Formations House – most definitely NOT to be confused with Companies House – is a name that you may well have heard recently. Thanks to The Times, The Organized Crime and Corruption Reporting Project and Finance Uncovered, you will probably be hearing quite a bit more about Formations House in the coming days and weeks as a saga potentially akin to ‘The Panama Papers’ and ‘The Paradise Papers’ begins to unravel. Keep an eye out for 29Leaks and watch this space.
This isn’t the time or the place to add to the ongoing dialog relating to tax ‘avoidance’ versus tax ‘evasion’ around off-shore accounts however some quite startling numbers have been posted online and a claim that over 400,000 companies, partnerships and trusts have been set up by Formations House. Since 2001. That’s roughly 100 new entities a day. Every day. For 18 years. Furthermore, there are allegations that they assisted an Iranian sanctioned entity to relocate and set up a new business entity in – wait for it – Gambia. Now, how does that work? The entity in question is Naftiran Intertrade Co (Nico), the international trading arm of the National Iranian Oil Company. They were initially incorporated in Jersey and, once they became the subject of OFAC sanctions in 2012, they moved to the Malaysian island of Labuan. (No – I hadn’t heard of it either!)
What appears to be evident at Formations House is an institutional disregard for generally accepted KYC standards – you know, boring stuff like asking if you have any Iranian directors in your portfolio. Clearly this lax approach to due diligence appeals to some, and it will come as no surprise that Nadeem Khan, former owner of Formations House – dubbed by some as a ‘Fraud Factory’ – was due to stand trial in 2015 for his role in an alleged scam estimated at £88m. Sadly for Nadeem Khan, Father Time caught up with him 4 weeks prior to his trial date. His stepdaughter, Charlotte Pawar, took over control of the company. In a peculiar twist, Ms Pawar’s grandmother continued to maintain Director positions at numerous companies established by Formations House – and sign off their annual accounts – even after her death.
This promises to be a long-developing story and RDC is paying close attention like the rest of you. As it unfolds, we’ll explore any publicly available information that can be added to our solution to help our clients identify individuals and entities involved in these activities.