Chronicling Lionel Messi's tax fraud case
Recent developments in Spain have lead to the to the Spanish authorities deciding to prosecute Barcelona’s number 10 Lionel Andres Messi and his father Jorge Messi to a jail term of twenty-one months. The news on his prosecution follows from a 4-year long saga that began in 2013. Lionel Messi has very often found his way to the headlines due to the tax fraud allegations and has been asked to appear in court from time to time. His most recent appearance in court was early in June after which the final decision was taken by the Spanish Authorities.
Leo Messi’s tax fraud saga could be long and very complex to understand and hence Sportskeeda are here to simplify it for you. Here is a timeline analysing the whole case.
2006-2009: The early years
A young Lionel Messi apparently failed to pay taxes worth €4.1 million ($4.6 million) to the Spanish authorities between the years 2006 and 2009 (some reports suggest it was 2007-2009).
2013: The first fomal allegation followed by a court hearing
In early June in 2013, the news broke out with Spanish Authorities alleging that Lionel Messi and his father have failed to pay taxes worth €4.1 million. The Initial reports claimed that the tax fraud began in 2006 when Lionel Messi was not even old enough to deal with his financial affair and hence was dealt by his father Jorge. According to Spain’s EFE news agency in 2013, the initiative to commit fraud had come from Leo’s father initially.
What exactly was the issue?
The allegations claim that an elaborate ploy was devised to hide Messi’s high revenue from his wide range of big-money contracts with major companies like Pepsi, Procter & Gamble and Adidas. He would then funnel them to tax havens using companies in Uruguay (like Belize), Switzerland and The United Kingdom.
Lionel Messi responded to such claims with a statement on Facebook that read: "We have just known through the media about the claim filed by the Spanish tax authorities. We are surprised about the news, because we have never committed any infringement. We have always fulfilled all our tax obligations, following the advice of our tax consultants, who will take care of clarifying this situation."
In September 2013, Messi and his father appeared in court for the first hearing over the case. The pair also paid back €5m to the Spanish Authority, but that did not prevent the prosecution. The country was in a financial crisis, and the government had cracked down on tax evasion.
The duo did not speak in the court session on 27th September but their lawyer spoke on their behalf. He claimed that Leo and Jorge have already made a "corrective payment" to Spanish authorities of just over five million euros.
2014: Court dates for a trial followed by recommendation to drop the charges
In July 2014, less than a month after the FIFA World Cup in Brazil, the Spanish court decided to move forward and prosecute Lionel Messi for the alleged tax evasion.
Reports suggest that the prosecutor seemed to agree that Messi’s father, Jorge was responsible for the tax fraud. A court in Barcelona did not seem convinced with the argument that Messi did not know about the tax scheme. It was hence sufficient reason for the court, to order Messi and his father to stand for a trail on the charges. The court also accounted that the trial would be during the fall of 2014.
In October 2014, the judge received a recommendation to drop charges on the ground that the player’s father was responsible for his fincances. The court rejected the attempt and hence the probe would go ahead.
2015: A second appeal to drop the charges
In June, 2015 a second appeal against the probe was rejected by the Spanish court ruling that Messi should not be granted immunity for not knowing what was happening with his finances. The Spanish court were very firm in stating that Lionel Messi knew enough to be prosecuted and it is not possible for the player to not know of any of the wrong doings that were happening under his nose.
2016: Final trial and the Verdict
In January, 2016 the Spanish court announced that the trial for tax fraud would begin on 31st of May 2016. The trial was expected to run until the 3rd of June.
In June, 2016 the Barcelona star appeared in court. "I was playing football, I knew nothing," claimed Leo. He also told the judge that he was only worried about playing football and nothing else. He also said that he never expected any wrong doings when he was asked to sign the contracts by his father. His lawyers argued that the player had "never devoted a minute of his life to reading, studying or analysing" the contracts.
On July 6th 2016, the news about Messi’s punishment was released. Leo and his father were sentenced to 21 months in prison and also ordered Messi to pay a fine of around £1.7m and his father to pay £1.27m.
Football Club Barcelona then released a statement saying - "FC Barcelona gives all its support to Leo Messi and his father with relation to the sentence for tax evasion handed out by the Provincial Court in Barcelona today.”
What are the implications of the judgement?
According to Spanish law, any sentence of imprisonment below two years does not have to be served unless it is a case of criminal violence. Hence, Lionel and Jorge will not be going to prison and Messi will be back playing for Barcelona later this year.