Not only is the UK’s much-vaunted public register of companies, held at Companies House, failing to meet the minimum requirement for ultimate beneficial owner (UBO) transparency, but Scotland continues to be mired up to its neck in controversy surrounding its status as an “offshore” service provider.

The Herald newspaper in Scotland has reported that Alisher Usmanov, an Uzbek-born Russian billionaire, may be behind a Scottish entity that appears to be funnelling funds to and from Uzbekistan. Mr. Usmanov is well known in the UK. He was a major shareholder in the Premier League football club, Arsenal, and latterly he has been linked with an investment into one of Arsenal’s Premier League rivals, Everton, having relinquished his shareholding in Arsenal.

Coincidentally, it appears that Mr. Usmanov is also the driving force behind the revival of Uzbek football team Pakhtakor, with plans for a super-modern $100 million stadium to replace the club’s roofless 1950s Tashkent ground.

In Europe, football (soccer) is big business. The sizeable transfer fees and income generated by TV and sponsorship makes it an excellent vehicle for shifting money around the globe. That said, let me be clear that I am not making any allegations of wrongdoing against Mr. Usmanov. My issue remains one regarding the double standards enjoyed by UK compliance in general, but Scotland in particular.

In this instance, the football club Pakhtakor was purchased last year by SFI Management Group, an Uzbek registered “foreign” company. The company has never publicly disclosed the names of any of its shareholders or explained why it is listed as “foreign.” However, The Herald newspaper obtained a corporate filing indicating SFI had just one shareholder, Quality Trade Supplies (QTS), registered at a former draper’s shop in Douglas, South Lanarkshire.

The Herald identified Quality Trade Supplies as a partner to another one of Scotland’s Limited Partnerships (SLP), described by Transparency International (TI) as being “a vehicle of choice for money-laundering.” David Leask from The Herald, who admirably pulls the various threads together, describes how SFI Management Group has taken control of swathes of Uzbek interests having struck deals with the Uzbek regime.

Once again, there is no allegation of wrongdoing. Rather it is the secrecythat is involved that is the cause for concern. Mr. Leask explains that a succession of anonymously owned Scottish and other British shell companies have been investing in Uzbekistan. The Herald wrote to SFI and QTS asking them to name their UBOs but received no reply.

The link between Mr. Usmanov and Everton football club featured in the BBC Panorama documentary on the Paradise Papers which centered on the information gleaned by the International Consortium of Investigative Journalists.

Panorama alleged that the Everton owner and close friend of Usmanov, Farshad Moshiri, had sold his shares in Arsenal to Usmanov, in order to acquire a 49 percent stake in Everton. This was done in order to comply with Premier League rules, which state that any individual with a 10 percent (or greater) stake in any club cannot buy into another. Panorama alleged that Moshiri’s investment in Everton was in fact “a gift” from Usmanov, which they believe should have raised the question over whether the Uzbek’s money was put into Everton. Mr. Moshiri strenuously denied accusations that he had broken the rules while the Premier League also confirmed he had no case to answer.

In the world of big business, rarely is something straightforward. Mr. Usmanov’s involvement in the UK, Uzbekistan and the world of football doesn’t appear to be uncomplicated. Oligarchs are always treated with a degree of suspicion, it seems. Their incredible wealth and their historic means of acquiring it are almost always open to question. If you add to the mix the SLP offshore connection (and thereby the inherent lack of transparency), you have the recipe for intrigue.

The point here isn’t that Mr. Usmanov has done anything wrong, as best we can tell, it is simply that the UK has continued to throw its weight around by insisting that her overseas territories — such as the British Virgin Islands (BVI) — adopt open public company registers. This latest piece of news suggests the UK is failing in its own backyard, and then has the audacity to criticize others.

I have crossed proverbial swords with Transparency International several times, in particular over this subject of open public registers. My argument with them is that UBO information is only as good as the due diligence process used to verify it. The fact that the information is readily available to the competent authorities means that the records are not “secret.” Rather, they are simply “confidential.”

TI is right to go after the SLPs, as their Scottish formation agents’ lack of due diligence and recording of UBO information is appalling. But TI also needs to turn its attention back to Companies House, where the ability to police and verify UBO information, as supplied by those opening companies there, is equally inept. A small number of staff are responsible for scrutinizing four million companies’ UBO filings. This is a farce. In contrast, the overseas territories such as the BVI have been targeted by TI repeatedly and pressed to adopt open public registers as the way forward.

The debate as to whether this information should be public is one-sided and misinformed. The fact is that the BVI and her sister territories across the Caribbean are in possession of tested and verified UBO identification information. The UK isn’t, despite having an open public register, which renders this overhyped database useless.

With thanks to Tony McClements, Senior Investigator at Martin Kenney & Co, for his assistance with this post.


Martin Kenney, pictured above, is Managing Partner of Martin Kenney & Co., Solicitors, a specialist investigative and asset recovery practice based in the BVI, focused on multi-jurisdictional fraud and grand corruption cases |@MKSolicitorsIn 2014 he was the recipient of the ACFE’s highest honor: the Cressey Award for life-time achievement in the detection and deterrence of fraud. He was selected as one of the Top Thought Leaders of the Legal Profession in 2018 by Who’s Who Legal International, as the number one offshore lawyer for asset recovery in 2017 and 2018, and as a Global Elite Thought Leader by Who’s Who Legal for 2019.

This article originally appeared in the FPCA Blog