Taxation
Tax avoidance ... tax havens

Warning that Scotland is becoming ‘Panama of the North’ as Edinburgh tax haven firm under investigation

Burgess COMMENTARY

Peter Burgess

Warning that Scotland is becoming ‘Panama of the North’ as Edinburgh tax haven firm under investigation LIAM McARTHUR: The MSP said they were ‘not minor allegations’. LIAM McARTHUR: The MSP said they were ‘not minor allegations’. 1 day ago / David Leask, Chief Reporter UKRAINE is investigating a Scottish-registered firm for alleged corruption at the former Soviet bloc’s state-owned vodka maker. Winglex Inter has a registered office in Edinburgh – but no physical presence in this country. It has now been named in a prosecution by the elite National Anti-Corruption Bureau (Nabu) over claims state officials abused their powers. The claims, which appear in Ukranian court documents, follow increasing fears a loophole in century-old Scottish company law is being exploited by international gun-runners, money-launderers and tax dodgers. Winglex Inter is a controversial Scottish Limited Partnership (SLP) with only an administrative address in this country. It is allegedly one of six firms that bought millions of dollars worth of ethyl spirit from the Ukraine government alcohol giant Ukrspirt in a cut-price deal. Politicians believe such cases are damaging Scotland’s reputation as a place to do “legitimate business.” Liberal Democrat MSP Liam McArthur said: “This is the latest in a series of reports that suggest that abuse of SLPs is damaging Scotland’s reputation as a place to do business. “These are not minor allegations. This is serious criminality. The last thing we want is for Scotland to be seen as the Panama of the north in the eyes of the world.” Scotland? The Panama of the north? Herald Scotland: Independent Mafia watchers in the eastern European country have suggested that some SLPs and other Scottish and British so-called “shell” companies – openly sold off-the-shelf as vehicles for tax avoidance and secrecy – are fronts for organised crime. The Scottish Government has formally asked the UK to close the SLP loophole to organised criminals. The charity Oxfam, as well as SNP, Green Party, Labour and Liberal Democrats’ politicians have called for reform. Company law is reserved, although law enforcement agencies north of the Border have raided the postal bases of SLPs involved in alleged overseas criminality. Nabu’s criminal case against officials accused of abuse of public office is spelled out in official documents filed at Solomianka district court in Kiev, the capital of Ukraine. The agency has alleged all six deals cost Ukrspirt more than $1.3 million. The other five firms include businesses from other former Soviet republics, Latvia and Georgia, one from Poland, and two shell companies from England, a limited liability partnership called Goliw Trading and a business called Winning Invest & Trade Ltd. 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It is registered at a virtual office and PO box facility in the Scottish capital used by hundreds of other shell firms, including a now dissolved SLP providing armed men in the war zone of eastern Ukraine. There is no suggestion that the firms providing the registered offices know how the SLPs are being used. Winglex Inter has no physical Scottish presence and therefore nobody to whom The Herald can put the allegations made by Ukrainian prosecutors. The Winglex Inter allegations after Nabu also named another SLP, Fuerteventura Inter, in a case at the same Kiev court where officials at the state arms exporter are accused of skimming from sales of munitions to the Middle East. SLPs have also already been implicated in the looting of $1 billion from banks in impoverished Moldova and a Latvian corruption scandal involving the jailed nephew of the authoritarian president of Uzbekistan. The Herald has also named SLPs acting as fronts for firms providing essay mills to help students cheat, diet pill scams and websites blacklisted by the French government for offering so-called binary options trading. A ban on such binary options sites came in to force in Belgium on Thursday after blanket warnings about such sites in the UK. The Herald reveals arms mafia links to Scottish limited partnership Herald Scotland: READ MORE: The secret bases of Scotland's 25,000 offshore firms READ MORE: Scottish tax haven firms front for controversial financial betting sites.