It was Britain’s Big Idea to improve trust and transparency in its often shadowy corporate world. Back in June 2016 the UK forced most companies to say who, if anyone, controlled them. After all, politicians conceded, hidden ownership facilitated crime. A year later Scotland’s troubled limited partnerships or SLPs were added to the scheme after a series of major crime scandals exposed by this newspaper.
There was, however, a Big Problem with the Big Idea. The new declarations of “Persons of Significant Control” – or PSC for short – were based on information on a corporate register you just cannot trust, Britain’s barely policed Companies House.
One particular group of agents with indecipherable signatures illustrates just how uninformative PSC statements can be. Let’s call these agents the Squiggles because we have no idea who they are bar their tiny autographs.
I think their story is telling. Bear with me while I explain why. Because it reveals what I believe is eye-poppingly sloppy supervision and a PSC system with a giant loophole
One of the Squiggles has signed a PSC for an SLP called ErgoInvest LP. This business is fascinating because of its name. It was set up this June, just four short months after an English firm, ErgoInvest LLP, was struck off after it was found to be part of a $10bn money-laundering scandal involving Deutsche Bank last year.
Deutsche Bank was fined $630m in Britain and America for allowing that to happen.
Now the new Ergoinvest LP has two partners called Dexberg Inc and Montbridge Inc, which are anonymous companies registered in the Marshall Islands, a scattered and impoverished group of 29 Pacific atolls best known for being the test sites of American thermonuclear bombs
These two distant partners, at least in name, control hundreds of other UK entities, including 150 SLPs registered in shops next to trendy coffee shops in Glasgow’s West End and South Side. So far, so typical.
One of the Squiggles has said ErgoInvest LP has no single controlling person, which is, of course, perfectly possible and a legitimate response allowed in the rules. In fact, he, or she, simply puts a cross in a box on a form to that effect. And adds their trademark squiggle.
This Squiggle has provided similar brush-offs for other SLPs, and volunteered some residents of the former Soviet Union for a few more.
It gets worse: Dexberg Inc of the Marshall Islands is the general partner of another SLP, Fortline Industrial. But Fortline’s PSC statement is signed by an entirely different Squiggle. And the accompanying stamp is for a firm called Dexberg Inc registered, not in the Marshall Islands in the Pacific, but in Dominica, more than 8500 thousand miles away in the Caribbean.
So the two firms have the same name but different signatures and different island homes.
What business does Dexberg Inc of Dominica have, making a PSC statement for Fortline Industrial, whose general Partner is Dexberg Inc of the Marshall islands? And why did Companies House accept this filing?
The Dexberg Squiggle family, from the various island homes, can be even more elusive. Take the PSC statement for Astronet Trade LP. It was signed by a Squiggle acting on behalf of a Dexberg Inc which does not indicate where it is based. The Squiggles, in their statements for both Fortline and Astronet, do say who they are controlled by: respectively, by another SLP and an English limited company. But those two firms have declared that they do not have any person of significant control. Another dead end.
So how do you keep your SLP secret? There are two options: deny that there is a PSC, or provide a PSC that is a UK company, LLP or SLP that has no PSC. And while you’re at it, make sure no-one can tell who you are or where you are.
Companies House is just a glorified honesty box at the moment: the dishonest can have their wicked way with it.
Richard Smith is a writer and researcher who specialises in global fraud and money-laundering.
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