Global Witness: Grave Secrecy

Grave Secrecy was published in June 2012.  It reveals evidence that numerous UK companies have been involved in a major money laundering scandal involving a Kyrgyzstan bank, and shows how urgent action is needed to address the current ease with which the UK and other major economies are used to launder the proceeds of corruption, tax evasion and other crimes. 

The report exposes how billions of dollars of suspicious transactions at the Kyrgyz bank, AsiaUniversialBank (AUB), involved UK, New Zealand and Bulgaria-registered companies. It also highlights how corrupt money can be moved around the globe easily by using companies to hide your identity.

The report reveals:

That three UK companies had US$1.2 billion running through their accounts despite not being involved in any real business that Global Witness could ascertain.

That the suspicious transactions went through many banks around the world, with the largest amounts passing through Citibank in New York, the UK’s Standard Chartered and Austria’s Raiffeisen Zentralbank. These banks continued their relationship, though one bank, UBS, was sufficiently concerned about their relationship with the Kyrgyz bank that it broke off relations.

That in one case, the identity of a dead man from Russia was used as the front for a UK company. While this person had died three years before the company was set up, he was listed as the company’s owner and he even ‘attended’ a company meeting in London.

That the Kyrgyz authorities believe that some of the companies have potential direct ties to Maxim Bakiyev, the son of the former president. Maxim Bakiyev has been indicted on money laundering charges in Kyrgyzstan, but is currently in the UK, having claimed political asylum.

That the Kyrgyz bank’s international reputation was helped by the presence of three former US Senators, including former presidential candidate Bob Dole, on its board.

At present, it is virtually impossible to find out the identities of the actual, ‘beneficial’ owners of companies. This is because there are several perfectly legal ways that corrupt politicians, tax evaders and terrorists can hide their identities. One way is to set up a company in a major financial centre such as the UK, then have its shareholders be other companies registered in places that keep ownership secret. Another way is to pay people to have their name on your company documents, instead of your own.

Global Witness believes that information on the real beneficial owners of companies must be made public.