Secretive owners of Scottish ‘tax haven’ firms to be revealed

24th June 2017

David Leask, Chief Reporter

Around 30,000 Scottish “tax haven” firms will be forced to reveal their owners’ identities following a two-year campaign by The Herald.

Conservative ministers last night imposed emergency legislation to bring Scottish Limited Partnerships (SLPs) into line with European Union anti-money laundering rules which are due to come into force next week.

They have ordered that SLPs – shell firms widely advertised around the globe as “zero-tax offshore companies” – must now file an “ultimate beneficial owner” report of the kind now routinely required of other businesses.

It should mean that the shadowy owners of Scottish shell companies may finally be exposed.

This modest property in Douglas, South Lanarkshire, housed over 2000 offshore firms. Picture: Jamie Simpson

The move comes in the wake of a long-running Herald investigation in which we revealed that SLPs were a major component of global organised crime.

In recent years we have shown how the entities were involved in corrupt arms exports to the Middle East and in the distribution of child pornography.

SLPs even played a key role in the biggest money-laundering scheme ever uncovered – the Russian Laundromat scandal in which up to $80 billion was moved out of the country to a network of global banks.

One of the leading campaigners on behalf of SLP reform has been former Kirkcaldy and Cowdenbeath MP Roger Mullin, who lost his seat a fortnight ago in the General Election.

RM Westminster 12

“If I have to have a swansong, it’s good that it is this,” he said. “At last, following a government review to which I put in lots of evidence, referencing The Herald’s work, we have the first practical recognition SLPs have been a significant problem, and some action is now being taken.”

The Herald previously revealed how criminals were trading on the respectability of Scotland’s reputation by buying off-the-shelf SLPs manufactured and hosted in Scotland but with anonymous shell companies in tax havens as their official “partners”.

This latest reform ordered by the Conservative Party will mean the true owners of such partners will either come to light or face £500-a-day fines by Companies House, the UK’s corporate register.

Speaking about the development, Scottish Secretary David Mundell said: “These new laws are a sign of the UK Government’s commitment to transparency around Scottish Limited Partnerships.”

The Conservative reform came on the same day that Transparency International, the global anti-corruption watchdog, published a major report on SLPs describing the instrument as Britain’s “home-grown secrecy vehicle”.

However, by fast-tracking the SLP reform, the Tories have kept on the right side of European partners.

Duncan Hames, director of Transparency International, said: “We have campaigned on this as part of our broader efforts to end the UK’s role as a safe haven for corrupt individuals from around the world.”

The watchdog said more than seven out of 10 SLPs were controlled from secrecy jurisdictions with a similar proportion registered at just 10 addresses in Scotland.

All Scottish political parties sighed up to a campaign by Oxfam for reform with Roger Mullin leading pressure in the House of Commons for change. The UK Government said its review of SLPs and partnerships, announce earlier this year, was ongoing.

Andy Wightman, the Scottish Greens MSP has campaigned alongside this newspaper for tougher laws on SLPs, said: “The Herald has been vital in bringing the mysteries of SLPs to the public’s attention.

“It is extremely welcome that the UK Government is treating this as a matter of urgency.

“I am still pressing the Justice Secretary [Michael Matheson] to create a new crime of ‘vicarious liability’ which would mean someone could be held responsible for the actions of somebody else.”

He said someone accused of such a crime could have to prove to a jury they had carried out due diligence of a company to avoid conviction for such an offence.

Mr Wightman added: “That would mean, for example, somebody setting up companies from say a flat in Leith for £100 a shot would be exposing themselves to potential police action.”

You can read the article in the Herald here.