Rich people's top choice is ELP.
Russian oligarchs linked to Vladimir Putin exploited a gap in British law meant to show who owns companies in the UK.
Arkady and Boris Rotenberg used a type of company that doesn't have to reveal its true owners as required by law. Furthermore, the UK government acknowledges that these companies, called English limited partnerships (ELPs), are sometimes used for criminal purposes.
A joint investigation by the BBC and the journalistic group Finance Uncovered found proof that several ELPs were involved in fraud, terrorism, and money laundering.
In 2016 and 2017, the government introduced new regulations that forced almost all UK companies to disclose their true owners. However, ELP was not affected by these new transparency laws.
The ELP business immediately took off. Since then, more than 4,500 new partnerships have been established.
BBC and Finance Uncovered journalists looked into the leak and numerous other company documents showing how ELPs have become a way to bypass laws against illegal money activities that demand the disclosure of the real owners or individuals with significant control over British companies.
ELPs are legally used in real estate, investment, and pension funds – for example, they have tax benefits, and the amounts investors risk are limited.
Unlike most companies, ELPs don't have a separate legal entity. This means they can't own assets, have no beneficial owner, and can't legally open bank accounts on their own.
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 Barrow, an expert in financial crimes, these companies are relatively easy to exploit for illegal purposes, as they are only required to disclose minimal information about their activities. Based on our data, the number of newly established 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 creating ELPs have formed 1,500 new partnerships, hundreds of which are registered at just a few addresses, including some not in the business districts of British cities.
It was discovered that the 71-year-old Swiss artist signed the official documents for over 160 such companies, with the real owners staying out of the spotlight.
FBI agents investigating the Boston Marathon bombing were looking into a partnership registered at an address in Bristol, UK, where a barbershop is now located.
In the five years since the new transparency laws came into effect, over 4,500 ELPs have been established. Five years before 2017 – 2950.
We have confirmed that among the owners of partnerships 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 established in January 2017. Its legal address is situated in the center of London, very close to Oxford Circus.
The company’s paperwork indicated that it was involved in “tourism and ticket sales.”
Between July 2017 and June 2018, the company made 14 wire transfers adding up to $133,000 to an art consultant who, according to the Senate report, “assisted in shopping for the Rothenbergs.”
According to UK law, the true owners of Sinara Company LP (which closed in 2019) do not have to be revealed.
“This is a real scandal, people like the Rotenbergs, who were under sanctions in America for years, can still utilize British corporate structures to withdraw their money from Russia through them, and then spend it as they see fit,”
Margaret Hodge, UK Labor Party MP who heads the parliamentary group on taxes and corruption, stated.
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 Dovzhik
an accountant of Anglo-Russian origin, and her business partner from Latvia Ineta UtinaneLAS, which includes 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. A number of companies associated with LAS have subsequently 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 connected to the largest Russian-language bitcoin exchange, BTC-e. In 2017, due to allegations 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 the creation of a huge 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 under no obligation to disclose their true owners at the time. But after being repeatedly 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 turned its attention to English partnerships, as seen in documents accessed by the BBC.
In a message to clients dated May 18, 2017, titled “Alternative Solutions”, LAS suggested ELP as a substitute for Scottish partnerships.
The leaked Pandora Papers document says:
“Currently, the benefits of this partnership type are that they are not and will not be subject to control disclosure laws.”
Our investigation uncovered the involvement of several ELPs related to LAS in alleged criminal activity.
According to LAS head Olena Dovzhik:
“We are aware that many years ago we submitted registration documents for some companies that were later accused of illegal activities, but this information was not available to us before registration … We have never been involved in any commercial activities of our former clients and only assisted our corporate clients in their company formation, mail forwarding and legal registration services. We have never supported fraud or illegal activity.”
According to her, the company now scrutinizes all international clients more carefully and immediately discontinues cooperation with those suspected of involvement in illegal activities.
Cosalima Trade LP was registered in the center of London, on the second floor (this is how the third floor is called in England, since the first one is the ground floor. – Approx. BBC Russian service) at number 6 on Market Place, indoors, above a popular restaurant.
About 800 operating companies are registered at this address. This is one of the most used ELP addresses in the UK. Over the past five years, over 240 ELPs have been registered here.
On a piece of paper inserted into 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 popular ELP address is in Bristol.
At 1 Straits Parade in the Fishponds district, a Turkish barbershop is now located.
This address was used by another company formation agency, Arran, which registered 197 ELPs.
Companies registered at this address have been linked to financial crimes.
Our investigation found that Rivelham LP, an English partnership incorporated in Bristol in 2013, was investigated by the FBI in the same year’s 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 say who owned this ELP, but recorded its participation in 116 suspicious transactions totaling more than $7.3 million in just one month, from December 2012 to January 2013.
The BBC attempted to contact the owners of Arran but received no response.
Even though the names of ELP partners can be seen in documents filed with the UK Companies House, they are often anonymous companies registered in other countries, like Belize and the Seychelles.
And even the people who sign the documents of these companies are unlikely to be their true owners.
Typically, 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 residing in Cyprus, works as a ceramics artist, crafts porcelain dolls and jewelry, and sometimes organizes pottery painting sessions for children’s parties.
An examination of UK registration documents indicated that since 2016, she has signed documents for over 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 stated that 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.”
“We have never controlled or managed any of the companies mentioned in your questions.”
“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.” .
He adds:
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.
