AN elite firm of accountants opposed to reform of Scotland’s ‘zero-tax offshore companies’ acted as host to one at the heart of an alleged £40m VAT fraud in Russia.
Saffery Champness has attacked UK Government attempts to force the true owners of often shadowy Scottish limited partnerships or SLPs in to the open as a “further erosion of privacy”.
However, it did so while providing a respectable Edinburgh address to opaque SLPs, including a business at the centre of a complex and long-standing tax crime investigation by the FSB, the successor agency to the Soviet Union’s KGB.
There is no evidence that the accountants had any knowledge of alleged wrongdoing or Russian law enforcement interest in the business, T.B.S. Enterprises, which was dissolved last year.
The accountancy firm refused to answer Herald questions about what, if anything, they knew about the investigation, which focuses on allegedly fraudulent exports of Russian aluminium to T.B.S. Enterprises in Scotland via St Petersburg port.
Saffery Champness also declined to say whether it had checked the identities of any anonymous owners of more than 100 SLPs which, according to Britain’s corporate register, Companies House, currently share its address, 133 Fountainbridge In contrast, the accountants have been vocal in their opposition to new UK Government rules under which SLPs have to report if they have a “person of significant control” or PSC.
British authorities this summer moved to boost transparency of SLPs amid concerns the firms, which can be bought off the shelf in the former Soviet Union as “zero-tax offshore companies”, were being used as secret fronts for organised crime and illegal tax evasion.
One of Saffery Champness’s Edinburgh partners, Jamie Younger, immediately issued a statement warning PSC requirements were bad news for some farmers and landed estates in Scotland.
He said: “This is an unwelcome broadening of the PSC rules, and limited liability brings with it further erosion of privacy and more annual compliance.”
For most of their 110-year history SLPs were used as an obscure means by which farmers could share fields and other assets.
However, recently their number has mushroomed to around 30,000, around nine out of 10 of which have anonymous owners in classic tax havens who pay no taxes and file no accounts.
St Petersburg
T.B.S. is the first and only SLP registered at the same address as Saffery Champness to have featured in a high-profile crime case.
The business was first named in 2015. Then prosecutors alleged three billion roubles - £40m - of VAT had been fraudulently claimed back on falsified exports of Russian aluminium to T.B.S. in Scotland starting in 2010.
T.B.S. is still officially listed as “active” by Companies House although filings suggest it was dissolved last December.
A man and a woman were arrested in connection with the investigation which involved scores of FSB agents raiding homes, factories and businesses in St Petersburg, Moscow and the provincial cities of Samara and Saransk in 2015.
The man, Vladislav Glumov, spent a year on remand before eventually admitting lesser charges of tax evasion and being jailed for three years and 10 months at St Petersburg’s Oktyabrsky District Court late last month.
Glumov was the former general director of a major Russian aluminium exporter, ZAO Bazis, which sold to T.B.S..
Russia’s Federal Tax Service has sought court action to put Bazis in to bankruptcy for hundreds of millions of roubles in unpaid taxes, St Petersburg’s Fontanka newspaper reported on Monday.
Prosecutors previously named a Israeli citizen called Aleksandr Tseytlin, currently said to be in Israel, as their main suspect. His wife was held on remand for a year but denied wrongdoing.
He has been described by Russian press, citing law enforcement agencies, as the owner of T.B.S. Enterprises, which was formally a partnership of businesses in the British Virgin Islands.
The Herald was unable to contact Mr Tseytlin or his family to confirm if he owned T.B.S. Enterprises.
Background: the Elite Financial Advisers Who Help the Rich Stay Rich
SAFFERY Champness does not want to speak to The Herald. And, of course, the firm of accountants, Britain’s 12th biggest, is under no obligation to do so.
We wanted to ask them about a Scottish limited partnership or SLP registered for nearly two decades at successive Edinburgh offices of the firm.
T.B.S. Enterprises has, after all, been named in a huge criminal investigation in to allegedly fraudulent exports of Russian aluminium.
The SLP was listed as an importer of the metal. However, prosecutors believe that the aluminium either did not exist or was scrap rather than newly smelted ingots, according to Russian press reports.
Back in 2015 Russian law enforcement agencies alleged three billion roubles of VAT - about £40m of public money at today’s exchange rates - had been falsely claimed back by the company selling to T.B.S.
Last week they jailed the general director of ZAO Bazis, the exporter, and this week it was announced tax authorities would put his firm in to bankruptcy.
There is no evidence that Saffery Champness had any knowledge of the case before or after it exploded in to a blaze of publicity with mass KGB raids in October 2015.
But the investigation once again raises the profile of shadowy Scottish limited partnerships and the businesses, some perfectly respectable, which host them.
Over the last two years we have run string of stories over the last two years about Scottish shell firms allegedly linked to serious criminality, including the the biggest money-laundering scheme ever uncovered, the $20bn Russian Laundromat.
So what kind of firm is Saffery Champness? Its website says it offers a wide variety of services, including advising Scotland’s land estates and farmers, who have legitimate uses for SLPs.
Saffery Champness also boasts that it can help the very rich - at home and abroad - to stay very rich.
Its website says: “For over 160 years we have specialised in advising some of the UK’s wealthiest individuals, helping them protect, maintain their privately-held wealth in the most commercial, tax-efficient and cost-effective manner possible.”
Saffery Champness also stresses that it sees clients whose interests “often involve complex offshore structures”.
Its Channel Islands-based subsidiary, Saffery Champness Management International, featured prominently in the Panama Papers, the 2015 leak of data from the Panamanian law firm Mossack Fonseca. This does not suggest any wrongdoing.
Saffery Champness website
There are legitimate reasons why global companies or entrepreneurs may use tax-neutral jurisdictions, including avoiding the risk of being taxed twice.
Saffery Champness also promotes its services to Russians wishing to navigate President Vladimir Putin’s policy of “de-offshore-isation”, his bid to stem capital flight from his country by blacklisting classic tax havens like the Panama or Belize.
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