By Paul Radu

Ten years ago, when I co-founded the Organised Crime and Corruption Reporting Project (OCCRP) in Eastern Europe I knew that exposing trans-national organised crime was not anything easy. At the time I had worked on national and regional eastern European stories about those topics, so I was aware that criminals always held the upper ground.

They had the money, the corrupt politicians in their pocket, the lawyers, the hackers and a global vision that allowed them to overlook national frontiers in the conduct of illicit business.

I knew journalists needed a whole new approach if we were ever to be efficient in exposing criminality not confined to the borders of any one nation-state.

One thing stood out in the work we’d done up to that point. Deconstruct any high-level criminal scheme or examine a whole lot of schemes and the money-laundering that went along with them – and the same four constants kept showing up. Every time you could find: offshore-type companies; formation agents – the people who established these companies; proxies – the straw parties used to obscure the real owners; and banks that played a role in all large-scale money laundering.

With this in mind, I and colleagues at OCCRP decided that we would not go after criminals on a case-by-case basis. Instead, we would focus on the infrastructure that allowed them to operate with impunity across frontiers.

Thinking like this we noticed that one of the main tools in the criminals’ money financial fraud toolkit was the Scottish Limited Partnership (SLP) type of company.

I must add that Scottish LPs were similar to the same kind of secretive business structures based in the US state of Delaware, in New Zealand, in Belize and in Cyprus to which criminal entrepreneurs also gravitated.

We found SLPs in all the massive fraud cases we investigated, including the $20 billion of money laundered in what we dubbed the Russian Laundromat. Russian, Moldova, Ukrainian and many other organised crime groups all used the Scottish partnerships that insured the highest degree of anonymity for the real beneficiaries of criminal schemes that defrauded nations across Eastern Europe.

We looked deeper into these businesses, based mostly in Edinburgh and Glasgow, and noticed that the Scottish-based formation agents were setting up SLPs at a very fast pace. They turned out to be perfect tools to anonymously open up bank accounts in Latvia and other Baltic countries and to run hundreds of millions of dollars through them.

Take Polux Management LP, a Glasgow company involved in the Azerbaijani Laundromat – a complex money-laundering operation and slush fund that handled $2.9bn between 2012 and 2014.

The Azerbaijani Government was making wholesale arrests of activists and journalists during this time, while the ruling elite tapped into a secret slush fund to pay off European politicians and other influencers willing to speak favourably about their oppressive regime.

Polux only ever recorded two documents with the British business registry: an initial registration document and a dissolution decision. Neither listed the people behind it. Instead, two other companies no even identified in terms of their jurisdiction are listed as members of the Scottish partnership.

There’s absolutely no way to find out from the filed paperwork who are the real beneficiaries of this SLP although the company owned a bank account of hundreds of millions of dollars in the Estonian branch of Danske Bank. Money from Polux and other SLPs involved in the Azerbaijani Laundromat went to European Union politicians and some of the people who said good things about Azerbaijan and lobbied for support.

Polux is one of many SLPs used in fraudulent arrangements and the Azerbaijani Laundromat is just one in a series of criminal schemes put together by crooks and corrupt politicians in recent years. Their success has generated more corruption and organised crime in western as well as eastern Europe and has eroded democratic processes in countries still trying to shake off their Communist past.

Paul Radu is co-director of the Organised Crime and Corruption Reporting Project.