Blog / 19 Feb 2018

Spring is here… time for the UK to clean up its backyard

Tomorrow a group of cross-party MPs will call on the government to ensure that the UK’s Overseas Territories publicly reveal the real people behind the shady anonymous companies registered there.

Including some of the world’s most significant tax havens, some of the UK’s Overseas Territories have long been a go-to destination for the criminal and corrupt.

In these sunny jurisdictions, the image of an island paradise belies a system built on secrecy, a system that makes it simple to hide and move suspect funds around the world. In financial centres such as the Cayman Islands and the British Virgin Islands, you can easily establish a company whilst keeping your identity hidden from prying eyes. This anonymity is a gift to those who want to stash their ill-gotten gains and launder their criminal proceeds in secrecy.

You’d be forgiven if you thought that all this is old news. Because in a way, it is.

In fact, MPs proposed and debated the same issue exactly a year ago this month. And if a week is a long time in politics, a year feels like an eternity. But though we’re all one year older, the problem of anonymous companies remains evergreen.

We’ve identified some of the most significant corruption scandals of the last year where companies in the UK’s Overseas Territories have played a central role, and it makes grim reading for anyone trying to argue this isn’t a problem that needs urgent action. While MPs debate, the scandals continue.

Gertler Earns Billions as Mine Deals Leave Congo

Simon Dawson/Bloomberg via Getty Images

Payments to a friend of the Congolese President

In March, Global Witness revealed that commodities giant Glencore had made payments of over $75 million to Dan Gertler, a controversial businessman accused of bribing senior officials in the Democratic Republic of Congo to advance his own mining interests in the country. These payments were originally due to be paid to Congo’s state mining company, but following a secretive agreement were instead paid to one of Dan Gertler’s companies registered in the Cayman Islands. Gertler’s spokesman told Bloomberg that his company “vigorously contests any and all accusations of wrongdoing”. 

The Azerbaijan Laundromat

Fast forward to September, and the Organised Crime and Corruption Reporting Project (OCCRP) and The Guardian exposed how Azerbaijan’s ruling elite operated a secret £2.2 billion scheme to buy luxury goods and launder money through a network of opaque British companies. Some of this money went to European politicians and journalists who were subject to an international lobbying scheme that sought to deflect criticism from Azerbajian’s president Ilham Aliyev. It is reported that the funds came from a range of sources including companies linked to Azerbaijan’s president, state ministries and the International Bank of Azerbaijan. The money was reportedly funnelled through four UK companies, with the true owners of two of them hidden by two companies registered in the British Virgin Islands. 

Claude Bastos

Claude Bastos, Instagram, @Jclaudebastos

Grubby fingers in Angola’s sovereign wealth fund

Two months later, the ICIJ’s Paradise Papers revealed that an entrepreneur responsible for managing Angola’s sovereign wealth fund, Jean-Claude Bastos, was paid more than $41 million from the fund via a secretive British Virgin Islands company. 

The $41 million were dividends – pure profit- taken from his Mauritian investment management company, which was paid $92 million over a period of just 20 months, to manage and control the sovereign wealth funds’ assets. The British Virgin Islands company was itself owned by a series of secretive offshore companies, which were reportedly ultimately owned by Mr. Bastos. Both the fund and Mr Bastos have said the management fees paid were in line with global industry standards.

Top Kazakh oil official owns secret stake in multi-billion-dollar company

More leaked documents in the Paradise Papers revealed that Sauat Mynbayev – one of Kazakhstan’s top oil and gas officials, and a former government minister – was a secret shareholder of a multi-billion-dollar Bermuda-registered company, Meridian. According to research by the OCCRP, Meridian’s owners received at least $176 million in dividends from an arrangement with a company involved in transporting Kazakh oil and minerals. Mynbayev was named as one of Meridian’s major shareholders at a time when he served as a government minister – a clear conflict of interest, and potentially  illegal under Kazakh law. In November 2017, Mynbayev confirmed he was a former shareholder of Meridian Capital, but said he had declared this in his tax documents, and that he had given up his stake “several years ago.”

Nights In Monaco - Red Carpet Arrivals

Andreas Rentz/Nights In Monaco/Getty Images

Daughter of former dictator linked to luxury London properties

Finally, in December, the Sunday Telegraph  linked ‘pop princess’ Gulnara Karimova - the daughter of the former president of Uzbekistan - to £17 million worth of luxury London properties. The paper revealed that two British Virgin Islands companies acquired the properties, reportedly for her benefit. Given that Karimova is at the centre of an $800 million bribery investigation, the news raises serious questions about the legitimacy of the money used to buy the properties.

A long overdue spring clean

It is clear to us that ending the suffering caused by the corrupt around the world requires cutting off their access to corporate secrecy.  And as time passes, the strength of the case for the Overseas Territories to introduce public registers of beneficial owners has grows stronger with every new scandal.

On Tuesday MPs will once again call for an end to the secrecy that enables corruption and tax evasion to flourish. The government must heed this call for a long overdue spring clean and do all it can to shine the light of transparency on shadier side of the UK’s Overseas Territories.

You might also like