Seychelles authorities raid the office of a Russian-owned corporate services provider

It has been reported that Police and financial regulators in the Seychelles raided the office of a Russian-owned corporate services provider within hours of a major investigation by Finance Uncovered and other media

The islands’ police and financial services authority swooped on the nondescript office of Alpha Consulting in the capital Victoria shortly after an international collaboration of investigative journalists had published details about its activities.

• Finance Uncovered story = https://www.financeuncovered.org/stories/seychelles-secrets-island-tourist-paradise-alpha-consulting-valkovskaya-uk-economic-crime-act

The officers seized hard drives and other documents as part of a twin investigation by the police and financial regulators.

The raids took place on November 2, less than three weeks after the islands’ reputation had taken a blow when the European Union added the Seychelles, an archipelago off the east coast of Africa, to its blacklist of tax and secrecy havens.

Being on this list can discourage foreign investment and damage international relations.

Patrick Payet, who is both Secretary of State for Finance and chairman of the Financial Services Authority in the Seychelles said

• Investigators were also engaging with law enforcement authorities in other countries as part of the probe.
• “We are treating it as if there are suspicions [of] potential money laundering taking place,”
• [though he did not give details of suspected criminal offences]
• “As soon as the press report was out, in the afternoon [from] 3:30pm onwards [on November 2], we were at the premises … to make sure that at least we have all of those documents.”

Victoria Valkovskaya, the Russian national behind Alpha Consulting, said in an email:

• “We can confirm to you that our offices have been visited by Seychelles law enforcement authorities, including the Seychelles Financial [Services] Authority, in the past weeks. With respect to both agencies, we have complied fully to their demands and requests and we remain at their disposal at all times.” She declined to say what allegations were under investigation.

In an official statement, the FSA said it

• “Condemns any unlawful business practices by any [corporate services provider] and the use of registered entities for illicit purposes.” It added:
• “The FSA has no tolerance for any activities which undermine the reputation and financial stability of the jurisdiction.”
• https://www.documentcloud.org/documents/24172936-the-financial-services-authority-fsa-investigates-allegations-agains?responsive=1&title=1

Earlier this month, Finance Uncovered, the BBC and Seychelles Broadcasting Corporation published articles detailing how Valkovskaya’s agency had recruited a group of Seychelles citizens to help set up and front firms — many registered in the United Kingdom — on behalf of hidden business figures in the former Soviet Union.

Journalists found some of the firms were then used for controversial, or even allegedly criminal, activities. The firms were variously linked to alleged large-scale corruption, a fugitive oligarch, the ownership of unseaworthy ships and an unlicensed internet pharmacy selling prescription medicines.

Journalists found that those Seychelles citizens recruited as nominees ranged from Alpha Consulting’s office administrator to its cleaner, as well as several freelancers with little or no financial expertise.

There is no suggestion that Valkovskaya or the nominees acted illegally by fronting UK firms, or that they had any involvement in the management of these businesses. In fact, all decision-making at the firms were taken by Alpha Consulting’s end clients.

For more than a decade, secretive figures in the former Soviet Union have used Seychelles nominees linked to Alpha Consulting to set up firms in the UK. And in the last six years, limited partnerships registered in England, Wales and Northern Ireland have proved especially popular.

This is because in 2017 they became the only type of UK firm exempt from laws that require the names of ultimate owners to be made public at Companies House, the UK corporate registry.

Last year, UK business minister Kevin Hollinrake claimed in parliament that such limited partnerships, as a matter of law, could not have hidden owners. He said such firms were merely a legal relationship “a bit like a marriage … not something separate that can be owned.”

But earlier this month this position was blown apart by detailed evidence published by Finance Uncovered, the Seychelles Broadcasting Authority and the BBC.

An analysis of Companies House data for the last six years showed that at least 832 limited partnerships were set up by 32 fronts — including individual and corporate nominees — linked to Alpha Consulting.

This represents one in five of all new limited partnerships registered in England, Wales and Northern Ireland in the six-year period.

Behind each of these UK firms was a hidden owner. And using hundreds of unpublished documents from the Pandora Papers data leak, Finance Uncovered was able to identify many of these secretive business figures, the overwhelming majority of whom were from Russia or other countries of the former Soviet Union.

The Pandora Papers is a leak of almost 12 million files obtained by the International Consortium of Investigative Journalists and shared with media outlets around the world, including Finance Uncovered. Investigative stories based on this leak have been appearing since 2021.

It is not unlawful for individuals to control UK firms through nominees. However, the way Alpha Consulting’s end clients are able to do so while remaining hidden from public view appears to be an unintended loophole that UK ministers failed to anticipate.

Seychelles Finance Secretary Payet told reporters

• He hoped swift action to secure copies of Alpha Consulting documents would ensure the country’s law enforcement agencies were not thrown into crisis as they were in the fallout from the 2016 Panama Papers, another high profile data leak obtained by investigative journalists.

In 2018, the firm at the centre of the Panama Papers disclosures, Mossack Fonseca, closed its doors and staff reportedly left the Seychelles, taking all records with them. The Seychelles government claims this left the country’s financial intelligence unit unable to answer a flood of enquiries from overseas tax inspectors prompted by the publication of the Panama Papers.

For the three years to March 2022, authorities in the Seychelles failed to meet one in three requests for information about the beneficial owners of companies. This eventually led to last month’s decision by the European Union to place the country on its blacklist of tax and secrecy havens, the Seychelles government has noted.

Payet said

• The authorities wanted to make sure such events were not repeated.
• “We've ensured that we have all [Alpha Consulting] documents necessary for the FSA and the Financial Crime Investigation Unit... to conduct their investigation.
• And to make sure that all of that information is protected properly,”

There is no suggestion that Alpha Consulting was planning to close down, or remove documents from its offices in response to recent media reports. And the agency continues to trade as a Seychelles-licensed international corporate services provider.

Payet said

• The investigation would include a look at whether Alpha Consulting had reported all suspicious activity to the financial intelligence unit, as required by corporate services providers.
• Investigators would also carry out interviews of all Seychelles citizens who acted as nominees,.

Payet added

• That the government was also urgently considering measures that could require individuals hired as nominees to report any suspicious activity to law enforcement authorities.
• “We have already started that discussion,”.

Before publishing their findings earlier this month, journalists presented a summary of their findings to Valkovskaya who welcomed the information, much of which she said was unknown to Alpha Consulting.

She told reporters

• She had swiftly fed the findings into a suspicious transaction report (STR) sent to the Seychelles government’s Financial Intelligence Unit.

Valkovskaya stressed that Alpha Consulting was not responsible for the actions of UK firms it helped to front.

• “We try our utmost to report any suspicious activity but we do not have a forensics investigation unit and can only rely on public records and press investigations.”

Valkovskaya told reporters that

• Alpha Consulting provided all nominees with “clear and comprehensive information regarding their roles, responsibilities and associated risks.” She said nominees were also indemnified by the agency’s clients.

Victoria Valkovskaya, 49, who has lived in the Seychelles since 2005, said:

• “The use of nominees is not something new or illegal in the industry.”

Source

https://www.financeuncovered.org/stories/seychelles-alpha-consulting-payrick-payet-raid-victoria-valkovskaya

https://www.financeuncovered.org/stories/seychelles-secrets-island-tourist-paradise-alpha-consulting-valkovskaya-uk-economic-crime-act

https://www.documentcloud.org/documents/24172936-the-financial-services-authority-fsa-investigates-allegations-agains?responsive=1&title=1