Rich people's favorite are ELP
Russian businessmen close to Vladimir Putin who have been punished made use of a gap in British legislation meant to ensure clarity of company ownership in the United Kingdom.
Arkady and Boris Rotenberg used a type of company that isn't obligated by law to reveal its true owners.
Also, the UK government admits that these companies, called English limited partnerships (ELPs), are at times used for illegal activities.
A collaboration between the BBC and the journalistic group Finance Uncovered discovered evidence that a number of ELPs were involved in deception, terrorism, and illegal money operations.
In 2016 and 2017, the government implemented new regulations requiring almost all UK companies to disclose their true owners. However, ELP was not impacted by these new transparency laws.
The ELP trend rapidly started. Since then, more than 4,500 new partnerships have been established.
BBC and Finance Uncovered journalists examined the leak and thousands of other company documents revealing how ELPs have become a method to avoid laws against illegal money activities that mandate the disclosure of the real owners or persons with substantial control over British companies.
ELPs are legally used in real estate, investment, and pension funds – for instance, they have tax benefits, and the amounts investors risk are restricted.
Unlike most companies, ELPs do not have a separate legal entity. This means they cannot own assets, have no beneficial owner, and cannot legally open bank accounts independently.
However, our investigation found documents identifying the beneficial owners of ELP and proof of their use to open bank accounts and enable 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 established ELPs has grown by 53% since 2017.
The investigation also exposed that ELPs were promoted as an “alternative solution” to bypass transparency laws.
Just five ELP-creating agencies have founded 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 determined 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 such company was Sinara Company LP, an English limited partnership created in January 2017. Its legal address is situated in central London, very close to Oxford Circus.
The company’s records indicated that it was involved in “tourism and ticket sales.”
From July 2017 to June 2018, the company transferred $133,000 in 14 wire transfers to an art consultant who, according to the Senate report, “helped with shopping for the Rothenbergs.”
According to UK law, the true owners of Sinara Company LP (which closed in 2019) do not need to be revealed.
The BBC attempted to contact the Rotenbergs but did not receive a response.
Most limited partnerships are established by so-called company formation agencies, which offer a registered address and administrative support.
The BBC and Finance Uncovered discovered that of the 4,500 ELPs formed since 2017, about a quarter are registered with just five UK agencies.
These agencies have expertise 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 managed by Elena Dovzhikan accountant of Anglo-Russian origin, and her business partner from Latvia Ineta Utinane.
LAS, whose activities include forming and managing hundreds of anonymous British companies for clients from Eastern Europe and Central Asia, has brought millions of dollars to its owners.
Several companies linked with LAS have subsequently been involved in criminal activities. One of them, Always Efficient LLP, a company registered at a London address provided by LAS, turned out to be associated with the largest Russian-language bitcoin exchange, BTC-e. In 2017, due to allegations of money laundering, BTC-e was shut down by 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 informed the BBC that it ceased operations of 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 forming 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 forming the SLP between 2015 and 2017.
SLPs were also not required to disclose their true owners at the time. However, after repeatedly being linked 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 started focusing on English partnerships, as seen in documents obtained by the BBC.
In a message to clients dated May 18, 2017, named “Alternative Solutions”, LAS proposed ELP as a substitute for Scottish partnerships.
The leaked Pandora Papers document says:
We found that several ELPs connected to LAS were involved in alleged criminal activity during our investigation.
These involve 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.
LAS head Olena Dovzhik stated:
According to her, the company now more carefully examines all international clients and promptly terminates cooperation with those suspected of participating in 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 what the third floor is called in England, as the first one is the ground floor. – Approx. BBC Russian service) at number 6 on Market Place, indoors, above a popular restaurant.
About 800 companies are registered at this address. This is one of the most popular ELP addresses in the UK. Over the last five years, more than 240 ELPs have been registered here.
On a note placed next to the intercom button, only one company is listed – 1000 Apostilles Ltd, owned by Ineta Utinane from LAS.
LAS says the lease on this space expired this year.
Another common ELP address is in Bristol.
Now located at 1 Straits Parade in the Fishponds district is a Turkish barbershop.
This address was used by another company formation agency, Arran, which registered 197 ELPs.
Companies registered at this address have been associated with financial crimes.
Our investigation discovered that Rivelham LP, an English partnership established in Bristol in 2013, was investigated by the FBI in connection with the 2013 Boston Marathon bombing in the United States.
Rivelham LP was mentioned in suspicious activity reports prepared by Deutsche Bank as part of an investigation into financial transactions related to those responsible for the explosion.
These reports, sent to the US Treasury, do not mention the owner of this ELP, but they do note its involvement in 116 suspicious transactions totaling over $7.3 million in just one month, from December 2012 to January 2013.
The BBC attempted to contact 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 the people signing the documents of these companies are unlikely to be their real owners.
Normally, these are nominal trustees who are paid to sign documents, and generally they do not know anything about what the company is doing.
For instance, Ruth Neidhart, a 71-year-old Swiss woman living in Cyprus, 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 she has signed documents for more than 160 ELPs created by IOS, the company formation agency for which she worked, since 2016.
Another person involved 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 said his participation was arranged 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.”
He adds:
“We have been warning the government for years about the problems with these non-transparent legal structures,” says Helena Wood of the Royal United Services Institute think tank. “As they say, transparency is the best disinfectant, and for all these English limited partnerships, we need a whole bucket of her.” .
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 misuse of ELP. 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.”
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.
