Australian Defence contracts pass from Russian with money-laundering links to shady US military contractor Dyncorp
27 Dec 2019

Dyncorp International is a US military contractor which has been embroiled in controversies around the world, is controlled by a private equity firm and provides a range of military services including supplying mercenary forces.

It established DynCorp Australia in 2004 and public contract data shows that its pickings from the Department of Defence were slim for nearly eight years. A turning point came in 2011 when the local agent for a Russian aviation company, Vertical-T, failed under curious circumstances.

DynCorp took over the agency agreement and began working more closely with the Australian Defence Force (ADF). Since 2014, the firm has reaped at least $380 million from Australian government contracts.

These facts alone are unremarkable. However, a recent data leak from UK shell company factory, Formations House, has laid bare the details of payments made under the agency agreement. The leak, dubbed #29 Leaks, raises the spectre of money-laundering, and poses serious questions about how the ADF spends taxpayer money.

Dyncorp’s predecessor, Vertical-T, is run by a Russian aviation magnate, Vladimir Skurikhin. From late 2010 it was represented in this country by a newly incorporated agent, Vertical Australia. It won a contract with the ADF almost immediately and began providing heavy-lift helicopter services for the war in Afghanistan. Central to the services was a Mi-26T, the largest and most powerful helicopter ever produced.

Vertical Australia was responsible for collecting payments from the ADF. Less than 12 months into the arrangement however, it found itself at the centre of a dispute between Vertical-T and Wellman Limited. Wellman, based in Cyprus, is one of a number of companies involved in handling payments on behalf of Vertical-T. The Russian company and the Cypriot company both demanded that Vertical Australia remit them the cash directly.

Over a period of two months, Vertical Australia accumulated $2.3 million in payments from the ADF. Eventually, apparently keen to avoid being sued by another company associated with the Russian aircraft magnate Skurikhin, it parked the funds with the NSW Supreme Court and went out of business.

By the time the matter was heard by the Court, Vertical-T had appointed DynCorp Australia as its new local agent. Ultimately, documents show the court ruled in favour of Vertical-T and the accumulated funds were transferred to DynCorp, and from there to Vertical-T. That appeared to be the end of the matter.

THE LEAK

Deep in the Formations House data this publication has discovered bank transactions belonging to another company controlled by Skurikhin, this time a UK company. The transactions reached across more than a dozen countries including Russia, Bulgaria and Uganda, and showed the regular use of tax havens and financial secrecy jurisdictions such as Seychelles, the Marshall Islands and Panama.

Outward payments were made from the Skurikhin accounts to numerous shell companies, and to at least one well known money laundering outfit, Progate Solutions LP.

Amongst the leaked transactions were payments from DynCorp Australia to Vertical-T. They were unremarkable, with the exception of four that occurred between late 2012 and early 2013, for a total of US$1.1 million. At that time, money launderers were using sham court cases and prepaid legal fees to disguise the true source of funds. The four transactions raised suspicions with their description of “refund legal fees overpaid”.

Further research has revealed that the warring companies, the companies which effectively tore Vertical-T’s Australian agent in two, were both closely connected to Skurikhin. He established Vertical-T in Russia and remains its General Director. He was, and continues to be, joint owner of the Cyprus company, Wellman Limited. Naturally, this raises questions about the authenticity of the court case.

The prospect of Australian taxpayer funds being laundered through Australian courts is worrying in itself, particularly where contracts relate to the ADF, the largest component of the Federal Budget and one of the government’s most secretive departments. In this case, those concerns are compounded by the fact that two of the suspicious payments to Skurikhin are immediately followed by large payments from Skurikhin to an unidentifiable recipient.

The payments, totalling US$730,000, appear to have gone to a UK company, Layne Design LLP. Layne Design was owned by two companies in the Marshall Islands, where the real owners were hidden behind a veil of corporate secrecy. Apart from its initial registration, Layne Design did not meet a single one of its filing obligations with the UK companies register. It was eventually struck off.

In other words, it appears that Layne Design was set up for the sole purpose of receiving a small number of secret, once-off payments.

By Kim Prince, MichaelWest.com.au, 27 December 2019

Read more at MichaelWest.com.au

Photo: U.S. Indo-Pacific Command [CC BY-NC-ND 2.0] via Flickr

RiskScreen: Eliminating Financial Crime with Smart Technology

Count this content towards your CPD minutes, by signing up to our CPD Wallet

FREE CPD Wallet