04 Dec 2019
A global web of businesses, banks and tax havens used by international crime gangs and fraudsters has been created by a family-owned company in Britain, an investigation has revealed.
Leaked documents show links to businesses set up by Formations House, a London-based company that establishes and helps to manage companies, and scams involving more than £300 million.
These include vintage wine frauds, fake stock market tipsters, dodgy gold and diamond traders, overpriced land investment schemes and a Hollywood heist carried out by a bogus aristocrat.
The documents show that the “formation agent” has repeatedly failed to carry out proper due diligence on clients and has set up companies for known fraudsters and organised criminals.
It can be revealed today that:
• The owner of Formations House told an undercover reporter from The Times that it was possible for company owners to conceal their identities and deposit funds at foreign banks;
• Directors of at least 40 UK companies that it created have been disqualified after allegations of wrongdoing;
• The owner’s grandmother remained a director of companies and signed off accounts even though she was dead.
A British fraud expert said that the investigation highlighted the “urgent need to clamp down on the abuse of British companies”. Formations House’s website boasts that since 2001 it has created “over 400,000 companies, partnerships and trusts” and sold 25,000 “ready-made companies and partnerships” and that it operated in 12 jurisdictions.
A Times undercover reporter was told by Charlotte Pawar, its chief executive, that company owners concealed an identity behind front companies and used foreign bank accounts to avoid scrutiny by the authorities. Details of its worldwide operations are revealed in a leaked database of more than a million documents being investigated by an international consortium, including The Times and Finance Uncovered, and co-ordinated by the Organised Crime and Corruption Reporting Project.
One of the directors of a company registered by Formations House had been banned from acting as a director after a failed land investment scheme. He simply called himself a lord and bought a Seychelles-registered company from Formations House for £300.
David Clarke, a former head of the National Fraud Intelligence Bureau at City of London Police and current chairman of the Fraud Advisory Panel, said the undercover footage showed discussions of “banking and avoidance of money-laundering checks that were totally unacceptable”. The lax controls surrounding company creation agencies such as Formations House — which is authorised by the official Companies House registry and regulated by HM Revenue & Customs — will lead to concerns that fraudsters and organised crime are damaging Britain’s reputation for corporate governance.
The scale of the criminal abuse by legal entities created by Formations House has led to calls for greater regulation even though there is no suggestion that the company is involved in or has any knowledge of any of the wrongdoing perpetrated by its clients.
By David Brown, Christian Eriksson, George Greenwood, Emma Yeomans, Alex Ralph and Katie Gibbons, The Times, 4 December 2019
Read more at The Times
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