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

Inverness

Hence Transparency's assessment that the firms were "secrecy vehicles". They were advertised as such globally and enjoyed particular popularity as what amounted to off-the-shelf money-laundering and crime kits in the former Soviet Union.
In fact the SLPs were so secret that many of their de-facto Scottish hosts had no idea what they were up to.
Some untraceable "criminal" SLPs were - on paper, at least - based at Mr MacMillan's home in Merkinch, the modest neighbourhood better known as The Ferry in Inverness.
Back in 2015 this newspaper revealed that five firms named in an independent investigation in to one of the world's biggest bank heists - the systematic looting of three financial institutions in the former Soviet republic of Moldova - were registered at Mr MacMillan's.
The firms - along with a score of others - have been used to funnel around $1bn out of the country, Europe's poorest, sparking public major concerns. 
Two years on, Mr MacMillan sees the funny side, the sheer absurdity of his near-accidental role as a mailbox for global skullduggery. But he was not so sanguine when law enforcement suddenly noticed his modest home on Rosehaugh Road.
"The fraud squad came," he says and blows out a long, whistling sigh as he gathers his thoughts. "I mean, the fraud squad at my door. I am a pretty laid-back guy. I don't get stressed but I just lost it. It was scary.
"I am an average guy from Inverness who works in his local hospital on a zero-hours contract. I am definitely not a gangster or anything like that.
"I am a guy who goes about his business and does not say boo to a goose so there is no way I have anything to do with all these criminal activities."
Mr MacMillan only learned of the Moldova scandal when Sunday Herald broke the link to his house. But he was aware of police interest in something unspecified.

Scotland imagined as a tropical island tax haven

So how did an Inverness council tenant - earning less than £20,000 a year - end up as a front for a £1bn bank heist?
Mr MacMillan used to share his home with a partner, a Latvian. She also has nothing, he says, to do with crime. He explains "Years ago my ex got an email from a former schoolmate looking for people in the UK to help with processing letters.
"She said she would give us a scanner and we could scan letters that came in. We agreed, telling them to send the money to my then partner's mother in Latvia."
Then came the letters, sometimes scores a day, 500 a week. For a while, Mr MacMillan's partner scanned them. Then the police came. "They told me we were dealing with fraud and I could not believe it. We tried to help her mum to find out we were actually helping other people without knowing." Now, years later, Mr MacMillan simply gathered all the letters in to a bag and gives them to the authorities. Police Scotland, "down south", he says, have a close interest.
They are not alone. Another SLP based at Mr MacMillan's home is in the news and the focus of authorities in two other countries. It's called Importica. MacMillan recognises the name from his envelopes.
What he does not know is that this shell firm, at his house, owns an entire ship currently abandoned off Istanbul. Turkish port masters are looking to identify an owner to bill for its salvage. "Oh, God," responds Mr MacMillan. But to understand his headache, we have to cross all of Europe to its southeastern extreme.

ISTANBUL

They had been anchored off Turkey's great seaport for four months when things got really desperate.
The crew of the 745-tonne freighter, the Tallas, or the least the last five of them, had no pay, no fresh water, no food, no medicine, no warm clothing for the coming winter.
To survive, they fished in the Sea of Marmara - they had just one rod between them and collected rain water on their deck to drink and wash.
Their captain, Valery Nalivaiko from the Russian-controlled Black Sea peninsula of Crimea, in mid-November 2015 ordered his crew to write HELP, in English, on huge sheets draped over the side and deck of their ship. Crucially, Tallas was running out of the diesel it needed to stay functioning.
"At first I felt panic," the veteran mariner said in an open letter published widely in Russian-language media in Crimea. "I wanted to press the distress button and shout over the radio that we were hungry. "A situation had arisen when our lives were at risk at sea. But we were not sinking or on fire or under attack from pirates. The ship was in working order and afloat in territorial waters."
By the time Captain Nalivaiko waved his flags half his crew had gone home. They had not been paid since August. He and four others - although they no longer recognised his authority - were determined to get their money so stayed on board.

The Tallas lilts off Istanbul

Mr Nalivaiko knew the theoretical owner of his ship was a firm called Importica in Scotland but he thought he answered to men in his home port, Yevpatoriya in Crimea.
One crew member, the cook, decided to quit. When he got home he made a formal complaint about the people he thought were the owners. Crimean authorities opened a criminal case. The men the cook - and captain - claimed those they answered to did not show up to a hearing in November 2015 According to Mr Nalivaiko's published account of his saga, there were no documents that the court could use to link those men to the ship.
On November 23 the first real help came, in the form of Captain Umur Zamanoglu, of the Turkish seafarers' charity Geddad. "I am a ship's officer and always help other mariners," Zamanoglu told The Herald. But he admitted authorities were not happy with him for doing so.
The following day, November 24, Zamonoglu took five TV crews out to the ship as the Tallas' story became big news.

VIDEO: The Rescue of the Tallas from Turkish TV

That same day Nalivaiko got an email telling him there was nothing the new Russian authorities in Crimea could do about a ship overseas. As it happened a Turkish jet had just shot a Russian one down over its border with war-torn Syria.
Cue a dramatic decline in Russian-Turkish relations and a new mood music from the shore to the abandoned men, three of whom were Crimeans and two from "mainland" Russia.
By January 2016 Nalivaiko claimed the ship's registered-owner Importica owed $150,000. He hired a local lawyer to help sell the boat out from under its shadow Scottish partnership and settle debts, including tens of thousands of pounds in crew back pay.
In March 2016 appeals for Russian authorities to help grew louder as the crew marked eight months in legal limbo, their old passports expired.
Scroll forward a year and there was no more crew on the Tallas.
By February, systems on the 33-year-old freighter were shut down and it had developed a list, alarming harbour authorities so much they had to salvage it.

The Tallas was in sight of the shore

In June Turkish harbour authorities launched another effort to local its owners to present them with a bill and said they would seize the ship to sell if they did not. Local news stories repeatedly assumed the ship was Russian, despite it being registered to a Scottish shell firm and, until 2016, flying the flag of the Southeast Asian nation of Cambodia. But what was this mystery ship even doing in Istanbul? The answer to that lies on the other side of the Black Sea.

CRIMEA

In late February 2014 men in unmarked uniforms appeared at the main airport of Simferopol, then capital of the Ukrainian province of Crimea. Some locals called them "the polite people" because they were so well-mannered with their perfect Russian accents. Others joked that they were "little green men". Ukraine was in upheaval, its pro-Kremlin president ousted, and this, western and Ukrainian experts, agreed was a Russian invasion.
In Moscow the men - believed to be elite Russian special forces - were described as volunteers supporting the majority ethnic Russian community of Crimea as they sought re-unification with their motherland.
By mid-March Russia had held a referendum - claiming it mirrored a Scottish plebiscite to be held later that year - and annexed the entire peninsula. All under the guns of the little green men.

Little Green Men

Many Crimeans did feel a close affinity to Russia but the international community decided there was no way a free decision had been made. Ukraine, the European Union and others immediately imposed sanctions. This was to include an embargo on direct shipping contacts with Crimean ports. Trade, mostly Russian, continued. But ships and their owners from EU nations or Ukraine could face prosecution for running the embargo, even if they were delivering routine cargos.
In Kiev, the new Ukrainian authorities drew up a blacklist of sanctions-busters. This included the Tallas, a ship made in Turkey, owned in Scotland and sailing under the flag of Cambodia.

Russian President Vladimir Putin

She was recorded entering Yevpatoriya in September 2014 and then again in July of the next year before heading to Istanbul to pick up a cargo that never materialised.
The blacklist details the ship's owners, managers and agents all as Importica, the SLP registered in Inverness in February 2014, just before Russia's little green men appeared at Simferopol Airport. Its partners give no clue as to its real beneficiary. They are called Financium Limited and Intercorporate Group Limited, both registered in offices in Belize, the Central American republic famed for its corporate secrecy. Between them they act as partners for scores of Scottish and English partnerships. Importica was dissolved almost exactly two years later, in February 2016, just before Captain Nalivaiko was making his last public appeals for support from Istanbul.
Andrii Klymenko is a Crimean journalist and economist who fled his homeland after what he regards as Russia's invasion. As the little green men marched in to Crimea he worked underground telling the story. The FSB, the successor organisation to the KGB, regards him as a terrorist. Now he monitors Crimean embargo-runners for a Kiev think tank, the Maidan of Foreign Affairs.
His detailed records show how unusual it is for an EU-owned or-registered ship to enter Crimean ports.

Andrii Klymenko

The last survey, for the month of March 2017, found four out of five vessels running the embargo were Russian. The rest flew flags of convenience, traditional tax havens. Three claimed to be from Mongolia, the landlocked giant state between Russia and China. Details of owners published by Mr Klymenko's team show just one was owned in the EU, in Romania, in the period.
Any vessel which enters Crimea and then Ukraine could be in big trouble. Crew members face fines. Owners can have their ships seized - and not just the actual embargo busters and not just in Ukraine. Two ships have been taken over by Ukrainian authorities to show their threats are not idle.
Mr Klymenko admits that the very "offshore" nature of shipping makes it hard to keep track of who is really responsible for embargo busting.
He said: "The real owners on the blacklist, especially foreign ones bar Russians, avoid sanctions by actively re-registering their ships in the names of fictitious owners. They also frequently change operating companies."

The Tallas' listing on Ukraine's shipping black list

Filings for the now dissolved Importica at Companies House

The Tallas is not the only embargo-busting ship to be formally owned in Scotland. The Ukrainian blacklist includes the Vitaliy Satik. This 2,478-tonne freighter - built in 1977 in the old Soviet Union - was blacklisted while flying a Moldovan flag. Her owner was given as another SLP, an Edinburgh-based business called Edison Project. It was set up in April 2014 by two partners called Winton Associates and Carberry Investments, both of the Seychelles. Edison Project was dissolved in June of this year. Like Importica, it has never filed any accounts.
Law enforcement sources have told the Sunday Herald they are concerned about SLPs having a role in shipping.

Such firms, after all, primarily differ from similar English or Canadian structures - which can also offer anonymity - in that they can own an asset.
Kiev-based Mr Klymenko stressed accountability for the embargo-busting lay with owners and operators.
Speaking of the Tallas and the Vitaliy Satik, he said: "These two ships have not just breached international sanctions, they have broken the law of Ukraine.
"According to the Criminal Code of Ukraine, Article 332-1, the penalty for breaking the rules for entering occupied territory is up to eight years in prison and the seizure of any ship or vehicle.
"This article does not only apply to the crew and the organisers of the journey. It also applies to the ships' owners and operating companies.
"In other words, even if there were no sanctions, these people would be criminals who had breached our state border."
Most such embargo-busters now avoid entering Ukrainian ports, fearing arrest and seizure. "They understand and they are afraid," Mr Klymenko said.  
But he suggests the story of the Tallas and the Vitaliy Satik - now back in Ukraine and renamed the Sandra - could end up in Scotland.

BACKGROUND: How Russia tried to use Scotland's indyref to spin invasion of Crimea

Little Green Men in Crimea in early 2014

Ukraine's prosecutors, police and SBU secret service are working with international partners to trace foreign fronts and vessels outside Ukraine.
Mr Klymenko said: "I am sure that in the near future we shall see formal investigations of sanction-busting in those countries which support the sanctions.'
And that, of course, includes the UK. And so the story of the Tallas and the Vitaliy Satik and their front companies returns to Britain.

BACK IN SCOTLAND

News of the sanction-busting SLPs sparked renewed concerns about the corporate vehicle.
Glasgow Central MP Alison Thewliss wants the UK Government, which is responsible for Scots corporate law, to act quickly to try to stop SLPs being used as secret ship owners.
She said: "To find ourselves in a circumstance where a blockade-running ship theoretically has an anonymous owner yet has been operated via a house in Inverness demonstrates precisely why the campaign around Scottish Limited Partnerships is absolutely imperative.
"The opaque structures of shell companies and SLPs have provided an ideal platform for criminality to flourish.
"In this instance the flag flown by the ship was Cambodian, the ship is sinking off Istanbul, the actual address of the owner is in Crimea, and yet the address provided for the owner is a home in Inverness.
"The so-called flags of convenience hold links to some of the most harrowing experiences of international criminality, from providing a platform for human trafficking to enabling the violation of sanctions. "To begin to tackle this, we must expose and eradicate blockade-running ships.
"To do so involves significantly enhancing transparency around the shell companies that so many of them are being operated by."

Alison Thewliss MP

There is some evidence that registrations of new SLPs fell back after new rules were imposed this month forcing any person of significant control to be named.
Transparency International, however, believes early signs are that compliance with the new rules are slow amid question marks over whether such modest reforms other own will work.
Steve Goodrich, of the campaign group, writing in The Herald, warned that British eagerness to register firms for foreigners was potentially dangerous. The big picture, he said, was whether Britain wanted to be an 'offshore' zone like the tax havens created in some of the UK's overseas territories.
Mr Goodrich said: "As we head closer towards Brexit, politicians from all parties are keen to show the UK is still open for business. However, this openness is being exploited on an industrial scale by those seeking to steal from some of the most impoverished and downtrodden people in Europe.
"If the UK is to avoid getting a reputation as the clearing house for the corrupt, the government needs to end its role as an 'offshore' on the edge of the continent."

Steve Goodrich, Transparency International

This is a longer version of stories which appeared in The Sunday Herald and The Herald on August 27 and August 28, 2017