Money launderers warned of possible UK crackdown on phantom firms
Corrupt politicians and dodgy businesses steal billions of pounds from world’s poorest countries using phantom firms.
Ahead of David Cameron’s Open Government Partnership Summit in London tomorrow, The ONE Campaign is shining a light on secretive companies – “phantom” firms that legally allow money launderers and criminals to hide their identities and remove money from the world’s poorest countries – by creating its own site: ‘Stash-the-Cash.com’.
Stash-the-Cash.com, Europe’s newest one-stop money-laundering shop, is taking to the streets of London on Wednesday, 30th October, to warn international criminals and corrupt businesses to sign up ahead of a possible crackdown on anonymous shell companies, or “phantom firms”, by the UK government. Phantom firms allow drug lords, people traffickers, and arms dealers to legally stash their dirty cash, robbing developing countries of vital resources they need to build a stronger future.
Adrian Lovett, Europe Executive Director of The ONE Campaign, which has pressed the Prime Minister to crack down on the issue, said:
“The shocking truth is that it’s not only easy, but 100% legal to set up anonymous companies that help rob governments in developing countries of vital resources that could be used for health, education and vital infrastructure programmes. The UK Government must deliver on the Prime Minister’s ambition and commit to making information about who owns and controls these companies and trusts publicly available.”
Stash-the-Cash.com highlights the remarkable fact that it is easier to set up a phantom firm than to apply for a driving licence or bank account, making phantom firms the number one choice for corrupt politicians and criminals stealing money from developing countries. 70% of corruption cases analysed by the World Bank used phantom firms to launder their dirty money. Wherever there’s a dodgy deal, there’s very likely a phantom firm helping to launder the cash.
Adrian Lovett continued:
“The truth is that while Stash-The-Cash.com is not really in business, it could be, and the problems caused by phantom firms are all too real.”
At the G8 in June David Cameron said he supported a public register of beneficial ownership that would put an end to phantom firms. Tomorrow, at the Open Government Partnership Summit in London he should announce that the UK will make information about who owns and controls companies public, and take steps to crack down on the abuse of trusts for money laundering.
Here’s the low down…
What is a phantom firm?
Phantom firms are secret companies used by international criminals, corrupt politicians and corrupt businesses to legally stash their cash and keep their identities hidden. They are the perfect vehicles to move dirty cash around.
They are 100% legal and 100% anonymous…for now.
What does it take to create one?
A creative name, dirty money from a dodgy deal and an hour of your time — that’s it. Genuine phantom firms include these innocent sounding business names: Sweet Pink, Inc., Unlimited Horizon Inc., and Beautiful Vision, Inc.
No passport, no official i.d., no questions asked …they’re anonymous, remember?
What’s the urgency? Why must we act now?
On Thursday the Prime Minister will be at a London Summit to talk about openness and transparency. This is the perfect opportunity for him to put his money where his mouth is and announce a crackdown on phantom firms, finally putting sites like Stash-the-Cash.com and shady criminals out of business.
Mr. Cameron has already publicly declared that he personally “hopes that the whole world will move towards public registers of beneficial ownership,” and this week we will find out if he’s serious and if the UK will show leadership by making it law.
Who are the winners and losers in this crackdown on Phantom Firms?
Losers: Money launderers, corrupt politicians, terrorists, arms traffickers, and drug smugglers who will finally have to put a face to a real name and be held accountable for their criminal acts.
Winners: African citizens who will benefit from resources being invested in poverty reduction, rather than stashed away in phantom firms.
***NOTE TO EDITORS****
- The new website, www.stash-the-cash.com highlights the shocking truth about phantom firms.
- For more detail on The ONE Campaign’s policy on phantom firms, beneficial ownership transparency, and how European governments can crack down on these deals, visit www.one.org
- The Open Government Partnership Summit takes place in London on 31 October and 1 November.
- Look out for the Stash-the-Cash.com ad van driving the message home around central London and the City on Wednesday 30 and Thursday 31 October.
- The European Union’s proposed update to the anti-money laundering directive is a real opportunity for European leaders to increase transparency about who owns and controls companies and trusts. It is being debated over the next three months.
REAL LIFE EXAMPLES:
“Bad” Phantom Firms: Teodoro Nguema Obiang, the son and vice-president of President Obiang of Equatorial Guinea, allegedly used Phantom Firms with innocent-sounding names like Sweet Pink, Inc., Unlimited Horizon, Inc., and Beautiful Vision, Inc. to purchase a $30 million seaside mansion in Malibu, California, a $38.5 million Gulfstream jet, and storage for various Michael Jackson memorabilia—including a crystal-encrusted Bad Tour glove and the Thriller jacket. Meanwhile, more than one in seven children under the age of five were dying from preventable diseases inside his country and poverty remains rampant.
Malabu Dreams: In 2011, subsidiaries of Shell and ENI paid $1.1 billion to the Nigerian government for an offshore block with estimated oil reserves of nine billion barrels. The government then transferred precisely the same amount to an account earmarked for “Malabu Oil & Gas”, a Phantom Firm whose hidden owner was Dan Etete. In 1998, while Nigeria’s petroleum minister, Etete awarded the rights from the lucrative oil concession to Malabu Oil & Gas, a company with no employees or assets that he had created just days earlier. That $1.1 billion could have been used to fully immunize every single child under five in the country (27.195 million kids).
Dodgy Deals: In the Democratic Republic of Congo, Phantom Firms have been used by unidentified individuals to purchase mines for as little as 1/16th of their actual value, and then to resell them at full price, siphoning off money that should have accrued to the state. Between 2010 and 2012, the DRC lost at least US$1.36 billion in revenues from just five of these deals, an amount nearly double the country’s combined annual budgets for health and education in 2012. The DRC has some of the world’s worst malnutrition, the world’s sixth highest child mortality rate, and over seven million children out of school.
$51.1b Illicit financial flows from sub-Saharan Africa in 2010
$39.5b Total overseas development assistance (excluding debt relief) to sub-Saharan Africa in 2010
$2.7b UK bilateral aid (excluding debt relief) to Sub Saharan Africa in 2010
Illicit financial flows from sub-Saharan Africa in 2010 were more than the total amount of aid [excl. debt relief] received by the region in the same year, and almost 19 times the amount of UK bilateral aid [excl. debt relief] to sub-Saharan Africa in 2010. Phantom firms play a central role in these losses
 Total net ODA, DAC Table 2a: Aid to disbursements to countries and regions
 Total net ODA, DAC Table 2a: Aid to disbursements to countries and regions