Mario Vargas Llosa was listed in 2015 as titleholder of an offshore company

Information from the Pandora Papers investigation has revealed that Nobel Prize-winning author Mario Vargas Llosa was listed as the main titleholder of Melek Investments, an offshore company registered in the British Virgin Islands in 2015. According to the documentation, the company was used to manage money stemming from the rights to his written works and the sale of real estate in Madrid and London. At the time the company was set up, according to the Carmen Balcells literary agency that represents Vargas Llosa, the author was not residing in either Spain or Peru, the two countries where he holds citizenship. When he became a tax resident in Spain in 2017, his investment portfolio was already in his name and not that of Melek Investments, and was declared to the Spanish tax authorities.

Carmen Balcells states that due to Vargas Llosa’s divorce from his former wife, Patricia Llosa Urquidi, US investment bank Jefferies Group LLC – which had handled the author’s business affairs for many years – set up a financial structure in the name of Melek Investments for reasons of privacy. The portfolio managed funds of €1.1 million ($1.27m). “It was the fruit of his savings. This company, during its brief existence, only managed an investment portfolio [of shares and bonds] that had been in existence for some time and that continued to exist in its name following its liquidation,” the agency added in an email.

This is not the first time that Vargas Llosa has been linked with an offshore company in a tax haven. The International Consortium of Investigative Journalists (ICIJ) and German newspaper Süddeutsche Zeitung reported in 2016 that Vargas Llosa and Llosa Urquidi, while still married, appeared in the Panama Papers investigation as having arranged an offshore company through Panamanian law firm Mossack Fonseca in 2010. The day before Vargas Llosa was made a Nobel Laureate, an intermediary asked for the shareholders of this company to be changed and it subsequently passed into the ownership of two Russian nationals. Later, Vargas Llosa would state that he had never held an offshore company and the whole incident had been a misunderstanding. On that occasion, his literary representatives insisted that he was unaware of the ownership of this company as setting up such structures is an habitual practice of the bank and a matter that is handled solely by those in charge of managing the portfolio.

Internal documents from the offices of Overseas Management Company (OMC Group), to which EL PAÍS has had access, reveal the existence of Melek Investments six years ago. Among emails and files generated by OMC, Vargas Llosa’s passport and signature are present and the author provides a residential address in the Barranco neighborhood of the Peruvian capital Lima. The conversations between lawyers for the OMC Group and their counterparts at RBC Wealth Management indicate that the creation of Melek Investments was necessary in order to open an account with Jefferies Group LLC at its Miami offices. Vargas Llosa required two references for OMC Group to sign off on the creation of Melek Investments.

The first letter of reference was signed by Lleana H. Platt, in her position as vice president of wealth management at Jefferies. Platt confirmed Vargas Llosa’s identity, his date of birth in March 1936 and his residence in Lima. She added that she had personally known the author and his family for 12 years and that he had always been of impeccable standing, and that he was a client of the investment bank and has always exercised judicious use of his account.

The second reference was signed by Carmen Balcells, the legendary literary agent who guided the careers of those writers involved in the Latin American literary boom of the 1960s, such as Gabriel García Márquez, Julio Cortázar and Vargas Llosa. “He is a well-respected client of my literary agency,” wrote Balcells. The agent also stated that Vargas Llosa lived in Lima, was born in 1936 and that the signature that featured on the bank’s documentation matched the one she kept on file. “Mario Vargas Llosa has been my client for 45 years,” she concluded. The letter is dated July 2015. Balcells died two months later. Her agency maintains that it is unaware of any other letter of recommendation being issued to create an offshore company.

English version by Rob Train.