LAS: Making millions from corporate secrecy
Elena Dovzhik, an Anglo-Russian accountant, and her Latvian business partner Ineta Utināne, have made their fortune running a company-formation agency called LAS for more than a decade.
Leaked financial statements from 2019 show the two women, aged 45 and 42 respectively, shared dividends of almost $2.5 million in less than three years.
Along the way, they have set up hundreds of anonymous British companies for clients based across Eastern Europe and Central Asia.
Some of the companies they helped create have proved controversial:
- A firm called Biniatta Trade LP paid a former campaign aide to president Donald Trump for US lobbying in support of a right-wing party in Albania — though Biniatta’s website said it was a textiles business based in Edinburgh.
- Russian national Alexander Vinnik, allegedly behind the BTC-e bitcoin exchange, was extradited from Greece last week to face charges in the US, where he is accused of helping to launder $4 billion of criminal proceeds. One of the companies allegedly operating the platform was a UK shell company registered to LAS offices in London.
- One company set up with help from LAS was linked to the Ukrainian seizure of one million packs of cigarettes, allegedly smuggled from Belarus, while another was allegedly involved in schemes to disguise malware in online adverts.
There is no suggestion that LAS, or any of its associates or hired proxies, participated in, or knew of, the activities of these companies, even though they often signed company paperwork for administrative purposes.
Dovzhik told Finance Uncovered some of these companies were terminated as clients and others were former clients who continued gave LAS’s offices as their registered address without permission.
Investigations by Finance Uncovered and the BBC found that the UK’s financial regulator, the Financial Conduct Authority, issued seven different warnings to consumers about possible investment scams connected to LAS addresses.
Alexander Vinnik (above), allegedly behind the BTC-e bitcoin exchange, was extradited from Greece last week to face charges in the US.
In 2013, Roman Putin, a first cousin once removed to the Russian president, set up an UK company called Putin Consulting Limited, using an LAS office in Fitzrovia, London, as its registered address. Though the UK company was dissolved three years later, its website, putinconsulting.com, continues to offer international investors “legal protection” and “security consulting” in Russia.
In May, the UK imposed sanctions on Roman Putin, insisting he and other relatives formed a core part of the president’s inner circle, receiving positions of power due to their family ties.
Last year, another website which gave an LAS contact address, fazze.com, allegedly ran a Russian-coordinated vaccine disinformation campaign, which, among other things, spread claims that the AstraZeneca vaccine would turn recipients into chimpanzees.
Facebook’s parent company, Meta, described this and other lies about AstraZeneca and Pfizer vaccines as a “disinformation laundromat”, banned fazze.com and took down more than 300 associated social media accounts in July, 2021.
There is no suggestion that LAS knew about these controversies and the connection between the formation agency’s offices and suspected scam websites - including fazze.com - may be fabricated or have come about because former LAS client companies did not keep contact details up to date online.
Dovzhik told Finance Uncovered some of the companies embroiled in controversies had breached the terms of their service agreement with LAS, and were terminated as clients. An agreement to provide a registered address for Roman Putin’s company was also ended after his London consultancy business was reported in The Telegraph newspaper in the UK.
Dovzhik said the episode had been “a good learning experience” for LAS which had a policy of not providing formation services to politicians or their immediate family members.
“There are 100,000s people with this surname across the countries of former USSR, who are not related to the [Russian president].” she said.
She added: “We assisted with registrations of more than 2,000 companies (various types) over the past 10 years. And over 95 percent of our clients’ companies were legitimate businesses that never breached our terms and conditions.
“Of course there were some companies (less than 5 percent), who breached our T&C, but this is a common problem for any registered office address …provider.”
Dovzhik said she would soon publish her own story about a career spent setting up companies for clients in the former Soviet Union. “All real industry insights will be published in our book … in near future,” she said.
Roman Putin: a relative of the Russian president set up a UK company using an LAS office in London
After years of busy trading, LAS was forced to adapt its strategy in 2017. The future of its thriving office in Edinburgh, Scotland, was suddenly threatened when the UK government announced tougher transparency rules designed to curb an explosion in anonymously-owned Scottish limited partnerships (SLPs).
The new rules targeted SLPs after investigative journalists at The Herald newspaper, OCCRP, the BBC’s File on Four radio programme revealed how some Scottish shell companies were linked to international money laundering scandals.
Before the crackdown, in 2015 and 2016, LAS and other company-formation agencies had created record numbers of SLPs as demand for this type of shell company soared.
At the peak of the boom in SLPs, no agency was doing more to meet surging demand than LAS. Bellingcat, the research collective, later found LAS had created more than 1,600 partnerships in Scotland between 2015 and 2017.
But after new transparency rules were applied to Scottish partnerships, LAS’s business in Edinburgh soon went into decline and its offices in the city were wound down in 2020.
A leaked LAS email to one client, written in Russian, explained: “Unfortunately, this type of SLP company has often been used for fraudulent activities, attracting the attention of … British authorities and the international press.
“Due to this and also due to the latest AML inspection by the regulator… LAS has decided to suspend the registration and maintenance of Scottish partnerships.”
The email comes from a leak of almost 12 million documents from the offshore secrecy industry, known as the Pandora Papers. It was obtained by the International Consortium of Investigative Journalists.
LAS’s operations elsewhere in the UK were changing too. In 2018, the agency moved out of its headquarters in a smart Georgian townhouse in Fitzrovia, London. The website, las-international.com, was taken down and replaced with a pared-down site, rebranded as “LAS Express”.
At the same time, hundreds of companies LAS had registered to the old Fitzrovia address were transferred to a nearby office above a Mexican burrito restaurant, where their administration was taken over by a new company within the LAS empire called Company Advice LTD.
Company Advice continued LAS’s company-formation activities in the UK until 2021, Dovzhik and Utinane told Finance Uncovered.
“But in 2021, LAS and all associated companies stopped offering any locally regulated services linked to company-formation in the UK, the added.
According to records held at Companies House, however, more than 800 active companies remained registered to the office above the Mexican restaurant at the end of March this year, many of them formed and administered by offshore companies associated with the LAS agency. Since then, new companies have been added there every week.
In recent months, companies have been formed at this address with sole director-shareholders living in war-torn Eastern Ukraine, Kazakhstan, Latvia and Cyprus. The most recent company set up for a Russian shareholder-director was incorporated just six days before Vladimir Putin began the invasion of Ukraine.
Asked who had set up these new companies after LAS stopped offering company-formation services in the UK, Dovzhik told Finance Uncovered she did not know. She noted that some of LAS’s former clients may have used the address above the Mexican restaurant without realising LAS was no longer in business there. “We have various types of corporate clients and some … usually do all [Companies House] filings themselves, without our involvement.”
Of older companies registered at the same address — also still active, according to Companies House records — Dovzhik said many of these firms would shortly be declared dissolved as paperwork was brought up to date.
Meanwhile, a few firms may continue to show up as “active” firms for much longer, though, in truth, they had been abandoned by their ultimate owners some time ago, she said.
According to analysis by Finance Uncovered and the BBC, before it ceased trading in the UK, LAS registered 244 ELPs above the Mexican restaurant on behalf of its clients, of which 181 were still active at the end of March this year.
LAS office on the second floor above a burrito bar in Fitzrovia, London. The office was still home to more than 800 active companies after LAS closed operations there
In 2017, LAS noticed that ELPs — unlike SLPs — were not required to disclose their ultimate owners. In a Russian-language newsletter written for clients, the agency marketed this as an “alternative solution” that might appeal to those who wanted to keep their identity private.
The newsletter, found in the Pandora Papers data leak, said: “[A]s a substitute for Scottish partnerships, we offer the registration of English, Welsh and Irish LP partnerships, which have an identical legal form and similar benefits.”
Spelling out the secrecy benefits of ELPs, it added: “At the moment, the privileges of this type of partnership are that they do not fall and will not fall under the laws on the disclosure of information about controlling persons.”
An ELP is an obscure type of corporate entity, unappealing to most conventional businesses because it does not have “legal personality” — meaning it cannot carry out many basic business functions, including entering into a contract or owning property.
A spokesperson for the UK Department for Business, Energy and Industrial Strategy said the government’s view was that ELPs could not lawfully be used to hold bank accounts in their own name.
This was not the advice LAS gave to clients in its 2017 newsletter. “Most banks will open accounts for this type of company,” the newsletter explained, “but before opening an account, we ask you to consult with us or with bank employees, as in some cases, they may refuse to open an account, believing that it should be opened for a partner, and not for the partnership itself.”
When Finance Uncovered asked Dovzhik if she still believed an ELP could lawfully open a bank account, she said: “If opening bank accounts for a UK registered partnership without ‘legal personality’ would be illegal, this form of companies [sic] would not exist for decades, and they would not be operational without banking facilities.”
Dovzhik also said LAS was not involved in opening bank accounts for clients or managing those accounts.
As well as marketing ELPs to its customers in 2017, LAS was also responsible for setting up roughly one in five of the 676 Irish limited partnerships formed that year, according to a recent investigation by Bellingcat and the Sunday Times newspaper.
LAS started to diversify into Canadian limited partnerships, too, but aborted that plan after one CLP the agency had helped set up was flagged as being possibly linked to an investment scam by financial regulators in Zambia and Canada.
Despite its business being disrupted by the steady creep of UK transparency laws, leaked LAS financial statements, found in the Pandora Papers, suggest the agency nevertheless made substantial – legal – profits in recent years.
For a period of just two and a half years, from 2016 to 2019, LAS Express (HK) Ltd made revenues of more than $6 million, and paid out almost $3 million in dividends, the statements show. Dovzhik has a controlling stake in this company, with Utinane having a smaller but significant interest.
There is no suggestion that either Dovzhik or Utinane acted improperly.