An offshore firm helped create companies used by members of Vladimir Putin’s inner circle, including one hiding the late mercenary boss Yevgeny Prigozhin’s yacht, according to the BBC.
Seychelles-based Alpha Consulting also helped to form more than 900 UK partnerships which used a secrecy loophole to conceal their true owners.
One partnership was involved in running a sanctions-busting oil tanker, while others committed crimes.
Alpha said it always followed the law.
The investigation by the BBC, Finance Uncovered, and the Seychelles Broadcasting Corporation has analysed internal Alpha documents and thousands of company records to identify some of the people who secretly benefitted from the work of the offshore firm, based in the island nation in the Indian Ocean.
As well as catering to members of Russian President Vladimir Putin’s inner circle, Alpha Consulting was a secrecy factory – one of the most prolific companies helping to exploit a gaping loophole in UK law.
Some of the partnerships it helped create have been involved in alleged fraud and running an illegal essay mill. One has been accused of interfering in a foreign election.
Yevgeny Prigozhin, the late Wagner mercenary group boss
Yevgeny Prigozhin, boss of the Wagner Group who died earlier this year, was one of those who benefitted from Alpha’s services. His company Beratex Group Ltd was sanctioned by the United States in 2019.
Beratex was a front company that concealed ownership of Prigozhin’s private jet and yacht.
Leaked documents – obtained by the International Consortium of Investigative Journalists and examined as part of the 2021 Pandora Papers investigation – show Alpha helped set up Beratex in the Seychelles.
The papers also show the hidden beneficial owner was recorded as the mercenary boss’s elderly mother-in-law.
Politically exposed persons
Leonid Reiman, a close friend and associate of President Putin, was a client of Alpha. In 2006, while he was Russia’s communications minister, Reiman was found by a Swiss tribunal to have been the secret owner of a company that received corrupt payments.
Despite Mr Reiman’s well-documented relationship with the Russian president, the documents show that Alpha provided a director for one of his companies who failed to declare Mr Reiman was a “politically exposed person”.
A politically exposed person is someone whose position or relationships mean they may be more exposed to risks of corruption, and who therefore requires a greater level of checks.
Breach of rules
Anti-money laundering expert Graham Barrow said this was “not really an oversight”. Failing to make a declaration is “a breach of the rules if you are knowingly doing business with somebody who is a politically exposed person,” he said.
Alpha said it had carried out all the required checks on Mr Reiman and did not find information which suggested he was a politically exposed person or involved in money-laundering. It said it does “not act for clients or professional intermediaries who we find have been involved in wrongdoing”.
The investigation also reveals that Alpha, run by a Russian businesswoman named Victoria Valkovskaya, helped to create 927 limited partnerships – one in five of those registered in England, Wales, and Northern Ireland since 2017.
Limited partnerships are a type of firm usually created by two or more people to own and run a business together. They unfortunately can also be used to sidestep transparency regulations.
After a law was introduced in 2016 requiring UK companies to declare who owns them or is really in control, there was a surge in the registration of limited partnerships, which were exempt.
This requirement was extended to Scottish limited partnerships a year later after it was revealed that they were being increasingly used for money laundering and other crimes.
But last year, the BBC and Finance Uncovered revealed the increasing use of English limited partnerships and evidence linking a number of them to fraud, terrorism, and money laundering.
Despite this, the government has failed to extend laws requiring companies to identify the people really in control – known as “persons of significant control” – to all limited partnerships.
As well as exploiting this loophole, Alpha may have breached the law in relation to Scottish partnerships, which does require that the people who really control them are disclosed.