- James Oliver, Nassos Stylianou, Will Dahlgreen, Steve Swann
- The BBC Data Journalism Team and the BBC Wide View programme
A sanctioned Russian oligarch, a member of Russian President Vladimir Putin’s inner circle, found and exploited loopholes in British corporate confidentiality and transparency laws, the investigation found.
Brothers Arkady Rotenberg and Boris Rotenberg are Putin’s judo buddies. The legal loophole they exploited involves a company that does not need to disclose its true owner.
UK government ministers have acknowledged that the category, known as UK Limited Liability Partnerships (ELPs), has a worrying potential for abuse by criminals.
In 2016-2017, the government introduced measures to force almost all UK companies to disclose their true owners, but ELPs are exempt from these new corporate transparency regulations.
Since then, more than 4,500 such companies have been established.
The BBC, in partnership with Financial Leaks, launched the investigation, analysing leaked documents and thousands of company records showing ELP as a way to circumvent anti-money laundering laws. These laws require UK companies to disclose their true owners or significant controllers.
ELP companies are legal and suitable for real estate companies, investments and pension funds, etc. They enjoy advantages such as tax incentives, and investors have a limited amount of risk liability.
Unlike most companies, ELPs do not have a separate legal identity, which means they cannot own assets, have no beneficial owners, and cannot legally open bank accounts.
However, our investigation found documents revealing that some ELPs had beneficial owners and evidence that some ELPs had opened bank accounts and facilitated financial crimes. Financial crime expert Graham Barrow said they were also “prone to abuse” because there was little information about business activities that were required to be made public.
Our data shows that the number of newly formed ELPs has increased by 53% since 2017.
Helena Wood, head of the UK Economic Crime Unit at the Royal United Institute, said: “I wish I was shocked by the scale, but I definitely haven’t, I’m just frustrated and helpless.”
- Leaked documents reveal that ELP is being marketed as an “alternative solution” to circumvent corporate transparency regulations;
- Only five companies, known as company formation agencies, are responsible for forming 1,500 ELPs, hundreds of which have the same registered address, including upstairs from a taco shop in central London;
- A 71-year-old Swiss ceramic artist used in official documents to disguise the true owner of the British company is a signatory to more than 160 ELP companies;
- FBI agents involved in the Boston Marathon bombing investigation investigated an ELP company registered at the same address as a barber shop in Bristol.
In the five years since the new Corporate Transparency Act came into effect, more than 4,500 new ELP companies were established, bringing the total to 2,950 new ELPs in the five years to 2017.
We have determined that among those exploiting the secrecy of the ELP are members of President Putin’s inner circle.
It was the Rotenberg brothers, Arkady and Boris. They are the subject of a 2020 U.S. Senate committee investigation. The committee said they used a global network of shell companies to evade U.S. sanctions following Russia’s 2014 annexation of Crimea. These companies are used to buy millions of dollars worth of art.
One of these companies is ELP, Sinara, which was established in January 2017 and has its principal place of business at an address just a stone’s throw from London’s Oxford Circus, and is involved in “tourism and ticketing services”.
Between July 2017 and June 2018, the company made “14 wire transfers of $9,500 each for a total of $133,000” (£109,000) to an art consultant; the Senate report said the consultant “Facilitates the purchase of Rotenberg”.
Under UK law, Sinara’s actual owner is not required to be disclosed. Sinara disbanded in 2019.
Labour MP Dame Margaret Hodge said: “People like the Rotenberg family, who have been sanctioned in the US for years, are still able to take advantage of UK corporate structures through which they channel their money. Take it out of Russia and spend it at will. It’s a scandal.” She chairs a parliamentary task force on taxation and corruption.
Attempts by the BBC to contact the Rotenbergs have gone unanswered.
Most limited partnerships are established by so-called company formation agents, who provide a registered address and administrative support.
A quarter of the 4,500 new ELPs registered since 2017 have been set up by five UK agencies, the BBC and Financial Leaks found.
These agencies have a track record of creating anonymous UK companies for clients in Eastern Europe and the former Soviet Union. Some of the companies they incorporated have also been linked to financial crimes including money laundering.
The most prolific of these institutions is LAS, run by British-Russian accountant Elena Dovzhik and her Latvian business partner Ineta Utināne, company records show. The British businesswoman has made millions of dollars through LAS, which includes the formation and management of hundreds of anonymous British companies for clients in Eastern Europe and Central Asia.
Some companies associated with LAS were later involved in criminal activity. One of them, Always Efficient LLP, a company registered with a London address provided by LAS, was found to be behind BTC-e, the largest Russian-language bitcoin exchange. The exchange was shut down in 2017 by the U.S. Department of Justice on money laundering charges.
In 2021, the website fazze.com, which used the LAS contact address, was accused of launching a disinformation campaign around vaccines in Russia, spreading rumors that the AstraZeneca vaccine would turn recipients into chimpanzees.
LAS told the BBC it terminated services to Always Efficient LLP “in 2017” for breaching “our terms and conditions”.
Regarding fazze.com, LAS stated: “Possibly unlawful and unauthorized use of our address service as exact or similar details are not available in our historical database.”
LAS is also responsible for setting up a large number of another type of UK company known as a Scottish Limited Partnership (SLP). A 2017 Bellingcat survey foundLAS was “the most prolific SLP founding agency between 2015 and 2017”.
At the time, SLPs were not required to disclose their true owners. But after such companies have been repeatedly implicated in major international money-laundering scandals, the UK government has changed the law and the companies must provide information about who ultimately owns or controls them. Since then, SLP registrations have almost halved almost immediately.
Following changes to the SLP laws, LAS turned its attention to the ELP, according to leaked documents seen by the BBC.
In an update emailed to clients on May 18, 2017, LAS suggested ELP as a “way out of, or as a replacement for, SLP” under the heading “Alternative Solutions”.
The document is one of the leaked data — the “Pandora Papers” — obtained by the International Consortium of Investigative Journalists (ICIJ). “Currently, the advantage of such partnerships is that they are not and will not be subject to laws governing disclosure of controller information,” it claims.
Now, our investigation has found that some of the ELP companies associated with LAS are suspected of being involved in criminal activity.
These include ELP, owned by Donnea Business LP, which has been accused of tax evasion in Ukraine, and another ELP called Cosalima Trade LP, controlled by a Russian businessman wanted by Russian authorities in a £5m fraud.
LAS boss Dobczyk said: “We are aware that we filed registration documents for some companies years ago that were ultimately accused of engaging in illegal activities, but prior to registration we had no access to such information.
“We have (never) been involved in any business activities of our former clients and have only assisted our corporate clients with the company formation process, mail forwarding services, (and) statutory filings.
“We have never supported any form of fraudulent or illegal activity.”
She explained that her company has “intensified due diligence on all international clients” and that “if any of our clients are reported suspected of engaging in illegal activity…service is terminated immediately”.
Both Donnea Business LP and Cosalima Trade LP use the London registered address provided by LAS.
Cosalima’s registered address is on the second floor of 6 Market Place, above an unrelated taco shop in Fitzrovia, central London.
This is the registered address of around 800 companies with business activities and is one of the most commonly used addresses for ELP companies in the UK. Over the past five years, more than 240 ELPs have registered here.
The slip of paper inserted into the radio button lists only one company – 1000 Apostilles Ltd, owned by Utinani, LAS.
“The lease at 6 Market Place expires this year,” LAS said.
Another common address for ELP is in Bristol.
1 Straits Parade in Bristol’s Fish Ponds is now a Turkish hair salon.
It is also the address used by another forming body, Arran, to register UK companies, including 197 ELPs.
Companies registered at this address have been linked to bribery, fraud and other financial crimes.
Our investigation found that an ELP called Riverham, registered there in 2013, was noticed and flagged by the FBI during the 2013 Boston Marathon bombing.
Riverham LP was mentioned in a suspicious activity report compiled by Deutsche Bank, which was given to FBI agents as part of an investigation into the bomb suspect’s financial transactions.
The reports, from a leaked suspicious activity report filed with the U.S. Treasury Department, known as the FinCEN filing, did not identify who actually owned the ELP, but documented its involvement in 116 transactions in just one month between December 2012 and January 2013. Suspicious transactions totalling over $7.3m (£6m).
The BBC tried to contact Arran’s boss but received no response.
While addresses like 1 Straits Parade and 6 Market Place may reveal which company formed the agency to be involved in the ELP, they offer little clue as to who is really behind it.
While the names of ELP partners can be found on documents filed with the UK Companies Registry, it is common to see these names as anonymous companies registered in countries such as Belize and Seychelles.
Also, the people who signed the paperwork for these companies are unlikely to be the true owners of the companies.
Often, they are proxy signers, paid to sign documents, often with no knowledge of what the company is doing.
A frequent proxy signer is Ruth Neidhart of Switzerland, 71, who lives in Cyprus. She is a ceramic artist, making porcelain dolls and jewelry, and sometimes arranging pottery painting classes for children’s birthday parties.
Our analysis of UK Companies Registry data shows that since 2016, at IOS, another company formation agency arranged for her to sign more than 160 ELP documents.
Mrs Nedhart did not respond to the BBC’s request for comment.
The investigation also found that one of LAS’ most prolific proxy signers was Alexandru Terna, a Romanian in his early 30s living in London. He signed corporate documents for at least 306 ELPs created by LAS for clients.
In response to written questions from the BBC, Turner said he had arranged to be involved in the work “through LAS International” or a related company, “on behalf of all the owners of companies; we have a trustee/agent service with these companies. protocol”.
He added: “As you mentioned in your letter, we have never been involved in the control or management of any company.”
Activists say the BBC’s revelation of the ELP shows UK law reform is long overdue.
“We’ve been warning governments of these problems with these opaque legal structures for years,” said Wood of the Royal United Services Institute think tank.
“Transparency is what they say is the best disinfectant, and we need barrels of this disinfectant against these UK limited partnerships.”
Successive UK governments have failed to close major loopholes in anti-money laundering laws, in stark contrast to the promises of politicians.
As early as 2014, the government considered taking action against the ELP, but failed to do so. The following year, then-Prime Minister David Cameron declared that he would never allow the UK to become a “safe haven for corrupt money from around the world”.
The government admitted in 2018 that limited partnerships were at risk and “feared that they could be abused by criminals following a massive money laundering scandal”.
After Russia invaded Ukraine, Boris Johnson said he wanted to “uncover the Russian company’s nesting doll” to reveal its true owners.
The government said there was no evidence that the ELP was being misused. A government spokesman said: “The UK already has some of the strongest anti-money laundering controls in the world and we must continue to upgrade our governance to tackle criminals who abuse UK business systems.
“That’s why we’re modernising the laws governing UK limited partnerships with the upcoming Economic Crimes Bill, which will tighten registration requirements and increase transparency – ensuring only those acting within the law’s authority can remain on the UK Register.
But the proposals do not appear to include plugging the ELP loophole, requiring disclosure of the true owners or key controllers behind the company.
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