Firm named in corruption report
Global watchdog highlights role of Scottish partnership in ex-USSR
ONE of Scotland’s controversial tax haven firms has been used by Georgian officials to advertise the former Soviet republic as a holiday destination.
Global anti-corruption organisation Transparency International has criticised the country’s national tourist agency for handing over hundreds of thousands of pounds to a newly-created Scottish limited partnership or SLP with no experience in the business.
The watchdog warned the Georgian National Tourist Administration (GNTA) that deals with such companies with opaque ownership posed “a high risk for corruption and misuse of public funds, given that the beneficial owners of these entities appear to hide behind layers of shell entities.”
Transparency International is just the latest to highlight concerns over SLPs, which have been routinely marketed across the former Soviet Union as vehicles for tax evasion and corporate secrecy.
The International Monetary Fund, UK Home Office and Scottish Government have all expressed reservations about the way SLPs can be abused for money-laundering.
The company named by Transparency International is Newfair Services LP.
It is registered at a modest address in Dundee and has an Edinburgh telephone number but its website is registered in the Ukrainian capital of Kiev. Newfair Services was incorporated just weeks before GNTA contracted it to provide advertising for Georgia as a tourist destination in February on TV stations in Russia and Ukraine for $675,000.
Its partners, its official shareholders, are two companies registered in the Caribbean island of Dominica, Vectorex Inc and Geotrans Inc.
Transparency International said the ultimate owners of Newfair Services were “hiding behind an opaque network of offshore shell companies”.
The firm was one of three shell companies to win business for advertising, including another British one, Gralane Invest LLP, which is registered in Birmingham.
Transparency, in a major report on the Georgian advertising industry, said: “While the fact that the GNTA has a pattern of contracting some highly opaque companies with no apparent record of doing business does not necessarily prove misconduct, this practice results in a high risk for corruption and misuse of public funds, given that the beneficial owners of these entities appear to hide behind layers of shell entities.
“At the very least, the way the GNTA has awarded contracts for advertising services suggests that Georgian taxpayer’s money aimed at promoting the country as a tourist destination abroad could be spent in a more transparent and effective manner.”
The Herald got no answer at the Edinburgh number on Newfair Services’ website. There was no response from the Georgian National Tourist Administration to the Transparency International report.
Earlier this month Police Scotland began investigating SLPs believed to be fronting for websites which host child sex abuse images.