The billion dollar a month money trail

Up to a billion dollars a month went through an international money-laundering network whose Russian

Up to a billion dollars a month went through an international money-laundering network whose Russian operators charged those using the service a 5 per cent fee, according to a classified US report seen by The Irish Times.

Some of the bank accounts that made up the network were in the name of UK entities provided by a company services group established by a businessman who operated from a house in Ranelagh, Dublin.

The network of bank accounts was used over a number of years to move enormous amounts of capital out of Russia and into the West, and the banks involved included one near Moscow that had a cousin of the Russian president, Vladimir Putin, as one of its directors.

Another figure associated with the bank is reputed to be linked to the Russian Federal Security Service (FSB), formerly the KGB, the Soviet intelligence agency where Putin worked before moving into politics.

The leaked report from the Financial Crimes Enforcement Network (FinCEN), an agency in the US Department of the Treasury, lists 54 “network controlled shell entities” that were the nominal owners of core bank accounts through which the billions of dollars flowed.

Among these shell entities are UK-based Limited Liability Partnerships (LLPs) that have links to a corporate services group set up by the Dublin businessman in the 1990s.

The money laundering network was operated by four named Russian businessmen and may have existed from as early as 2011, according to the undated FinCENreport, which appears to have been written in late 2016 or early 2017.

“In an apparently ongoing process, these individuals, who have engaged in suspicious behaviour, ensure that the funds transfers are processed opaquely for a fee of up to 5 per cent.”

The report is among a large number of highly confidential documents – the FinCEN Files – that have been seen by The Irish Times as part of the latest project from the International Consortium of Investigative Journalists (ICIJ).

The bulk of the documents in the FinCEN Files were leaked to BuzzFeed News, which shared them with the ICIJ and 108 other media partners, including The Irish Times, the BBC, Le Monde, Suddeutsche Zeitung, the Canadian Broadcasting Corporation, and the Miami Herald.

In total, more than 400 journalists from 88 countries worked on the collaborative project.

Most of the leaked documents are “suspicious activity reports”, or Sars, which are reports US banks have to file to FinCEN if they believe their customers have been involved in transactions that might be linked to money-laundering or other crimes.

Because so many of the world’s dollar transactions require the involvement of what are called correspondent banks in the US, the leaked reports provide an unprecedented glimpse into the extraordinary amounts of suspect money that moves through the world’s banking system, despite the system itself believing the transactions may be linked to money-laundering, corruption, and other crimes.

In this way, FinCEN acts as a kind of CIA of the global banking network, collecting huge amounts of information about suspect transactions and rogue or suspect banks and customers.

FinCEN “collects and analyses information about financial transactions in order to combat domestic and international money-laundering, terrorist financing, and other financial crimes,” according to the agency’s website.

It issued a statement on September 1st, saying it was aware that media outlets were working on reports based on “unlawfully disclosed” Sars and other sensitive documents, adding that the unauthorised disclosure of Sars was a criminal offence that could jeopardise the national security of the United States, as well as the safety of those who filed the reports.

The leaked Sars contain multiple references to corporate entities linked to an international company services operation, International Overseas Services Group (IOS), which has its origins in a company called International Offshore Services, set up in 1995 by Dublin businessman Philip Burwell (63).

For years it was run from a rented house, 42 Chelmsford Road, in Ranelagh, Dublin 6. It also had offices at 1/3 Sandford Road, in Ranelagh village, as well as in Riga, Latvia, and other international locations.

A total of 646 English and Scottish corporate entities with direct or apparent links to IOS are mentioned in the 2,100 leaked Sars, according to a study of the documents by the ICIJ.

This is by far the highest number of entities linked to a single corporate services provider that emerges from the documents, which cover the period 2000 to 2017.

However, Burwell told The Irish Times that while he established IOS in the 1990s and worked for a number of years with banks in Latvia who wanted to provide offshore and other types of secretive corporate entities for Russian and other clients from the former Soviet Union, he began to distance himself from the Latvian business in the early 2000s.

“I accept that some companies created by IOS have been used for money-laundering,” he said. However, he insisted that since 2003 he was no longer a part of IOS in Latvia, and that since 2011 he had no longer been providing director and other company services to IOS in the UK.

Burwell said he had nothing to do with the provision of administration to the companies that were involved in the network described in the FinCEN report or other massive money-laundering – or laundromat – networks linked with Russian money that have been exposed over recent years.

The reason so many IOS-created companies had emerged in so many scandals over recent years, he said, was because of Latvia’s location.

IOS in Latvia became the largest company formations agent in the Baltic States at a time when Latvia and Estonia together hosted more than 50 banks that were focused on providing services to non-resident, and principally Russian clients, he said in an email to The Irish Times and the ICIJ.

The Dublin businessman began providing corporate services in Riga in the wake of the collapse of the Soviet Union, after a Latvian banking friend, whom he would not name, told him that there were lots of opportunities for providing services to customers from Russia, Ukraine, Kazakhstan and other former soviet states, who wanted to hide their money in the west.

“I have been in the offshore business since the early 1980s and I sold offshore companies to British, Arabs, Germans… Americans. Everybody has uses for them. But I never saw anything like what happened when the Russian market took off. It really got out of hand. There were banks that were set up to cater for that market, for the specific needs of the Russians, who are a very secretive people, and the whole thing got out of hand, and that’s why I didn’t want to be involved that deeply any more.”

A lot of the Russians, Kazakhs and others who wanted to bank in Latvia in the late 1990s were more concerned with secrecy than avoiding tax, he said.

It’s not the money-laundering that is the problem, it’s the human-trafficking, the organised criminal activity, the corrupt officials who steal taxpayers’ money

Having long been poor, these people suddenly found themselves with money, but feared another change in political circumstances could see the money disappear again.

“They were paranoid that everything could be taken off them in a heartbeat. So there were layers and layers of secrecy.”

He said he began to disassociate himself from IOS in Latvia in the early 2000s because he was growing increasingly uncomfortable with what was going on there in relation to the movement of money out of Russia through the Baltic banking system.

When it was put to him that he didn’t appear to have removed himself entirely from the IOS operation, he said: “I’d removed myself as far as I felt comfortable with.”

Burwell said that he continued to sell companies to IOS in Latvia after he “divorced” from the Latvian business in 2003.

He would not say who he worked with in Latvia prior to 2003, or who in Latvia he continued to sell companies to after 2003. He would sell companies to agents who would in turn sell them to banks, he said.

He said that since late 2010 or early 2011, he had stopped setting up UK corporate entities for IOS in Latvia, though he continued, he said, to be involved with the administration of companies in the British Virgin Islands which he had set up at the request of IOS in Latvia.

Money-laundering networks

The leaked FinCEN report on the Russian money-laundering network is a special “intelligence assessment” which describes the structure in order to highlight how the global market in company shares can be used by money-laundering operators.

The report says it is based on information from Sars, press reports, Deutsche Bank, and an unidentified “foreign government”.

It details how the system allowed for the purchase by network entities of listed bluechip shares, for rubles, in Moscow and then their almost immediate sale in London, for dollars, with Deutsche Bank acting as a counter-party in both capitals.

A web of shell companies and other entities was used to hold and transfer the money and shares, and obscure the ownership and provenance of the money.

The network was operated by four Russians – two brokers and two bankers – “to transfer billions of dollars per year, and at least $1 billion a month in some instances, from Russia to other jurisdictions and, at times, on behalf of illicit actors,” according to the report. Illicit actors is a reference to criminal organisations.

Among the “network controlled shell entities” named in the report are a number of UK LLPs, including Chadborg Trade LLP, Ergoinvest LLP, and Lantana Trade LLP, which have been linked to IOS by a number of parties over recent years.

Among the striking characteristics shared by these LLPs is that the accounts they have filed to Companies House in the UK appear to carry the signature of a Brussels-based dentist called Ali Moulaye, who moved to Belgium from Latvia in 2014 and has a Latvian wife.

Money-laundering expert Graham Barrow
Money-laundering expert Graham Barrow

Graham Barrow, a banking and money-laundering expert who was a lead liaison between Deutsche Bank and the UK’s Financial Conduct Authority in relation to the German bank’s role in the activity that is the subject of the FinCEN report, has been studying IOS-created companies for the past number of years.

“I realised how many UK companies were involved in this business,” he told The Irish Times. “Chadborg Trade LLP and Ergoinvest LLP were two in particular. That led me to Mr Moulaye, which led me to IOS, and Philip Burwell, and to Dublin and Chelmsford Road.”

According to the FinCEN report, Lantana and Ergoinvest were two of the shell entities in the network that banked with Promsberbank, a Russian bank that collapsed in 2016.

Igor Putin, a cousin of the Russian president, was on the Promsberbank board, and one of its shareholders is alleged to have worked for the FSB.

UK LLPs are not taxed and don’t have to file accounts with the UK tax authorities, though they are obliged to file annual accounts and returns to Companies House.

Often their “designated members”, the partners who nominally own and control the LLP, are themselves LLPs, or offshore companies, so it is not possible to say who is really behind the entities.

LLPs are only obliged to have a registered address in the UK. Typically, IOS LLPs have no other commercial connection with the jurisdiction.

According to Barrow, UK LLPs were attractive to non-resident customers who were using banks in the Baltics for a number of reasons. “They are very easy to register. You can do it from anywhere in the world, and they are very cheap. It is just a few pounds.

“So you create this company, it is British, it has this veneer of honesty and transparency, and having done that, within 10 minutes, you can go down to a bank [in the Baltics] and open an account.”

When Barrow studied the accounts filed by LLPs with Companies House that were apparently signed by Moulaye, he found that they usually declared turnovers of a few thousand pounds, seemed to be working off templates, and were often filed in batches.

The same templates continued to used by different LLPs, even when their offshore designated members changed, and the associated people whose apparent signatures were being used, also changed.

Earlier this month a journalist with Knack, a Belgian weekly news magazine, and a media partner working on the FinCEN files, called to Moulaye’s home with copies of the 2013 accounts for Ergoinvest LLP and Chadborg LLP, and asked about the signatures on the documents.

“I know nothing about it,” Moulaye said. “Anyone could forge it.”

He said he was not involved with any LLPs and barely knew what an LLP was. IOS meant nothing to him, he said, and his signature would be easy to forge.

He said he and his wife both worked, they had no car, and they had recently bought their house with a loan from a public credit institution that provides finance to people who do not have high incomes. “I know nothing about it,” he said. “I am a dentist. I don’t need to do such things.”

It is now known that many of the LLPs whose accounts were nominally signed by Moulaye were at the same time the account holders in money-laundering networks through which hundreds of millions of dollars were flowing on a weekly basis, mostly from Russia into the west.

Spatz was a taxi driver who was offered money for the use of his signature when he was asked by a banker whom he regularly drove from his home to work in Riga

One such LLP was Lantana Sales. When Howard Wilkinson, a banker working with the Estonian branch of Danske Bank, decided off his own bat in 2012 to check the UK filings of this customer, he found that the filed accounts were those of a dormant company. However, there were huge amounts of cash flowing through the Lantana account in Wilkinson’s bank.

Concerns raised within the bank by Wilkinson led in time to Lantana being linked, within the bank, to the Putin family and the FSB, to Wilkinson becoming a whistleblower, and the eventual exposure of a massive $230 billion money-laundering network involving a range of international banks.

At one stage during the scandal, staff at the bank in Tallinn were warned against walking home alone at night.

When Barrow, courtesy of the Danish newspaper, Berlingske – another media partner on the FinCen Files project – got to see leaked bank statements from the accounts that were part of the money-laundering activity Wilkinson had exposed, he again found links to IOS. This was a separate money-laundering network to the one described in the FinCEN report.

“IOS were just all over these bank statements,” Barrow told The Irish Times. “They were all over. At that point I went down a rabbit hole and I’m sorry to say I’ve never come out.”

Ireland & Overseas Acquisitions

Two companies that formed an important part of the IOS operation were Ireland & Overseas Acquisitions (I&OA), and Milltown Corporate Services, companies originally established in Ireland by Burwell but which were later dissolved, with a new incarnation being incorporated in the British Virgin Islands, before it moved to Belize.

For years these companies (Milltown is named after the Dublin suburb) acted as the designated members, or controlling parties, of the IOS LLPs established in the UK and elsewhere.

The reason for this structure, according to both Barrow and Burwell, is that LLPs are very cheap to maintain, and offshore companies are much more expensive.

So a few offshore companies, such as I&OA and Milltown, could be used to run a huge number of (cheap) UK LLPs, while hiding the beneficial ownership of the UK entities.

In time, I&OA and Milltown were replaced by other offshore entities that took over as the designated members for UK LLPs established by IOS.

For a long time, the IOS structure made use the signatures of a small number of by now well-known Latvian proxies -–Voldemar Spatz, Eric Vanagels, Stan Gorin, Juri Vitman and Inta Bilder – the use of whose signatures has since been replaced by Moulaye’s apparent signature and that of others.

The names of these Latvian proxies, ordinary people whose signatures appeared on documents filed by IOS companies, but who otherwise had nothing to do with their business activities, feature among the large number of Sars reports on LLPs that share the IOS characteristics identified by Barrow.

The Latvian proxies

It is understood Spatz was a taxi driver who was offered money for the use of his signature when he was asked by a banker whom he regularly drove from his home to work in Riga.

Spatz, Vanagels and Gorin served during the 2000s as directors of Irish-registered companies set up by Burwell, records in the Companies Office show.

Vanagels and Gorin were the directors of I&OA and Milltown when the two companies were incorporated in 1996, using the registered address 42 Chelmsford Road. The two Irish companies were dissolved, respectively, in 2003 and 2005.

The US financier, Bill Browder, told The Irish Times last month that these Latvian names, and shell companies associated with I&OA and Milltown, featured in the laundering of the proceeds of the $230 million tax fraud scam involving his Hermitage Fund.

As part of a linked US court action taken in 2013, the US v Prevezon Holdings Ltd, officials from the US Dept of Justice travelled to Latvia and interviewed Gorin and others.

Gorin told the investigators, according to a court document, that “his signatures on corporate documents for four shell companies were not signed by him but rather were forged”.

The court submission by the plaintiffs said that “whether or not [Gorin’s statement] is a true statement, it demonstrates that the shell companies for which Mr Gorin served as nominal director are not legitimate entities.”

The case was settled before it went to trial, with Prevezon paying a substantial fine.

Burwell said that he used Gorin and Vanegels and Vitman when setting up companies for IOS, but that he had no role in relation to the use of Moulaye’s name. “I honestly don’t know who Ali Moulaye is.”

Barrow says there are still 250 live LLPs in the UK for which I&OA and Milltown have in the past acted as designated members.

“And there is no point in keeping [an LLP ]alive unless they have a bank account.” These bank accounts are undoubtedly not in the UK, he added.

Lota sales

Burwell features in another set of leaked documents to do with Danske Bank in Estonia, where Wilkinson worked.

The documents were shared with the ICIJ by the Italian news magazine, L’Expresso, another ICIJ media partner in the FinCEN Files project.

The Dubliner’s name appears in a file associated with one of Danske Bank’s customers, Lota Sales LLP, which opened a dollar account in the Estonian bank in June 2008, two months after the LLP was incorporated in the UK.

The designated members of Lota Sales were I&OA and Milltown (both of the British Virgin Islands). Spatz’s name was used as signatory for the former, and Gorin’s for the latter.

The bank documents associated with the opening of the Lota Sales account say that the signatory on the account was to be an Ilham Shirinov, from Azerbaijan.

A photocopy of Shirinov’s passport is included in the file and a phone number given for him has the international code for Azerbaijan. When The Irish Times called the number last month, there was no reply.

Another document in the Lota Sales file, dated June 2008, stated that a London solicitor, James Pearson, of Pearson Lowe solicitors, 48 Queen Anne St, London, had certified the Lota Sales documents that had been sent to the bank. The law firm has since been sold and efforts to contact Pearson, who is now believed to be retired, were not successful.

In the file, Pearson attested that the signatures that conveyed a power of attorney on Shirinov, including the right to operate the bank account for Lota Sales, were those of Gorin and Spatz. He supported this statement with two documents which he annexed.

One of these was a document signed in July 2007 by a once prominent Dublin solicitor, the late Stanley Asher Siev, who certified that, in his office on Aungier Street, Dublin, “Pilip Donall Boireil” had appeared before him and declared that a specimen of Spatz’s signature was true and correct. (Burwell sometimes uses the Irish version of his name.)

The second annexed document was dated October 11th, 2005, and in it Siev certified that “Philip Burwell, of 42 Chelmsford Road, Dublin 6, who is personally known to me, has this day appeared before me” [in the Aungier Street office] and declared that a specimen signature was that of Gorin, made in Gorin’s handwriting, with which “the declarant [Burwell] is fully conversant”.

Burwell, in his interview with The Irish Times, said he could not remember Lota Sales but that he believed the documents signed by Siev were used in the establishment by him of a number of LLPs for which the signatures of Gorin and Spatz were used.

He said he continued through the 2000s to run the IOS business in the British Virgin Islands, and that he sometimes sold companies to IOS in Latvia.

“That document that you are referring to, I can remember . It is a specimen signature of Stan Gorin and Vanagels. They came to Ireland at one point and they saw Stanley Siev.”

He said it was regularly the case that the people acting as proxy directors would sign over power of attorney to others, who were also ordinary people who were being paid small sums for acting as proxies for the real clients, who would not be known to Burwell. “That was how it worked.”

“To be honest with you, that was one of the reasons why I wanted out of the business, because when this first started happening in eastern Europe, especially in the Latvian banks in the early 2000s, and I could see people being named willy-nilly, and the banks were accepting these documents with the full knowledge that the persons being named [as the controllers of the accounts] were not the real persons.”

The Estonian bank’s files show that in 2012 the two British Virgin Islands companies (I&OA and Milltown) were replaced in their roles as the designated partners of Lota Sales LLP, by Primecross Inc, and Formond Inc, of the Marshall Islands. In the same year these two companies became the designated members of Lantana Trade, the LLP that banked with Promsberbank and was associated with Igor Putin.

The new designated members for Lota Sales immediately re-assigned power of attorney to Shirinov. Gorin and Spatz were replaced by a new signatory acting for both Primecross and Formond.

Lota Sales has no internet presence, and nor does Shirinov. Yet the bank’s records for Lota Sales includes a number of sales contracts (for machinery) for very large sums of money, and the statements for the LLP’s bank account show huge, mostly round figure sums being lodged and debited on an ongoing basis.

For instance, in the month of January, 2013, the payments to the Lota Sales account included transfers of $607,000, $575,000, and $600,000. They came from different companies, countries and banks.

The payments out from the Lota Sales account that same month included transfers of $140,000, $100,000, and $250,000. These are just samples.

In the first 18 days of June 2013, also by way of example, there were 11 lodgments into the Lota Sales account, totalling $6,509,563.

Only two of the lodgments were not rounded up to the nearest thousand, and only one was not rounded up to the nearest hundred.

Over the same 18 days, the transfers out of the account totalled $3,578,578. Month in, month out, money flowed through the account. Invariably the counter-parties to the transactions were other LLPs.

Think in terms of a washing machine, the rinse cycle, it goes around the system two, three, four, five times, before it comes out again. It mixes different people’s money

The enormous sums that travelled through the Lota Sales bank account in Estonia contrasted hugely with the accounts that were being filed to Companies House in Cardiff.

The accounts filed by Lota Sales for the year to the end of April 2013 appear to bear the signature of Ali Moulaye, on behalf of Formond, the designated partner that had taken over from Milltown a year earlier.

They stated that during the year Lota Sales was active as a trade agent in textiles and that the commission received was £37,692.

Some of the money that was flowing in and out of the Lota Sales accounts in Estonia was coming from, and going to, other companies with names and companies that have been associated with IOS.

One of these, LCM Alliance LLP, of Darkes Lane, Hertfordshire, filed accounts for the period to the end of February 2013, saying it had received commission income of £26,159, arising from trading in industrial equipment.

The accounts appear to be signed by Moulaye, on behalf of a company in the Seychelles, Astromcom AG, that was the designated partner of LCM. In the following year’s accounts, also apparently signed by Moulaye, the LLP said it had not traded.

However the leaked bank files show eye-watering sums of money going through the LCM account in Estonia (which the leaked files show was opened in 2012 with the help of documents signed by the London solicitor, Pearson).

On one day, for example – May 14th, 2013 – the LCM account sent $3 million to one company, and $1.4 million to another.

The LCM account was sending money to the Lota Sales account, even though both contained Moulaye’s apparent signature, and one was nominally involved in the textile trade while the other was nominally involved as an agent in the supply of industrial equipment.

On July 8th, 2013, $129,000 went from LCM to Lota Sales. Two days later, LCM sent $33,000 to Lota Sales. Three days later, Lota Sales sent $16,000 to LCM. On May 14th, LCM transferred $300,000 to Lota Sales. The next day it transferred a further $800,000. Meanwhile other huge sums were binging back and forth between other LLPs in the network.

Barrow says the reason why the networks are so complex, and have such huge sums going back and forth between different accounts within them, is that by mixing up the money it becomes impossible to trace it back to its original source.

“The money comes into the system, it doesn’t go straight to whoever wants it. If you think in terms of a washing machine, the rinse cycle, it goes around the system two, three, four, five times, before it comes out again. It mixes different people’s money. Why? Because you can’t then point at the destination and go back to the source, because to show money-laundering, you have to show the predicate crime.”

According to Barrow, someone somewhere had to be keeping a ledger as to who owned what money. Also someone somewhere had to be organising the filings to Companies House that were needed to keep the LLPs being used in a laundering network, on the UK register.

Asked if someone somewhere was centrally organising the production and filing of the returns and accounts that were sent to Companies House on behalf of the LLPs that bore what was nominally Moulaye’s signature, Burwell said: “I can tell you it, 100 per cent, wasn’t me.”

He said that it was important to understand that with these type of systems the administration of the companies would be separate from the handling of the companies money.

“Let’s say it was IOS, hypothetically, and so IOS was pally with a couple of banks in Latvia and they were selling the companies to the banks and then the client, say Mr Russia, I have a 10 million dollars, recently acquired, walks into one of the banks and says, I have this money and they say, yes, we can supply you with an offshore company, run around the corner to IOS or one of the other agents, and get the company, and then it is that agent that is responsible for filing the accounts and the returns at the instruction of the bank; but 100 per cent they wouldn’t be involved in the actual money flow through the bank, for the simple reason that the client wouldn’t trust them.”

The person who would be in charge of the company’s money would be the bank’s client, or that person’s lawyer or personal banker, not the administrator of the companies that nominally controlled the bank accounts, or the agent who was supplying the company directors for those companies, Burwell said.

“No-one in their right mind would do that.”

The IOS website

IOS kept a website on which the services it offered were described in both English and Russian. Most of the website’s content is no longer available but in a capture of the content from October 2nd, 2003, by The Wayback Machine, IOS states that its “main office for the Central European region” was at 1/3 Sandford Road, Ranelagh, Dublin 6.

Those who would like to have a “general discussion about offshore matters” were asked to call the office at 18 Smilsu Str, Riga, while qualified agents and representatives could also be contacted at phone numbers in Moscow, Minsk, and Almaty (the largest city in Kazakhstan).

The website said that, unlike its competitors, “our objective at IOS is not simply to sell a company to our clients” but to work closely with them to help solve their problems.

“We have developed successful long-term relationships with many clients and IOS representatives through the world”.

IOS, the website said, had been in “long term cooperation with one of the leading banks in the Baltic region”.

Burwell said IOS had an office on Durcan House, 1/3 Sandford Road, until 1998 or 1999. “I don’t know why [the address] was on the website [in 2003]. Probably nobody took it off.”

A notice announcing the decision to begin closing down the IOS business was posted in 2017 and is now the only accessible item on the website.

Working from a laptop

In a leaked 2009/2010 email string from the 2013 ICIJ Offshore Leaks project, which has not previously been published, Burwell stated that the IOS group office in Latvia was just a registered representative office. “Our principal office is in Dublin.”

In the correspondence Burwell was discussing regulatory matters arising from IOS doing business with an entity called the Commonwealth Trust Ltd (CTL), in the British Virgin Islands.

As already noted, Burwell told The Irish Times that after he “divorced” from IOS in Latvia, he continued to own the IOS business in the British Virgin Islands.

In an email to CTL on October 21st, 2009, Burwell said: “All IOSG activities relating to BVI and certain other jurisdictions are managed for compliance purposes by W1 Administration Ltd, of 48 Queen Anne Street, London W1M OJJ, which is supervised by Pearson Lowe & Co, solicitors, of the same address.”

“Tom Ward [one of the founders of CTL] visited myself and James Pearson of Pearson Lowe in person some time ago to discuss the entire structure and was satisfied that IOSG was indeed a qualified introducer,” Burwell wrote, signing himself off as ‘Philip Boireil’ and using an email address [email protected]

The next day, Burwell signed himself off as PB Consult/International Offshore Services Group, 42 Chelmsford Road, Dublin, 6 Ireland. PB Consult is a Dublin company and trust services business that Burwell owned and that was, up to recently, registered in Ireland for the provision of company and trust services.

PB Consult, 42 Chelmsford Road, Ranelagh, Dublin 6.
42 Chelmsford Road, Ranelagh, Dublin 6.

“For your information, you will find our full contact details below. Please address any matters relating to compliance or similar directly to me only,” he wrote in the email.

He then gave contact details in Dublin for his long-time secretary (who, like Burwell, was a director of W1 Administration when it was set up in 2008) and two others working with IOS/PB Consult in Dublin, as well as for client representatives in Latvia and Spain.

In an email from December 10th, 2009, in the same email string, Burwell wrote that he had been travelling all week and “running the business from my laptop”.

“The IOSG office in Latvia is simply a registered representative office which is responsible for liaison in local languages with our (many) clients in Baltic States, Baltic Russia and Scandinavia and for distribution of documents in this region,’ he told Mark Young, of the new business department of CTL. “Our principal office is in Dublin.”

Asked about this, Burwell said that he worked with Pearson and W1 Administration in London in relation to the IOS business in the British Virgin Islands, which was still his, by way of PB Consult, after he had “divorced” from IOS in Latvia. Up to 2011, he had continued to sell companies to IOS in Latvia.

It was not the case that he was running the IOS operation in Latvia in early 2010, he said. “You can infer that, but I assure you that I was not.”

“I mean, how could I? These guys, Vanagels, Gorin,Vitman, some of these people don’t even speak English. How could I be running it? I was running my own little business, setting up companies for IOS, and others, no argument.”

Invoices

In a 2012 report called Behind the Proxies, an invoice from two years earlier from the Dublin company formations business, Kearney Curran, to IOSG Secretaries, El Dorado, Panama, was published.

The report was published by the Organized Crime and Corruption Reporting Project (OCCRP), which is a consortium of investigative centres and journalists operating in Eastern Europe, the Caucasus, Central Asia and Central America. It is one of media partners working on the FinCEN Files project.

The invoices, dated January 2010, were in relation to services provided in respect of a number of UK-registered LLPs. The email address that appeared on the invoices was the same one used by Burwell in his dealings with CTL.

The LLPs which Kearney Curran provided administration services for in the UK, and for which they were charging IOSG Secretaries in Panama, used I&OA and Milltown, both of the British Virgin Islands, as their designated members.

Desmond Kearney, the managing director of Kearney Curran, said he did not want to comment about any of his clients when contacted by The Irish Times. Burwell said he used the services of Kearney Curran over the years when setting up companies. It is not being suggested that Kearney Curran knew the purposes for which any IOS companies were being used.

Seán Quinn

As well as setting up companies in Ireland, the UK, and various offshore jurisdictions, Burwell and IOS were also involved in the setting up of companies in New Zealand, where again the names of Latvian proxy directors, such as Gorin, Bilder and Spatz, were used.

During the massive conspiracy case between the family of the former billionaire Seán Quinn, and the Irish Bank Resolution Corporation (IBRC, now in liquidation), one of these New Zealand companies had a cameo role.

The case involved an international property portfolio worth hundreds of millions of euro in locations that included Russia and Ukraine, and over which the IBRC had legal entitlements.

The family said that it had put in train a scheme to prevent the IBRC seizing the portfolio, but that it had in turn been double-crossed by those it had engaged to frustrate the State-owned entity’s efforts. The IBRC told the courts it did not accept what the family was claiming.

In 2013, it emerged that two payments totalling €265,527 that had been made in 2011 to the Dublin law firm Eversheds, which was acting for the family in the case, had come from a company in New Zealand called Corlex Sales LLP.

In an affidavit in June 2016, one of the IBRC liquidators, Kieran Wallace, said the payments from Corlex were among a number made to the Quinn children that had come from “unusual sources”.

“The plaintiffs [the IBRC] have been unable to identify who the beneficial owners of the company are,” he told the court, three years after the payments from Corlex had first been disclosed to the IBRC.

Asked about this last week, Seán Quinn jnr told The Irish Times: “Corlex never ever paid money on behalf of the Quinn family. I understand they did pay money on behalf of Senat Legal.”

Senat Legal, based in Dubai, was one of the parties that IBRC alleged were involved in the scheme to frustrate its efforts to seize the international property portfolio.

The Senat partners, Willem Smit and Michael Waechter, were found to be in contempt of court by the High Court in November 2018, and orders were issued for their commital to prison. Smit died a month later, in Dubai, of a suspected heart attack.

Company records in New Zealand show that Corlex was incorporated in 2007 and dissolved in 2012. It had one director, Bilder, with an address in Riga, who had taken over from the original director, Spatz, in December 2008.

It is not possible to identify the company’s owner from its filings. Burwell said he knew nothing about any IOS company in New Zealand having any link with the Quinns.

FinCEN takes action

By the late 2010s the level of dollar transactions going through the Latvian banking system constituted approximately 2 per cent of the global total, and was a cause of concern in Washington DC.

In February 2018, FinCEN issued a public statement saying it was proposing to prohibit one of the largest banks in the Baltics, ABLV Bank, of Latvia, from having a correspondent account in any bank operating in the United States.

“ABLV has facilitated transactions for corrupt politically exposed persons and has funnelled billions of dollars in public corruption and asset stripping proceeds through shell company accounts,” it said.

“ABLV failed to mitigate the risk stemming from these accounts, which involved large-scale illicit activity connected to Azerbaijan, Russia, and Ukraine.”

the problem has not gone away but has morphed into something else

The move not only led to ABLV going into liquidation, but also hit the businesses of other Latvian banks that were significantly involved in providing services to customers who were not resident in Latvia.

Much of the type of Latvian banking activity that features in the Sars reports, and had created so much business for Baltic banks – and also for IOS Latvia – then came to an end. However, Graham Barrow has no doubt but that it has moved on somewhere else.

“There is internet-based banking, and probably countries within the EU that haven’t had the spotlight shone on them yet, but are going to have a problem in the future.”

He has had material shared with him that, he said, he does not feel entitled to describe but which “indicates the problem has not gone away but has morphed into something else.”

Burwell said he is no longer involved in the offshore market, other than continuing to provide services to people who formerly worked for IOS in Latvia, in relation to the administration of a small number of BVI companies. He divides his time between Dublin and Riga.

He has been contacted over the years by the authorities here in relation to criminal investigations being conducted abroad, and provided statements, but was never called to give evidence at any trial.

“I’ve been interviewed many times by the gardaí… mainly at the request of the British police, or the Germans, or the Russians.”

It used to happen “about one or twice a year”. The last time was in 2013.

He doesn’t feel frightened, he said, despite the fact that companies he established have been linked to networks used by some very significant and dangerous criminal organisations.

“I just set up the companies. If you sell a car and it gets used in a robbery… I mean, that was my job. I was in the company formations business.”

He at all time operated openly from 42 Chelmsford Road, he said. He finished up renting the house in about 2015.

When The Irish Times called to the house in July, a young Asian man who opened the door said he had been renting a room there for the past number of months, and that as far as he knew the house had been rented out to tenants for the past number of years.

Graham Barrow makes the point that money-laundering is a very serious matter. “It’s not the money-laundering that is the problem, it’s the human-trafficking, the organised criminal activity, the corrupt officials who steal taxpayers’ money, the people who don’t get the hospitals and roads and schools [they paid for through their taxes] because the money has been stolen at a state level and then laundered through the European financial system, often ending up in property in places like Dublin and London, or a condo in Miami.”

While a large amount of the enormous amount of money that left Russia over the past two decades did so for business reasons, or because people wanted to put their money somewhere they felt it would be secure, some parts of the huge outflow is available to fund political instability in the Western democracies, according to some observers.

An extensive network of regime-linked oligarchs stands ready and willing to finance all sorts of influence operations, whenever necessary

In testimony to the US Committee on Foreign Affairs last year, Michael Carpenter, formerly the senior Pentagon official responsible for US defence policies against Russia, said he believed that covert influence and destabilisation operations run on behalf of the Putin regime in Moscow, were a bigger threat to US national security than intercontinental ballistic missiles.

In the course of a submission where he mentioned, among other matters, Russian support for the 2016 presidential campaign of Donald Trump, the Brexit Leave campaign, and Marine le Pen in France, Carpenter said the Russian destabilisation operations in the West were being “financed through a financial ecosystem that exists in Western countries thanks to the investments of Russian oligarchs and businessmen”.

Among the enabling financing schemes he cited was “Denmark’s Danske Bank, which facilitated Russian money-laundering through an Estonian correspondent bank that resulted in the transfer of a staggering $225 billion in illicit funds into Western financial markets”.

An “extensive network of regime-linked oligarchs stands ready and willing to finance all sorts of influence operations, whenever necessary”, said Carpenter, who is the managing director of the Penn Biden Center for Diplomacy and Global Engagement in the University of Pennsylvania. He was a foreign policy advisor to the then US vice-president and now US presidential candidate Joe Biden.

More needed to be done to clamp down on money-laundering, he told the US lawmakers, including doing more to prevent illicit financial transactions that were using US limited liability partnerships.

As for why the UK authorities don’t do something about LLPs there being used to hide criminal financial transactions, Barrow said it is probably because the criminal activity was not taking place in the UK.

“It’s weird.”

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