The British company that set up firms for international criminals
Finance Uncovered worked with the Organized Crime and Corruption Reporting Project (OCCRP), The Times and a host of other news organisations (see below) to shine a light on a murky corner of the UK’s corporate laws – an aspect that makes Britain so attractive to money launderers, fraudsters, and kleptocrats.
With our partners, we examined a major leak of data acquired by information activists “Distributed Denial of Secrets” and after five months of work, our stories managed to make page one of The Times despite being at the height of a general election campaign. Over four days, The Times ran a series of stories we had worked on together, concluding with a main editorial opinion piece on its leader page.
The leak included the email accounts and client datasets of Formations House, a family-run corporate service provider that had been based at 29 Harley Street, a prestigious address in central London. The company had been plagued by reports linking it to international crime and even kleptocrats for years, most notably a major article by Oliver Bullough in the Guardian in 2016, which he later developed for a chapter of his book, Moneyland.
Trust or corporate service providers (TCSPs) are companies that register other companies. They also manage them on behalf of clients, and sell other (more expensive) corporate products such as “readymades” – which are companies with bank accounts, trading histories, and VAT numbers.
Experts say it’s these that are attractive to money launderers and organised criminals, which is why TCSPs have a legal duty to report all suspicions to the police.
But on the evidence we examined, it appeared that Formations House – particularly attractive to many clients because of the Harley Street address it offered them – often failed to do that.
In total, we found alleged frauds totalling £315 million linked to shell companies they registered.
Of over 450,000 companies they claim to have set up all over the world, some were sold to known criminals without any indication that concerns were raised. Clients included:
- Violent Italian mobsters, including the family of the former boss of the Sicilian Cosa Nostra
- The former leader of Sweden’s Hell Angels, who led the group during a bloody turf war
- A sanctioned Iranian state-owned oil trader, that the US Treasury says has links to the Revolutionary Guard
- A whole host of international fraudsters
We also found that Formations House had set up a bespoke tax haven in Gambia. Formations House boss Charlotte Pawar flew around the world pitching similar “free trade zones” to heads of state in Eastern Europe and sub-Saharan Africa, claiming that businesses in these zones would enjoy “total anonymity… with no visibility to US or international institutions”. But this was all hype. Gambian authorities shut down their registry and none of their other “zones” ever got off the ground.
Formations House also registered hundreds of companies with the word “bank” in their name. In Gambia, the resultant “shell banks” went on to be used in almost two hundred million pounds worth of alleged frauds.
We also found that the Harley Street operation was merely the shop window. Formations House itself was an international web, comprised of companies registered in Hong Kong, Cyprus, the British Virgin Islands and Pakistan, where most of the clerical work had been outsourced.
Formations House and Ms Pawar strongly denied any wrongdoing and insisted they complied with applicable laws and regulations. They added that they actively worked with relevant law enforcement authorities.
We reported seven stories, including an undercover sting. Our reporting sparked calls for a dirty money crackdown from top politicians in Sweden and the UK, including from Boris Johnson’s anti-corruption champion.
We mined the leak for stories using data-matching techniques, connected partners to reporters in Africa, and supplied the detailed cover story for The Times’s undercover reporter.
The Organized Crime and Corruption Reporting Project (Bosnia)
Finance Uncovered (UK)
The Times (UK)
Dagens Nyheter (Sweden)
Süddeutsche Zeitung (Germany)
South China Morning Post (Hong Kong)
NBC Universal (US)
El Confidencial (Spain)
Economic Times (India)
IRL (N. Macedonia)
The News (Pakistan)