The UK’s Reform of Limited Partnership Law: Dead on Arrival (I)

“Scottish Limited Partnerships are used by thousands of legitimate British businesses – from pension schemes to owning farm land in Scotland – to invest more than £30 billion in the UK a year.

We have seen mounting evidence that in their current form they are vulnerable to abuse. Last year it emerged more than 100 Scottish Limited Partnerships were used to launder up to $80bn in the “global laundromat”, a complex and corrupt money laundering scheme that allowed officials to move money out of Russia and around the world.

The Herald itself has continued to shine a spotlight on this issue, reporting their use in alleged complex global money laundering schemes from Brazilian politicians to Russian oligarchs, and in the process shown the value of investigatory reporting.”

Business Minister Andrew Griffiths, putting the word “alleged” through its paces.

Herald, 30th April 2018

“I want you to be really ******* rough with ***. The video of you spanking her was nowhere near hard enough. Can she take a beating? I have to be slightly careful in my job.”…

Soon-To-Be-Ex-Business-Minister Andrew Griffiths, possibly typing one-handed.

Liverpool Echo, 15th Jul 2018

By Richard Smith

The UK’s Department for Business, Energy & Industrial Strategy (henceforward, BEIS) kicked off its investigation of Limited Partnerships abuse via a call for evidence published on 16th January 2017. The BEIS reform package was finally announced on 10th December 2018, though that’s just bullet points, and in fact, simply a rehash of what alleged Flagellation Voyeur Andrew Griffiths had already announced in April.

A little more detail is available in the full response here, but it would be fair to describe it as ‘disappointing’. For instance, here’s how alleged Chief Spankwatcher Andrew Griffiths’ “mounting evidence that in their current form [SLPs] are vulnerable to abuse” is depicted, in BEIS’s detail. I have put the key part of the summary in bold.

Government Response: Review of Limited Partnership Law

Responses to the consultation

Evidence

Question 1: Can you provide any additional evidence to help explain the trends in registrations of limited partnerships (LPs) across the UK in recent years?

  1. The purpose of this question was to obtain more detail on the history, uses and misuse of LPs, further to that received in response to the call for evidence. The question garnered 29 responses; the vast majority of which said that they could not offer evidence which definitively links LPs, in particular in their Scottish form, to criminal activity. They also suggested that the recent reduction in registrations of Scottish limited partnerships (SLPs) was linked to the introduction of the Persons of Significant Control (PSC) register for SLPs in 2017. None of the respondents could provide firm explanations for the recent rise in registrations of LPs in Northern Ireland.

…and that’s all the “evidence”, from a total of two years of information gathering and analysis, that BEIS sees fit to record. This time the words “vast majority” and “definitively” are doing the hard work.

Thus, the entirety of the SLP abuse evidence considered and published by BEIS is to be the words of a “vast majority” of 29 self-selecting survey respondents, who admit to not having any evidence of anything.

This amazingly confident positioning does rather make one wonder whether alleged Lewd Texter Griffiths’ ex-minions are quite as persuaded, as their erstwhile boss, of the value of ‘investigatory reporting’. Other documents that don’t count as evidence in BEISWorld include, apparently:

  • Moldovan court judgments in the Moldovan bank fraud case
  • Regulator interventions in Latvia against Trasta Comercbanka and Privatbank Latvia
  • The FINCEN intervention against ABLV
  • Russian court verdicts
  • Regulator warnings in America, Canada, France, Belgium, Italy, Israel and Cyprus
  • The conclusions of a 10-month investigation by the Council of Europe in which SLPs were a key mechanism (the ‘Azerbaijan Laundromat’)
  • United Nations blacklisting of various SLPs for aid fraud

Unless you are familiar with UK-Governmental evidence-gathering processes, you may find BEIS’s evidence-filtering strategy to be surprisingly aggressive. It would certainly have been helpful of BEIS to describe exactly what it meant by ‘evidence’, before soliciting it, and then ignoring the evidence that it did get, but that’s not how BEIS rolls.

Mind you, BEIS’s definition of ‘evidence’ would have been tricky to state explicitly, since it is clearly both quite exacting (ignoring all those foreign agencies), yet, at the same time, extremely liberal (foregrounding the views of twenty-odd unnamed respondents, all of whom say they know absolutely nothing about the question they are answering).

This dogged obliviousness is still more striking when one surveys the last three years of SLP press coverage. All of the above stories, and many more, still developing, are in my linkfest below, which documents the involvement of SLPs in some $100Billion of alleged or court-proven fraud, grand corruption and money laundering.

I’ve put in as many free sources as I could find, but a lot of the heavy lifting has been done by the Scottish Herald, whose journalists’ children depend on a paywall for their daily bread. You do get five free stories, though, so you could pick carefully. Alternatively, a month’s Herald subscription, which would enable you to read everything, is only seven quid.

Source Headline Theme
Naked Capitalism A Billion-Dollar Bank Fraud in Moldova, and 20,000 Opaque British Corporations 20+ LPs (and LLPs) abused in large scale international financial crime, FSU. Latest figure: $3Bn stolen, see Dec 2017 report from The National, UAE
BBC The great Moldovan bank robbery
Herald Tycoon accused of using Scottish firms in $1bn fraud
ianfraser.org The Moldovan Connection
bne IntelliNews Latvia banks fuel Scotland’s shell company ‘factory’ linked to Moldova fraud
bne IntelliNews Mystery Latvian linked to Scottish shell companies denies role in $1bn Moldova bank fraud
BBC radio Dirty Money UK
BBC The billion-dollar ex-council flat
OCCRP Moldova: Former PM Sentenced in Billion-Dollar Bank Fraud Case
Reuters Moldovan businessman jailed for role in $1 billion bank fraud
The National (UAE) Scottish limited partnerships ‘used as cover for bank heist’
Herald Scottish firm at centre of global corruption scandal involving family of Uzbekistan President Islam Karimov Grand corruption, Uzbekistan
Herald Authorities put Scotland tax haven industry in the crosshairs as concerns rise on Eastern European corruption links
Herald Fuerteventura Inter: Scots firm at centre of organised crime probe into weapons deal Grand corruption, Ukraine; arms trade
Herald Scottish Limited Partnership behind global ‘essay mills’ offering to write students’ work for cash. Academic fraud, FSU
Herald Revealed: Scottish firms fronting for global websites pushing ‘complete scam’ diet pills On-line retail fraud, unknown base
Herald Warning that Scotland is becoming ‘Panama of the North’ as Edinburgh tax haven firm under investigation Corruption, FSU
Herald Revealed: Scottish firms fronting global child-porn websites Child abuse & violent pornography
Herald Scottish firms pushing Swiss bank accounts to international tax dodgers Tax dodging
Herald Tax haven firm in ID theft row Identity theft
Herald Revealed: The Scots firm at the heart of $1bn theft Copyright violation, FSU
Herald Scottish tax haven firm peddling ‘dangerous’ sex pills On-line retail fraud
Herald Scots firm in fraudster link falsely using Tory peer’s bank Identity theft
Herald Scots firms fronting for global financial betting websites condemned as ‘scam’ Up to 40 SLPs abused in “Binary Options”: large scale international financial crime, $10Bn/year (FBI estimate), Israel/FSU base
Herald Tax evasion arrests in Israel for tycoons using Scots firm
Herald Scam financial gambling sites are fronted by Scots shell firms
Herald Revealed: Thirty Scots firms fronting for what police call Britain’s biggest internet scam
Times of Israel Israel Securities Authority fines binary options firm — but why is it located in Scotland?
Times of Israel How Scotland unwittingly became a tax haven for internet scams
Herald Alert issued over scam Scots financial websites State agencies in America, Canada, France, Belgium, Italy, Israel and Cyprus have all published formal cautions about unregulated online binary options businesses registered through Scottish shell firms…An investigation by The Herald has been found 43 Scottish shell companies as corporate fronts for binary options sites. Of these, 41 are Scottish limited partnerships or SLPs, a kind of business which allows their owners to be secret, file no accounts and pay no taxes. At least 22 of the shell companies are named as owners or payment processors on websites subject to international warnings.
The Guardian UK companies ‘linked to Azerbaijan pipeline bribery scandal’ 20 SLPs (and some LLPs) abused in “Azerbaijan Laundromat”: $4Bn Grand corruption, EU and Azerbaijan
The Guardian Council of Europe urged to investigate Azerbaijan bribery allegations
The Guardian The Scottish firms that let money flow from Azerbaijan to the UK
Herald  

Revealed: all the Scottish shell firms in Azerbaijan Laundromat

 

Herald Another Scots agency linked to £2bn Azeri slush fund
Bloomberg There Is Something Rotten in the State of Denmark
Herald Scots firm named in Ukraine arms deal corruption probe Grand corruption, Ukraine
Herald Uzbek playboy arrested after Scots scandal Grand corruption, Uzbekistan
OCCRP Moldova: 20 Judges, Court Officials Accused in Huge Money-Laundering Scheme “Russian Laundromat” $20-$80Bn money laundering,

Involved 113 SLPs (see Transparency International’s publication “Offshore in the UK”, Jun 2017), and some LLPs.

CrimeMoldova.com “Russian laundry” case: 14 judges and two bailiffs will go on trial
The Baltic Course Court declares Trasta Komercbanka insolvent
Guardian The Global Laundromat: how did it work and who benefited?
Guardian British banks handled vast sums of laundered Russian money
Herald Scots shell companies used to launder £4 billion out of Russia
Transparency International Offshore In the UK: Analysing the use of Scottish Limited Partnerships in Corruption and Money Laundering
Herald Latvia strikes blow against Scotland’s secrecy firms
Herald Exposed: the Scottish firms busting sanctions for Russia Sanctions busting, Russia
Herald How a Scots council house was secret base for criminals busting Putin sanctions
Herald Elite Edinburgh accountants host firm in £40m KGB fraud probe – An elite firm of accountants opposed to reform of Scotland’s ‘zero-tax offshore companies’ acted as host to one at the heart of an alleged £40m VAT fraud in Russia. VAT Fraud, Russia
Herald Who are the secret ‘Scottish investors’ in tyrannical Uzbekistan? Grand corruption, Uzbekistan
The Black Sea Offshore scheme behind the riches of Uzbek dictator’s daughter
Herald Questions as Uzbek president grants tax breaks to anonymous Scots firms
Herald Scottish shell firms used to launder tens of millions of dollars looted from Ukraine by country’s former leaders revealed Grand corruption, Ukraine
Herald The Edinburgh neighbourhood that’s ‘home’ to a hive of illegal activity and money laundering Roundup: grand corruption, copyright breaches and other frauds, Russian Laundromat
Herald Scots shell firms play key role in Latin America’s bribery ‘mega scandal’ “SCOTTISH shell firms played a core role in a billion-dollar bribery ‘mega scandal’ threatening to topple or disgrace up to a dozen world leaders.” Odebrecht: Grand Corruption, Latin America
Herald Peru leader accused of taking bribes through company based at Scots law firm
Herald Mexican oil boss denies taking multi-million bribes through Scots firm
Herald Russian gang leader jailed for faking metal exports to Scotland Organised Crime, Russia
Herald Analysis: Why Northern Ireland must not be forgotten in shell firm reforms Grand Corruption, Ukraine
Mother Jones How a Russian-Linked Shell Company Hired An Ex-Trump Aide to Boost Albania’s Right-Wing Party in DC Covert lobbying, US
Herald UK Government clampdown on Scottish ‘tax haven’ firms Action announced
Herald Business Minister Andrew Griffiths: ‘The Herald has shown the value of investigatory reporting’ Spectacularly insincere backslap for journalists
Transparency International Tackling the abuse of Scottish Limited Partnerships needs a UK-wide money laundering reform Reform proposal
Herald Why Scottish firms are ‘perfect tools’ to launder hundreds of millions Explanation of common features of abusive SLP structures
Herald Football’s ‘dark money’ funnelled through UK and Scottish firms Football Dark Money, FSU; an SLP and an LLP
Business New Europe Death in Vinnytsia Grand Corruption, Ukraine
Herald Boom in new English ‘tax haven’ firms after Scottish crackdown Displacement of abuse by the previous inept reform effort
Herald United Nations blacklists Scottish firms after international aid fraud Grand Corruption, Uzbekistan
Herald Investigation: Scotland’s firms, Argentina’s ‘bribes’ and Uzbekistan’s dirty cotton Grand Corruption, Uzbekistan and Argentina

Clearly, though, that’s not enough smoke, or multiple fires, for a Government department that is very evidently determined not to find anything wrong at all, in which case, it’s probably pointless to add this post-consultation footnote, a further $230Bn “allegation” that has already resulted in preliminary money laundering charges:

Source Headline Theme
Moneyweek Danske Bank’s money-laundering scandal “According to Danske’s report into the affair, UK entities such as LLPs and SLPs (Scottish limited partnerships) made up the second biggest proportion of Danske Estonia’s non-resident customers – second only to those based in Russia.” Largest European money laundering scandal ever, $230Bn of suspicious transactions, FSU state actors. Numbers of SLPs and LLPs involved unknown, but most likely hundreds or even thousands
Herald New laundering warnings on Scottish shell firms
Reuters Danske money laundering whistleblower labels UK structures a ‘disgrace’

Still – disgrace isn’t so bad. It soon passes, as Alleged Vexatious Creep Andrew Griffiths already knows: as if by a miracle, he returned to the Tory party fold just in time for the recent, potentially fraught, Theresa May confidence vote.

I can’t help suspecting that the SLP story, now with its extra $230Bn of impetus, won’t go away quite as quickly as Mr Griffiths’ dauntingly voluminous textual ejaculations (700 of them, to just two women, according to reports).

Accordingly, with the SLP sequel in mind, my next piece, in the coming few days, will be a quick and by now decidedly jaundiced look at the reform proposals, such as they are.

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6 comments

  1. ambrit

    Oh good!
    Will the SLPs wecieve a thound thwashing? Just like ‘Matey’ gave us at the Hall? *squeals with delight*
    Time to go back and reread all those old Billy Bunter tales. I must have missed something in them.
    Somehow, the imminent humiliation of The City looks to be a case of well deserved poetic justice. After Brexit, who will step into the breach to replace the UK as ‘Shell Game Venue of Choice?’

    Reply
  2. The Rev Kev

    Are these Scottish Limited Partnerships just another conduit for dodgy dealings for the City of London like those island jurisdictions? I suppose that the advantage is that if you have to visit Scotland to set one of these things up, you do not need to pack a passport.

    Reply
  3. Ignacio

    Mr. Griffith was quite busy to address that properly.

    I would be interested if you know of similar cases with LLPs based on Gibraltar

    Reply
  4. wilroncanada

    I always find it revealing that someone like Business Minister Griffiths, the “allegator”, finds it convenient to name names like: Brazilian politicians ( preparing for or justifying the coup) or Russian oligarchs, and not, for example, US politicians, or former Russian but now Israeli or British oligarchs.

    Reply

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