06 Dec 2019
Boris Johnson’s anti-corruption champion has said that the UK must “clamp down harder” on corruption after an investigation revealed how a British company registered a global web of businesses linked to international crime gangs.
John Penrose, who co-ordinates the response to corruption, said that Britain’s reputation for integrity was vital to secure trade deals after Brexit as all three main parties agreed to introduce tougher regulations after the election.
An investigation by an international consortium, including The Times and Finance Uncovered, and co-ordinated by the Organised Crime and Corruption Reporting Project, found that companies created by Formations House, which is based in London, were later used by criminals to carry out scams worth more than £300 million.
Leaked documents today show that Formations House planned to help to create a tax haven in southern Europe which legal experts said was at risk of becoming “a haven for dirty money”.
Mr Penrose said that Britain must introduce tougher regulations on creating new companies.
“Britain’s reputation as a clean, safe place to do business and invest will be absolutely vital for all those post-Brexit trade deals we want to do,” he said. “Reputations take years to earn but can be lost in an instant, so we simply can’t let kleptocrats or crime lords channel dirty money through Britain’s system.”
Mr Penrose said that a draft was ready to go through parliament “which will make Britain’s rules for registering new companies cleaner and safer, so we can clamp down harder where it’s needed”.
Sir Ed Davey, the Liberal Democrat deputy leader, said: “The rules for company formation agents need an urgent rethink, coupled with a stronger Companies House, to ensure that unscrupulous companies can’t exploit the rules.”
John McDonnell, the shadow chancellor, has pledged to “provide greater powers and resources to tackle the scale of abuse” following the Formations House revelations.
Formations House papers linked the company to Viktor Yanukovych, a former Ukrainian president who is accused of embezzling $1.5 billion.
In 2008 it created the company that owned Mr Yanukovych’s country mansion set within 350 acres on the banks of the Dnieper river near Kiev, and became a symbol of the 2014 revolution. The Ukrainian government later seized the property.
The leaked database reveals that Charlotte Pawar, the boss of Formations House, drew up plans for a secretive new tax haven in North Macedonia. Its marketing presentation promised: “Total anonymity provided, with no visibility to US or international institutions.”
By Christian Eriksson, David Brown and George Greenwood, The Times, 5 December 2019
Read more at The Times
RiskScreen: Eliminating Financial Crime with Smart Technology
You can claim CPD minutes for this content, by signing up to our CPD WalletFREE CPD Wallet