IT’S amazing what Scottish produce you can source around the world if you have an eye for it. Whether you’re in Motherwell, Moscow, or indeed anywhere else, opportunities can be found to snap up a Scottish business scheme with a history of facilitating the flow of dirty money.
We’ve been investigating the “formation agents” that set up Scottish Limited Partnerships, specifically the ones with offices in Moscow. But we came across one on our home turf too, and, naturally, paid its “office” a visit.
Our findings have prompted politicians and anti-corruption experts to ask both the Scottish Government and UK authorities to take action against “rogue” formation agents and “dodgy companies”.
At number 211 on Glasgow’s Dumbarton Road, the sun beams through a neat glass door that sits unassumingly between a Tesco Express and an ATM, and illuminates the stairwell inside.
While shoppers pop into the supermarket for bread and milk, next door, companies are sold to international clients looking for an “official” base in Scotland, using a business scheme with a shady reputation.
The Ferret is outside the listed address of Scotland LP, a “formation agent” that sets up these companies, known as Scottish Limited Partnerships, or SLPs, for paid clients. We’re here to ask about the notable background of its apparent owner, Norwegian businessman Havard Arneson Haugen, and the products it’s selling.
SLPs are used legitimately, but have also been widely abused by money launderers, tax evaders and fraudsters. The man behind the firm we’re interested in raises further questions.
Before pivoting to corporate services, Haugen was accused of running websites that facilitated child sex abuse and spreading fake news designed to sow hate.
He’s not the only notable seller of SLPs. The Ferret has found more than a dozen SLP formation agents with Moscow offices. Some Moscow agents trumpet SLPs for their “financial privacy”, and rate Scotland as a five-star “offshore zone”.
Just last year, Transparency International UK warned a Westminster committee that Russian websites were still punting UK LPs, with investigations lead Ben Cowdock saying “we need to stop the supply of these dangerous companies to crooks and sanctioned individuals, by clamping down on the rogue formation agents who are setting them up”.
Our most recent findings prompted a past chair of Holyrood’s cross-party group on Ukraine to ask the Scottish Government how to “stop this flow of dirty money”, while anti-corruption experts urged UK authorities to target formation agents setting up “dodgy companies”.
The Westminster Government said the UK has some of the world’s “strongest controls” to fight economic crime and its reforms to the business registry would “crack down on criminals abusing UK corporate entities”.
The man behind Scotland LP
IN 2010, Havard Arneson Haugen reportedly headed a company behind the domain of an unofficial Norwegian clone of Chatroulette – a video chat website that pairs random users – in which children were allegedly pressured by men to strip and touch themselves. The firm reportedly failed to act on a whistleblower’s reports.
In response, an anonymous representative told a newspaper that while it took the issue seriously, the whistleblower’s evidence was taken out of context, it was difficult to enforce an age limit and that parents held some responsibility.
Reports in 2017 again named Haugen, this time in his capacity as the owner of a website that spread fake news that Somalis had deceived Norway’s immigration and welfare departments, and that Norway’s Labor Party made a secret deal with “immigrant leaders”.
The site’s anonymous editor defended its content, which “is, or could have been, real news” and said it lacked the capacity and “source criticism” of larger newspapers.
Scotland LP’s website offered to set up an SLP for £500, while clients could open an account with the firm’s “global banking partners” for £400. While there’s no record of the outfit on business registers, Scotland LP’s minimalist website said copyright belonged to two firms.
The first, Dammcom LP, itself an SLP, was registered in 2019 and confirmed its information was up to date in March this year. Its registered office address is “Dept 347” on the first floor of 211 Dumbarton Road. Business records name Haugen as Dammcom’s owner.
International Corporate Services ICS LLC, Scotland LP’s other listed copyright holder, was incorporated in the tiny US state of Delaware, where corporate owners can remain anonymous.
But leaked Paradise Papers files, obtained by the International Consortium of Investigative Journalists (ICIJ) and Süddeutsche Zeitung, and made accessible to The Ferret, reveal ICS is also linked to Haugen – he signed off documents as a director and secretary in 2011.
Inside 211
AS 211 Dumbarton Road is home to six offices, Scotland LP’s listed address is little help to visitors. As we arrive, a man leaves through the front door and we take the opportunity to go inside. We reach the first floor and push the buzzer outside the first office we come to – Independent Accountants In Scotland.
A woman we speak to has never heard of Scotland LP – but the name Dammcom rings a bell. She’s forwarded its letters, unopened, to another agent, CFS Formations, although not recently. CFS is responsible for checking the due diligence of its clients, the woman stresses, and states her accountancy firm knows nothing about any of them.
The Doncaster firm uses mailboxes at 211 for companies it’s set up for clients – labelled as the official sounding “Dept 347”, in the case of Dammcom. These mailboxes are presumably used to meet the UK Government’s rules that an SLP’s registered address must be a physical location in the UK and its “main place of business”.
CFS, which did not respond to requests to comment, is not new to the scene. In 2016, the Financial Times had CFS set up offshore firms to test its vetting processes and claimed the formation agent did not care who its customer was.
“Literally, just let us know what you want and we can do it for you,” a journalist was told.
When contacted by The Ferret, Scotland LP said it had “never been used to provide SLP services” and would update its website “to avoid confusion”. Any mention of SLPs, Dammcom and ICS was removed from the website, but archived versions show a sole focus on SLPs.
“Scotlandlp.com is a premium domain name available for sale,” it now states. “It was acquired as an investment and is not associated with any company or service.”
A respondent, who declined to reveal their identity, did not address specific questions about Haugen and his reported background, adding that we were “pursuing the wrong lead”.
At 211, SLPs registered here actually predate Scotland LP, indicating that this unassuming location has long been a hotspot. In fact, this is not our first venture here.
We visited 211 last year because it’s also the listed address of an SLP owned by a businesswoman who allegedly represented criminal clients, and had links to a politician from a banned pro-Russia political party in Ukraine.
£175m fraud links
Other Russia-linked firms selling SLPs include GSL Law and Consulting, which has offices in Moscow, London and a dozen other cities. It sells SLP service packages for as much as £3225, and accepts payment methods including the cryptocurrency Bitcoin. For £1110, GSL offers directors and shareholders to appear on UK company records.
In 2012, the ICIJ reported that two Brits signed up with GSL to put their names to more than 200 offshore entities that were sold on to anonymous Russians. GSL was later embroiled in a bigger scandal.
Russia’s then-biggest foreign investment firm, Hermitage Capital, claimed officials seized three of its subsidiaries to gain £175m in bogus tax rebates from the state. Hermitage said the thieves tried to cover their tracks by reassigning control of the entities to Boily Systems, a company that Commonwealth Trust, an offshore services provider, set up at GSL’s request.
A young whistleblower, Sergei Magnitsky, was arrested and died in a Russian prison. Bill Browder, founder and CEO of Hermitage, spearheaded an international campaign to hold those responsible for his death to account and helped spark a global anticorruption movement. The events led to “Magnitsky” sanctions in the UK, US, Canada and the Baltic states that target those responsible for human rights violations or corruption.
Asked about GSL, Browder told The Ferret: “The UK has spent years promising to crack down on dirty money, yet one of the company formation agents we identified in connection with the Magnitsky money-laundering network is still openly selling UK and Scottish corporate structures.
“Criminals don’t launder money without facilitators. If those facilitators face no meaningful consequences, all the political promises about tackling kleptocracy ring hollow.”
GSL did not respond to a request to comment.
Calls to stop ‘rogue actors’
SLPs are considered as legal persons that can enter into contracts, take on debts, own assets and don’t need to file accounts. They offered greater levels of secrecy before the rules were tightened, having helped move £60 billion out of Russia, and allowed the Kremlin to bypass sanctions by importing battlefield components to aid its illegal invasion of Ukraine.
UK Government crackdowns in recent years have reformed more than 100-year-old laws around SLPs to try to tackle their abuse, but The Ferret and others have exposed their continued role in aiding the flow of dirty money. In doing so, they’ve used Scottish addresses ranging from boarded-up back alley entrances, to a flat in an Edinburgh housing scheme immortalised in Irvine Welsh’s Trainspotting.
Transparency International UK’s Cowdock warned that despite reforms, “in the wrong hands”, SLPs “can still be used to hide assets and launder money”. Regulators should “work together to identify rogue actors in the UK continuing to market limited partnerships to high-risk markets,” he said.
James Bolton-Jones, senior policy researcher at Spotlight on Corruption, echoed Cowdock’s concerns. It was “deeply alarming” that SLPs were still being “snapped up” and sold on to clients, he said. “These findings illustrate that the hard work of cleaning up Companies House is only just beginning.”
The agency must “ramp up its efforts to kick dodgy companies off the register, and leverage its new powers to share data with law enforcement to crack down on companies involved in economic crime,” he added.
The SNP’s Colin Beattie, who chaired Holyrood’s cross-party group on Ukraine, said: “It is concerning that this shady practice continues to be in use.” He added: “We must continue to support Ukraine in any way we can and in light of these reports, I have written to the Scottish Government to determine what action can be taken to stop this flow of dirty money.”
Labour MP Phil Brickell, an officer for the all-party parliamentary group on anti-corruption, said: “The registrar should urgently investigate these entities to ensure they are not being used for criminal activity. Because we have to be able to look our Ukrainian allies in the eye and say everything possible is being done to ensure no Kremlin crony finds a safe haven on our shores.”
A spokesperson for the UK Government’s department for business said: “The UK already has some of the strongest controls in the world to combat economic crime and our reforms to Companies House will crack down on criminals abusing UK corporate entities.”
