Ex-president ‘took bribes through Scots shell firm’
A FORMER president of Peru has been accused of taking millions of pounds in bribes through a shell company based at one of Scotland’s biggest law firms.
Alejandro Toledo is currently on the run from justice after being named as one of a series of Latin American leaders implicated in a nearly-billion-dollar corruption “mega-scandal” rocking the entire continent.
Mr Toledo, his country’s first indigenous president, denies any wrongdoing, but prosecutors allege he took around $10 million in illicit payments from the Brazilian construction giant Odebrecht in return for lucrative contracts to build a major highway.
Authorities also say that the former president got nearly $6m of that money – more than £4m – through an account in the name of a Scottish limited partnership, or SLP, registered at Glasgow addresses of blue chip law firm Burness, which later merged with another firm to create today’s Burness Paull.
Campaigners are increasingly concerned about the role of opaquely owned British companies – and especially SLPS – as financial “getaway cars” for criminals, scammers and corrupt officials around the world.
Some fear Scotland’s secretly owned companies – many registered at respectable white-collar firms – will tarnish the nation’s image in the same way as anonymous bank accounts did for Switzerland.
The latest revelations come after The Herald revealed that three other SLPS – based at another respectable Scottish establishment firm, Jordans – were at the heart of the offshore finance system Odebrecht admits that it used to launder kickbacks. Neither Burness, its successor firm Burness Paull nor Jordans broke any law or regulation and there is no suggestion they were involved in the alleged bribery or knew how the SLPS registered with them were being used.
SNP MP Alison Thewliss has been campaigning for the UK Government – which controls Scots company law – to both tighten the rules on SLPS and beef up the ability of its corporate register, Companies House, to investigate shell firm abuse.
But she also signalled that the time had come for those hosting or creating secrecy vehicles to take action.
Ms Thewliss said: “The more that we delve into the murky world of SLPS, the more evident it becomes that the rules are being flouted and those who ought to carry out due diligence are shirking their responsibility.
“When even respectable firms are being linked unwittingly to international corruption and criminality, alarm bells should be ringing in the UK Government.
“Ministers cannot continue to pretend that this is some niche matter – it is of fundamental importance to democracy. The UK must ensure that we are not facilitating the kinds of nefarious activity linked to the Odebrecht scandal, and Companies House must be funded properly to investigate and crack down on this behaviour.”
Mr Toledo, meanwhile, denies taking any money from Odebrecht. His lawyer this week renewed an attempt to lift a preventative custody order imposed on the ex-president a year ago. The 70-year-old former
democracy activist – who rose to fame after leading street protests against authoritarian former president Alberto Fujimori in the 1990s – faces arrest if he returns to Peru.
He is accused of receiving money from shortly after he left office in 2006 until 2010. Prosecutors, citing admissions made by Odebrecht officials, say Mr Toledo was paid through intermediaries in return for contracts to build two stretches of the Ruta Interoceanica, a major highway designed to link the Pacific coast of Peru with the Atlantic shores of
Brazil.
Prosecutors allege just 10 payments totalling just under $6m were made to Mr Toledo via an SLP called Warbury & Co. The now dissolved partnership was registered at 242 West George Street, now a block of luxury holiday apartments in Glasgow city centre.
However, when Warbury was operational the building was the Glasgow headquarters of Burness Solicitors, which later merged with Aberdeen’s Paull and Williamson to form Burness Paull, one of Scotland’s biggest law firms.
Warbury dissolved in 2011, 18 years after its creation, having never revealed its ownership.
In a statement, Burness Paull chairman Philip Rodney said: “Under an arrangement with a reputable third-party UK registration agent, Burness,
(now known as Burness Paull) historically provided a registered office service to Warbury & Co for a nominal amount.
“The firm provided no advice to Warbury & Co, did not represent it, and did not provide any other services to it.”
Burness Paull remains one of the biggest creators and hosts of SLPS, mostly for private equity funds.
Warbury & Co is one of hundreds of SLPS identified by The Herald over the last three years as being involved or allegedly involved in criminal or unethical behaviour.
Such partnerships, referred to as “Britain’s home-grown secrecy vehicle” by campaign group Transparency International, played a core role in some of the biggest and most elaborate money-laundering scandals ever uncovered, including the multi-billion-dollar Russian and Azerbaijan laundromats.
Our revelations of their involvement in Latin America’s giant Odebrecht scandal last week prompted the UK Government to say it would announce reforms
“soon”.
Transparency International, however, wants to see a wider Uk-wide crackdown on abuse of all shell firms, not just Scottish ones.
The group’s Rachel Davies Teka said: “The frequency with which fake Uk-registered companies are involved in corruption is no coincidence. “There appears to be a money launderers’ playbook and this case is straight out of that text.”
“Corruption robs the prosperity and safety of ordinary people. Whether it be a health budget looted by a corrupt official, or a defence budget so decimated it cannot protect its citizens, corruption is never without its victims.”
“What’s increasingly of concern is that this isn’t about shady criminals operating in far flung corners of the globe. This activity is happening right on our doorstep and we need stronger action from the UK government to end our reputation as a facilitator of global corruption.”