The next reunion of the Three Tenors seems likely to take place in a tax lawyer’s office or somewhere offshore. The jailing [in December 1998] in Mannheim of Matthias Hoffmann, the German impresario who organized the Tenors’ world tour, is not the end of the aria.
The tangle of tax schemes unfolded by the prosecution, and substantially unchallenged by the defense, has alerted the authorities in several countries.
Luciano Pavarotti canceled two concerts this month in Berlin, reportedly on advice that it might be costly for him if he sets foot on German soil. Placido Domingo and José Carreras must also be watching their step.
Hoffmann, 47, was convicted of defrauding German taxpayers by failing to deduct 25 percent tax at source from the $1.5 million he paid each tenor for every night of their 12-stop tour. The money was split into half a million “salary” and a million in “licensing income” which was transferred to an Irish company, IIPS, allegedly controlled by the tenors. Hoffmann neither docked the salary segment, as required by law, nor justified the “licensing” arrangement. It has cost him five years and eight months in jail.
A portion of Pavarotti’s fees, the court heard, was taken by Hoffmann or his courier and deposited in banks in Zürich and Luxembourg. Domingo had $4 million paid into a Panama company, ICI. Other amounts went into an offshore Jersey company, TTL, which stands for Three Tenors Limited.
The outcome, according to the prosecution, has left Domingo owing DM5.3 million ($2.9 million) in unpaid tax, Carreras DM4.5 million ($2.5 million) and Pavarotti DM2 million ($1.1 million). No doubt, they will wish to settle up without delay.
Quite apart from the amounts involved, the paying arrangements may seem surprisingly sophisticated to most music lovers, unversed in the ways of high finance. They are, however, becoming unfortunately commonplace in the higher realms of classical music, where minimizing tax liabilities seems almost as important to some major players as hitting the right notes.
I have seen conductors sign record contracts that are made out in the name of a company in the Dutch Antilles. I have read faxes from the office of Anne-Sophie Mutter, the immaculate German violinist, demanding a concert fee of DM 87,000 ($48,000) “net of any taxes and commission.” The conductor James Levine, who got half a million dollars nightly from Hoffmann for his Three Tenors stick work, receives an annual million dollars from Munich for directing its municipal orchestra; his emolument is paid net into an offshore account without Levine himself contributing a pfennig in German taxes.
All this is perfectly above board, and doubtless devised by the cleverest accountants on earth. Not for a moment would I imply that any of these artists have put a toe on the wrong side of the law. My criticism is restricted to the aesthetic aspects and artistic consequences of their conduct.
Every classical musician is sustained through life by public revenue. Their education is state-funded, at least in part. The opera houses and concert halls that engage them are state-supported in Europe, and funded by tax-breaks in the U.S. Every seat in every house they play to is subsidized by money that comes from the hard-earned, heavily taxed income of ordinary people.
When a classical performer puts himself or herself beyond the reach of fair, representative taxation, he rejects the humane culture that he purports to represent. Pop and sports stars may do the same, but their act is unsubsidized. They do not deprive the public purse of state pensions and healthcare.
The high-C cash games of classical stars have begun to generate a funding backlash. Demands have been heard in the German Bundestag to cap the fees of state-salaried music directors. In Britain, Sir Richard Eyre has wondered aloud why a singer at Covent Garden gets paid 10 times as much as an actor at the National Theatre. Musicians at Welsh National Opera are aggrieved about their below-inflation grants, while the Royal Opera House receives a 15 percent rise, in part to pay £10,000 a night to itinerant, foreign top-noters. It is not an issue of envied wealth, more a question of public priorities.
Every artist has two duties—to the art and to its recipients. The first is fulfilled by giving a wholehearted, faithful performance, true in text and meaning. The second duty is to respect the public, and not spit in its eye.
No matter how many charity galas the Three Tenors may sing, music will suffer long after they have paid their last note.
