The UK's
approach has attracted many post-Soviet billionaires, including some on the run
The Guardian, David Leigh, Harold Frayman and James Ball, Tuesday 27 November 2012
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| Ukrainian billionaire Rinat Akhmetov used a BVI company to buy the most expensive flat sold in London, at One Hyde Park. Photograph: Sergei Supinsky/AFP/Getty |
Britain's
friendly regime of offshore secrecy has tempted an extraordinary array of
post-Soviet billionaires to descend on London, sometimes to the sound of
gunfire.
Vladimir
Antonov fled permanently to Britain after his father, Alexander, was gunned
down in a Moscow street in 2009. Another associate, German Gorbuntsov, narrowly survived a volley of shots in London last March.
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| Offshore Secrets |
When
Antonov bought a luxury yacht in Antibes, the Sea D, he was careful to register
its ownership to an anonymous British Virgin Islands (BVI) entity, Danforth
Ventures Inc.
He also
found funds to try to take over the ailing Swedish car manufacturer Saab,
though he did not take control. He did succeed for a while in owning the even
more ailing Portsmouth football club.
Antonov is
currently on bail in Britain. Lithuanian authorities are trying to extradite
him for allegedly looting their collapsed bank Snoras, which he denies.
The
allegation that oligarchs exploit Britain's offshore secrecy regime to shift
assets out of their own countries is not an uncommon one. One refugee from the
law is the Kazakh billionaire Mukhtar Ablyazov, who was allegedly last seen in
February heading out of London on a coach to France. Ablyazov has been
sentenced to 22 months in jail for contempt of court as the BTA Bank in
Kazakhstan attempts to pursue his maze of offshore assets. The bank's lawyers
claim Ablyazov has made off with £4bn using BVI and Seychelles companies,
nominee directors and layers of front men. Ablyazov denies it.
These
billionaires justify their use of British-controlled secrecy jurisdictions
because they say they must protect themselves from corporate predators and
political enemies in their home countries.
Another
fleeing oligarch, the Georgian Badri Patarkatsishvili – a partner of fellow
exile Boris Berezovsky– was found dead in 2008 in his Surrey mansion.
Patarkatsishvili's business manager, Eugene Jaffe, managed £500m of the
Georgian's assets from a central London office through a BVI company, Salford
Capital Partners. Jaffe's company was owned in turn by an opaque BVI trust he
set up called Montana River.
The
wild-west financial landscape of post-Soviet Russia has attracted at least one
entrepreneur from the British Isles to exploit the possibilities of the BVI
secrecy regime. We have traced BVI entities used in Russia by the man once
known as the richest in Ireland, the property developer Seán Quinn. He expanded
into schemes for shopping malls in Moscow and Kiev.
He has now
declared himself bankrupt and has received an Irish jail sentence for contempt,
as the now state-owned Anglo Irish Bank seeks to recover what it says is a
missing £2bn.
Other
post-Soviet financiers have used Britain's secret offshore facilities for
widely different purposes. The London-based Latvian oil trader Evgeny Tikhonov
set up an entity in the BVI to hide a total of $2.4m (£1.5m) that his employer,
Shell, subsequently convinced a British civil court he was wrongly skimming off
from fuel deals. He was, however, acquitted of criminal charges over this.
The fund
manager Igor Tsukanov, another arrival in the fashionable west London area of
Notting Hill, kept funds in the BVI that will have apparently legally sheltered
them from Russian taxes.
Dimitry
Sergeev, a mobile phone games entrepreneur from Novosibirsk, whose firm was
BVI-registered, faced a potentially costly dispute with a small Manchester
supplier over some allegedly unpaid invoices. A source there said: "We
decided it was too difficult to bring a legal action in the BVI." Sergeev
did not comment.
Undoubtedly
the most flamboyant post-Soviet beneficiary of Britain's offshore secrecy
regime is Rinat Akhmetov, the richest man in the Ukraine. From a base in the
coal-mining Donetsk region, he has personally acquired industrial assets
estimated to be worth £11bn. He shifted £136m out of the former Soviet republic
in 2007, in order to buy the most expensive flat sold in London, at One Hyde
Park.
Asked why
he hid behind a BVI company, his company spokesman in the Ukraine said it was
"for internal structuring reasons". He added: "Water Property
Holdings Limited fully paid all taxes and charges … as required by applicable
laws in the UK. This includes payment in February 2011 of stamp duty land tax
(SDLT) at a rate of 4% which amounted to £5.467m."
Legal use
of BVI entities to disguise Russian movement of funds into British companies,
also appears to be widespread. In one example we have unearthed, a
British-registered firm, Pennard Chemicals Ltd, with an address at rental
offices in Cannon St in the City of London, has had declared revenue over the
last 3 years of more than 100 million euros, described as commission on unspecified
Russian deals. Pennard Chemicals named director, The Hon Andrew Moray Stuart,
with an address in Mauritius, is one of the sham nominees the Guardian/ICIJ
research has identified. The shareholder, Imex Executive Ltd, is a BVI entity
set up by a Moscow incorporation agency. In turn, its sham nominee directors
include Jesse Hester in Mauritius and a sham nominee shareholder, Brenda
Cocksedge. These nominees sell their names, without exercising genuine control
or ownership. The real owner, according to company records we have seen, is
named as Ivan Kovlachuk.
Offshore
secrets
Guardian
team: David Leigh, Harold Frayman and James Ball.
The project
is a collaboration between the Guardian and the International Consortium of Investigative Journalists (ICIJ) headed by Gerard Ryle in Washington DC.
Guardian investigations editor David Leigh is a member of ICIJ, a global
network of reporters in more than 60 countries who collaborate on in-depth
investigative stories that cross national boundaries. The ICIJ was founded in
1997 as a project of the Center for Public Integrity, a Washington DC-based
non-profit.
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