by Richard Smith, UK editor of the Naked Capitalism blog
SEARCH for the word ‘clone’ on the website of Britain’s financial services watchdog and you will find more than 900 different entities which have stolen the identities of bona fide firms in order to perpetrate expensive con tricks.
UK regulators, such as the Financial Conduct Authority, face a constant challenge from those who would wish to trade on the reputations of legitimate businesses. So how do such “clone” firms even get registered? And whose job is it to stop them?
Well, historically, the first step to stop such abuse would be due diligence by a company creation agent.
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So let’s consider the heroically oblivious company agent who formed 96 British companies for an apparently Russian national and Ukrainian resident Tofikuddin Ovaysi. That agent never seems to have noticed the similarity between the names of Mr Ovaysi’s £10-a-pop companies – “Johnnie Walker Ltd”, “Wal-Mart Ltd”, “Arthur Guinness Son and Company Limited”, “Volvo Group Trucks” – and the brands of giant international businesses.
A thoughtful, observant agent who knew his client might have wondered about copyright breaches, or deceptive intent, but our agent is clearly not like that.
Who’s the agent? One might incautiously conclude that it is the agent who occupies Kemp House, 160 City Road, London, the original registered office of these 96 companies. That is very unlikely. Each of the 96 companies now has a so-called “Companies House default address”, which means that there’s been a complaint, most likely from 160 City Road itself, that the address is being used without permission.
Companies House has also received complaints from the genuine Bushmills, Glenfiddich, Gordon & MacPhail, and Bacardi, for copyright breaches by Mr Ovaysi’s clone companies.
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They should also expect complaints from the brand owners of Diageo, Johnnie Walker, Wal-Mart, Duncan Taylor, AB Inbev, United Breweries, Glenlivet, Chivas, Asda, United Distillers, Volvo Group, Irish Distillers, Smirnoff, and SAB Miller. That’s quite a list; one wonders what all those corporate lawyers will have cost by the time it’s all straightened out.
Our oblivious agent is still a mystery, but there is one obvious possibility. It might be Companies House itself. The registration giant’s heavily-used all-electronic Web Incorporation service does not impose the kind of naming and branding sanity check that a human agent can perform. It’s the perfect service point for a cheap offshore con man. Even if it isn’t implicated in this particular expensive fiasco, it can’t be long before it attracts attention to itself.
Companies House has today confirmed to The Herald that it does not check for copyright breaches in company names before registering them, whether they have come through its Web Incorporation service or not.
If I were in charge of Companies House, I’d be just starting to get worried about lawsuits from giant overseas companies, perhaps represented by ferocious American lawyers, for brand damage. That’s not exactly the right sort of business-friendly image for Companies House, and it might be very expensive, too.
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