in 2008, it has provided more than 11.5 million loans totalling over 4.0 billion Euro.

But interest rates can increase to even 2,000 per cent per year. This has caught the attention of consumer protection agencies.

In 2016, the Finnish Consumer Ombudsman applied for an injunction on a 4finance subsidiary on the grounds of unlawful credit granting practices - stating that a 2,010 Euro credit could balloon into 4,145 Euro in six months due to late payments.

In Denmark, 4Finance subsidiary Vivus violated Danish marketing laws by stating on the website that the interest rate on a loan was 19 per cent. According to the Danish consumer ombudsman, the correct figure would have been 730.1 per cent.

While 4Finance preys on vulnerable citizens across the continent, The Malta Files can reveal how its former and current owners are using tax avoidance schemes in Luxembourg, Cyprus and the Bahamas. The full report on this story is here.

But one of the most important tax friendly country for beneficial owners who profit from poor European citizens with usurious fast loans is - Malta.