If you're an oligarch in the former Soviet Union, chances are you owe your billions to corruption and even overt criminal activity, and your ability to hang onto that money is entirely contingent on the sufferance of the even-more-corrupt strongmen at the top, like Vladimir Putin — one wrong move and you may find yourself stripped of your assets (or even assassinated in broad daylight).
So the looter classes in Russian (and client states like Belarus, Moldova, etc) devote a lot of time to anonymizing their money and moving it out of the country — that way, they can recover some or all of their fortunes if they go into exile in order to spend the rest of their lives hanging around on superyachts and dodging assassins.
Enter Scotland: long notorious for its Scottish Limited Partnerships (which allowed for anonymous shell companies to hold significant assets with no beneficial owners), the country claimed that it had tightened up its rules to prevent abuse by requiring every SLP to list at least one "person of significant control" (PSC) — who could be called in for an interview by the tax authorities or the police.
But the new SLP rules allow the PSC to be an English or Northern Irish Limited Partnership — corporate structures that, themselves, can be fully anonymous. Thus an SLP can be owned by English LPs which are in turn owned by numbered companies in tax havens. The Scottish authorities then rubberstamp these companies, allowing them to be entered into the registry at the UK-wide Companies House, ready to do business.
Companies House is notoriously understaffed, with a handful of accountants overseeing 4,000,000 companies. The registry bans the use of English and Northern Irish LPs as PSCs, but lack the resources to investigate the corporate structure of SLPs, taking the Scottish government's word for it when it says that the companies are in compliance.
Enter the looters of the former USSR. Investigations by the Herald Scotland show that SLPs have become a preferred vehicle for laundering money out of Russia and its client states — it's allegedly Oleksandr Yanukovych (son of deposed dictator Viktor Yanukovych) got his money out of Ukraine before going into exile in Russia after being convicted by a court in Kyiv, for example.
The Herald found that only 2,000 SLPs had an actual human being as their PSC — and of these, three quarters were in the former USSR, especially Ukraine. SLPs were also used to launder the proceeds of the "heist of the century" robbery of three Moldovan banks.
Theresa May says that Russia is a "hostile state," but London's fanciest neighbourhoods are full of mansions owned by Russia's most powerful leaders, and their money sloshes through the country in a torrent.
Kellano Inter has become something of a test case for transparency rules.
It was supposed to say who its true owner was back in August. Instead it listed its “person of significant control” as a Birmingham partnership called London and Loch Ness, whose formal partners are anonymous shell firms in tax havens. So are Kellano Inter’s.
There is no way of knowing for sure who owns Kellano Inter or London and Loch Ness.
However, credible news media in Ukraine believe they have the answer. They have reported Kellano as a vehicle for Oleksandr Yanukovych who, like his father ex-President Viktor Yanukovych, is currently hiding in Russia from mass corruption charges.
Kellano Inter, which is registered at a former draper’s shop in the South Lanarkshire mining village of Douglas, was linked to Mr Yanukovych junior back in 2014.
Revealed: how shell firms avoid transparency [David Leask and Richard Smith/The Herald]
Analysis: Britain rails against Russia while helping its rulers launder their loot [David Leask/The Herald]
(via Naked Capitalism)
