Analysis: How controversial shell companies conquered everything from money laundering to Formula One

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The Herald has been at the forefront of highlighting the full scale of Scotland’s SLP scandal.

Little had been known about Scotland’s role as a tax haven until June 2015 when a complex fraud which saw almost $1billion removed from banks in one of Europe’s poorest countries was found to have roots in a rundown Edinburgh  flat.

An investigation by private investigators Kroll identified 20 UK limited partnerships (LPs) linked to the fraud that saw three of Moldova’s leading banks almost emptied of their funds.

Nineteen were based in Scotland.

The report traced one company to a flat with another registered in Leith.. in Royston Mains Street, Pilton. Another was registered at a property in Duke Street, Leith.

Read more: Secretive owners of offshore companies to be revealed    https://archive.is/S6fpS

A Sunday Herald probe at the time revealed aAlmost 440 firms were legitimately registered at one address, some with ties to the offshore vehicles based in jurisdictions such as theSeychelles.

It emerged that criminal gangs – some with links to the arms trade and pornography – were exploiting a tax loophole. Unlike English partnerships, Scottish firms do not have to provide financial reports or register for tax if they conduct their business overseas. Owners of the business can be secret, file no accounts and pay no taxes.

Chief Reporter David Leask revealed the lack of a requirement to submit financial reports or register for tax by businesses operating oversees opened the door to unscrupulous money launderers. who were marketing Scotland as the perfect destination for financial abuse. Many of the SLPs businesses investigated by The Herald were shown to be acting as front for alleged child porn websites and corruption in the Soviet Union.

Our inquiries revealed that Scottish-based shell firms were being promoted across Eastern Europe in money-laundering and tax evasion kits being offered for sale online, with phantom firms even registered at a Scottish Enterprise building in the heart of Edinburgh.

The sheer scale of the issue was laid bare when a Herald Analysis of around 6,000 registered SLPs found that half were produced by agencies which did not appear to be HMRC registered.

Despite growing calls for action, in March, The Herald revealed that to close the loophole, in March this year it emerged that Scottish shell firms had been used to move at least £4bn out of the former Soviet Union as part of the so-called “Laundromat” criminal conspiracy which enabled Russia’s elite to channel at least $20bn from the country.

Our investigations even led to the fast and glamorous world of Formula One. In April, we revealed how American investors used the “zero tax” shell firms in their £6.4bn takeover of the sports business. Liberty Media sealed the deal with the help of two SLPs which had been registered at an Aberdeen law firm’s HQ.

In one case a “limited partnership” company based in Fife was linked to an investigation into an £8 million turf war involving the nephew of Uzbekistan’s President Islam Karimov and a business rival.

In February this year MPs considering the Criminal Finance Bill heard evidence from David Leask. He urged them to “.. take a detailed look at SLPs… and ask yourself whether you want Scotland and Britain to be linked to this behaviour.”

http://www.heraldscotland.com/news/15368778.Analysis__How_controversial_shell_companies_conquered_everything_from_money_laundering_to_Formula_One/    https://archive.is/H4bae

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