Questions arise as mega-rich from Russia and former Soviet republics descend on London.
Britain’s friendly regime of offshore secrecy has tempted an extraordinary array of post-Soviet billionaires to descend on London, sometimes to the sound of gunfire.
Vladimir Antonov fled permanently to Britain after his father, Alexander, was gunned down in a Moscow street in 2009. Another associate, German Gorbuntsov, narrowly survived a volley of shots in London last March.
When Antonov bought a luxury yacht in Antibes, the Sea D, he was careful to register its ownership to an anonymous British Virgin Islands (BVI) entity, Danforth Ventures Inc.
He also got his hands on enough cash to try to take over the ailing Swedish car manufacturer Saab, though he did not take control. He did succeed for a while in owning Portsmouth FC, the even more ailing British football club.
Antonov is currently on bail in Britain. Lithuanian authorities are trying to extradite him for allegedly looting their collapsed bank Snoras, which he denies.
The allegation that oligarchs exploit Britain’s offshore secrecy regime to shift assets out of their own countries is not an uncommon one. Another refugee from the law is the Kazakh billionaire Mukhtar Ablyazov, who was last seen in February allegedly heading out of London on a coach to France.
Ablyazov has been sentenced to 22 months in jail for contempt of a UK court as the BTA Bank in Kazakhstan attempts to pursue his maze of offshore assets. The bank’s lawyers claim Ablyazov, who denies it, has made off with an astonishing £4 billion using BVI and Seychelles companies, nominee directors and layers of front-men.
These billionaires justify their use of British-controlled secrecy jurisdictions because they say they must protect themselves from corporate predators and political enemies in their home countries.
Another fleeing oligarch, the Georgian Badri Patarkatsishvili, – a partner of fellow exile Boris Berezovsky – was found dead in 2008 in his Surrey mansion.
Patarkatsishvili’s business manager, Eugene Jaffe, managed £500 million of the Georgian’s assets from a central London office in St James’s Square through a BVI company, Salford Capital Partners. In an additional layer of secrecy, Jaffe’s company was owned in turn by an opaque BVI trust he set up called Montana River.
The wild-west financial landscape of post-Soviet Russia has attracted at least one entrepreneur from the British Isles to exploit the possibilities of the BVI secrecy regime.
We have traced opaque BVI entities used in Russia by the man once known as the richest in Ireland, the property developer Seán Quinn. He expanded into schemes for shopping malls in Moscow and Kiev. He has now declared himself bankrupt and has received an Irish jail sentence for contempt, as the now state-owned Allied Irish Bank seeks to recover what it says is a missing £2 billion.
Other post-Soviet financiers have used Britain’s secret offshore facilities for widely different purposes. The London-based Latvian oil trader Evgeny Tikhonov set up an entity in the BVI to hide a total of $2.4 million (£1.5 million) that his employer, Shell, subsequently convinced a civil British court he was wrongly skimming off from fuel deals. He was, however, acquitted of criminal charges after this.
The fund manager Igor Tsukanov, another arrival in the fashionable west London area of Notting Hill, kept funds in the BVI that will have apparently legally sheltered them from Russian taxes.
And on a lesser scale, Dimitry Sergeev, a mobile phone games entrepreneur from Novosibirsk, faced a potentially costly dispute with a small Manchester supplier over some allegedly unpaid invoices because his firm was BVI-registered firm. A source there said: “We decided it was too difficult to bring a legal action in the BVI.” Sergeev did not comment.
Undoubtedly the most flamboyant post-Soviet beneficiary of Britain’s offshore secrecy regime is Rinat Akhmetov, the richest man in the Ukraine. From a base in the coal-mining Donetsk region, he has personally acquired industrial assets estimated to be worth £11 billion. He shifted £136 million out of the former Soviet republic in 2007, in order to buy the most expensive flat ever sold in London, at One Hyde Park.
Asked why he hid behind a BVI company, his company spokesman in the Ukraine said it was “for internal structuring reasons.” He added: “Water Property Holdings Limited fully paid all taxes and charges . . . as required by applicable laws in the UK. This includes payment in February 2011 of stamp duty land tax (SDLT) at a rate of 4 percent which amounted to £5.467 million.”
Details of Russian, Kazakh and Latvian BVI companies
These ownership details are being published in the interests of transparency. It is not suggested that the setting-up of such offshore companies was in itself illegal.
Evgeny Tikhonov
• Company: T Capital
• The London-based Shell trader hid $2.4m (£1.5m) commissions offshore in Russian fuel deal. A Latvian, he was hired by Shell for £120,000 pa plus bonus to obtain Russian fuel supplies. Tikhonov allegedly overcharged freight costs and skimmed off the proceeds to his British Virgin Islands entity with its Swiss bank account. He had another offshore account with HSBC in Jersey, used to buy an €800, 000 (£645,000) apartment in Riga. Shell had a UK high court judgment against him in 2009 for “dishonest” behaviour, by which time the BVI company account had been emptied. He was acquitted, however, of criminal charges over this.
• Company formation: Phil Burwell in Dublin, acting for Latvian affiliate, IOS, with a nominee director in Riga, Eriks Vanagels.
• Shell sources confirm that the high court judgment stands and some cash has been recovered.
Dimitry Sergeev
• Salazar Multimedia
• The Russian mobile phone games entrepreneur allegedly avoided litigation over some unpaid UK invoices. The Manchester phone games firm Mforma/Connect2Media claimed Sergeev’s firm owed it $42,000 for a distribution contract. The company was set up in 2004 with nominee Cypriot directors. They were replaced in 2010 by nominee directors for Bonical Corp, registered in the Seychelles.
• Company formation: Appleton Company Services, of Hammersmith, London.
• Sergeev has not responded to requests to comment. A Mforma source said: “We decided at the time it was too difficult to bring a legal action in the BVI.”
Sean Quinn
• Soverint Holdings; Lyndhurst Development
• The bankrupt Irishman is alleged to use offshore entities to hide Russian activities and profits. The Quinn family, once lionised as “Ireland’s richest,” are being pursued after the collapse of the Allied Irish Bank, for alleged debts to the bank of more than £2bn. This follows a buying spree of Russian property, commenced in 2007, including shopping malls in Moscow and Kiev bought via offshore companies. Since Quinn’s bankruptcy, Irish courts have declared that assets have been shuffled away into other offshore companies in a dishonest “charade.” As a result, Quinn is currently serving a 9-week prison sentences imposed by a Dublin court for contempt.
• Company formation: Unitrust, London and Canada
• Quinn denies any wrongdoing
Vladimir Antonov
• Danforth Ventures Inc; Paterson Association Inc; Griffon Properties [Jersey]; . . . and others
• This major Russian oligarch and one-time Portsmouth FC owner is fighting extradition from London, following collapse of a Lithuanian bank and assassination attempts. The Danforth entity was used to buy a superyacht in 2007 in Antibes in the south of France. The 37-year-old Antonov also allegedly used offshore entities to hide property holdings. He moved to Notting Hill in west London after his father narrowly survived an assassination attempt in Moscow by Chechen hitmen. Antonov is now accused of looting the assets of the Snoras bank in Lithuania, which is trying to have him extradited on a European arrest warrant. Assets worth €492m (£397m) have been frozen. As director, he used his business associate Vladimir Oplanchuk, then nominee director Edward Petre-Mears in Nevis.
• Company formation: Unitrust, London and Canada
• Antonov’s lawyers say the allegations are politically motivated, following articles criticizing the government published by an Antonov media company.
Mukhtar Ablyazov
• Roverfield Europe Corp; Forrell Real Estate Inc; Lafe Technology [Seychelles]; Mount Properties; Bensbourogh [sic] Trading
• This fugitive Kazakh banker is being sued for £4bn. Ablyazov fled Kazakhstan, obtained asylum in the UK, and fled the UK in turn on a coach to France, receiving a 22-month jail sentence for contempt of court for lying about his vast fortune, should he ever return. According to lawsuits by the crippled BTA Bank in Kazakhstan, he looted the bank of £4bn. He bought UK property in 2007 through BVI offshore vehicles, not only avoiding stamp duty, but allegedly using a Latvian nominee director, Eriks Vanagels, signing a power of attorney to his brother-in-law Syrym Shalabayev, posing in turn as the nominal beneficial owner. UK purchases included a Hampstead mansion in Bishops Avenue, a flat at Albert Court, London NW1 and a 40-hectare country estate, Oaklands Park near Windsor.
• Company formation: GWM (Global Wealth Management), Russia
• Ablyazov denies wrongdoing and says he was trying to protect assets from raids by the Kazakh president, Nursultan Nazarbayev, and his cronies.
Igor Tsukanov
• CentreInvest Capital Partners; Enid Investments; Dakoro; Boulivot Invetments; Peritas Holdings; Floros
• Tsukanov is a prominent Russian fund manager with offshore holdings. The founder of CentreInvest Group, he partially sold out in 2007 to Gleb Fetisov, owner of My Bank, Moscow, and bought a £5m Notting Hill house. The exit deal with Fetisov left him in charge of the BVI entity CentreInvest Capital Partners Inc. He held interests in Russian poultry farm, Enid Investments Ltd, incorporated in the BVI, 2007.
• Company formation: Hill Consulting, Moscow
• No response.
Eugene Jaffe
• Montana River Trust; Salford Capital Partners Inc
• The BVI entity Salford, with disguised ownership, managed £750m of investments in Georgia and Serbia for the Georgian oligarch Badri Patarkatsishvili. Jaffe originally worked in the Russian finance ministry, but acquired US nationality and a luxury central London flat in Hyde Park Gate. He managed Patarkatsishvili’s investments, including a bank in Georgia, from an office in St James’s Square. Patarkatsishvili was a partner of Boris Berezovsky and fled to London as Berezovsky did. He was said to be worth $12bn (£7.5bn), and suddenly died in 2008, aged 52, at Downside Manor, Leatherhead, the Surrey mansion where he was in exile. Until Patarkatsishvili’s death, Jaffe kept his own assets at Salford Capital Partners hidden in a BVI trust called Montana, set up 2003 – of which 40% was for Jaffe and his son, and the other 60% for the benefit of various business employees.
• Company formation: London lawyers Salans
• No response
David Leigh is a member of ICIJ. This story was also published in The Guardian.
