THE UK Government has vowed to crack down on the abuse of Scottish shell firms by international criminals.
In a clear signal of intent, ministers pledged to unveil reforms to secretive limited partnerships that are used to launder billions of dirty dollars from countries of the former Soviet Union.
They did so after The Herald this weekend revealed that three Scottish firms had also played a key role in a complex global mechanism that funnels kickbacks to politicians in Latin America.
Our article linked Scotland and the UK to the Odebrecht bribery “mega scandal”, involving roughly $1 billion, which toppled or threatened to topple leaders across the Spanish and Portuguese-speaking world.
BACKGROUND: How Scottish firms were used in a bribery mega scandal
The Herad's story on Saturday
Odebrecht, a giant Brazilian construction firm, has admitted paying $800 million in bribes in what many regard as the biggest corruption scandal ever exposed.
A spokesman for the Government’s Department of Business, Energy and Industrial Strategy responded to our story by saying: “This Government is committed to making the UK a hostile environment for all forms of economic crime, including money laundering.
“We have concerns that some Scottish limited partnerships are being abused and that is why we will shortly announce new reforms to prevent limited partnerships from being used for unlawful activities.”
The Odebrecht links surfaced after at least three other global money-laundering schemes using limited partnerships – usually abbreviated as SLPs – were exposed by The Herald and by our journalistic partners overseas.
Anti-corruption campaigners regarded the latest article as the last straw. Transparency International rounded on the Government for not acting faster on the abuse of partnerships and other shell firms.
A Transparency International spokeswoman said: “As more and more of these cases are exposed, the UK’s hotchpotch and haphazard approach to anti-money laundering supervision becomes ever more indefensible.”
The SNP’s Alison Thewliss said Britain was dragging its feet on the issue to the degree that its actions were close to “complicity”.
Ms Thewliss gave a cautious welcome to news that unspecified reforms would be announced soon.
She said: “While any signs of progress are always encouraging, we need to see the fine print on what that action is and how far-reaching it will be. The scale of the problem and the sums of money involved need a comprehensive plan from the UK Government – they simply cannot allow these shady dealings to continue.'
Alison Thewliss MP
The UK Government, which is responsible for Scots corporate law, last year introduced emergency measures to force the controllers of SLPs to reveal themselves. These have been widely ignored, despite the threat of daily fines of £500.
Campaigners warn that closing just one loophole in legislation – which make SLPs attractive to criminals the attractiveness of SLPs to criminals – will not be enough. Britain, they said, needs to make its entire corporate system less vulnerable to criminal abuse. The Herald found two English firms were also used in the Odebrecht scheme.
Security Minister Ben Wallace at the weekend said the “full force of government” would be brought to bear on corrupt politicians who use the UK as a haven.
The Herald last year revealed Scots shell firms were used in the Russian Laundromat, the biggest laundering scheme ever uncovered. Mr Wallace said: “What we know from the Laundromat exposé is that certainly there have been links to the [Russian] state.”
Security Minister Ben Wallace
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