IOS: pioneering secrecy firm dogged by allegations of money laundering and 'fake' documents

Trouble has never been very far from some of the anonymous British companies created by IOS, one of the first company-formation agencies to generate large numbers of UK shell companies for clients in the former Soviet Union.

In the last two decades, IOS-created firms have been variously linked to:

  • Sanction-busting arms shipments to South Sudan;
  • Extravagant properties secretly controlled by the family of former Ukrainian president Viktor Yanukovych;
  • An $11 million ponzi scheme;
  • Bribes paid to European politicians; and
  • Undeclared foreign government lobbying payments to US political consultant Paul Manafort.

There is no suggestion that IOS, sometimes called International Overseas Services, knew the intentions of its clients or knowingly participated in any criminal activity.

Instead, the agency was well known for routinely setting up shell companies and perhaps supplying them with nominee and other administrative services — without ever being involved in the control or management of any of these firms.

Last month however, prosecutors charged Arvis Šteinbergs, one of the leading figures at IOS, over links to an alleged $2.2 billion money laundering scheme.

The case, which was first reported by Latvian TV news programme Kas notiek Latvijā?, centres around bank accounts at the failed Latvian bank ABLV, and features companies created by IOS, some of them registered in the UK.

Šteinbergs is charged along with seven others, including one of the bank’s largest former shareholders. Šteinbergs denies the charges, according to local media.

Failed Latvian bank ABLV

For weeks, Finance Uncovered has been trying to contact Šteinbergs with questions about a long list of other controversial firms IOS created for clients over many years. Attempts to reach him by phone, email and social media received no response.

One former IOS insider, Philip Burwell, described him as “just a guy who saw a couple of economic opportunities, just an entrepreneur.”

With his late business partner Gints Poiss, a former bank executive, Šteinbergs made a fortune setting up shell companies for those looking to transfer wealth from the former Soviet Union to offshore banks.

“When the offshore banking business took off in Latvia, I’d say Arvis and Gints … they would've been [helping create] two or three hundred companies a month,” Burwell said.

The agency has always kept a low-profile, and in 2011 it closed one of its companies in Riga, removing a brass name plate from the front of a building on Smilsu Street, the heart of Latvia's financial district.

Six years later, the agency's website even announced that collaboration under the IOS "trademark/brand" was winding down.

However, since 2017 new shell companies, in the UK and elsewhere, have continued to be formed by formation agencies and individuals once linked to the IOS brand.

Early on in his career, Šteinbergs was more open about his business life. In a interview in 2000 with Chas, a Russian-language Latvian newspaper, he said: “For those who are acquainted with tax planning, the offshore business is simply a working instrument, like a screwdriver for a mechanic. And for them, society’s opinion is unimportant.”

Former IOS insider, Philip Burwell, who cut ties with the agency many years ago, said the agency was helping to create up to 300 companies every month. Burwell has previously said that he always acted on client instructions and was never aware that any of the companies might be used for unlawful activities

Catalogue of controversy

Over the years, IOS-created UK companies have featured in a string of complex money laundering schemes. A firm called Loginex Projects LLP was named in a civil fraud judgment in London against Mukhtar Ablyazov, the Kazakh dissident and businessman accused of embezzling $5 billion from BTA Bank in Kazakhstan in 2010, an allegation Ablyazov has denied.

Four other UK shell companies created by IOS — Castlefront LLP, Everfront Sales LLP, Jackwell LLP, and Unitronic LLP — played a key role in the laundering of proceeds connected to an alleged $230 million Russian tax rebate fraud exposed by a lawyer called Sergei Magnitsky.

When Magnitsky claimed the fraud had been carried out with the help of corrupt police officers, he was imprisoned for almost a year, without charges, and pressured to withdraw the accusations. Days before he was to be released, Magnitsky was found beaten and dead in his cell.

In 2020, Magnitsky’s former boss, Bill Browder, an investment fund manager turned anti-corruption campaigner, told a UK parliament’s Intelligence and Security Committee that $3 billion in suspicious transactions had flowed through bank accounts held by the four UK companies, including funds from the alleged tax fraud discovered by the dead lawyer.

Meanwhile, the companies’ financial statements — filed at Companies House by IOS operatives — showed minimal business activity. “These suspicious transactions have been reported, yet no action has been taken by the regulatory and law enforcement authorities in the UK,” Browder told the parliamentarians.

Elsewhere, even larger laundering operations — dubbed the Russian Laundromat, Troika Laundromat and Azerbaijani Laundromat — have been exposed by journalists at OCCRP, Danish newspaper Berlingske and other media outlets. Each of these schemes involved anonymous UK firms created by IOS.

One IOS-created company linked to both Troika Laundromat transactions and to the tax fraud uncovered by Magnitsky was called Roberta Transit LLP. According to reporting by OCCRP, this anonymous UK company also helped channel funds into a deal to buy a stake in Russian gas company Rosneft that was secretly held by Segui Roldugin, a Russian cellist and life-long friend of president Vladimir Putin. No regulatory or law enforcement action followed.

There is no suggestion that IOS or any of its directors or employees were accused of, participated in, or knew of wrong-doing linked to any of these companies that it had created.

IOS created shell companies that were linked to the alleged tax fraud late Russian lawyer, Sergei Magnitsky (above) was investigating

Whistleblower concerns

Bank whistleblowers, too, have raised concerns about anonymous UK companies set up by IOS.

Almost a decade ago, Howard Wilkinson, a British banker working for Danske Bank in Estonia, wrote an email to bosses in Copenhagen titled: “Whistleblower disclosure: knowingly dealing with criminals in Estonia Branch.”

The subject of the 2013 email was a bank customer called Lantana Trade LLP, a firm administered by IOS.

Wilkinson had become suspicious after receiving reports — still not verified — that the company was connected to an official in the FSB, Russia’s federal security service, and to a relative of president Vladimir Putin.

Looking up Lantana Trade’s financial statements at Companies House, Wilkinson quickly noticed they dramatically under-reported the huge flows of money that he could see had passed through the company’s bank account. The statements were, he said, “fake.”

Five years after Wilkinson’s whistleblower email, Danske Bank finally published the findings from a subsequent investigation by law firm Bruun & Hjejle. It found the Estonian branch had processed up to €200 billion ($230 billion) of suspicious transactions for customers, many of them anonymous UK companies.

Giving evidence to the European Parliament, Wilkinson reflected: “The role of the UK is an absolute disgrace. Limited liability partnerships and Scottish liability partnerships have been abused for absolutely years.”

Bank whistleblower, Howard Wilkinson (above) described UK's role in international money laundering as an "absolute disgrace"

Signature mystery

Thousands of miles across the Atlantic Ocean, a leaked US Treasury financial intelligence report, leaked to BuzzFeed News by a whistleblower and shared with other media as part of ICIJ’s FinCEN Files project, raised separate concerns about Lantana Trade.

The leaked report named 54 shell companies — including Lantana Trade — which, it said, had been used in a multi-billion dollar scheme to launder money out of Russia through stock market deals, in a manoeuvre known as “mirror trading”. Finance Uncovered’s analysis of the companies listed in the report found that 21 were anonymous UK firms, of which 11 had been created or administered by IOS.

Between 2012 and 2015, two of these 11 — Ergoinvest LLP and Chadborg Trade LLP — had received payments of $2.6 billion and $700 million respectively, according to a second leaked document from the FinCEN Files, a suspicious activity report sent by Deutsche Bank to the US Treasury’s Financial Crimes Enforcement Network (FinCEN).

Despite these huge money flows, IOS operatives submitted financial statements to Companies House on behalf of Ergoinvest and Chadborg Trade, reporting that the two companies had received income over the three-year period of just £50,593 and £48,317 respectively.

Misleading financial statements for both companies — and for Lantana Trade — bore the signature of Ali Moulaye, a dentist based in Belgium who had previously worked in Latvia and married a Latvian woman. His signature has also appeared on financial statements filed by hundreds of other anonymous UK shell companies set up by IOS.

Moulaye has claimed these were all forgeries and that his identity was stolen — though he had not complained to the police. “​​Frankly speaking, I don’t even know what an LLP is,” he told a reporter from Knack magazine in 2020.

He is not the first to make such a claim. Nine years earlier, journalists from Ukraine’s TVi channel confronted Staņislavs Gorins, a Latvian insurance broker also known as Stan Gorin, whose signature also appeared on paperwork submitted by a large numbers of anonymous UK companies created by IOS. Asked to confirm the signature belonged to him, Gorins said “Yes, but I didn’t put it there. My signature could have been copied, transferred or something else.”

Staņislavs Gorins (far left) being interviewed about his signature on documents for one IOS company in 2011 and (right) Ali Moulaye, a dentist in Belgium, who says his signature has been forged on company documents for hundreds of UK shell companies created by IOS

Similarly, a Latvian banker called Daniels “Danny” Banger, whose signature appeared on many Companies House papers for many firms created by IOS, also claimed his signature was forged. In 2012, he told journalists from Re:Baltica that he had asked UK Companies House to remove all information relating to him from its records. This has not happened.

There is no suggestion that IOS or any of its directors or employees were accused of, participated in or knew of wrong-doing linked to any of these companies that it had created.