…There's Brass Plates

SPECIAL REPORT 1 where there’s MUck… “members”, ie owners, of the “limited liability partnership”. The control of these could be tracked back only as far as a chain of Belgian, British Virgin Islands and Maltese companies, behind which sat a mysterious Isle of Man trust. So even after Vector Aerospace LLP received an €18m pay-off when the whole set-up was dis- mantled following awkward questions in the Viennese parliament, where the cash went remained a mystery that is still furrowing the brows of Munich police offi cers who raided EADS-Deutschland over the matter last year. The same could be said for the puzzling question of why a spider’s web of companies channeling dubious payments on business entirely unrelated to the UK, for benefi ciaries who had nothing to do with Britain, was spun from Mayfair. The answer lies in the historic relaxation of British company law, and almost non-existent regulation and fi nancial policing, that has turned Britain into a capital of international organised crime. “Limited liability partnerships”, of which Vector Aerospace LLP was one, joined the lexi- con of British corporate law only in 2000 as a result of heavy lobbying from Britain’s big accountancy partnerships, which wanted to limit their liability for carrying out dodgy audits without becoming limited companies and so incurring extra taxes. The new corporate vehicle allowed them to have it both ways by stipulating that an LLP would have limited liability but would not be a taxable entity itself (see Partnerships in crime). The new hybrid had great appeal: not just to respectable accountants, but also to those who were up to no good. For if an LLP’s members can also claim that they are not taxable in the UK, there is nothing to trouble the taxman and no inconvenient questions will be asked by the authorities about what the LLP is up to. In Vector Aerospace LLP’s case, while the fi rm turned over millions and made handsome profi ts, its members, Hopewell Investments and …there’s brass plates Provan Trading, showed no sign of this activity or any resulting tax bill. They too had evidently stayed off the taxman’s radar and gave little How UK ghost companies made Britain away to prying eyes because, as UK-incorporated companies, they were allowed to fi le the capital of global corporate crime “abbreviated” accounts giving next to no fi nancial information. What fi gures they did produce, A Special Report by RICHARD BROOKS and ANDREW BOUSFIELD signed by offshore directors at various times in Belgium and the Isle of Man, bore no relation to those included in Vector’s accounts (multi-mil- SETTING OUT PLANS for the UK’s presi- jets, the fi xer set up in neither of these conveni- lion pound balances between the two, for dency of the G8 at Davos in January, David ent locations, nor at his longstanding base in example, evaporated) and appeared to be no Cameron presented “a vision of proper com- Rome. Instead, he set up shop at 31 Dover more than works of fi ction. As with other cases panies, proper taxes, proper rules”. A light Street in Mayfair. the Eye has examined, there was no sign of would be shone on corruption around the From here and his Grosvenor Square apart- intervention by the UK authorities. world with “more transparency on how gov- ment, Gianfranco Lande would manage an The reason Lande had chosen London for ernments and, yes, companies operate”. Days outfi t that remained unknown until, four years this web was now clear. British companies and later he was in Tripoli, lecturing Libyans on later, suspicious Austrian MPs started to ask other legal structures provided all the obfusca- the need to “uphold the law and ﬁ ght corrup- questions. By then Vector Aerospace Limited tion a man running such an operation could tion”. But as a Private Eye investigation Liability Partnership, as the Mayfair fi rm was reveals, the world’s most corrupt, least trans- known, had paid out more than €80m to com- parent companies are not located in fragile panies controlled offshore by Lande, his states or faraway tax havens. They are to be Maltese bagman David Marinelli, and other found here, in ofﬁ ces across the UK from unknown parties. Much of the money was paid Clapham to Cardiff, facilitating the most seri- through RBS Bank in the Isle of Man; but ous international crimes while the government where it ended up is still not clear. Among the ignores one of Britain’s few growth industries: outcomes believed to be linked to the scandal corporate corruption services… was the melting away of domestic opposition to the fi ghter contract in Austria: in 2004 the It doesn’t take long on Europe’s fastest motor- country had no discernible need for €1.5bn ways to get from the Munich offi ces of EADS, worth of fi ghter jets. the European defence company, to the Austrian It wasn’t just Vector’s dubious payments defence ministry in Vienna. But when in 2004 that were impossible to trace: so too was the EADS employed a renowned Italian fraudster fi rm’s ownership. Records pieced together by to facilitate side deals on the Austrian air the Eye show two British companies, Hopewell MADE IN MAYFAIR: Gianfranco Lande, who directed force’s €1.5bn purchase of a fl eet of Eurofi ghter Investments Ltd and Provan Trading Ltd, as €80m of dodgy payments from London’s Dover Street 2 want. At the same time, an address in Dover military aviation technology to the Eritrean London-based client Hermitage Capital, inves- Street, Mayfair, and the imprimatur of a thor- regime, a supporter of murderous Islamist tigators from the Baltic and Russian-based oughly respectable legal and fiscal jurisdiction groups in neighbouring Somalia and firmly Organised Crime and Corruption Reporting like the United Kingdom, gave assurances that under UN sanctions. Project (OCCRP) sought to follow the money. would satisfy the bankers who would be called Another company, Hazel UK Ltd, manages The financial route out of eastern Europe, they on to move the funds without asking too many to trade arms from eastern Europe to the Sri found, was through an office in Birmingham, questions. Lankan and Syrian regimes while registered at home to Nomirex Trading Ltd, a company As one senior money-laundering compli- an address in Tiverton, Devon, under the sole incorporated in 2006 and wholly owned by ance officer told the Eye: “The UK has the directorship of a man giving a Seychelles Voilent Trade Ltd, a company registered in the appearance of credibility. If you send your address and listing his occupation on company Russian crime world’s favourite outpost of money through UK companies in and out of filings as “caterer”. The company, meanwhile, Limassol, Cyprus, and itself owned by a com- London, you have clean money.” In reality the is said to be owned by an Isle of Man company pany in Belize. money was anything but clean; but no one was which, filings there show, was struck off more In fact Birmingham’s Nomirex, directed at going to ask any questions. than four years ago. first by a couple of British shell companies and Neither Hazel nor Espace is required to then by a 48-year-old yoga instructor with 52 publish full or audited accounts declaring their current or past UK company directorships to WEAPONS SHELLS ultimate ownership, putting them well under her name, appeared to be the conduit for Britain’s ill-founded reputation for corporate the official radar. One senior official at HM money laundering on a far larger scale than just respectability went a long way to explaining Revenue & Customs, the body that is meant to the alleged tax fraud. what MPs from a Westminster parliamentary police arms exports, told a recent BBC File on It had been in business since 2006, a couple committee on arms export control discovered 4 programme on the arms trade: “The fact that of years before the fraud on the Russian tax- when they visited Kiev in 2009 to hear about it is clandestine and involves a series of perhaps payer, and bank records obtained by the the UK’s role in selling weapons from Ukraine, shell companies and shadowy individuals all OCCRP showed that in total the company had the old Soviet arms manufacturing heartland. make this a very difficult area to paid and received $365m, largely They were given a list of British shell compa- investigate.” What he didn’t admit on hundreds of invoices for nies supplying countries, including Sri Lanka, was that in this game, the shell “equipment” of various sorts, but Syria, Libya and Rwanda, in breach of interna- companies are very much Made in also on luxury items such as prop- tional sanctions. Britain. erty in Dubai and at least one The companies went under such unlikely upmarket car from a US Mercedes- names as Espace Soft Trading Ltd, which the Benz dealership. It sprayed money Eye has established is directed – at least nomi- DEATH AND TAXES to front companies around the nally – from Cyprus and owned by dormant However dubious their trade, these world, including Chinese opera- companies themselves held by Bahamas com- companies were, nominally at least, tions and other UK companies panies operating out of one of the world’s shifting real goods. But unaccounta- registered in Greenwich, south- thousands of tax haven company service ble British limited liability companies east London. Despite its frenetic addresses – just the set-up, obviously, to ship have many other uses.

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