By Jim Fitzpatrick: Hundreds of firms set up by two companies linked to the world’s most notorious organised crime gangs shared an address just yards from the government agency responsible for the UK’s company register.
Companies House oversees the information held on all UK firms on the register of companies. It says one of its priorities is to make the register as complete and accurate as possible. But it seems the agency failed to notice, or do anything to stop, hundreds of suspicious firms at one address that Google Maps suggests is just a four-minute walk from the front door of its own headquarters in Cardiff.
Research by Transparency International UK uncovered 948 suspect Limited Liability Partnerships (LLPs) registered at the small property, Enterprise House, at Whitchurch Road in Cardiff.
UK LLPs can operate just like private companies but offer much greater secrecy and have therefore been popular with international crime gangs seeking to launder and conceal their billions in illicit funds
Transparency International’s research calculates that there has been a staggering $730bn-worth of known money laundering associated with UK LLPs. It identifies 21,000 LLPs – 14% of those created between 2001 and 2021 – as sharing almost identical characteristics to those used in major corruption and money-laundering schemes.
Among the most frequent company names to feature – connected to more than a fifth of all these tainted LLPs – are just two notorious firms.
These firms, according to a report by OpenDemocracy – Ireland & Overseas Acquisitions Limited and Milltown Corporate Services Limited – have been used to hide global networks of companies controlling criminal funds running into many billions.
They are nominally controlled by two Latvian men, Erik Vanagels and Stan Gorin, but neither is the multi-billionaire he appears to be on paper. Instead, their companies have been used as fronts for criminal money.
Perhaps the most high-profile case connected to the Vanagels and Gorin names is the Magnitsky fraud. Their two companies – the same two connected to hundreds of the LLPs at the address in Cardiff – were part of the $230m theft of Russian citizens’ money that Moscow lawyer Sergei Magnitsky challenged and exposed before his arrest, torture and death in prison in 2009.
The criminal gang behind the fraud and Magnitsky’s death enjoys protection from the Putin regime and has been shielded from justice at home in Russia. But foreign governments have taken action, with laws in the US, Europe and UK enacted in Magnitsky’s name that allow for targeted sanctions on individuals. These are the laws that have been used to freeze the assets of many Kremlin-linked Russians in the aftermath of the invasion of Ukraine.
As part of action taken in the US to seize assets linked to the Magnitsky fraud, officials from the US Department of Justice travelled to Latvia in 2013 to interview one of the men fronting the companies, Gorin. Investigators reported he told them “signatures on corporate documents for four shell companies were not signed by him but rather were forged”.
Investigators suggested this was proof, whether Gorin could be believed or not, that the companies he was linked to were not “legitimate entities”.
It’s clear that those engaged in major financial crimes are one step ahead of the government’s response
The evidence of global criminal cartels operating in plain sight in the UK and under the nose of Companies House comes as Westminster prepares for the second reading of the Economic Crime and Corporate Transparency Bill this week.
Duncan Hames, director of policy at Transparency International UK, said the research “lays bare the seemingly industrial-scale abuse of UK LLPs and how this type of company has been used to facilitate billions in economic harm”.
It’s believed that much of the money that flowed through the UK LLPs originated in Russia and, like the Magnitsky fraud, was ultimately a theft from the Russian people using the UK’s lax financial regulations.
Transparency International discovered that, at one point, the two companies fronted by Gorin and Vanagels controlled a remarkable 1,873 LLPs in the UK. Following years of exposure, their names no longer appear with any frequency on company registrations.
The suspect activity at the address in Cardiff also stopped some years ago and there is no suggestion that the current traders located there, or the owners of the property, have any connection to the raft of registrations.
It’s likely that the criminal gangs have simply found new methods to conceal their dirty money. The Economic Crime Bill proposes giving Companies House new powers of oversight. But Hames believes there are “glaring gaps” in the legislation and that it requires strengthening.
“With a substantial proportion of LLPs showing red flags for use in high-end money laundering, it’s clear that those engaged in corruption and other major financial crimes are one step ahead of the government’s response,” he said. “Key to getting on the front foot is a long-overdue reform of Companies House, effective anti-money laundering regulators and properly resourced law enforcement that can provide a credible deterrent to economic crime.”
Companies House did not want to comment on the findings, but a government spokesperson claimed the UK had some of the strongest controls in the world to combat money laundering and that it was “continuing to upgrade our governance to crack down on criminals”.
“Our new Economic Crime and Corporate Transparency Bill will bear down on the use of thousands of UK companies and other corporate structures as vehicles for facilitating international money laundering, fraud, corruption, terrorist financing and illegal arms movements,” the spokesperson said.
The bill will have its second reading in the House of Commons on Thursday.
Jim Fitzpatrick is ‘dirty money’ reporter at openDemocracy. He spent more than two decades at BBC Northern Ireland, where his roles included presenting the award-winning ‘Spotlight’ investigations series.
The European Financial Review is the leading financial intelligence magazine read widely by financial experts and the wider business community.