By Richard Smith 

DESPOTS, gangsters and crooked foreign banks must be delighted.

Evidence of their mass abuse of British companies has been accumulating for years. And yet little, if anything, has been done to stop them. First successive governments allowed a laissez-faire system of corporate oversight. Then they failed to react when this system was exploited by criminals.

By 2013 Private Eye had uncovered what it called “epic levels of money laundering, illicit arms dealing, frauds, counterfeiting and government corruption … all thriving on emasculated British company law and political and official indifference.” A year later, there were the first indications that British firms were used in the so-called Russian Laundromat scheme to launder $20 billion of dirty money. An ex-policeman said: “We need a proper, concerted effort between law enforcement because at the moment we are still handing it on a silver platter to the villains.”

Last year this newspaper revealed Scottish shell firms played a key role in the Russian Laundromat. Many of them were of a kind which The Herald has been investigating since 2015: the Scottish limited partnership or SLP.

First exposed in a billion-dollar bank fraud in poverty-stricken Moldova, these once invisible entities were quickly dubbed “Britain’s home-grown secrecy vehicle.”

Their number began rocketing in 2008 but it was only after a series of scandals revealed in The Herald that Westminster’s Department for Business, Energy & Industrial Strategy (BEIS) called for evidence on limited partnership law. It even threatened SLPs that do not disclose who controls them with tough legal penalties, including fines and jail. SLP owners worldwide shrugged their shoulders.

There followed more multi-billion dollar Laundromat exposés – and no official penalties for the SLPs or other British firms they featured.

So where are we in 2018? That year-old BEIS consultation on limited partnerships has not yet published any findings. No more than 30 per cent of the 20,000 to 30,000 active SLPs have complied with so-called Persons of Significant Control or PSC regulations. It turns out SLP owners were right to ignore the rules: all that talk of fines and jail was bluff, a last resort.

Tens of thousands of opaque SLPs and other firms still litter the UK’s company register.

It is almost as if criminals and money-launderers are the only intended beneficiaries of a feckless, impotent and disgraceful UK policy. This must change.

Richard Smith is a writer and researcher who specialises in global fraud and money-laundering.