Tories warned Scots firms busting Putin sanctions

Her government has also said it will announce reforms to Scottish limited partnerships, or SLPs, a kind of firm dubbed “Britain’s home-grown secrecy vehicle” by anti-corruption campaigners.

However, the SNP last night warned the Kremlin and its proxies may be able to use the veil of SLPs’ secrecy to avoid sanctions.

The Herald has already revealed how SLPs were used to own sanction-busting ships running a blockade of Crimea imposed after the Ukrainian peninsula was invaded and annexed by Russia in 2014.

But the new concerns come amid claims that British ghost companies, including an SLP, had been used to help firms close to the Putin regime prop up the economies of two other breakaway regions of eastern Ukraine.

Pro-Russian separatists have controlled most of the provinces of Donetsk and Luhansk - and their rich coalfields - since 2014. Widely regarded as Kremlin proxies, the unrecognised Republics of Donetsk and Luhansk have relied on exports of coal and steel to stay afloat.

Sergei Skripal in court in Russia

They can ship their product over the border with Russia to Rostov-na-Donu, Glasgow’s twin city, and from there to Turkey and elsewhere.

Last year it was reported that 1 million tonnes of coal was leaving the regions a month. Ukrainian authorities have begun a criminal investigation in to what they regard as “contraband”.

READ MORE: How a Scots council house was secret base for criminals busting Putin sanctions

Ukraine itself has been starved of its main energy source while seeing its separatists - which it sees as Putin proxies - profit from what it would think of as the sale of its coal.

SNP MP Alison Thewliss has been leading the campaign for reforms of SLPs in Westminster, which has control over Scots corporate law.

She said: “This is a further troubling example of the misuse of SLPs, which shows how even states are making use of them for their own ends.

“For British shell firms to be implicated in an international dispute, where they are circumventing and undermining the Ukrainian Government, is deeply concerning.

“If the UK is serious about stopping this abuse, they must crack down on the rules governing SLPs and other anonymous owned firms.”

Alison Thewliss MP

Ukrainian news site Liga last year claimed a pro-Kremlin oligarch called Serhiy Kurchenko was the “king of coal” in the Donbass, the name given to Donetsk and its rich anthracite fields.

Mr Kurchenko, a reclusive 33-year-old, made a fortune in Ukraine under the regime of the ousted former president Viktor Yanukovych. Both men fled to Moscow in 2014. Mr Kurchenko has been described as Mr Yanukovych’s “wallet”.

But firms owned by Mr Kurchenko and others are not the formal exporters of coal. Liga and other Ukrainian sources have named six “offshore” firms as doing this. Three are from Hong Kong, two are from England, one a limited liability partnership whose name, Coal Trade Antrahcit misspells the English word for its product, anthracite. That business has now been would up. Liga also named an SLP, Bornholm Inter, as an exporter of “contraband” coal.

Both Coal Trade Antrahcit and Bornholm Inter have complied with UK rules under which they must name a person of significant control.

Donetsk, ablaze, in 2014

Steve Goodrich of campaign group Transparency International stressed complex corporate structures were often used by money-launderers. “Our research has found that UK companies are regularly being used by corrupt individuals and kleptocratic regimes to hide money they’ve stolen from their people and gained through illicit trade, including embezzlement, bank raids and sanctions-evasion.

“Although the UK Government has taken steps to peel back these layers of secrecy, it needs to do more to ensure the information submitted to Companies House is accurate.”

ANALYSIS: How UK helps sanction-busters

BRITAIN backs EU existing sanctions against Vladimir Putin. It also - inadvertently - helps Russia’s newly re-coronated leader bust them. 
The UK, Theresa May said yesterday, is “actively considering” further measures against the Kremlin following the attempted murders of double agent Sergei Skripal and his daughter Yulia. 
The prime minister did not announce any new sanctions, despite growing clamour for Mr Putin and his cronies to be “hit in the pocket”. But, before she does, she and her officials should think about how to make them stick. 
And that might mean tackling the industrial scale abuse of British - and especially Scottish - shell firms in the former Soviet Union.
UK ghost businesses, such as Scottish limited partnerships or SLPs, are known to have been used to bypass Ukrainian, EU and other sanctions imposed on Mr Putin and his regime following the invasion and annexation of Crimea in 2014.

READ MORE: How a Scots council house was secret base for criminals busting Putin sanctions

Last year, for example, we reported the fate of a ship called the Tallas, listing in Istanbul bay, its crew left abandoned. The freighter had been used to run the blockade of Crimea imposed by Ukraine after the peninsula was seized by Russia. Its true owners were able to escape punishment in Ukraine or elsewhere for trading with Crimea because they hid behind an anonymous firm.
The Tallas  was formally registered in the name of an SLP registered at a council house in Inverness. The home’s tenant had no knowledge of the whole episode. Why an SLP? Because they do not just let their owners remain secret - despite recent reforms to boost transparency. They also have legal personality: they can own things.

The Tallas listing in Istanbul harbour

Today we report the British firms - including an SLP - are fronting for exports for “contraband” coal smuggled out of two other parts of Ukraine, the regions of Donetsk and Luhansk currently largely controlled by separatists regarded as Russian proxies.
But the activities of secrecy vehicles like SLPs are, by their very nature, hidden. So we can only guess how often they have been used to bust sanctions or just hide the true source of goods. Take the import of liquid gas through an unauthorised port near Crimea reporter in Ukrainian media last year. Shipments were made by an SLP.  Scotland has oil and gas, sure. Or maybe the cargo came from a giant gas-rich country a bit nearer to Ukraine? 

READ MORE: Why going after dirty money and shell firms would hurt Putin

It is not impossible that, after Salisbury, Britain will introduce sanctions against individuals linked to the Putin regime or oligarchs which support it.
Those individuals will want to find a way to hide their identity. Britain offers that service, with SLPs or limited liability partnerships (LLPs) or even limited companies with patsy directors nobody checks.
True, the government now insists SLPs or LLPs name a person of significant control, or PSC, effectively an owner. Thousands have not done so. None have been prosecuted for this failure. But any partnership that wants  to comply with the letter of the law can buy a fake owner online for a fake PSC. The price? 170 euros. Most oligarchs or sanction-busters can afford that.

The Number of SLPS have boomed in recent years though fell back a little in 2017 in response to PSC reforms.

And scandals involving SLPs have erupted around the world, not just in Ukraine and Russia.