The KGB is investigating a Scottish “tax haven” shell firm at the heart of a corruption scandal rocking a former Soviet republic.
Belarusian secret police – whose agency has not changed its name since the collapse of communism – have detained a senior state official for allegedly skimming from import contracts.
Belarus
Authorities allege the director of a wood-processing plant bought supplies from China using a Scottish limited partnership or SLP and then sold it on to his own factory at double the cost.
Read more: Secretive owners of Scottish 'tax haven' firms to be revealed
Their investigation is the first high-profile case involving an SLP in Belarus despite multiple adverts in the country for what locally are called “zero-tax Scottish offshore companies”.
The probe began before the UK Government last week responded to a Herald campaign on mass global abuse of SLPs by saying they would force the firms’ largely anonymous, owners in to open.
The KGB, in a statement reported in Belarus, said the plant’s director, Vladimir Shulga, had made more than 200,000 euros by selling melamine boards to his own factory through an SLP called Great Export/Import and a Lithuanian shell firm, both controlled by his son. Both men have been arrested.
Analysis: How controversial shell companies conquered everything from money laundering to Formula One
Belarusian president Aleksandr Lukashenka intervened in the case, which centres on a vital employer in the town of Ivatsevichi near the Polish frontier.
The leader chastised other officials for not noticing the alleged crimes, saying: “He had set up a company through his son to buy some rubbish. Why did they not see that the final beneficiary or the vendor was his son?”
The Herald has exposed hundreds of SLPs involved in everything from money-laundering to mass tax evasion.
Oxfam Scotland campaigned for reform of the firms, which are regulated at Westminster. Charity chief Jamie Livingstone, welcomed the first reforms, saying: “This outcome wouldn’t have been possible without the collaborative efforts of The Herald, politicians from different parties, and Oxfam supporters.”
Jamie Livingstone
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