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  • Apr.22.2018: Britain, headquarters of fraud. Last month, Companies House successfully prosecuted Warwickshire businessman Kevin Brewer. He pleaded guilty, paid a fine and the govt’s costs. His crime had been to falsely claim that two companies he created belonged, in one case, to the MP Vince Cable, and, in the other, to the MP James Cleverly, Lady Neville-Rolfe and an imaginary Israeli. Within a month of the triumphant press release, Tory MP John Penrose, the govt's anti-corruption champion, was slamming the prosecution as “a bone-headed exercise in shooting the messenger”. Brewer was trying to expose a flaw in British regulations that enables frauds totalling £hundreds of billions. His reward was years of being ignored and, finally, a criminal record. Problems began in 2011 under the coalition govt, when business secretary Vince Cable opened up Companies House’s online registration system. This threatened his business, but it also threatened to unleash fraud on a scale never before seen. He felt sure the government hadn’t considered the consequences of its policy, so he wrote to Cable. Jo Swinson MP replied on behalf of Cable, explaining at length why Companies House was not covered by anti-money laundering regulations. British corporate vehicles have enabled fraud on a global scale. Sophisticated financial crime is impossible without corporate vehicles. In an attempt to stop this happening, David Cameron’s govt obliged UK companies to declare a person with significant control (PSC – someone who actually owns the shares) and made it free to search Companies House so as to increase public scrutiny. The trouble is that no one at Companies House is checking the accuracy of the information submitted. In Jan.2018, Global Witness analysed PSC entries and found 4,000 toddlers owning companies, as well as one beneficial owner who was yet to be born. A recent example documented the adventures of a man who had spelled his name six different ways, thus foiling attempts to search for him electronically. Most agencies don’t have software that can communicate with each other, let alone share intelligence with them. In March, MPs discussed a sanctions and anti-money-laundering bill and Labour’s Anneliese Dodds, shadow Treasury minister, proposed two amendments that would have addressed the problems. One amendment sought to make the registry liable to money-laundering regulations and the other sought to block anyone not subject to UK regulations from creating UK companies. John Glen, Treasury minister, replied for the govt, repeating many of the same arguments that Jo Swinson used with Brewer in 2013: Companies House is just a repository of information, it has no powers to check the accuracy of what is presented to it. TI-UK has also assessed the cost of the kind of changes Labour was arguing for, but came to a figure far below that of the govt. It estimated that Companies House could cover the cost of the reform by raising the price of incorporation by just £5-10. Frances Coulson, a director of the Fraud Advisory Panel, said “This is a hole, through which people can launder money. It wouldn’t cost the state anything - it’s self-funding. After Cable lost his position following GE-2015, Brewer renewed his campaign with the new all-Conservative govt. He decided to repeat the trick that had failed to impress Cable and incorporated a new company – Cleverly Clogs Ltd – on 17 May 2016, but it got nowhere. An investigator from the Insolvency Service interviewed him under caution, Brewer showed him the correspondence and explained. Then, on Dec.11.2017 came the summons. He consulted a lawyer and pleaded guilty on Mar.15.2018. With the fine, his own costs and those of the govt, he was £22,800 out of pocket. This was the decision that so appalled Penrose, the anti-corruption champion. It took me most of a day to discover who had taken the decision to prosecute Brewer. BEIS, the department whose minister Andrew Griffiths was so enthusiastic in the original press release, passed me on to Companies House, which credited the decision to unnamed “prosecutors”. Eventually, the buck stopped with the Insolvency Service. Oliver Bullough, The Guardian.
  • Apr.16.2018: Companies House lambasted for trumpeting conviction of fraud whistleblower Kevin Brewer. Businessman Kevin Brewer acted very publicly to highlight a loophole – but has now become the only person ever brought to book for using it. Companies House issued an official statement from business minister Andrew Griffiths claiming it showed their determination to "come down hard on people who knowingly break the law". However, as he made abundantly clear, Brewer submitted the name of the Liberal Democrat leader in a pointed protest at how easy it is to register false details with the authority. He documented his actions in the pages of a national newspaper. Companies House does not carry out background checks on who sets up firms and has just six people policing the system, according to a report by Transparency International. Brewer first attempted to expose the potential for fraud in 2013 by registering John Vincent Cable Services Ltd on the Companies House website with Vince Cable listed as a director. He then wrote to Mr Cable, then Business Secretary, to tell him what he had done. Mr Brewer repeated the stunt in 2016 using the names of James Cleverly MP and Baroness Neville-Rolfe, who was at that time the minister responsible for the agency. Companies House finally took action - by getting the Insolvency Service to charge Brewer with a criminal offence. Peter Stubley, The Independent.


  • Nov.20.2017: Who will catch the medium fish in foreign bribery cases? The remit of the Serious Fraud Office (SFO) has always been to tackle the big fish. The under-resourced SFO is simply unable to take on the middle to low tier stuff, posing the question: who is responsible for going after mid-range foreign bribery? Until two years ago, the City of London Police’s Overseas Anti-Corruption Unit (OACU), was responsible for tackling just this end of the spectrum of foreign bribery. The remit of the unit, which was set up in Nov.2006 with funding from the Department for International Development, was passed in May.2015 to the International Corruption Unit (ICU) at the National Crime Agency (NCA). Originally, the idea was for OACU to move lock stock and barrel into the ICU, but its investigators refused to go. (Why?) As a result, OACU was asked to finish off its existing cases while the ICU had to start from scratch, recruiting new staff to investigate foreign bribery. Politicians have been quick to recognise the value for money provided by the OACU. Speaking in Dec.2013, Labour MP Catherine McKinnell said: “For every pound invested in that unit (OACU), Her Majesty’s Revenue and Customs retrieves between £10 and £30 from the clutches of shell companies and returns it to the UK public purse. In times of austerity, the govt should clearly be prioritising areas of work that provide such good value for money.” The OACU’s two cases this year are good examples of the kind of medium size investigation that the unit specialised in, going after individuals engaged in corruption schemes that severely inhibit growth in poor countries. Both cases involved corrupt officials at international development banks who took millions of pounds in bribes. Wassim Tappuni, who was sentenced to 6 years at the end of September, served as a consultant for the World Bank, while Andrey Ryjenko, who was sentenced in June, also for six years, worked at the European Bank for Reconstruction and Development (EBRD) where he corruptly approved loans for projects, including a methanol plant in Azerbaijan backed by former Prime Minister Tony Blair. ... The ICU’s place in the anti-corruption ecosystem is just as important as the SFO’s. Rahul Rose, Corruption Watch.