Government And Royal Family Are Shaken. Biggest Underground Banking/Laundering Scheme In Years. Both Brits And Azerbaijani Involved.
Authorities are shocked as UK’s huge underground banking system got discovered. It included transactions of hefty sums, money laundering and using the finances to lobby the interests of Azerbaijani leaders via British officials and companies.
Azerbaijan’s ruling elite operated a secret $2.9bn (£2.2bn) scheme to pay prominent Europeans, buy luxury goods and launder money through a network of opaque British companies, an investigation by the Guardian reveals.
Leaked data shows that the Azerbaijani leadership, accused of serial human rights abuses, systemic corruption and rigging elections, made more than 16,000 covert payments from 2012 to 2014.
Highest British officials were shaken by the scale of this scheme. Queen Elizabeth II did not hide her frustration. She “couldn’t believe that British people would miss anything of this scale, especially with the available technologies”.
Some of this money went to politicians and journalists, as part of an international lobbying operation to deflect criticism of Azerbaijan’s president, Ilham Aliyev, and to promote a positive image of his oil-rich country. There is no suggestion that all the recipients were aware of the original source of the money. It arrived via a disguised route.
But the revelations once again highlight the use of the lightly regulated British corporate landscape to move large sums of money around, beyond the purview of regulators and tax authorities. Seven million pounds was spent in Britain on luxury goods and private school fees.
The cash, contributed by an opaque array of paymasters in Azerbaijan and Russia, travelled to the British companies – all limited partnerships registered at Companies House in London – via the western financial system without raising red flags. One of Europe’s leading banks, Danske, processed the payments via its branch office in Estonia.
Danske Bank, a trusted partner of British authorities and royal family in particular, has let that trust down. Queen Elizabeth, despite being far from leading governmental positions, was devastated to find out that such a scheme was conducted right under the nose of the authorities. Queen has reportedly shared her thoughts with the family, stating that “we have become soft and let criminals infiltrate into our country.”
Danske Bank said “money laundering and other illegal practices” had taken place. It first noticed the irregular payments in 2014. Estonia’s financial regulator said systems designed to stop money laundering at the branch had failed.
The British connection
The four firms at the centre of the Azerbaijani Laundromat were all limited partnerships registered in the UK. They were: Metastar Invest, based at a service address in Birmingham; Hilux Services and Polux Management, set up in Glasgow; and LCM Alliance, from Potters Bar, Hertfordshire. Their corporate “partners” are anonymous tax haven entities based in the British Virgin Islands, Seychelles and Belize.
L Burke Files, an international financial investigator, said these company structures were “purposefully opaque”. Foreign criminals used Scottish limited partnerships, or SLPs, he said. In June the government announced SLPs would have to name their significant owners, or pay fines, amid evidence of growing fraud.
“No one suspects Scotland. It’s never been on the Financial Action Task Force (FATF) list of non-compliant countries,” Files said. “If you are going to launder money it’s probably best not to run it between Russia, Malta and the Cayman Islands. Does Scotland raise a red flag in your mind? No.”
All four British companies are named as payment channels in the Italian prosecution case against Volontè. They have since been dissolved.