Global Witness, and others, have repeatedly exposed the role of anonymously owned companies in enabling corruption and criminality. Some examples include:
- The DR Congo lost out on $1.3 billion or twice the country’s health and education budgets when key mining assets were sold off extremely cheaply to anonymously-owned British Virgin Island (BVI) companies.
- The ex-Nigerian oil minister, Dan Etete, awarded a lucrative oil block to an anonymously-owned company, that later turned out to be owned by himself. The money from the deal was distributed to BVI companies. The ex-President of Nigeria, Sani Abacha used the pretence of fake national emergencies to steal more than $2 billion from the country. The money was held via BVI, Jersey and other companies.
- In 2004, a former Kenyan anti-corruption advisor, John Githongo, blew the whistle on a massive Kenyan corruption scandal, that became known as the ‘Anglo Leasing’ affair, after the name of one of the BVI companies involved. The scandal cost the country nearly $1 billion.
- The former President of Zambia, Frederick Chiluba, transferred millions of dollars of public money from the Zambian Ministry of Finance into bank accounts and companies for his own personal use. A BVI company with bearer shares was used to buy property in Brussels for one of the people involved in this $25 m scam. In 2006, Zambia brought a civil case in the UK against those involved in the Zamtrop Conspiracy and another case of fraud, the ‘BK Conspiracy’. The judge found that all the Zambian defendants, including Chiluba, had conspired to steal millions of dollars of public funds and held them collectively liable for over $25 million. A criminal case against Chiluba in the Zambian courts resulted in him being acquitted
- The ex-Prime Minister of Pakistan, Benazir Bhutto, and her husband are accused of having received kickbacks from gold import licenses via a BVI company that was secretly owned by Bhutto’s husband. It has been reported that Bhutto and her husband stole over $1 billion from the country.
- Wu Sue-Jen, the wife of a former Taiwanese president accepted a $6 million bribe for encouraging her husband to approve a contested company merger. The money was used to buy property in Virginia and New York, via a BVI company.
- A former governor of a Nigeria state, Diepreye Alamieyeseigha, guilty of corruption and money laundering, used a BVI company to buy four London properties.
- A number of large scale corporate bribery cases have involved anonymously-owned BVI companies, including theBritish arms firm BAE Systems, the metal company Alcoa, the compute rcompany Hewlett-Packard
- Saadi Gaddafi, one of Colonel Gaddafi’s sons, bought a £10 million house in Hampstead via a BVI company, Capitana Seas Limited. The High Court in London ruled that the property rightfully belongs to the Libyan state as it had been purchased with diverted Libyan state funds.
- The Marange diamond fields in Zimbabwe are notorious for human rights abuses. One of the companies that mines there, Mbada Diamonds, is part-owned by Transfrontier, which has an opaque company structure based in the BVI, Hong Kong and Dubai.[i] The man at the centre of the 2012 horsemeat scandal, who was convicted of passing off South American horsemeat as Dutch and German beef, hide his identity behind a Cypriot company and a BVI trust.
(2) Escolano, J. and Arbatli, E. (2012) Fiscal Transparency, Fiscal Performance and Credit Ratings, IMF Working Paper No. 12/156 https://www.imf.org/external/pubs/cat/longres.aspx?sk=25996
(3) See the Guardian, “Africa losing billions from fraud and tax avoidance”
(4) See World Bank report “Puppet Masters: How the corrupt Use Legal Structures to Move Stolen Assets and What To Do About It”
(5) See the Guardian, “David Cameron says not enough being done to tackle tax evasion”
(6) This is not just an offshore problem. In January 2016 a groundbreaking undercover investigation by Global Witness was profiled by CBS’ 60 Minutes programme, showing how the U.S. is a critical player in this global web of secrecy.
GLOBAL WITNESS WELCOMES UK’S HISTORIC ROLLBACK OF CORPORATE SECRECY
David Cameron will pledge today to make public the names of who actually owns and controls British companies, in a move applauded by Global Witness which has been campaigning on this issue for many years. This will make it much harder for criminals to hide their identity behind sham UK shell companies, and for the corrupt to steal billions of dollars from developing countries.
“Global Witness’ investigations have shown how anonymous shell companies are the global getaway cars for crime, corruption and tax evasion. Full credit should go to the Prime Minister and the Business Secretary for acting to take away the keys,” said Gavin Hayman, director of campaigns at Global Witness.
At the G8 in June, the UK said it would create a central database of the ultimate owners of UK companies, rather than just the legal ownership information currently held by Companies House. Following a consultation, the Prime Minister has now announced that this register will be open to members of the public, rather than just restricted to law enforcement.
It is crucial that information on the real, beneficial owners of companies is out in the open. It will allow citizens to hold companies to account, companies to know who they are doing business with, and law enforcement from around the world to chase down criminals who have abused UK companies. This move will be cheap for the majority of businesses who do not have complicated ownership structures.
“Life is about to get much more difficult for corrupt politicians, arms traders, drug traffickers and tax evaders. Others countries, including the British tax havens, the EU and the US, now need to follow the UK’s leadership and commit to publishing information on who ultimately owns companies,” added Hayman.
Contact: Robert Palmer on +44 (0)7545 645 406 or firstname.lastname@example.org or Andrea Pattison on +44 (0)7970 103 083 email@example.com.
Notes to editors:
- The announcement will be made at the start of the Open Government Partnership summit in London.
- Read Global Witness’ Idiot’s Guide to Money Laundering for step-by-step instructions on how to use companies to hide stolen assets, fund terrorism and evade taxes. http://bit.ly/11LQuyV.
- Read Global Witness’ briefing, ‘Anonymous Companies: How secretive shell companies are a major barrier in the fight against poverty and what to do about it’. http://bit.ly/1gbKb2R.
- Global Witness believes that it needs to include enough information to properly identify a company’s beneficial owner, as well as to understand how they exercise their ownership. The register should be published as machine readable open data to ensure that the information can be used as widely as possible, and combined with other information easily and cheaply.
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