Criminals and sanctions-busters exploiting UK secrecy loophole

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, 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, as a front company which concealed ownership of his 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, and the hidden beneficial owner was recorded as the mercenary boss's elderly mother-in-law.

Alpha said it was "never involved in any business activity" with Beratex.

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" - someone whose position or relationships mean they may be more exposed to risks of corruption and who therefore requires a greater level of checks.

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, a type of firm usually created by two or more people to own and run a business together, 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.

Kevin Hollinrake, a junior business minister, dismissed concerns about a loophole, telling the House of Commons "limited partnerships cannot own property or assets in their own name".

But our investigation shows that Alpha helped create limited partnerships which were used to acquire assets and hide the owners of them - including an oil tanker, the Delfi, which polluted the coast of Ukraine after it was wrecked in 2019.

Investigations by authorities obtained documents identifying the owner of the tanker as a Cardiff-based limited partnership called Mister Drake PC.

Like many of the firms Alpha helped to set up, it appeared to be partly owned by a Seychelles resident who on paper looked like a prolific entrepreneur: Luther Denis, who is listed as general partner of 184 UK limited partnerships.

But internal documents show that partners like Mr Denis sign over all their powers to the secret "beneficial owner". Mr Denis is one of 12 nominee or sham partners provided and paid by Alpha, who often know nothing about what the firms that they help to create actually do.

Following the wreck, a court imposed a fine on Mister Drake PC - but it has never been able to identify the real owner and the fine has never been paid.

Michelle Wiese Bockmann, an analyst at Lloyd's List Intelligence, said: "The beneficial owners, as they're known, are ultimately liable and responsible for any of the environmental costs or damages that the vessel causes."

Our investigation found internal Alpha documents that record the beneficial owner of Mister Drake PC as Alla Kovtunova, the mother of a former local politician in Ukraine's now-banned pro-Russian Party of the Regions.

Alpha said it was "not aware of any of your claimed activities in relation to this company".

Baroness Kramer, Liberal Democrat Treasury spokesperson in the House of Lords, said it was a shock the government had not used its economic crime bill to shut down every loophole. "It certainly is aware of this one, and frankly, it can't even be called a loophole - it's so wide, you can drive an oil tanker through it," she said.

The investigation uncovered another eight partnerships linked to Alpha which at one time were registered as owning ships.

In September 2020, Luther Denis was named on paperwork of another partnership, Cilkon PC, which this time was involved in running an oil tanker called the Ostra.

Under a different name, the Ostra had already breached sanctions against Syria in 2019. Mr Denis's partnership became involved in running the tanker after its registered owner, a Russian company called Rustanker, was sanctioned for attempting to evade the US ban on trading in Venezuelan oil.

Our investigation analysed tracking data for the Ostra during the period after Mr Denis's partnership took over. It found the tracker was turned off for three weeks in September last year, allowing it to disappear off the coast of Venezuela - indicating it may have been breaching sanctions again.

Ms Bockmann said ships "go dark" to obscure where they are loading and unloading their cargo, "in order to deceive, evade, and keep one step ahead of any regulatory authorities that are monitoring these vessels".

The BBC wrote to Cilkon and Rustanker but received no response. We also wrote to Mr Denis but he declined to comment.

-bbc