Who are the se­cret ‘Scot­tish in­vestors’ in tyran­ni­cal Uzbek­istan?

The Herald - - FRONT PAGE -

LAST year one of the world’s most cor­rupt and least demo­cratic coun­tries an­nounced sub­stan­tial “for­eign in­vest­ment” from Scot­land.

Uzbek­istan au­thor­i­ties, in a se­ries of stock ex­change bul­letins, said two busi­nesses based in Ed­in­burgh had taken im­por­tant eq­uity stakes in a se­ries of cot­ton­seed oil mills.

This, from our per­spec­tive, does not sound like big news. But it should be.

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. As a re­sult the coun­try ranked sec­ond high­est in the World Slav­ery In­dex.

So any Scot­tish in­vest­ment in the in­dus­try would be po­ten­tially open to scru­tiny, par­tic­u­larly as the eq­uity stakes were be­ing sold by the Uzbek­istan’s au­thor­i­tar­ian govern­ment un­der a par­tial pri­vati­sa­tion scheme. How­ever, Uzbek state-con­trolled me­dia, which was ranked among the least free in the world this year by press free­dom or­gan­i­sa­tion, Re­porters with­out Bor­ders, showed lit­tle in­ter­est.

Uzbek au­thor­i­ties can have no of­fi­cial idea who now owns chunks of the coun­try’s most im­por­tant in­dus­tries. Be­cause the firms con­cerned were two Scot­tish lim­ited part­ner­ships, or SLPs, called Ter­nesy De­vel­op­ment and New­gen Trade, both reg­is­tered at mail­drops in the cap­i­tal. Their own­er­ship is en­tirely opaque.

They have failed to com­ply with new UK Govern­ment re­quire­ments that they re­veal their real own­ers, their “per­sons of sig­nif­i­cant con­trol” or PSC, if they had them.

Ter­nesy can be traced back to part­ners that are shell com­pa­nies in Panama. New­gen has its nom­i­nal par­ents in equally opaque Belize.

There is no way to know how suc­cess­ful their in­vest­ments were. SLPs do not need to file ac­counts. Or pay tax.

An English lim­ited li­a­bil­ity part­ner­ship or LLP called Prime­bury Trade last year also bought in to a Uzbek cot­ton­seed mill. Its anony­mous par­ents were in the Sey­chelles. But it did is­sue a PSC state­ment. Where was its owner from? Uzbek­istan.

The Her­ald last month re­vealed that just one in 12 ac­tive SLPs have ac­tu­ally named a real per­son as their “per­son of sig­nif­i­cant con­trol”. How­ever, three quar­ters of peo­ple who were iden­ti­fied as own­ers came from the for­mer Soviet Union.

As of Septem­ber we cal­cu­lated there were 95 ac­tive SLPs with named in­di­vid­u­als as of­fi­cial own­ers in Uzbek­istan.

There is no way of know­ing how many SLPs have Uzbek own­ers or busi­ness in­ter­ests but have not de­clared this. The vast ma­jor­ity of SLPs have made no own­er­ship dis­clo­sures.

Last year The Her­ald re­ported the nephew by mar­riage of Uzbek­istan’s then hard­line pres­i­dent Is­lam Ka­ri­mov was in a turf war over con­trol of an SLP, called Brook Or­gan­i­sa­tion.

That SLP – which has also since failed to file a PSC – was at the cen­tre of a cor­rup­tion scan­dal over con­trol of two fives­tar ho­tels in Riga, Latvia.

The despotic Mr Ka­ri­mov died last year. His nephew, Ak­bar Ab­dul­layev, was ar­rested this year in Ukraine af­ter be­ing charged with em­bez­zle­ment and fraud in Uzbek­istan.

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