The United Kingdom's HM Revenue & Customs (HMRC) has imposed a fine of £365,651 (€428,733) on Kristo Käärmann, co-founder of London-based fintec unicorn Wise. The fine could jeopardize Käärmann's position as CEO of Wise, formerly Transferwise, British newspaper The Daily Telegraph reported on its website.
The fine on Käärmann, who reportedly tops the Estonian rich-list, follows a charge that he had either intentionally submitted incorrect documents to the HMRC, or had deliberately failed to provide authorities with correct information or had made errors in paying VAT or excise duties, The Telegraph reports.
The fine relates to Käärmann's tax return for the 2017-2018 tax year, which came to a total of £720,495 (c. €845,000).
Käärmann headed up Wise's €9.3 billion flotation on the London Stock Exchange (LSE) this year, the largest tech firm listing on the LSE to date. The company is currently valued at £11.3 billion (€13.2 billion), ERR reports.
According to legal experts, the fine imposed on Käärmann may mean that he has violated stock exchange rules which say that the head of a company must not have conflicts with authorities, owners of the company or other persons.
Questions may also arise over Käärmann's suitability for top management of a financial company, The Telegraph wrote.
If evidence comes to light that the company's CEO had not acted in accordance with standards of honesty and openness, the U.K.'s Financial Conduct Authority (FCA) may withdraw Käärmann's permission to work there. The FCA has confirmed that it uses HMRC data in the case of allegedly intentional offences, in order to monitor the activities of financial firms.
A spokesperson for Käärmann said that he had been late in submitting his personal tax return for 2017-2018 despite reminders from the HMRC.
Käärmann has now paid outstanding tax and a late payment penalty. "Since then, he has devoted more time to keeping his affairs in order," the spokesperson added.
Käärmann founded Transferwise together with Taavet Hinrikus in January 2011 and became the richest person in Estonia after the listing of the company's shares in summer, The Telegraph wrote. Prior to founding the company, Käärmann had worked for two of the big four accountancy firms: Deloittes and PricewaterhouseCoopers, and had also advised a number of European banks and insurance companies on modernizing their management systems.
Käärmann's holding in Wise is estimated at £1.7 billion (€1.99 billion), while Hinrikus' holding comes to almost £1 billion (€1.17 billion). Wise's shareholders have also included a number of world-renowned investors, such as Richard Branson, who initially put in a million in 2014, but reportedly sold his holding in late 2019, and PayPal co-founder Peter Thiel.
Due to UK data protection rules, HMRC cannot comment further on the case.
Editor: Roberta Vaino, Andrew Whyte