Tangled triangles

A case study in complex multi-jurisdictional ownership structures

On 26 October 2005, two new companies were formed in New Zealand – Stafford Financial Limited and Norwell Management Limited. The following day Highvale Limited, Lanefield Limited and Victoria Point Limited were also registered.

In each case, the application was filed by Andrea Taylor of GT Group Limited, who gave 369 Queen Street, Auckland as the address for service and Vicam (Auckland) Limited as its owner. Unfortunately for these companies, GT Group and its head, Ian Taylor, managed to attract an awful lot of negative press over the next few years culminating in the closing down of GT Group in June 2011. This followed hard on the heels of an in-depth report by the Organised Crime and Corruption Reporting Project (OCCRP) on the use of a number of GT Group created entities in various illegal enterprises.

For example, SP Trading Limited, incorporated in July 2009 by GT Group at the same address and with the same ownership as the above companies was used to charter an aeroplane which were caught smuggling 35 tomes of weapons out of North Korea headed for Iran.

And then there was Tormex Limited, incorporated in June 2010, also at the same address and with Vicam as their sole shareholder, was discovered to be involved in the laundering of money on behalf of the Mexican Sinaloa cartel.

Returning to our five companies formed on 26 and 27 October 2005, all of them replaced their initial director (either Ulpiano Moreno or Mario Castillo – both from Panama) with a lady called Irita Enkuzena in December 2005. Little is known about two of them but it is known, thanks to the Latvian database available through Lursoft and interrogated by Caspian’s Entity Investigator, three of them, Stafford Financial, Lanefield and Norwell Management invested, on 20 January 2006 into three Latvian companies respectively MARCOS FIN LET SIA, Motel Autosole SIA and SEMAR FIN LET.REAL ESTATE SIA.

We also know that by the time they were removed, the shareholders for each company were either Wellington Capital Limited registered in Belize or Leada Limited, registered in the Marshall Islands.

And then, in 2011, as explained above, GT Group were effectively shut down and these five companies were themselves removed from the registry during July 2011. But that wasn’t the end of the story.

Because on 2 August 2011, five new LLPs were registered at Companies House. They were called Stafford Financial LLP, Norwell Management LLP, Highvale LLP, Lanefild LLP and Victoria Point LLP.

And yes, it really was registered as Lanefild rather than Lanefield but other than that, the names are pretty much identical to the New Zealand companies. Oddly, each of them was registered to different addresses. Odd because each of them declared the same two Designated Members (Krontex Solutions Inc and Wellington Capital Ltd, both of #1 Mapp Street, Belize City, Belize.

And anyway, between August 2014 and July 2016, all of them moved to the same address in South Shields, Tyne and Wear.  But that wasn’t the last time they moved because, on the 25 July 2016, every one of them moved to Shield Street Newcastle, just round the corner from Caspian.

And on 24 July 2014, every one of them lost Krontex Solution Inc, of Mapp Street, Belize as a designated member (not to be confused with Krontex Services of 7 New Road, Belize), to be replaced by the totally different Brontex Solutions Inc from 7 New Road, Belize City, Belize.

Of course, one of the other filing requirements at Companies House is to lodge Annual Accounts and all of them did so. For example, every one of them filed their accounts for the year ending 31 August 2014 on 22 September 2014. The were all signed by the same person and helpfully, one of them appended the name of the signer next to the signature and here it is:

I think it is reasonable to assume, given the unusual nature of the name, that this is the same Irita Enkuzena that used to be the director of the New Zealand companies.

And that means, for some reason, they have wound up the New Zealand companies and incorporated companies with almost identical names in the UK.

This also means that they need to meet the UK Person with Significant Control (PSC) requirements, which they do.

Initially, all five of them appointed Irita Enkuzena-Seki as their PSC only for all of them to replace her with Marco Giovanni Maria Sechi on 7 August 2017.

The similarities don’t end there. Every one of them has a compulsory strike off order initiated on or around 25 October 2018 and every one of them had that discontinued following the filing of their annual confirmation statements.

And between January and March 2019, every one of them filed accounts, every one of which was dormant. As indeed every set of accounts filed by all five LLPs have been since incorporation in 2011.

Of course, they could be holding companies but, if they are, they are not showing the assets that they are holding on their balance sheets because every one of them is showing zero.

But are they a holding company? We know that the New Zealand companies had invested in Latvia so let’s go back to Entity Investigator and Lursoft to see what we can discover there.

And sure enough, we discover something quite interesting, as you can see.

Each of our five LLPs invested equal sums in the same three Latvian entities that the New Zealand companies had invested in previously.

Not that there’s anything wrong with that but where are they on the UK balance sheets?

And what do we know about them?

Let’s start off with Marcos Fin Let SIA. The first thing we learn from Lursoft is that it has paid capital of €2845 (i.e. €569 x 5). Which means that Mr Sechi is the sole owner of Marcos Fin Let although he achieves this through 5 x 20% shareholdings. According to the commercial register, Marcos Fin Let is a real estate agency and made total payments to the state budget in 2018 of €15,470. And apart from a couple of old stories about landlord and tenant disputes, that’s about it.

We’ll move on to Motel Autosole SIA. That is also on the commercial register and has the same paid up capital of €2845. It paid €36,380 in taxes to the general state budget on 2018 and shares the same address as Marcos Fin Let. It has a website! In which it explains that it operates seven hotels in Riga, Milan and Andalucia.

And finally, Semar Fin Let.Real Estate SIA. Also has paid capital of €2,845, has paid €7,810 to the state budget and has the same legal address. And that’s about it.

So, to recap, Mr Sechi is the Person of Significant Control of 5 UK LLPs which bear the same name as 5 now defunct New Zealand companies for which Ms Seki was the director but the owners were hidden behind the corporate veils of Marshall Islands and Belize.

The 5 LLPs are themselves run by two Belizean companies, one of which is the self-same Wellington Capital Ltd from the New Zealand days but they are controlled by Mr Sechi having all previously been controlled by Ms Enkuzena-Seki.

And there is nothing inherently wrong with any of that.

Except you’ve got to wonder why three Latvian companies would go to the trouble and expense of having their ownership shared between five companies, each owning 20% when the same person ultimately runs all of them, and also using the services of offshore companies to run them.

It’s also odd that the accounts for these companies do not in any way declare the assets which they control. Nor why they have had three different registered addresses.

But the point here is not that there is necessarily anything inherently criminal going on here (and I’m certainly not trying to suggest there is) just that the underlying structures inevitably require a greater awareness of the risks that something could be amiss than a more transparent arrangement would require. Particularly given the multi-jurisdictional nature of the enterprises.

It’s hard enough when there’s just one country involved but, in this case there is New Zealand, Panama, Latvia, Italy, Spain, Belize, Marshall Islands and the UK. This should inevitably change the nature of the risk assessment as well as the correct level of monitoring required of the underlying transactions.