The President of Uzbekistan has granted tax breaks to Scottish shell firms which have failed to live up to basic UK transparency laws, The Herald can reveal.
Strongman leader Shavkat Mirziyoyev this autumn waived all import duties on farm equipment for a new venture in his country’s all-important cotton industry.
He did so just weeks after the venture’s formal owners, two Scottish limited partnerships said they could not say who their ultimate controllers were under new rules which came in to force in August.
Mr Mirziyoyev has ruled Uzbekistan since his predecessor, the dictator Islam Karimov, died in 2016. His country has been described by Transparency International as an “oligarch-authoritarian state where public resources are misused to sustain power to the benefit of those in or close to the ruling elite”.
The Herald earlier this year revealed that some 95 Uzbeks had admitted that they own Scottish limited partnerships or SLPs, the once obscure corporate entity now referred to by Transparency as “Britain’s home-grown secrecy vehicle.”
The UK Government this year ordered that SLPs revealed their owners, or persons of significant control (PSC).
At last count only 95 Uzbeks have admitted they own such structures. There is no way of knowing how many of the 18,000 SLPs which have failed to name any PSC are held in Uzbekistan.
Mr Mirziyoyev in September issued a presidential decree granting the import duty perks to a joint venture called Bek Cluster, according to Uzbek media.
This venture, local media said, citing official sources, is owned by the SLPs Trontex of Stirling and Gratum Trading of Edinburgh. Both firms filed statements in August saying they had not attempted to identify a PSC.
The Herald wrote to Mirziyoyev’s press office in Tashkent, the country’s capital, and the Uzbek Embassy in London. We asked if he knew who the beneficiaries of his tax breaks were. There was no reply.
The SLP’s venture Bek Cluster will operate in the Sirdaryo region of eastern Uzbekistan, on the fertile banks of the country’s great river, the Syr Darya, which irrigates.
Mr Mirziyoyev’s decree allocates some 18,000 hectares of cotton fields to the venture “as an experiment” and frees it from import duties until 2022. Local media reported this as “British companies to grow Uzbek cotton” and trumpeted the prospect of Bek Cluster manufacturing textiles, as well as harvesting raw cotton.
Last year Uzbekistan also announced substantial “foreign investment” from Scotland.
Authorities said another two SLPs based in Edinburgh had taken important equity stakes in a series of cottonseed oil mills.
The SLPs were Ternesy Development and Newgen Trade, both registered at maildrops in the capital. Their ownership is entirely opaque.
Ternesy in November said it had been unable to identify a PSC. Newgen Trade has made no filings on its PSC status.
Uzbekistan’s cotton industry has been widely criticised for mass human rights abuses.
Over a million people a year are forced to work its fields, according to Amnesty International.
Last year the nephew by marriage of the late Mr Karimov was in a turf war over control of yet another SLP.
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