Revealed: Almost a quarter of BrewDog shares held by tax havens, with former director of Vote Leave among investors
But The Scotsman can reveal that nearly a quarter of BrewDog’s shares are held by obscure partnerships based in one of the world’s most notorious tax havens, with a pro-Brexit Conservative donor who chaired the finance committee of Vote Leave among its most prominent investors. .
The beverage company has been engulfed in criticism from dozens of former employees over the past week, with allegations of a “toxic attitude” among management and a “sense of fear” among staff.
As the company suffers a backlash after its meteoric rise, questions surrounding its culture and philosophy in the workplace are growing. The economic impact of the coronavirus has also led him to secure a Â£ 25million loan through the UK government’s Covid business interruption loan program.
The company’s rapid rise has been built in large part on its so-called âequity for the punksâ crowdfunding initiatives, which have assembled an army of more than 145,000 small shareholders while strengthening its profile.
Its most recent flyer quotes the famous Apple advertisement narrated by Steve Jobs to pay tribute to “misfits, rebels, troublemakers”, and those who would be classified as “round pegs in square holes”.
However, a significant part of the company is owned by parts that could not be further from its punk image.
Some 23.25 percent of the issued share capital of the company is held by two exempt limited partnerships based in the Cayman Islands.
The TSG7 A AIV II (Cayman) LP and TSG7 A Lassies and Laddies (Cayman) LP entities hold a total of 891,383 A common shares of Brewdog PLC.
In the meantime, they also hold an additional 16,160,949 C preferred shares in the company, according to confirming statements filed with Companies House.
The Brewdog Row continues as the brewery is accused of fostering a toxic work environment …
Unlike other stakes in the company, stocks held by Cayman entities have what is called a âliquidation preference,â which means that if the company is liquidated, they will get their money back first.
The partnerships are controlled by TSG Consumer Partners, a US private equity firm with more than Â£ 6.4 billion in assets.
The recent controversies surrounding BrewDog have allowed TSG to have even more influence on the company. Last week its chief executive, Blythe Jack, was parachuted in as the inaugural chairman of BrewDog’s board of directors.
Alex Cobham, managing director of the Tax Justice Network, the advocacy group that advocates for a fairer tax system, said: âIt’s a disappointing story, but sadly a common one – of companies whose approach to tax havens is totally defective. contradiction with their projected image.
âCayman ranks the world’s worst in our Financial Secrecy Index and second in the Corporate Tax Haven Index. This is an overwhelming jurisdiction dedicated to facilitating anonymous ownership, profit shifting, and the avoidance of capital gains tax that would otherwise be generated in places where the real business takes place.
“Cayman’s success hinges on the continued political support of the British government, which refuses to demand improvements despite the power to impose them, or to support the island’s authorities in developing a less pernicious business model.”
He added, “Having major investors using Cayman as a middleman is certainly antisocial, but it’s about as punk as croquet.”
When asked how she can reconcile her business philosophy with the fact that such a large proportion of her shares are owned by Cayman entities, a spokesperson for BrewDog said she “can only comment BrewDog’s fiscal obligations and activities “.
It is not just the offshore companies that are among the largest individual shareholders in the Aberdeenshire company.
Some 7,142 Class A shares are held by Jon Moynihan, a longtime Conservative donor who donated Â£ 100,000 to the party ahead of the 2019 general election.
The pro-Brexit venture capitalist and private investor is perhaps best known for having been chairman of Vote Leave’s finance committee, as well as a member of its board of directors.
He also chairs the board of directors of the Initiative for Free Trade, a right-wing think tank, and is a member of the advisory board of the Free Speech Union, the lobby group founded by Toby Young.
Ironically, BrewDog’s latest accounts note that the Brexit negotiations had created “uncertainty for some trade relations”, due to its international reach.
The company’s decision to buy a brewery in Berlin, in order to produce and distribute its drinks within the EU, was largely driven by Brexit. At the time, Watt warned that the process would cause “serious long-term damage” to the UK economy.
Asked about Moynihan, the BrewDog spokeswoman said the company had hundreds of thousands of investors and “would never judge any of them based on their personal political beliefs.”
She added, âThey are free to believe in whatever they like. We have made our views clear on these issues in the past, but we are not going to exclude anyone who does not agree with everything we say.
Controversy surrounding BrewDog’s corporate culture exploded last week with the publication of an open letter from 61 former employees under the banner “Punks with Purpose”.
They claimed that a “significant number” of former employees had suffered mental illness as a result of their work at the company, and said it was built around a “cult of personality”, checking the name of Watt and its co-founder Martin Dickie.
Punks with Purpose said it has since been “inundated” with people willing to tell their stories, with more than 300 signing the open letter.
In his response to the letter, Watt said BrewDog would “not leave things to apologies” and promised to introduce a “better culture” that “sets our industry by example.”
The spokesperson for the company said she had met with “several experts in corporate culture” and intended to appoint a third party in the coming days to review the culture and HR practices of the company.
Moynihan could not be reached for comment.
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