Scots shell firms linked to bribery ‘mega scandal’
SCOTTISH shell firms have been named in a multi-million-dollar bribery court case in Argentina.
Two of this country’s limited partnerships were allegedly used to funnel kickbacks in the latest twist in a corruption “mega scandal” ripping through Latin America.
Prosecutors say one of the bestconnected lobbyists in Buenos Aires used the anonymously-owned Scottish firms – SLPs – to take cash from the Brazilian construction giant Odebrecht in return for state contracts.
The case comes as a Herald on Sunday investigation published today reveals anonymous SLPs and similar English structures were used to make hundreds of millions of dollars of untraceable “foreign” investment in Uzbekistan.
Anti-corruption and humanrights campaigners in the central Asian nation – still one of the least open societies in the world – are demanding to know where the money comes from. They are particularly concerned over secretive buy-ups of the nation’s cotton industry, with its record of slavery and environmental damage.
Concerns over both bribery in Latin America and opaque investments in the former Soviet Union prompted Britain’s big business lobby to issue a warning about SLPs.
Tracy Black, Scotland director of the CBI, said: “These reports are concerning because they pose a risk to the hard-won reputation of Scottish business.
“We want Scottish firms to feel confident about pitching for international projects and exporting to global markets.
“This comes at a time when business is working tirelessly in partnership with the Government to attract top talent and muchneeded investment.”
Over the last three years The Herald and former Sunday Herald have published scores of stories about the abuse of SLPs. These include allegations that Odebrecht – whose officials admit paying bribes of at least $800 million across the Spanish and Portuguese-speaking world, used SLPs and other British corporate entities to suborn officials and politicians.
The UK Government – which is responsible for Scots corporate law – is currently mulling new reforms to the structures under pressure from opposition and backbench MPs, such as the SNP’s Alison Thewliss.
British officials – especially since the attempted murders in Salisbury – are particularly concerned about the abuse of SLPs in Russia.
UK firms, including SLPs and Scottish limited companies, were are the centre of the $20 billion Russian Laundromat, one of the biggest and most elaborate money-laundering schemes ever uncovered.
The CBI’s concerns echo those of Scottish politicians, who have long warned of a threat to the country’s corporate reputation from SLPs involved in global fraud and money laundering.
In some major markets the words “Scottish firm” has come to have the same kind of image as “Swiss bank account”.
Researcher Ben Cowdock of anti-corruption group Transparency International said: “It is now well established that SLPs have been a moneylaundering vehicle of choice for corrupt individuals around the world. Controlled by anonymous offshore companies, they have proven to be effective in funnelling bribes to politicians and allowing corrupt elites to gain control of key industrial assets.
“Their continued use in high corruption risk jurisdictions should raise red flags to law enforcement agencies in the UK and abroad.”
Cowdock added: “It is clear that money launderers and corrupt individuals have sought to exploit the UK’s ease of doing business for criminal ends ... As the tally of crimes committed with UK companies mounts, the cost of inertia becomes increasingly clear.”
The SLPs in the Argentinian case have not named their owners under rules Cowdock cites. Nor have most of the SLPs and other firms making opaque investments in Uzbekistan. No business has been prosecuted for failure to comply with transparency laws.
The UK Government is expected to unveil reforms before Christmas.