Who Taxes the Wind?

How the Serbian Prime Minister’s former company was part of an offshore network investing in renewable energy in Europe and Australia

by Blaz Zgaga (Nacional)

14 March 2018

Malta, USA, Serbia

Serbian Prime Minister Ana Brnabić could be personally involved in the process of creating an offshore corporate structure for a renewable wind project in her previous job as director of energy developer Continental Winds Serbia

Prior to her top appointment, Brnabić lobbied for new regulations on state incentives on renewable energy in Serbia. Regulations were approved while she was a minister in the Serbian government, which guaranteed her former company over 500 million Euro of revenues from the state-owned electricity distributor over 12 years [this project has since been sold]

Brnabić denies being involved or having any contact with the legislation concerning renewable energy, or of being involved in the ownership structure outside of Serbia

Following Brnabić’s appointment as the replacement for Aleksandar Vučić as the Serbian premier in 2017, energy developer Continental Wind’s main investment in Serbia – the Čibuk wind farm project - received the authorization to begin construction. The project received 215 million Euro in loans from the International Finance Corporation (IFC) and the European Bank for Reconstruction and Development

Despite Continental Wind’s presentation as American, the firm owns only a shell company in the US tax haven of Delaware, reports Croatian newspaper Nacional. The company and its founder, ex-Glencore and ex-Trafigura trader Mark W Crandall, is a US citizen who lives in Belgrade. He has collected revenues from developing and selling renewable energy projects using many offshore jurisdictions – including the British Virgin Islands, Guernsey, Luxembourg, Cyprus, the US state of Delaware and Malta. In none of these countries is the company in possession of, or developing publicly, a wind farm

At the end of 2015 Crandall and his partners transferred assets - mostly Australian wind farms - of their US company to a Malta trust, which has the potential to obscure and confuse the real owners. Some of them will receive what is understood to be millions from the sale of Čibuk wind farm, according to documents

Although this scheme does not appear to be illegal, there is a public interest concern that pan-national companies and investors which speculate on developments in different countries can use a vast network of offshore companies to create a system that makes it hard for the nations in which they operate to put them under comprehensive tax scrutiny

This is a summary of a report published by a partner of the EIC Network, Nacional, in Croatia


In September 2015, Serbia was rocked by a major eavesdropping scandal including a massive bribe allegation. A transcript of a private phone conversation was leaked to the press between Bojan Pajtić, the head of government of the northern Vojvodina province and Lidija Udovički, wife of Mark W Crandall of Continental Wind and sister of Kori Udovički, then Minister of Public Administration and Local Self-Government.

Lidija Udovički told Pajtić that she was blackmailed by Nikola Petrović, the director of the state-owned electricity transmission system operator, Elektromreža Srbije (EMS). He allegedly requested two million Euro in cash to approve the connection to the grid of a major investment by Continental Wind in the Čibuk farm in Dolovo, Vojvodina. Besides his job as boss of one major state company, Petrović was also the best man at the wedding of Aleksandar Vučić, then Prime Minister and now President of Serbia.

Pajtić later confirmed that the transcript of this phone conversation was authentic, while Udovički in the next year told police investigators that she has never met Petrović or talked to him. Petrović denied that he demanded any bribes. However the story further solidified Serbia’s status as a hotbed of corruption at the highest level, which is one of the country’s handicaps on its path to becoming an EU member state.

In the same month as the phone conversation, September 2015, Aleksandar Vučić visited Washington D.C for high-level meetings. He was met with a protest. At that time, five U.S congressmen signed a letter, which they passed to then-U.S Vice-President Joe Biden, detailing corrupt practices in Serbia. This letter showed how a small group, including Vučić's brother Andrej, and Nikola Petrović, had consolidated their influence “in all major businesses in Serbia.”

Vučić accused business “tycoons” of organizing the protest, claiming they were behind cases of blackmail in Serbia. Local tabloid newspapers who supported Vučić named Mark W Crandall, owner of Continental Wind Partners (CWP) as one of them.

It was Vučić himself who fueled this speculation.

“Some want to build wind farms in Serbia where there was no proper regulation, with the idea of selling electricity at three times the market price,” Vučić said. “One American company and a relative of one of our ministers was involved. They wished to win this deal at any cost.”

Crandall denies any involvement in this letter of protest.

This is when the new Prime Minister came in.

4 October 2015. The director of Continental Wind’s local subsidiary in Serbia was Ana Brnabić. She had just turned 40 years old, was a graduate of the University of Hull in the UK and had a history of consulting on USAID projects in Serbia. One of her key jobs as a director of the Continental Wind subsidiary was the development of the wind farm in Dolovo in Serbia.

She held a press conference in the government building. There was no illegal activity in her company, she said, no problem of communication between the wind firm and the Serbian state and no corruption took place during these procedures. The scandal came to a close.

She then publicly resigned as director of the company, but remained as director of Continental Wind Serbia until 19 August 2016, from when her career in government took off quickly.

In August 2016 Brnabić replaced Kori Udovički as Minister of Public Administration and Local Self-Government, and in June 2017, when Vučić became President of Serbia, Brnabić was surprisingly elected by the Serbian Parliament as Prime Minister.

Now her priorities are to combat the grey economy, reduce bureaucracy and tackle corruption in a country where the top oligarchs hide their fortunes in offshore companies. Brnabić also announced that her government would pass through parliament a law on making citizens reveal the origin of their wealth. After nine months, this law has still not seen fruition.

Brnabić in “email loop” over offshore set-up

Documents obtained by the European Investigative Collaborations (EIC) reveal that during her work as director of Continental Wind Serbia, Ana Brnabić was acquainted with some offshore operations of the international parent of this renewables company.

On 11 September 2014, the executive manager of Continental Wind Partners and business partner of Crandall, Italian citizen Fabrizio Cagnasso, who has a residence in the tax haven of Monaco, wrote an email to a Maltese law and accounting firm, Credence. Cagnasso owns Monaco-based company Deprojen, full owner of Continental Wind Serbia. Deprojen also owned Warm Waters Ltd, a company registered in Malta on 16 September 2014.

“We are a bit in rush to incorporate the Serbian special purpose vehicle (SPV) owned by Warm Waters Ltd,” he wrote to officials of a Maltese firm. He was asking for legal documents to incorporate a daughter company in Serbia, owned by a Maltese parent company. Alongside three different requested documents, he listed two persons and their private information. One was Ana Brnabić.

Less than a month since this email, on 10 October 2014, Warm Waters's Serbian subsidiary River Power Solutions was founded in the Serbian capital of Belgrade with about one Euro of share capital.

It is not clear from the above-mentioned email what role was taken by Brnabić in River Power Solutions, nor is there an obvious role for her in both the Serbian and Maltese companies.

However, a week earlier, on 3 October 2014, Brnabić, in her role as a director of Continental Wind Serbia, signed an amendment Nr. 2 to a lease agreement with a local landlord in Serbia, which included the company River Power Solutions. Beside the new Maltese-owned company, a few other energy-related firms were listed in this document, which all shared the same address at Djure Jaksica 6/5, Belgrade. These included Vetroelektrane Balkana, Vetroelektrane Balkana Zapad, and the Serbian Association for Wind Energy SEWEA.

The SEWEA is a non-profit lobbying organization that promoted wind energy, which was also represented by Brnabić before she began her political ascendence. Both the ‘Vetroelektrane Balkana’ companies had minority owners listed in another EU tax haven – Cyprus, until the end of 2017.

In response to this arrangement, Brnabić gave a statement declaring all to be legal:

“These companies are affiliates and I as the Continental Wind Serbia director, in agreement with the management of the company and in accordance with all applicable laws of the Republic of Serbia, allowed River Power Solutions to register in the CWS offices, for which they paid compensation. It was only important for me as the CWS Director to do business in accordance with the laws and legislation of the Republic of Serbia.”

Investments in the Serbian company River Power Solutions were funneled to Serbia from Luxembourg and Monaco through the Maltese middleman company controlled by Cagnasso and Crandall, who are also among the main owners of Brnabić’s former company Continental Wind Partners, incorporated in another tax haven, in Delaware, U.S.A

Brnabic (EC)

“It was only important for me as the CWS Director to do business in accordance with the laws and legislation of the Republic of Serbia,” Serbian Prime Minister Ana Brnabić (Picture: European Commission)

Wind farm: Serbia’s biggest private investment

Vetroelektrane Balkana is now building the Čibuk 1 wind farm in Dolovo, in the Serbian province of Vojvodina. This 300 million Euro will consist of 57 wind turbines over 37 square kilometers with a capacity of 158 Mega-Watts, and targets the powering of more than 110,000 homes. Construction started in July 2017 and is planned to be finished in 2019. Both the International Finance Corporation (IFC), a private investment arm of the World Bank, and the European Bank for Development and Reconstruction (EBRD) co-financed the project with 215 million Euro in lending.

The project is wholly owned by Vetroelekrane Balkana and the electricity will be sold to the Serbian guaranteed supplier of electricity Elektroprivreda Srbije (EPS), under a 12-year Power Purchase Agreement.

Before the decision by the creditors IFC and EBRD, in June 2017, the Serbian government amended the regulation on the incentive measures for the production of electric energy from renewable sources, which was adopted a year earlier. IFC drafted four key decrees on the renewable energy market which were adopted by the Serbian government and IFC advisors contributed to drafting a pioneering Power Purchase Agreement for the Čibuk wind farm.

Due to new regulations, the 158 Mega-Watt Dolovo wind farm should be entitled to up to 130.8 million Euro from EPS every three years - or up to 523.3 million Euro over a 12-year period, if its wind turbines will operate effectively for at least a third of every year.

For years Continental Wind had lobbied for renewable energy incentives and more favorable legislation and regulations, but in the last two years the firm had seen its former director of the Serbian subsidiary, Ana Brnabić, as a minister for Public Administration, and now Prime Minister, at the same time as new laws and regulations were approved in the company's favour. This was a big moment.

On 16 October 2017, the public launch of the Continental Wind project was attended by Serbian president Aleksandar Vučić. His attitude towards the project was more positive than before two years earlier, when he’d made vicious comments about foreign investors developing Serbian renewable energy.

The Serbian minister of mining and energy Aleksandar Antić announced during the event that this is “the biggest private investment in Serbia”.

The official owner of Vetroelektrane Balkana is another Serbian company Tesla Wind. Both are registered at the same address of Djure Jaksica 6/5, Belgrade. Tesla Wind is 60 per cent owned by the United Arab Emirates (UAE) state-controlled Abu Dhabi Future Energy Company Pjsc (Masdar).

The remaining 40 per cent of Tesla Wind has been owned by another offshore subsidiary of Continental Wind Partners, named Cibuk Wind Holding Limited in Cyprus.

In December 2017 and January 2018 Continental Wind sold its 40 per cent shares to Finnish renewable energy investor Taaleri Group and German subsidiary of state export bank DEG. The value of this sale remains confidential.

Man Behind the Wind: Ex-Glencore Oil Trader

The key figure behind Continental Wind's Delaware company is an experienced investor with a history of partnerships in major multinational corporations. According to Bloomberg, Mark W Crandall, 59, co-founded Morgan Stanley’s energy division in 1984, and later was head of the oil trading business at commodity producer and trader Glencore. Later he co-founded Trafigura, now one of the largest physical commodity traders in the world. Both Glencore and Trafigura, with headquarters in Switzerland, were intensively investigated for wrongdoings by the British press, which have often faced injunctions against reporting on these companies in the British courts.

Crandall formed Continental Wind Partners in 2007, investing his own money in Polish and Romanian wind development, and later recruiting outside capital to officially form Continental Wind Partners LLC in 2007.

Since at least 2014, Crandall has his residency in Belgrade, Serbia, but remains a US citizen and is obliged to pay income tax to the US Treasury. In a Continental Wind email to Credence from December 2015, Crandall is also mentioned as a politically exposed person (PEP) by the OECD rules since May 2014, when the sister of his wife was appointed a minister in the Serbian government.

The Malta Files documents reveal that Continental Wind Partners, which is publicly presented in the Serbian press and by the IFC as an “American” company, is almost exclusively operating offshore companies without employees.

In U.S.A., for example, they have only a mailbox. At its registered address 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808, there are an additional 385 active companies and no working telephone number of Continental Wind is listed on its official website.

According to CWP's Operating Agreement from 2009, the company’s primary purpose is “to acquire, hold, manage and dispose of, directly or indirectly, interests, entities and projects relating to wind energy project development from start-up to acquisition of building permits and other project documents“ in east Europe and Australia.

Today Continental Wind Partners operations are managed from Bulgaria, but they have developed and sold a few wind farms in east Europe and Australia.

A lawyer, quoted in Croatian newspaper Nacional, stated that a Maltese or Cyprus holding company allows investors to begin the development of several projects in different countries under one holding company. The holding company structure allows the investors to shift their investment to those projects that are viable.

All the holding company structures are tax-transparent, and the profit flows to the ultimate investor and is taxed in the resident jurisdiction of the ultimate investor. The lawyer, reported Nacional, added that CWP LLC is a Delaware company that has elected to be tax-transparent. The U.S. government levies no tax at the CWP LLC level. CWP LLC’s net profits are paid to its members and taxed as individual income.

Tax Haven Bingo: Luxembourg, British Virgin Islands, Monaco, Singapore

Documents reveal that the main owner of CWP, Mark W Crandall, has operations in tax havens. In 2015 he owned 61.75 per cent of Luxembourg company Postscriptum Ventures through Postscriptum Ventures Ltd, incorporated in the British Virgin islands.

Postscriptum Ventures in Luxembourg was founded in July 2015 and does not have one employee. That year the company had 3.7 million Euro assets and finished the year with 182,000 Euro in losses. But in 2016 the assets rose significantly to 12 million Euro and its profit reached 2.6 million Euro. Nevertheless, the taxes paid in Luxembourg on these profits were 6,420 Euro or 0.24 per cent, according to its annual accounts.

In October 2015, Besides Crandall, behind BVI Postscriptum Ventures Ltd’s shell company, and his partners in Luxembourg were Fabrizio Cagnasso behind Windream (Monaco) with 14.25 per cent. 9.5 per cent was owned by the former economic advisor to the Bulgarian president and former Deputy Minister of Economy of Bulgaria, Evgeny Angelov. These shares were owned by a BVI company, Ammano Limited, and he has also served as chairman of the board of the Bulgarian National Electricity Company in the past.

Mewanhile Bulgarian businessman Dimitar Enchev owns 9.5 per cent. Enchev's shares were behind Valeo Group in the BVI.

Enchev confirmed that, among others, Valeo Group, British Virgin islands company, is the owner of this Luxembourg company, but he didn't confirm or deny if he is owner of Valeo Group.

“The other information you seem to have about our shareholding structure and our investors is incorrect,” he added. He confirmed Postscriptum Ventures [PSVS] received proceeds after the sale of its Australian project, the Sapphire wind farm, but this was fully reinvested in its portfolio investments.

“PSVS has not made any distributions since its inception so the only relevant taxes so far have been in Luxembourg. PSVS is subject to Luxembourg taxes, and its owners are also subject to tax in their own jurisdictions upon distribution.

“When I eventually receive a distribution from PSVS I will be subject to and pay tax in Bulgaria, at the Bulgarian personal income tax rate of 10%,” Enchev explained.

Continental Wind has not managed to develop any major projects in Bulgaria. The company claims that “due to a series of restrictive legislative changes and unfavorable economic conditions for wind energy” it terminated its sole 200 MW wind farm development in Mirovci in 2014.

In neighboring Romania, Continental Wind had more success. The company developed the 600 MW wind farm Fantanele-Cogealac in Dobrogea, southeast Romania. In 2008, the 'Americans' sold the project to the Czech Republic's energy company ČEZ, which invested 1.1 billion Euro in the development of what it calls “the biggest coastal wind farm in Europe”.

Brnabic Serbia Wind CWP

The Australian Connection

The remaining five per cent of shares of the Luxembourg-based Postscriptum Ventures were held by Alex Hewitt behind Future Blue International in Singapore, yet another tax haven. Australian-British citizen Hewitt is one of the directors of Continental Wind, and is responsible for its wind farm investments in Australia, where it has a portfolio of 12 projects.

It was the Australian wind farm which contributed high profits to the Continental Wind Partners beneficiaries in 2016, and which passed through Malta. Crandall and his partners own another Maltese company called Asia Pacific Renewables Limited, which owns the dozen wind farms. In 2016 Asia Pacific Renewables Limited sold the second largest wind farm in New South Wales under construction named Sapphire for 19.5 million Euro. These revenues contributed significantly to the 17.1 million Euro profits in this Maltese company that year. As revenues from this sale were exempt income, the company paid zero taxes in Malta.

Crandall also has two trusts, one in Guernsey and another in Malta. Usually, a trust can be used to determine how a person’s money should be managed and distributed while that person is alive, or after their death. A trust structure can help in aggressively managing tax liabilities or even eliminate tax liabilities.

The first one - The Crandall Family Trust - was established in 2006 under Guernsey law and is the 100 per cent ultimate beneficial owner of Postscriptum Ventures Ltd, incorporated in the British Virgin Islands, through which Crandall mostly controls his wind farm empire. Documents seen by Nacional prove that this Trust is the real beneficiary and were signed by representatives of another two British Virgin Islands companies, Cosign Services Limited and Spread Services Limited, which serve as nominees shareholders of Postscriptum Ventures Ltd. Mark W. Crandall is both grantor and the beneficiary of this Trust. In 2014 his wife Lidija Udovički was added to the list of beneficiaries of The Crandall Family Trust.

Crandall's lawyer explained to Nacional, that this trust has been set up so that Crandall would pay inheritance taxes to US and not United Kingdom and that both BVI and Luxembourg companies owned by this trust are 'transparent' for the US Treasury, where he pays taxes.

But another Maltese APRL Resolution Trust, managed by Credence Corporate and Advisory firm as the trustee, was created on 31 December 2015. According to a deed Declaration of Trust, the initial trust property consists of transferred assets in the form of 2,980 shares of company Asia Pacific Renewables Limited and 16.5 million Euro of shareholders loans which were transferred from the Delaware company Continental Wind Partners LLC to the newly-founded Maltese trust and all its beneficiaries. According to the deed, beneficiaries of this trust are the same as shareholders in the Delaware company. The Australian wind farms are the main assets of this trust.

L Burke Files, an international finance investigator based in Arizona, USA, who has analyzed some documents, explained that the purpose of such a trust as this could be to liquidate assets for the beneficiaries and manage tax liability. “An irrevocable trust creates a structure to hold and manage assets that is exempt from legal proceeds of either the grantor, grantee or the beneficiaries. Under most circumstances, the assets are out of the reach of any creditors,” he said, and added that the ultimate control of the assets of the trust could be very remote from the actual trust. This is a feature that can be used to obscure or confuse both ultimate beneficial ownership and control.

The trust is well crafted, and appears to be tax neutral, meaning the profits or distributions will flow directly to each of the beneficiaries without tax consequences. This leaves each of the beneficiaries to deal with their own tax consequences in each of their home countries.

“At best – if honest – this is a tax deferral and may recast the distributions into an asset category with a much lower tax rate. In time they will have to pay real tax where there is a real gain – when the payouts from the wind farms to the trust are paid to the beneficiaries. At worst this could be used for a very effective tax screen,” Files explained.

Crandall's lawyer explained to Nacional that the purpose of the formation of the Trust was to separate the Australian assets from Dolovo in Serbia. APRL Resolution Trust will not profit from the sale of Dolovo. Additionally, each ultimate beneficial owner of this trust has been declaring taxes in his or her jurisdiction of residence, and will continue to do so, the lawyer was quoted as saying.

Brnabić: “I have no idea what it is”

Serbian Prime Minister Ana Brnabić stressed that since entering government in 2016, she resigned from Continental Wind Serbia (CWS).

“I do not want to have any influence on any decisions that generally concern the policy of renewable sources in Serbia. As the Minister of Public Administration and Local Self-Government, I absolutely was not involved or had no contact points with the legislation concerning renewable energy sources,” she wrote.

She is also satisfied with Čibuk wind farm development and wrote “all taxes were paid to the Republic of Serbia and we always tried to be a socially responsible company, as best confirmed by numerous donations and contracts with the local self-government that part of the company's profit is paid directly to the budget of the municipalities.”

On the question about Continental Wind Partners offshore structure Brnabić answered: “I was not involved in creating the ownership structure outside of Serbia and I have no idea what it is.”

Nacional asked the IFC, one of the major financiers of Cibuk, about the due diligence before approving loans for the wind farm and if Continental Wind Partners’ companies in Cyprus, Malta, British Virgin islands, Luxembourg, Guernsey, Monaco, Delaware (US) and Singapore, where they don't have any wind farms. IFC spokesman Frederick Jones gave the following answer: “As with all projects funded by IFC, IFC undertook a thorough due diligence of the [Cibuk] project, including the legitimate use of intermediary jurisdictions, to ensure that it meets all IFC investments criteria.” The EBRD has since given a similar response.

Alex Cobham, chief executive of Tax Justice Network, UK based international advocacy group in the area of international tax avoidance and evasion, said this is a deeply worrying story of financial secrecy and the dangerous mingling of public and private interests. It confirms the importance of key transparency policies, in order to protect the public from the risks of corruption and tax abuse.

“It is crucial that we have public registers of the ultimate beneficial ownership of companies and of trusts and foundations. Such a measure, now required in the EU through the revised Anti Money Laundering Directive, is the new international standard.”

“This case makes clear that all public contracts must be in the public domain,” he added. “There can be no good reason to prevent the public seeing how their own money is being spent by their elected representatives – and that logic extends equally to subsidies and tax incentives. The importance of incentives for the global switch to renewable energy makes this an industry of particular concern, likely to attract unscrupulous operators with no interest in sustainable development.”


Opening picture: Wind Farm in Romania, where Continental Wind Partners developed the Fantanele-Cogealac turbine farm, later sold to CEZ. Picture copyright by Petrut Calinescu

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