Fresh calls to close SLP loophole as Scots firm named in fresh corruption case

Renewed calls to reform the law have been made after a Scottish-registered firm was named at the centre of a Ukrainian investigation into alleged corruption at the former Soviet bloc’s state-owned vodka manufacturer.

The eastern European nation’s National Anti-Corruption Bureau (Nabu) has named Winglex Inter, a firm with a registered office in Edinburgh but no physical presence in Scotland, as the subject of its probe which claims state officials abused their powers.

With just an administrative address in this country Winglex Inter has the controversial status of a Scottish Limited Partnership (SLP) or so-called “shell” company.

According to Ukrainian prosecuters it is one of six firms that allegedly bought millions of dollars worth of ethyl spirit from the Ukraine government alcohol giant Ukrspirt in a cut- price deal.

According to The Herald newspaper, the Ukrainian investigation claims all six deals cost Ukrspirt more than $1.3 million. The other five firms include businesses from other former Soviet republics, Latvia and Georgia, one from Poland, and two other shell companies from England, a limited liability partnership called Goliw Trading and a business called Winning Invest & Trade Ltd.

Winglex Inter is registered at a virtual office and PO box facility in the Scottish capital used by hundreds of other shell firms, including a now dissolved SLP providing armed men in the war zone of eastern Ukraine.

There is no suggestion that the firms providing the registered offices know how the SLPs are being used, and because Winglex Inter has no physical Scottish presence there is nobody to respond to the Nabu’s allegations.

However, the investigation has prompted Scottish politicians to suggest the murky nature of such arrangements are undermining Scotland’s reputation as a place to do “legitimate business.”

SNP, Green Party, Labour and Liberal Democrat politicians, along with the charity Oxfam, have all called for reform of the SLP arrangements which some observers have said are openly sold as off-the-shelf vehicles for tax avoidance and secrecy and as fronts for organised crime.

The Scottish Government has also formally asked the UK to close the SLP loophole to organised criminals.

Liberal Democrat MSP Liam McArthur said: “This is the latest in a series of reports that suggest that abuse of SLPs is damaging Scotland’s reputation as a place to do business.

“These are not minor allegations. This is serious criminality. The last thing we want is for Scotland to be seen as the Panama of the north in the eyes of the world.”