gun-runners are using Scotland to launder their profits, Mafia watchers
in the former Soviet Union have said. Organised criminals are
increasingly exploiting secretive and obscure Scottish shell firms as
fronts for everything from cyber-scams to the wholesale looting of
Now Mafia monitoring group CRiME has warned that Scotland has become a money-laundering factory for criminal gun-runners hiding behind SLPs.
Journalist Andriy Lavryk, who heads CRiME,
said: “For some reason the interests of arms dealers from Ukraine,
Russia and the Middle East – and their customers – are concentrated in
stressed how hard it is to get infallible information on Scottish arms
links but confirmed that corrupt officials and businessmen from across
the former Soviet Union – not just the so-called “arms Mafia” – use SLPs
and other British “offshore structures”. He cites a source as saying:
“All the arms dealers gather in Scotland. Arms billionaires live there.”
law enforcement and political sources in Scotland have long been
concerned that SLPs – which often exist only on paper – were putting
this country on the radar of very serious international criminals.
are businesses that often start of their lives advertised online in
eastern Europe as “Scottish offshore companies”, firms registered in
Scotland but with parent companies in the world’s shadiest fiscal
paradises such as Belize or Panama. The Sunday Herald last month revealed thereare now more than 25,000 such firms registered, none of which has filed accounts and almost all of which have ownership in secretive offshore jurisdictions.
Herald and Sunday Herald have since revealed SLPs have been allegedly
implicated in a Latvian scandal involving the now-jailed nephew of the
president of Uzbekistan, and as fronts for websites peddling diet pills
dubbed a scam, as well as sites offering to write essays for students.
stressed that criminals and corrupt officials and politicians in the
former Soviet Union were attracted to “offshore” companies with
addresses in the EU, not just Scotland.
Soviet criminals – and nervous legitimate business people – will choose
any jurisdiction that provides a way of hiding the ultimate owner of
assets – and protecting those assets from potential threats, including
But he added that there was a “specific” arms element to organised criminals who had shown an interest in Scotland.
said: “Scottish offshores have only started to crop up relatively
recently in the investigations of law enforcement and independent
journalists. “Some offshore companies registered in Scotland have
appeared in dubious contracts involving Ukroboronprom, a group of
companies belonging to the government of Ukraine and specialising in the
production and trading of military hardware, from Kalashnikovs and
mortars to tanks, planes and missiles.”
Ukraine: the former Soviet republic is currently in a ‘frozen’ conflict with Russian-backed separatists
sources in Ukraine stress that the prestige and kudos of Scotland and
the UK also plays a role in prompting tax evaders and gangsters to use
SLPs or English limited liability partnerships.
controlling an SLP or LLP – which have legal personality – can open an
EU bank account. Firms marketing SLPs for around £1,000 off-the-shelf
claim the Scottish model has the added advantage of not having to file
financial accounts if neither of its partners is a limited company.
SLPs are routinely used in conjunction with banks in countries like
Latvia or Cyprus. So the money they launder may never move through
Scottish accounts, sources say. Scottish politicians across party lines
have become increasingly concerned about the boom in SLPs – amid fears
the country’s international reputation could be tarnished.
Holyrood cannot legislate because corporate law is reserved to London.
Mullin, SNP Treasury spokesman in Westminster, said: “It is not
acceptable that despite being raised over a year ago no action has been
taken to close these loopholes.
SNP proposed a Fair Tax Bill to take action against tax avoidance and
the UK Government needs to get on with the job of stopping criminals
using these methods to move and conceal their money. The Scottish
Government has asked the UK to make these changes and the SNP at
Westminster will be pushing for urgent action.”
MSP Jackie Baillie agreed. She said: “It appears there has been very
little movement on this issue since the Sunday Herald revealed the
problems over a year ago. Scottish Labour believes the UK Government
must consider whether the law covering limited partnerships needs to be
tightened and whether it is being abused by criminals.TheHerald