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Monday, July 15, 2024

Debate flies over Thon’s foundation

Real estate magnate Olav Thon has suddenly become the subject of debate in Norway over whether he’s the country’s most generous Santa Claus or its biggest Scrooge. Just days after announcing that he was placing his entire fortune into a charitable foundation, Thon is being accused of also making sure that his legacy will avoid taxes.

Real estate magnate and entrepreneur Olav Thon admits to being a billionaire, but is proud of paying taxes and a modest lifestyle. PHOTO: Wikipedia Commons/Ulf Larsen
Real estate magnate and entrepreneur Olav Thon, shown here wearing his trademark wool cap, has long been proud of his modest lifestyle and the huge amounts of taxes he’s paid over the years, more than any other individual Norwegian. Now, however, he’s being accused of tax avoidance by placing his fortune in a foundation that will preserve his businesses and make charitable donations. PHOTO: Wikipedia Commons/Ulf Larsen

While Thon was enthusiastically hailed by everyone from government ministers to the dean of the University of Oslo and media outlets all over the country, critics didn’t waste much time in claiming that Thon’s foundation is little more than a means of dodging Norway’s high taxes. Mimir Kristjansson, author of a book on wealthy persons called De Superrike, was among the first to write in a commentary for that Thon’s new foundation (Olav Thon Stiftelsen) is meant first and foremost to ensure “stable and long-term ownership” of Thon’s main business entity, Olav Thon Gruppen, and its subsidiaries in line with how Olav Thon himself wants it to be run.

This goal, argues Kristjansson, is neither charitable nor based on the public’s interest. Rather, he claims, it’s meant to continue operating Olav Thon’s vast business interests in the most profitable manner so as to further increase the value of their holdings and retain control. The foundation’s board is made up largely of Thon’s top managers, and instead of “giving away” his fortune, Kristjansson claims the foundation’s goal is for Olav Thon Gruppen to maintain full control over it even after the 90-year-old Thon dies.

Petter Gottschalk, a professor at Norwegian business school BI, told newspaper Dagbladet that Thon was motivated more by “egotistical” reasons than charitable, even though Thon has stated that the foundation will generate “at least” NOK 50 million a year in charitable donations for the public good. They will include grants for scientific and medical research, along with community development projects.

Newspaper Dagens Næringsliv (DN) reported on Thursday that Thon’s foundation may save more money in fortune taxes (around NOK 70 million) than it will spend on charitable grants. Another professor at BI, Ole Gjems-Onstad, told DN that giving away NOK 50 million worth of gifts is just enough to avoid fortune tax on the foundation. Gjems-Onstad stressed that it’s admirable for wealthy Norwegians like Thon to dole out money, but he also believes the foundation is meant to protect the fortune that Thon has built up during his long life, “and then there are the tax implications of it.”

‘Amazed’ by the criticism
Norway’s new government, however, has already signalled that it intends to do away with the country’s controversial fortune tax, and Thon’s top executive says he’s amazed by the criticism that’s emerged since Thon made his announcement.

“No private person in Norway has paid more taxes to the state than Thon,” Dag Tangevald-Jensen, chief executive for Olav Thon Gruppen, told newspaper Aftenposten. He was taken aback by the criticism and the rants on social media that have surfaced since Thon himself thought he was making a generous gesture in the run-up to Christmas on Tuesday.

“Here Thon gives almost all he owns to a foundation with two equal goals, to carry on Olav Thon Gruppen and to dole out money in the public interest,” Tangevald-Jensen said. “Then it’s very strange if people think he’s really not giving away anything, when he’s doing exactly that.” He said it was “meaningless to draw taxes into the debate,” because Thon himself has consistently ranked as Norway’s largest private contributor to the state treasury, paying tens of millions in taxes every year, when he could have followed other wealthy Norwegians in moving his fortunes and his residence abroad.

Critics ‘petty’ or “just jealous”
Others also sprang to Thon’s defense, calling the critics “petty” or even “jealous,” and simply anxious to question the motives of anyone trying to be philanthropic in Norway. The country doesn’t have the culture of philanthropy found in many other countries such as the US, where wealthy individuals often are expected to voluntarily share their wealth. In Norway, they’re expected to pay their tax instead.

Thon’s foundation will award a prize every year of NOK 5 million for outstanding research within math, science and medicine. The foundation will also award 10 prizes of NOK 500,000 each to encourage entrepreneurs and other innovators, and plans to make additional grants for various community development projects.

Thon, who has no children, already gave gifts of NOK 1 million to each 26 of his relatives in 2006. Establishment of his foundation means they won’t inherit anything more upon Thon’s death, but few if any were surprised or disappointed.

Family ‘knew this was going to happen’
“He’s been talking about wanting to set up a fund to finance start-up firms and scientific research,” Embrik Thon, at 20 the youngest of Thon’s extended family, told DN. “We knew this was going to happen.” Marit Medgard, another of Thon’s relatives who received NOK 1 million from him seven years ago, called the foundation “fantastic” and said it was “super” that the family’s “rich uncle” would support medical research, among other things.

She chooses to be grateful for the gift she received from Thon, instead of bitter over losing an inheritance. Thon himself has said that his relatives, who otherwise stood to inherit his fortune under Norwegian law, had no reason to be disappointed. He earlier has said that inheriting lots of money can be destructive, and that his relatives were able to take care of themselves even before he distributed NOK 26 million in gifts to them.

“I think they’re satisfied with their uncle,” Thon told DN after announcing his new foundation this week. “I have a very large family, but they are fortunately well-equipped to stand on their own feet.” Berglund



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