Shell companies with secrets: UK pledges to clean up its Company House

November 24, 2020 | by Matteo Civillini

Imagine being a great tax evader, a scammer or, even better, the boss of a criminal organisation. You have accumulated tens (or hundreds) of millions of euros through drug trafficking, extortion, corruption. Dirty money must necessarily be cleaned up, without leaving an indelible trace which would lead back to their origin. You want to move them, putting them in the circuits of global finance, but you also know that opening an account under your name could be a serious mistake. If you are clever, you rely on a professional in the field who will explain to you the importance of putting a screen (ideally more than one) between your name and your swag, showing you what your options are.

You can ask a figurehead to open a company for you in the British Virgin Islands, for example, where the notorious secrecy should guarantee your anonymity. Or, if you would rather stay close to home and save a few quids, you can just pop across the Channel. With a few pounds, you can set up your UK company just in a few minutes: no questions asked. The system is entirely based on self-certification and – in order to disguise your identity – it is enough to just enter false or partial data.

A child’s game that, however, could get complicated. At least according to the promises recently made by those Governments that, for over half a century, have turned a blind eye to these well-known but profitable mechanisms.

The first announcement came in mid-September from Downing Street: an unprecedented reform of Companies House, the UK companies’ register. After years of pressure from civil society and journalists, only nowadays the Government recognises that the cases of improper use of the register are constantly increasing and that they are the way to financial crimes.

In the series Mafia in the UK, IrpiMedia learned how Antonio Righi (convicted of money laundering on behalf of Camorra) had appeared in English companies alongside real figureheads and fictional subjects. Among these, Ottavio, called «Il Ladro di Galline» (The Chickens’ Thief) who – in the companies’ register – indicates the profession of «fraudster». Or also the «Banda Bassotti Company Ltd» (The Beagle Boys Company Ltd) registered in «Via Dei 40 Ladroni, Ali Babbà, Italy» (40 Robbers Street, Ali Babbà, Italy).

This is not an isolated case. A study by Transparency International says that “empty boxes” companies (incorporated under the British law) have been used in at least 89 corruption and money laundering cases, contributing to economic damage of around £ 137 billion.

To be clear, the process of discussing and approving such a law could be long and troubled, especially during a health emergency such as the ongoing Covid-19 pandemic. However, if actually implemented, the proposed law would patch many of the flaws exploited by criminals.

A system based on the alleged good faith of users would be replaced by a system of mandatory identity checks of all directors and ultimate beneficiaries of companies registered in the UK. A basic change that should, finally, put an end to sensational absurdities like the use of imaginative generalities, among others. A research conducted by Global Witness, for example, found 4,000 latest beneficiaries of British companies that declare being no older than the age of two.

Another key point of the proposed law is the stricter regulation of training agents, as those subjects who open companies on behalf of third parties. An opaque market where the most sophisticated illegalities often lurk. In the 29Leaks investigation, IrpiMedia had recounted the suspicious affairs of Formations House, one of the best-known agencies. Over 400,000 companies registered in Her Majesty’s register on behalf of clients including heirs of the Sicilian Riina family, white-collar workers in the service of Camorra men, Iranian entrepreneurs under sanctions, and Swedish bikers from the Hell’s Angels gang. Under the new Companies House regime, only “adequately supervised” training agents could file information, and only if able to provide tangible evidence of customer audits.

The third cornerstone of the plan is the investiture in Companies House of the power to proactively investigate the information entered in the companies’ register, instead of passively accepting its validity. An epochal change, given that today only 4% of applications for inclusion in the register are rejected every year, and exclusively for formal formatting errors.

This piece was translated by FirmUk, a nonprofit antimafia, anti-organised crime and corruption network based in London (UK). Subscribe to FirmUk’s newsletter “Spotlight“.

More cautious, albeit always supportive of the new law proposal, is Helena Wood, a member of the Royal United Services Institute. «The proposed reforms are significant, but they lack the scope and ambition necessary to clean up the image of the business register», Wood writes in an editorial. The big question raised by the researcher concerns the financing of the additional costs that all these new prerogatives entail. Wood’s proposal is to raise the fee customers to pay to open a new company, now set at just £12.

The measures proposed by the Government must now face the parliamentary path and must be discussed in the House of Commons first, and in the House of Lords afterwards, before being finally approved.

Meanwhile, a week after the announcement by the British Government, another potentially historic opening was made by a country at the crossroads of offshore finance and dependent on the British Crown: the British Virgin Islands.
The government of the Caribbean territory committed to introducing by 2023 a public register of the ultimate beneficiaries of all the companies incorporated in the well-known tax haven. As a result, the names and surnames of those who own a company on the Islands should become accessible. Here the conditional is a must, but a new season devoted to transparency would break the smokescreen that today protects, among others, Mafia members, dictators, scammers, and tax evaders.

International journalistic inquiries such as the Panama Papers or the recent FinCen Files have shown several times how the British Virgin Islands are a favourite destination for those seeking to disguise the movements of illicit money. For Ava Lee of Global Witness, this is «a big step forward in the fight against the use of UK-related tax havens for money laundering purposes».

The decision to open up to transparency is not the result of an altruistic effort by the British Virgin Islands, which have built an economic fortune on the industry of secrecy. London played a decisive role: in 2018 the Parliament approved a new anti-money laundering law that obliges the Overseas Territories to establish a public register of beneficiaries. Prior to the BVI, other Crown tax havens such as the islands of Jersey, Guernsey, and Man had also signed up to make their corporate data public. However, it will take time to see some results: we have to wait until 2023 for governments to present measures in their respective parliaments to establish public registers.

It should also be noted that in announcing the will of the Government, the Prime Minister of the British Virgin Islands Andrew Fahie has maintained some reservations. «There must be prudence and balance in the system», said Fahie, «disproportionate measures risk violating the rights of law-abiding individuals who are far more numerous than offenders».

An attempt, probably, to sweeten the pill for local voters, emphasising their resignation to the directives of the mother country. It is in the shadow of Big Ben, in fact, that political determination must be sought to close some of those doors left open to all kinds of money launders.

Photo: Deniz Fuchidzhiev/Unsplash

0Shares

Northern League: those dangerous intersections with organised crime

#InEnglish

Northern League: those dangerous intersections with organised crime

October 30, 2020

 

Lorenzo Bagnoli
Luca Rinaldi

There is a historical moment in the affair of the Northern League’s money for which, both outside the party and inside, there is very little talk. These are three particular years in which the Carroccio’s balance was significantly eroded. A period that goes from 2012 to 2014: the interregnum of Roberto Maroni that marked the passage from Umberto Bossi’s League to Matteo Salvini’s. A moment of “cleanliness”, as Maroni himself defined it, but which seems to have “cleaned up” more the funds of the League than its structure.

In those same years, the investigations into the ‘Ndrangheta infiltration in Northern Italy became more relentless. By contrast, what emerges from these investigations are contacts between the League and circles close to organised crime that the investigators considered, and in part still consider today, worthy of attention.

Indigested breakfast

The main judicial case involving the League in this decade is the “Breakfast” investigation, launched by the Reggio Calabria prosecutor Giuseppe Lombardo in 2009. During the summer of that year, Lombardo asked the men of the Anti-Mafia Investigation Department (a.k.a. DIA) to investigate a series of fictitious registrations of businesses in the city that would go back to the De Stefano, Condello and Tegano clans that split up Reggio Calabria.

De Stefano-Condello-Tegano-Libri, the clans that own Reggio Calabria

The De Stefano, Tegano and Condello families, together with the Libri family, are the clans that make up the so-called mandamento di Centro, that is to say the territorial hegemony over the city of Reggio Calabria. The mandamento di Centro, as it emerges from the judgment of the Meta case, one of the most important cases of the last ten years regarding Calabrian organised crime, includes the large urban area between the municipality of Villa San Giovanni (north of Reggio Calabria) and the densely popolated Pellaro district (south of the city of the Strait of Messina). The partition among clans was created after the “peace” that had marked the end of the second ‘Ndrangheta war, which broke out between 1985 and 1991 and that made 700 dead, redefining the hierarchical and organisational structures of Calabrian organised crime.

Following the pacification, the mandamento of Reggio was in fact “governed” by a restricted group of people, despite the formal division between several “families” of the territory of Reggio. These are, specifically, the most important members of the De Stefano, Tegano, Condello and Libri families, which – following the redefinition of the competence of the each ‘ndrina (n.d.r. a clan in the ‘Ndrangheta are called ‘ndrina, as emerged from the agreements signed at the end of the ‘Ndrangheta war – demonstrated a criminal capacity even superior to other.

What it emerges, among others, is the name of the former treasurer of the Northern League, Francesco Belsito, also former undersecretary of the then Minister Roberto Calderoli. Belsito, in fact, is investigated for money laundering: Reggio Calabria’s prosecutors start from the “treasure of the De Stefanos” when they then come across Bossi’s party treasurer (n.d.r. Belsito). The money trail is intertwined with the story of the investments of the Northern League funds between Cyprus and Tanzania. The thread – that leads the investigators to Belsito – starts from Romolo Girardelli, known as “the Admiral”. Girardelli was being investigated for Mafia links because – as it emerges from official documents – he was “believed to be associated with elements of the De Stefano family clan”. This part of the investigation leads to Milan where, in addition to well-known figures of Milan’s far-right, Paolo Martino appears, recognised by the others as a sort of Treasury minister for the De Stefano family in northern Italy.

The hot axis between Reggio Calabria and Milan

The investigation in Reggio Calabria crosses with the one in Milan, the latter was launched to investigate a number of suspicious transactions drawn up by the Bank of Italy’s anti-money laundering department and monitored between 2010 and 2012. In April of the same year, the DIA enters the historic headquarter of the League in Bellerio Street; it also enters the offices, a few steps away from Milan’s Cathedral, of Mgim studio. Liquidated in 2015, from 2009 Mgim became a recurring theme song of the investigations between Milan and Reggio Calabria. Here, in fact, the investigators find the Calabrian lawyer Brunello Mafrici, a consultant to Belsito himself and considered by the investigators as a connection point with the clans.

Immediately after seizing the servers’ computers of the Mgim firm, Milan’s prosecution office would proceed against Belsito for aggravated embezzlement arising from the Bank of Italy’s anti-money laundering reports. These are the years in which the expenses of Senator Umberto Bossi’s “Family” and the treasurer’s investments in Tanzania and Cyprus come to light.

Paolo Martino: from the clans to black subversion, the Treasury minister of the Lombard 'Ndrangheta

Paolo Martino is considered the referent of the De Stefano clan in Lombardy. The investigators define him as “a very high level member of Reggio Calabria’s ‘Ndrangheta. He is one of those people who have largely overcome the phase of “black” crime to move up to the entrepreneurial Mafia, with contacts in high economic and political institutions. Cousin of Paolo De Stefano and Bruno Tegano, heads of the mob, Martino has been in the Calabrian organised crime since the 1970s: in 1971 he committed his first murder, at the age of sixteen. He was arrested and sentenced to nine years and six months after a period on the run. After serving his sentence with an early release six years later, Martino once again entered the ranks of organised crime, in particular the De Stefano family.

Convicted of drug trafficking offences in the mid-1980s and already then called Paolo De Stefano’s “longa manus”, Martino spent another period on the run between Liguria and Tuscany. Reached by the officers of the Chiavari police station, he would deny any charges at the trials in the early 1990s; he would also deny shared illicit interests with cousins, the De Stefano. Yet the investigations describe him as “a directive mind of drug trafficking operated by different Calabrian families of the Reggio Calabria – Milan axis, with branches in Liguria”.

The relationship between Martino and the De Stefano family was never closed: in 2009, the investigators found him again in Milan at Carmelina Condello Sibio’s, the lover of boss Paolo De Stefano with whom he also had three children. Moreover, in that same house, three men spent part of their time while on the run, and they could all be linked to the Calabrian clans during their stays in Milan. Martino was then arrested in 2011 and definitevely sentenced in 2016 to 16 years and four months in the Redux-Caposaldo operation of the Milan’s District Anti-Mafia Directorate (a.k.a. DDA).

According to witness Filippo Barreca (a collaborator di justice), in the ’70s Martino covered up former neofascist terrorist Franco Freda, accused of being one of the organisers of the 1969’s Piazza Fontana massacre, in Milan. Freda was then acquitted of the charge in 1987. However, in 2005, Italy’s Supreme Court wrote that the same massacre had been carried out by “a subversive group set up in Padua by Ordine Nuovo” (n.d.r. a violent, far-right movement) and “led by Franco Freda and Giovanni Ventura”. However, the Supreme Court declared them no longer subjected to trial as “irreversibly acquitted by the Appeal’s Court of Bari”. Freda always denied this reconstruction of events occurred at that time.

According to the Milan’s Public Prosecutor’s Office “the management of the treasury of the Northern League has been in total opacity since 2004 and in any case, as far as Belsito is concerned, ever since he began to hold the position of treasurer. He has fed the treasury with the money never recorded and has made payments which were also never recorder or that were recorded in a not truthful way”. These are the first steps of the investigation into the League’s black funds and also the first acts of the “treasure hunt” of the 49 million electoral reimbursements unduly received by the League.

The interregnum of Maroni

Roberto Maroni’s interregnum unravels between the “night of brooms” on 12th April 2012 and the election of Matteo Salvini as federal secretary on 07th December 2013. This phase began with a speech by Maroni announcing a real “repulisti”(n.d.r. a clean up) within the party. “These are days of sorrow, but they are also days of anger,” preached the party’s scrapper, “for the humiliation we have suffered, for the shame we have suffered to be considered a party of corrupted people”. Listening to him, in Bergamo, there was an audience of faithful people holding brooms, the symbol of the repulisti in progress. The era of Umberto Bossi, until then father and master of the Northern League, came to an end.

Maroni, former President of the Lombardy Region, is one of the most powerful figures of the political party. No matter how bad the climate in the Northern League was, it was mandatory to manage Expo 2015 where Maroni sent his most trusted man, lawyer Domenico Aiello, to represent Lombardy. A highly experienced lawyer, Aiello quickly managed many delicate dossiers in the League, becoming the party’s lawyer.

«The management of the treasury of the Northern League has been in total opacity since 2004 and in any case, as far as Belsito is concerned, ever since he began to hold the position of treasurer»
As in the order of arrest of Milan's public prosecutor office

It is during this interregnum that the “treasure” of Carroccio’s budget seems to evaporate. In 2011, financial statements showed 33 million euros in cash and securities, together with about 26 million in contribution from the State and other subjects. The assets amounted to 47 million euros. Between 2012 and 2014, the years in which Maroni was the secretary, cash fell from 31 to 8 million euros. During those three years, legal expenses increased from 300 thousand to 3.1 million euros, and “other operating expenses” – whose origin cannot be reconstructed – reached 13 million euros.

These are the years in which the internal war between Bossi’s and Maroni’s men started within the party. Umberto Bossi’s former legal counsel and MP, Matteo Brigandì, wanted to claim back his own paid fees from the party’s budget.

A war starts: it is a war of official documents that is still ongoing today and for which Brigandì has been condemned to return 2 million euros to the party. From his side, Brigandì is also ready to ask money back to Salvini’s League. On the other hand, Maroni and Aiello put on a strategy to avoid demands similar to Brigandì’s: the internal war had risked destroying the party’s finances once and for all, so Maroni and Aiello opted for the creation of a trust or a foundation untied from the party, in order to secure part of the money.

#inEnglish

The strategy begins in 2013 and appears also in the same investigation in Reggio Calabria which involved former treasurer Francesco Belsito, so the Breakfast investigation. It was Aiello himself (initially defined as a “person of investigative interest”, then never investigated) who discussed the project with one of the professionals (notary Angelo Busani) who later also reappeared in a more recent investigation into the Lombardy Film Commission (LFC) for the purchase of the property in Cormano.

Busani, who was not investigated, appears in one of the LFC investigation files for an anti-money laundering report dating back to 2018 on two transfers from the firm’s accounts of notary Mauro Grandi and for a total of 18 million euros. Mauro Grandi was the one who had worked on the paperwork for the purchase and sale of the LFC building. The mechanism, also according to the investigators, appears to be the same as the one put in place for money laundering: Grandi would transfer almost the same amount to the accounts of a Cypriot company owned by Sergei Tigipko, former Ukrainian Finance Minister and President of the Ukrainian National Bank from 2002 to 2004.

Returning now to the Maroni-Aiello strategy of the party’s trust, national newspaper Il Fatto Quotidiano – in an article in 2016 officially acquired as material for LFC enquiry – gives details of the operation set up with the Bolzano Sparkasse credit institution: 20 million euros were transferred from the party to the same Bolzano savings bank. Busani says he has heard nothing more about it. However, in 2019, answering some questions by L’Espresso, Maroni would not deny the existence of the trust nor the money transfer to the Bolzano bank. The only element that challenges the reconstruction of the events made by journalists is the fact that the trust “would not have served to hide the money from the judiciary. But from other parties who could have claimed against the party”.

Certainly, a few people want to talk about the years between 2012 and 2014. Not even the current treasurer Giulio Centemero who – in an interview given on 9 October at Il Giornale – says he has obtained a “super evaluation” from one of the most important auditing firms in the world that reconstructed all the income and expenses relating to the notorious 49 million. While recalling the party expenses, however, Centemero doesn’t mention at all Maroni’s secretariat, so that none of the main characters of Maroni’s interregnum appears in Centemero’s interview.

From Belsito to the Film Commission affaire: dangerous intersections with the Lombard ‘Ndrangheta

What was done in Maroni’s management was a first step, after which the corporate structures that, according to the investigators, stand between the party’s money and its destination became increasingly complex. From there, the most recent investigations developed.

«The trust would not have served to hide the money from the judiciary. But from other parties who could have claimed against the party»
Roberto Maroni, Former Northern League secretary

In the swirl of names, professionals and companies involved in the investigation about the purchase and sale of the property of the Lombardy Film Commission, the investigators come across organised crime. Very often, this happens from a completely different basis and usually following the potential crime of money-laundering.

All of this doesn’t only refer to relationships with acquaintances or wiretaps. As a matter of fact, when searching companies mostly in the name of Luca Sostegni (defined as a wooden head for the accountant Michele Scillieri), it is likely to find stories of organised crime in the shadow of the Madonnina (Our little Lady), the symbol of Milan’s Cathedral.

Between 2008 and 2019, Sostegni held positions in thirty-nine companies, mostly as liquidator; he received compensation exclusively by managing seven of them. Among these thirty-nine companies, there are the Red Church buildings, the real estate group I Girasoli (The Sunflowers), Edilwest, and Andromeda itself.

In the first two, it also appears an already-known name of Milan’s crime, Domenico Coraglia: beforehand, he was involved in the “Duomo Connection” investigation at the end of the ‘80s. Coraglia was also close to the historic ‘Ndrangheta’s Papalia family (operating in the city’s hinterland) and to the Sicilians Carollo. He then emerged in the “Cerberus” investigation conducted by the Finance Police at the beginning of the 2000s, highlighting his good relationships with Milan’s ‘ndrine man, Salvatore Barbaro. Edilwest, active in the earthmoving sector, appeared in the same enquiry as well. Furthermore, during another Antimafia investigation, “Redux Caposaldo”, in Milan, Coraglia’s name emerges again as linked to the real estate group I Girasoli. The latter is among the companies of which Sostegni has been liquidator since 2013.

This long-read investigation was translated by FirmUk, a nonprofit antimafia, anti-organised crime and corruption network based in London (UK). Subscribe to FirmUk’s newsletter “Spotlight“.

When questioned, Sostegni himself tells Milan prosecutors how the “Coraglia affair” brought him closer to Scillieri: “The group (Girasoli, ed.) had entered an irreversible crisis and Dr Castellini, an accountant with whom Scillieri had worked for a long time,” says Sostegni, “had named the latter as the most suitable professional to solve the problem. Scillieri accepted the position and I was appointed director of seven to eight companies in the Girasoli group, which belonged to the Coraglia family”.

But this is not the only time that Scillieri is involved in a judicial affair intertwining with other people’s businesses connected to organised crime rooted in Northern Italy. The professional’s, although not investigated, emerges in 2014 for Milan’s DDA investigation about what actually was a proper ‘Ndrangheta bank. The main character at the centre of it is Giuseppe Pensabene, the head of Desio’s ‘Ndrangheta bank and sentenced to 15 years.

From Seveso, in Brianza, Pino Pensabene coordinated men and operations of a structure that essentially was an illicit bank useful for ‘Ndragheta affiliates and entrepreneurs in difficulty (then victims of extortion). The former used it to improve prisoners’ cash while the latter used it for loans which had, however, extortion rates ranging from 15% to 20%.

Scillieri’s name appears because, as the public prosecutors write, “it was decided to establish the domicile of the companies” administered by Pensabene’s own loan officers in Scillieri’s offices. It’s in the course of the same investigation that Scillieri was also intercepted on the phone with one of them, and later appointed director of Coimpre, a company of which Scillieri was among the owners with his Effe V. srl. The wooden heads of Pensabene, write the prosecutor, acquired it from the previous owners, including Scillieri himself, “following the needs of the criminal organisation, and especially to bring into its asset real estate bought with illicit capital”.

CREDITS

Authors

Lorenzo Bagnoli
Luca Rinaldi

Editing

Giulio Rubino

Translation by

Photo

Pierre Teyssot, Eugenio Marongiu/Shutterstock

Share via