The Northern Irish ghost companies that mask crime worldwide

The uptick in NILP registrations came after the UK government – which has gradually been improving corporate transparency – ordered Scottish limited partnerships to name their beneficiaries or ‘persons of significant control’.

NILPs immediately popped up as the person of significant control of Scottish limited partnerships, adding a layer of opacity to the Scottish firms and effectively neutering attempts to provide transparency.

Ghost corporations such as Scottish limited partnerships and NILPs had been routinely marketed along with a bank account in Latvia. The boom in registration of NILPs came to an end in 2018 after authorities in the Baltic state moved to stop British and other shell firms being used to open what were effectively anonymous bank accounts.

The entities, however, remain registered and continue to shield the identity of their owners. And that means controversies continue, sparking political fears of damage to Northern Ireland’s business reputation.

“It’s bizarre and in fact shameful that companies registered in NI are linked to so much wrongdoing, ranging from non transparency to causing real harm and financial hardship to people,” said SDLP MP Claire Hanna.

‘We are a serious business’

Northern Ireland limited partnerships are often used precisely because a British or an Irish company – this distinction is not always as obvious in the former Sovet Union as it is closer to home – sounds like it comes from a safe jurisdiction with the rule of law and a good reputation for fair trade.

Some NILPs in eastern Europe move to capitalise on this image of UK or EU probity.

Take Capital Gold. This NILP shared an address in Newry with our shipowner Emerald Invest. Its business was gold, online. Capital Gold promised returns on investment of 220% in 20 days when it launched last summer. Its website – in English and Russian – has now disappeared.

Capital Gold’s UK registration, it declared, “means we are a serious business”. Financial bloggers such as Bezobmana (“Without cons”) and Viktoria Sandi have red-flagged the firm’s website as a scam and warned there is no way to contact its owners. It is still active. We are not aware of any specific complaints against it.

Another NILP to make waves in the former Soviet Union is AviaTrade Corp. The Belfast-registered entity was last year announced as the minority 49% shareholder of an airline in Kyrgyzstan called Air Manas. Like all other airlines in the Central Asian nation, it is banned from flying to the European Union.

An NILP set up with two or more partners based in a traditional secrecy jurisdiction such as Panama or Belize enjoys the status of a UK firm, but the properties of an offshore tax haven business. These structures are pretty familiar to the small bank of forensic investigators who try to track the use and abuse of British shell companies.

It can cost as little as £20 to register a NILP. However, it costs around eighty times as much to purchase a ready-made one off the shelf, complete with legal documents that enable people to run the NILP through ‘phantom’ partners in tax havens. Last year, 45 new NILPs were registered.

Some NILPs cease trading after months. Others continue to operate shrouded in secrecy. But by a quirk of corporate law, even when their partners dissolve NILPs, the companies remain on the register. They are sometimes reanimated. That means officials cannot even be sure how many of them are active.

Like Scottish limited partnerships and limited liability partnerships, a kind of firm found across the UK, NILPs have legitimate uses. For example, they sometimes crop up in tax-efficient equity investment vehicles.

But money-laundering expert Graham Barrow reckons NILPs are a symptom of a combination of soft-touch corporate regulation and high prestige that makes the UK an attractive place to set up a ghost firm.

“NILPs are effectively just a different flavour of UK entity but not intrinsically different from the many other varieties which have been put to nefarious use.

“Ultimately, all sorts of UK companies are found in laundromats both large and small, mainly because of their ease of formation, lack of verification and their appearance of being low risk.”

Too lax?

UK authorities are currently considering further reforms of UK partnership law. Some opposition politicians and government backbenchers have argued that British corporate law is too lax and not properly enforced. They warn the current regime is effectively enabling unethical or criminal behaviours – including schemes spiriting billions out of countries like Russia and Ukraine.

Rachel Davies, head of advocacy at Transparency International UK, believes that there is still a lot to be done to stop the abuse of British corporate entities, on both sides of the Irish Sea.

She said: “As other types of UK company have been required to reveal the real people that own them, Northern Irish Limited Partnerships remain an alternative UK secrecy vehicle.”

Davies believes that it is “now vital that the government introduces more transparency to limited partnerships in addition to wider reforms denying criminals access to all forms of UK corporate entities”.

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Peter Geoghegan David Leask Richard Smith | Radio Free (2021-09-22T18:36:29+00:00) » The Northern Irish ghost companies that mask crime worldwide. Retrieved from https://www.radiofree.org/2020/03/26/the-northern-irish-ghost-companies-that-mask-crime-worldwide/.
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