2009 SLOVENIA INVESTMENT DISPUTE AND EXPROPRIATION

C O N F I D E N T I A L LJUBLJANA 000168

SIPDIS

EB/OIA FOR HEATHER GOETHERT AND KIMBERLY BUTLER
L/CID FOR PATRICK PEARSALL

E.O. 12958: DECL: 06/15/2019
TAGS: EINV CASC OPIC KIDE SI
SUBJECT: 2009 SLOVENIA INVESTMENT DISPUTE AND EXPROPRIATION
CLAIMS REPORT

REF: STATE 49477

Classified By: CDA BFreden, reason 1.4(b,d)

Summary
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1. (U) Post is unaware of any relevant investment disputes or
additional expropriation claims against the Government of
Slovenia. Post is aware of one claim of a United States
citizen against the Ljubljana Tax Office (a municipal-level
office). Post has only heard Claimant A's side of the
seemingly complex and convoluted case. Claimant A claims
that the Ljubljana Tax Office must return the Value Added Tax
(VAT) of 729,393 Euros that he paid for the intermediary
purchase of land on which he intends to develop a ski resort.
End summary.


2. (C) Below is the format reflecting requirements of Section
527 of the Foreign Relations Authorization Act:


A. Claimant designation: Claimant A


B. Year dispute arose: 2008


C. Case History: Claimant A purchased land and paid VAT to
the Ljubljana Tax Office intending to construct a ski resort.
According to Claimant A, he represents a "development
company that opened a Limited Liability Special Purpose
Vehicle for the purpose of buying a large plot of land
properly zoned for their plans" (to build a ski resort).
Claimant A agreed with two companies that if the two
companies delivered all the land consolidated, properly
subdivided and zoned for construction, Claimant A would pay
these two companies 125 Euros per square meter. The
companies from whom Claimant A purchased the land, negotiated
individually with farmers and paid the farmers each 40 Euros
per square meter, and succeeded in parceling and rezoning the
land.

-- Claimant A has hired an attorney and has started to pursue
local remedies by filing a complaint with the Ljubljana Tax
Office in an effort to receive a refund of the VAT. The Tax
Office refused to refund the VAT, alleging that Claimant A is
not a real business because "they do not have employees or
revenues". The Tax Office also states Claimant A should have
paid 40 Euros per square meter directly to the farmers.
Claimant A states that his company is not a land developer,
and was obliged to purchase from a local company, more
capable of the initial negotiations with the farmers and able
to get the land rezoned.

-- Location of property: Jezerca-Krvavec, North of Ljubljana,
Slovenia

-- Estimated Value in US dollars: $1,012,252 VAT tax being
withheld. Equal to 20% of total value of land purchased
prior to development.

-- Approximate date when information was last received on the
claim: Claimant A last approached Post in June 2009.


3. (U) Claimant A: Greg Tobias, managing partner of Center
Jezerca d.o.o. Tobias is an American Citizen - no Privacy
Act Waiver signed. Center Jezerca is a "Limited Liability
Special Purpose Vehicle."


4. (U) Additional information: Claimant A states that
because the VAT was not returned, he was unable to pay a
rotating loan for the land, and is now in jeopardy of losing
the entire land, worth more than 5M USD.


5. (C) The Government of Slovenia has recently started
cracking down on "shadow companies" (i.e. companies that "do
not have employees or revenues") through which money is
funneled, leaving the government no way to collect VAT. Post
has received information that Claimant A may have been
targeted due to his alleged association with individuals who
are currently under investigation for tax evasion in similar
cases. Specifically, one of the local land developers from
whom Claimant A made the purchase, has been indicted for tax
evasion in a case involving a "shadow company".
FREDEN