The less journalists can trace, the better. Bernt Aksel Larsen, the business brain behind the international sectarian Christian religious community called the Smith’s Friends, is up in arms when a journalist posed a number of questions to some of his fellow brothers in South Africa back in January this year. His advice: don’t answer them.
Dagens Næringsliv, a Norwegian newspaper, wants to know who owns the Cote de Val lifestyle resort Cote de Val on the Vaal River near Johannesburg. The fact that the Smith’s Friends have injected money into the luxury leisure project via a Cypriot company has to remain a secret.
Larsen orders the brothers in South Africa to “quickly set up a holding structure under which a foundation or you, in a private capacity, owns Cote de Val”. The financial statements should not mention the fact that the Cypriot company is financially involved in the project. Larsen: “Specifically, I wouldn’t answer the journalist right now, and make sure you get this sorted out as soon as possible. I do believe you have to prevent Norway or brothers from getting involved in anything to do with ownership or doing business.”
The Smith’s Friends (Dutch: ‘Noorse broeders’) have 40,000 members, 2,000 of whom in the Netherlands. The global centre of Brunstad lies in the south of Norway. In Norway, there have been numerous reports for years now about the mixing of business and faith among the brothers who, on an international basis, like to call themselves Brunstad Christian Church (BCC). So far, no hard evidence has been found. The more journalists write about money flows and tax havens, the deeper the brothers bury themselves.
Following the arrest of Dutch former brother Jonathan van der L. (34) in the Netherlands in March, the church is facing the biggest crisis in its existence. Van der L. has led the Dutch Fiscal Intelligence and Investigation Service (FIOD) through the obscure network of the brothers. The FIOD seized 50GB in information from him. NRC and Dagens Næringsliv have access to these hundreds of internal documents and 200,000 e-mails, including the e-mail from Larsen about the project in South Africa. The e-mails show that Jonathan van der L. was not just a key figure in the Dutch branch of this movement, but that he was worldwide the right-hand man of spiritual leader Kåre J. Smith (71) and business leader, Larsen (56).
Smith and Larsen manage a global network of more than 450 businesses and foundations. Within this network, businesses regularly change owners, and million-Euro loans are shifted to and fro. The money flows pass through tax havens on a surprisingly regular basis.
The businesses and foundations are managed by or are registered in the name of individuals. They work closely with Larsen and Smith. In practice, it is Larsen who dishes out the orders after consulting Smith. Jonathan van der L. and others carry them out. This is how Smith and Larsen rule the brother syndicate, as if it is their private property.
The duo is mixed up in businesses which they say they have no ties with. Compusoft for instance, European market leader in design software for kitchens and bathrooms. The company also has a branch in the Netherlands. The fact that the majority of Compusoft’s shares are owned by the Smith’s Friends is not known. In 2014, half a million Euros in dividends is transferred (as a loan) to a Cypriot business owned by the brothers.
Larsen attends the shareholders’ meeting of Compusoft. However, he is also involved in the Dutch contracting firm Emergo, he looks at the production figures of IEC-Hus, a Norwegian contractor, and attends board meetings of Finn Tack/Horze, a Finnish equestrian sport company, with leader Smith. These businesses form part of the business network of the brothers and they employ the followers who work voluntarily for them.
Presence of Larsen at the shareholders’ meeting
Aanwezigheid Larsen aandeelhoudersvergadering
The key theme in the seized e-mails is the payment of as few taxes as possible. Businesses are established on the British Virgin Islands, Bermuda, Cyprus and Dubai, among other places. Corporation and dividend tax in these countries are lower or zero. Whatever management in Cyprus and Dubai get up to is thought out in Norway. As such, the brothers are tax payers in Norway and the route via Cyprus can be regarded as tax avoidance, a lawyer tells Larsen in an e-mail in the spring of 2013: “The location of the actual management is decisive.” Larsen writes back saying that he will be careful with documenting “formal and informal” decisions.
Personal money machine
The financial motor of the network is formed by the 40,000 believers, spread out across the world. Their millions, saved for the Kingdom of God, have been transferred to two companies registered in Cyprus, BCC Global and BCC Financial, for years. BCC is the abbreviation of Brunstad Christian Church. Although Smith and Larsen have no official position at either company, they do manage them.
For the day-to-day management of BCC Global and BCC Financial, Smith and Larsen find the perfect man: Dutchman Jonathan van der L. He is a loyal brother, as a former FIOD officer he has a fiscal background and he is fluent in Norwegian.
Among other things, the church’s divisions give BCC Global the membership money paid by members for their own satellite channel, Brunstad TV. BCC Financial is the internal bank of the church. Cyprus is the ideal location. It has a nice tax regime and the banking rules are more lenient than those in western European countries. Those countries would demand a bank licence, but Cyprus does not.
Divisions that have any savings, lend it to BCC Financial. And the latter lends it to others. The Borrowing & Lending Covenants of BCC Financial state that the money can be lent only to businesses or foundations with a religious, humanitarian or charitable objective. Contracts with private individuals are not permitted. By the end of 2014 BCC Financial has outgoing loans worth 86 million Euros. The internal bank has more than 300 outstanding loans.
Lending conditions and annual report BCC Financial:
Uitleenvoorwaarden en jaarverslag BCC Financial
The e-mails show that religious organisations do not or hardly benefit from the savings. BCC Financial appears to be the personal money machine of Larsen and Smith.
From Norway, Larsen sends Van der L. instructions to lend money to a select group close to both leaders, on favourable conditions. Nineteen brothers, including children of Smith, are able to borrow one million Euros in 2011 in order to buy Finn Tack, a Finnish equestrian sport company. Then, 9 daughters, sons, sons-in-law and cousins of Smith or Larsen borrow another 1.4 million Euros.
Larsen also gives instructions to transfer money to himself. He is given 15 loans, worth 2.3 million Euros, in a private capacity and via a business. Church leader Smith also joins in. Together with Larsen, he indirectly receives a 6 million Euro loan. Larsen is aware of the risk. The loans issued to him and Smith are “dangerous”, he writes Van der L.
Loans to Larsen and his company:
Leningen aan Larsen en zijn bedrijf
Most of the money spent by BCC Financial goes to businesses in the network. Whereas ordinary banks face hardship after the financial crisis, money is readily available from BCC Financial, at a low interest rate and without the need for securities. Issuing loans seems to be the ultimate way of sending money around the network cheaply. Other than with an invoice or payment of dividend, a loan is tax-free. And after some time, a loan can be written off as “irrecoverable”. Thus only a part of the loans are paid back.
The brother’s own accountants, Deloitte in Oslo, voice their criticism about the loans just before New Years’ Eve 2011. The fact that the church takes care of the financing of BCC Financial which in its turn issues loans to parties affiliated with the church, can be seen as “evasion”, especially because the conditions are not competitive and the brothers are favoured over others who are not given such loans. The best solution would be to end the loans, says Deloitte.
The fact that at this time the Norwegian media starts writing critical news items about the sectarian brothers and the conflicts of interests of leaders Smith and Larsen turns this into a matter of urgency. In order to take the wind out of the media’s sails, Larsen withdraws from his official positions at the church. Nothing changes behind the scenes. Larsen continues to issue orders, the e-mails show. Afterwards, the dubious loans in Cyprus are transferred to BCC Global. Other than BCC Financial, BCC Global is not supervised by accountants and has no governance rules. BCC Financial’s annual figures for 2015 confirm the big clean-up. Of the 86 million Euros in loans from 2014, only 36 million Euros are left one year later.
Among the loans transferred to BCC Global are loans to family and friends. At BCC Global, dozens of loans to businesses and private individuals, together worth 7.4 million Euros, are subsequently written off as ‘irrecoverable’.
Transferring account BCC to BCC Financial Global:
Overhevelen rekening BCC Financial naar BCC Global
This brings no end to the shifting of loans to family members, friends and highly-ranked brothers and their businesses. They are now moved to a third company in Cyprus, this time with a shareholder who is hedged by a trust office in Bermuda. That is more secure.
Just as loans are handed out, so are jobs. Those around the leading duo are given high positions and interesting projects. Hanne Smith Nielsen, Smith’s daughter, becomes the director of Finn Tack/Horze, the equestrian sport company, in 2015. Son-in-law Tobias Nielsen, an architect, is able to submit invoices up to nearly 200.000 Euros. Both are paid with savings from the disciples, via a company in Cyprus.
Five-star hotel in Bangalore
In the meantime, Smith and Larsen travel the world at the expense of their disciples. They use the credit card of yet another Cypriot business, which is co-financed by means of a million-Euro loan from a charity owned by the Dutch brothers.
In 2012, church leader Smith spends more than 15,000 Euros on this card, including 450 Euros in the Hugo Boss store in Bangalore, India. He is staying at The Leela, a five-star hotel. During the winter months, the church leader stays in Malaysia, Tokyo, San Francisco and Honolulu. In Honolulu, he stays at the luxury Kahala Resort, a popular “celebrity hideaway” for American presidents and Hollywood stars, according to the website. Larsen visits Waihi Beach, a beach hotel in New Zealand, followed by a stay at the luxury Loews Hotel in Miami Beach.
Credit cards Smith and Larsen:
Uitgaven creditcards Smith en Larsen
Smith also uses the credit card of another Cypriot business, Smilar Invest. This company is owned by him and Larsen, for 50% each. Smilar Invest is “a private investment” Larsen stresses to the Norwegian media. But again, private interests are in conflict with those of the church. Director of Smilar Invest is, again, Jonathan van der L. His salary is not paid by Smilar Invest, but by a subsidiary. The staff at the Cypriot office of Smilar Invest also work for subsidiaries.
An e-mail from Smilar Invest’s accountant shows that church leader Smith spent seven thousand Euros in private purchases on the card of this company end of 2014/start of 2015. The accountant asks for copies of the bills. Jonathan van der L. responds on behalf of Smith: “This is paid back to the company in cash. Next time, cash will be taken to Cyprus.”
By paying back the private purchases in cash, Smith and Larsen prevent themselves from having to pay tax in Norway on these benefits in kind. The tax authorities could regard this as tax fraud and money laundering.
In the spring of 2015, the accountant confirms that she has received the money.
Four months later, Smith has spent no less than 20,757 Euros on the credit card. This includes a bill for more than 11,500 Euros in a hotel in Miami. The accountant now asks one of Smith’s sons: “I presume you’re taking cash for these expenses next time you visit Cyprus?”
Smith and Larsen receive this cash from Jonathan van der L. He withdraws the money in the Netherlands, from the accounts of businesses in Dubai and takes the money to Larsen in Norway, according to a statement from Van der L. at the court in Zutphen. A printout of the text messages between him and Larsen, seized by the FIOD, supports this. Larsen asks: “Are you taking Euros?” Later, Van der L. sends a text message that reads: “Do you want me to bring 4,000 Euros?”
SMS traffic between Larsen and van der L.:
Sms verkeer tussen Larsen en van der L.
Suspicious supervisory bodies
The brothers are able to get away with it for a long time, but during the past few years, the supervisory bodies have been asking critical questions about the global money flows. It starts with accountants Deloitte, who criticise the loans. This is followed by the Dutch tax authorities, who in 2014 decide to revoke the foundation’s charity status.
The British tax authorities than ask critical questions about the amounts of money transferred as loans to BCC Financial in Cyprus by the local division. How can it be proven that this money is indeed used for charity? The tax authorities are happy with the assurance that “yes, the money definitely goes to charity”.
This is not the end of the problems however. The Nordea Bank in Oslo is also querying the governance surrounding BCC Financial. Referring to the rules about money laundering, the bank asks for a list of loans. Jonathan van der L., with the knowledge of Larsen, gives Nordea a list from which the loans to private persons, including family and friends, have been deleted.
Larsen and van der L. about Nordea:
Larsen en van der L. over Nordea
Another Norwegian bank, DNB Nor, is also concerned about “the conflict of church and business interests”. This is mentioned in a letter that is delivered to the Smith’s Friends in the summer of 2015. The bank points out the risk of a conflict of interest and wants to know the status of internal audits. After all, those are intended to prevent money, saved by volunteers, from disappearing into the pockets of private individuals.
This bank too is told that BCC Financial only lends money to businesses that are affiliated with the church. This way, the brothers write, it is “completely impossible” for private individuals to favour themselves.
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