Rich people's close connections are ELP
Russian oligarchs, who have been punished, and are linked to Vladimir Putin, exploited a gap in British law. The law was made to make it clear who owns companies in the UK.
Arkady and Boris Rotenberg used a type of company that is not required by law to identify its true owners.
Additionally, the UK government acknowledges that these companies, called English limited partnerships (ELPs), are sometimes used for criminal purposes.
An investigation by the BBC and the journalistic organization Finance Uncovered found proof that several ELPs were involved in fraud, terrorism and money laundering.
In 2016 and 2017, the government made new rules that forced nearly all UK companies to state who their true owners are. However, these new transparency laws didn't apply to ELPs.
The number of new partnerships exploded right away. Since then, more than 4,500 new partnerships have been made.
Investigative journalists from BBC and Finance Uncovered examined the leak and thousands of other company documents that reveal how ELPs have become a way to avoid laws against illegal money activities. These laws require the disclosure of the real owners or persons with significant control over British companies.
ELPs are legally used in real estate, investment and pension funds – for example, they have tax advantages, and the amounts investors risk are limited.
Unlike most companies, ELPs do not have a separate legal entity. This means that they cannot own assets, have no beneficial owner, and cannot legally open bank accounts on their own.
But our investigation found documents identifying the beneficial owners of ELP and evidence of their use to open bank accounts and facilitate financial crime.
According to Graham Barrowan expert on financial crimes, these companies are relatively easy to exploit for illegal purposes, since they are required to disclose only minimal information about their activities.
According to our data, the number of newly created ELPs has increased by 53% since 2017.
The investigation also revealed that ELPs were advertised as an “alternative solution” to bypass transparency laws.
Just five agencies for creating ELPs have created 1,500 new partnerships, hundreds of which are registered at just a few addresses, including by no means in the business districts of British cities.
It turned out that the 71-year-old Swiss artist signed the official documents of more than 160 such companies, the real owners of which remained behind the scenes.
FBI agents investigating the Boston Marathon bombing were checking a partnership registered at an address in Bristol, UK, where a barbershop is now located.
In the five years since the new transparency laws went into effect, more than 4,500 ELPs have been created. Five years before 2017 – 2950.
We have established that among the owners of partnerships there are members of President Putin’s inner circle.
The brothers Arkady and Boris Rotenberg in 2020 came under investigation by a US Senate committee. It alleged that they used a global network of shell companies to evade U.S. sanctions following the 2014 annexation of Crimea. These companies were used to purchase millions of dollars worth of art.
One company like this was Sinara Company LP, a British limited partnership formed in January 2017. Its legal address is located in central London, very close to Oxford Circus.
The company’s paperwork said it was involved in “tourism and ticket sales.”
From July 2017 to June 2018, the company made 14 wire transfers adding up to $133,000 to an art consultant who, according to the Senate report, “helped the Rothenbergs with their shopping.”
According to UK law, the true owners of Sinara Company LP (which closed in 2019) do not have to be revealed.
The BBC attempted to contact the Rotenbergs but did not get a response.
Most limited partnerships are created by so-called company formation agencies, which offer a registered address and administrative support.
The BBC and Finance Uncovered discovered that out of the 4,500 ELPs established since 2017, around a quarter are registered with just five UK agencies.
These agencies have experience in setting up anonymous companies in the UK for clients in Eastern Europe and the former Soviet Union. Some of the companies they registered were also involved in financial crimes, including money laundering.
According to the documents, the most successful of these agencies is LAS, which is run by Elena Dovzhikan accountant of Anglo-Russian origin, and her business partner from Latvia Ineta Utinane.
LAS, which involves the creation and management of hundreds of anonymous British companies for clients in Eastern Europe and Central Asia, has generated millions of dollars for its owners.
Several companies connected with LAS have later been involved in criminal activities. One of them, Always Efficient LLP, a firm registered at a London address provided by LAS, turned out to be linked to the largest Russian-language bitcoin exchange, BTC-e. In 2017, due to accusations of money laundering, the PTS-e closed the US Department of Justice.
And last year, the fazze.com website, which used a legal address provided by LAS, was allegedly behind a vaccine disinformation campaign believed to be coordinated from Russia. The site spread rumors that the AstraZeneca vaccine turns patients into chimpanzees.
LAS told the BBC that it stopped operating Always Efficient LLP in 2017 “due to violations of our policies.”
Regarding fazze.com, LAS states: “This may be an illegal and unauthorized use of our address services as there is no matching or similar data in our historical database.”
LAS was also responsible for creating a large number of British companies of another type – Scottish Limited Liability Partnerships (SLP). In 2017, a Bellingcat investigation found that LAS was most actively involved in the creation of the SLP between 2015 and 2017.
SLPs were also not required to disclose their true owners at the time. But after being repeatedly connected to major international money laundering scandals, the UK government changed the law and they had to provide information about their owners. Almost immediately, the number of registrations was almost halved.
After the SLP law changed, LAS began focusing on English partnerships, as per documents obtained by the BBC.
In a May 18, 2017 email titled “Alternative Solutions”, LAS suggested ELP as a replacement for Scottish partnerships.
The Pandora Papers document that was leaked stated:
Our investigation found that several ELPs related to LAS were involved in alleged criminal activity.
This includes companies owned by ELP Donnea Business LP, which are accused of tax evasion in Ukraine, and another ELP called Cosalima Trade LP, controlled by a Russian businessman wanted by Russian authorities on £5 million fraud charges.
Olena Dovzhik, the head of LAS, said:
According to her, the company now conducts more thorough checks on international clients and terminates cooperation with those suspected of illegal activities.
Both Donnea Business LP and Cosalima Trade LP were registered at London addresses provided by LAS.
Cosalima Trade LP was registered in the center of London, on the second floor (this is how the third floor is called in England, because the first one is the ground floor. – Approx. BBC Russian service) at number 6 on Market Place, indoors, above a popular restaurant.
This address has approximately 800 operating companies registered and is one of the most frequently used ELP addresses in the UK. Over the past five years, over 240 ELPs have been registered here.
Only one company, 1000 Apostilles Ltd owned by Ineta Utinane from LAS, is listed on a piece of paper inserted into the intercom button.
LAS says the lease for this space expired this year.
Another popular ELP address is located in Bristol.
A Turkish barbershop is currently located at 1 Straits Parade in the Fishponds district, which was once used as an ELP address by another company formation agency, Arran, which registered 197 ELPs.
Companies registered at this address have been linked to financial crimes.
Our investigation uncovered that Rivelham LP, an English partnership formed in Bristol in 2013, was investigated by the FBI in connection with the 2013 Boston Marathon bombing.
Rivelham LP was mentioned in suspicious activity reports prepared by Deutsche Bank as part of an investigation into financial transactions related to those involved in the explosion.
These reports were sent to the US Treasury and indicated the ELP’s participation in 116 suspicious transactions totaling over $7.3 million in just one month, from December 2012 to January 2013.
The BBC attempted to reach the owners of Arran but did not receive a response.
Even though the names of ELP partners can be found on documents filed with the UK Companies House, they are usually anonymous companies registered in other countries, like Belize and the Seychelles.
And even the people signing the documents of these companies are unlikely to be their true owners.
Normally, these are nominal trustees who are paid to sign documents, and usually they do not have any knowledge about what the company is doing.
For instance, Ruth Neidhart, a 71-year-old Swiss woman living in Cyprus: she works as a ceramics artist, makes porcelain dolls and jewelry, and sometimes organizes pottery painting sessions for children’s parties.
An examination of UK registration documents revealed that since 2016 she has signed documents for more than 160 ELPs created by IOS, the company formation agency for which she worked.
Another “zitz-chairman” is Alexandru Terna, a Romanian citizen living in London. Terna has signed UK Companies House documents for at least 306 ELPs created by LAS for its clients.
In response to written questions from the BBC, Terna remarked that his participation was organized through LAS International or a related company “for and on behalf of the owners of all individual companies with whom we had fiduciary/nominal service agreements.”
“We have never controlled or managed any of the companies mentioned in your questions.”
He adds:
British politicians often promise to plug the many loopholes in anti-money laundering legislation. However, the governments of the country are changing, and the gaps in the law have not gone away.
As early as 2014, the government considered taking action against the ELP but failed to do so. The following year, the then prime minister
David Cameron stated that he would not allow the UK to become “a safe haven for corrupt money from around the world.” In 2018, the government acknowledged the risks associated with limited partnerships and — after several high-profile money-laundering scandals — raised concerns about their abuse by criminals.
After the start of the NWO in Ukraine by Russia
Boris Johnson declared that he wanted to “open the nesting dolls of Russian companies” in order to reveal their true owners. The government says it has no evidence of serious ELP misuse. A government spokesman said: “The UK already has some of the most stringent anti-money laundering controls in the world and it is imperative that we continue to improve our controls to deal with criminals abusing UK entities.”
“Therefore, we are modernizing the law governing limited partnerships in the UK in our forthcoming Economic Crimes Bill. It will tighten registration requirements and increase transparency, ensuring that only those who act within the law can remain on the UK company register.” ,
Whitehall said in a statement.
However, this modernization does not appear to include closing the loophole that allows limited partnerships to not disclose information about their true owners or beneficiaries.
