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How derelict Finchley Road office was home to tens of thousands of firms - and unwittingly linked to Mafia, dictators and fraud

PUBLISHED: 10:00 12 September 2019 | UPDATED: 16:08 12 September 2019

Right, James Ibori, the former governor of Nigeria’s Delta state, whose offshore entity Haleway Properties Limited was registered in Gibraltar by BC Business Centrum at 788-790 Finchley Road, left. Ibori was jailed in 2012 after admitting fraud of nearly £50million. Pictures: Hannah Somerville/Met Police

Right, James Ibori, the former governor of Nigeria's Delta state, whose offshore entity Haleway Properties Limited was registered in Gibraltar by BC Business Centrum at 788-790 Finchley Road, left. Ibori was jailed in 2012 after admitting fraud of nearly £50million. Pictures: Hannah Somerville/Met Police

Archant

This abandoned office is the birthplace of 260,000 companies, including some pressed into service by corrupt politicians and criminals across the globe. As sweeping reforms are planned for the UK corporate register, Hannah Somerville reports.

The gutted interior of 788-790 Finchley Road, once a thriving hub in London's company formations industry. Picture: ArchantThe gutted interior of 788-790 Finchley Road, once a thriving hub in London's company formations industry. Picture: Archant

The derelict ground floor unit at Arcade House, Finchley Road is coated in a thick layer of dust, having stood empty for around two years.

Owners Freshwater have had some trouble finding new tenants of late - despite dropping the monthly asking price from £45,000 to £39,000.

This Grade II-listed building was once home to a staggering 215,000 to 260,000 companies, used by everyone from gangsters to deposed dictators - and more than half of which are now dissolved.

They were set up through two firms called BC Business Centrum and A1, so-called 'formation agents' which create and sell ready-made UK corporate entities to clients all over the world.

Around 30,000 were set up in the name of one 88-year old pensioner called Barbara Kahan who worked for A1. Her name was used as the 'initial director' for new companies.

An 'initial director' is typically appointed to a newly-formed company but resigns as soon as the company is sold and has no involvement in the ongoing business. When we visited her, her carer told us she could not comment.

The Finchley Road formation agents had a number of high-profile clients over the years, including Tony Blair and Peter Mandelson, for above-board business activities.

The agents established tens of thousands of legitimate businesses, from freight forwarders to private schools to the Real Lancashire Black Pudding Company.

The derelict offices at Arcade House have stood empty for a long time. Picture: ArchantThe derelict offices at Arcade House have stood empty for a long time. Picture: Archant

But analysis of public records shows that unbeknownst to the formation agents, other clients went on to use their bespoke or "off-the-shelf" companies to facilitate corruption, money-laundering and massive financial fraud costing millions of pounds to the British taxpayer.

In May a government consultation on reforms to the public register, Companies House, was launched, intending to make checks on UK company owners more robust.

It included some specific provisions for third-party agents such as the ex-tenants of 788-790 Finchley Road.

Its authors said: "Evidence from UK law enforcement… suggests companies deployed in criminal activity are overwhelmingly using third party agents, wittingly or unwittingly, to help conceal their identities".

The doorbell at 788-790 Finchley Road still bears the name of one of its tenants, A1, many years after the firm moved on. Picture: ArchantThe doorbell at 788-790 Finchley Road still bears the name of one of its tenants, A1, many years after the firm moved on. Picture: Archant

In turn these third-party agents have hit back, claiming they do far more to keep tabs on their clients than the government - and insisting they are not at fault.

"We are no more complicit," BC Centrum's owner told the Ham&High, "than the hardware shop that sells a knife."

'Company factories'

The estate agents' listing for 788-790 Finchley Road, which in May this year was described as 'previously occupied by a firm of accountants'. This sentence has subsequently been removed.The estate agents' listing for 788-790 Finchley Road, which in May this year was described as 'previously occupied by a firm of accountants'. This sentence has subsequently been removed.

It costs £12 and takes around 24 hours to register a UK company.

Just under half of new registrations are done directly through Companies House. But would-be directors can also employ a third-party formation agent to carry out the process for them, for as little as £29.99.

The former tenants of 788-790 Finchley Road registered their companies through a multi-layered web of subsidiaries and individual employees.

These include 'initial directors' in whose name a company is first set up, who resigns quickly afterwards like Ms Kahan.

Arcade House in the Hampstead Garden Suburb, which is currently undergoing external renovations. Picture: ArchantArcade House in the Hampstead Garden Suburb, which is currently undergoing external renovations. Picture: Archant

Other 'initial directors' at 788-790 Finchley Road were corporate entities Temple Secretaries Limited and Company Directors Limited.

A scrape of online data on Temple Secretaries reveals 69,378 records attached to this name alone from 1982 to 2007.

Of these 39,875 are still running and in 83 per cent of cases Temple Secretaries was 'appointed' and 'resigned' on the same day.

In 2017 a report by anti-corruption watchdog Transparency International found 66 'company factories' like this one, sometimes called 'boiler rooms', in the UK with more than 1,000 active companies at each address.

Freshwater, which owns the building and has a site office next door, did not respond to a request for comment. Picture: ArchantFreshwater, which owns the building and has a site office next door, did not respond to a request for comment. Picture: Archant

Researchers wrote: "These non-descript buildings house thousands - sometimes tens of thousands - of firms, offering the respectable appearance of a UK company address whilst in reality representing little more than a mailbox."

The researchers added that the formation agents were often "unwitting accomplices" in financial crime.

Here are some of the firms linked to international scandals which were registered at Finchley Road down the years:

BC Business Centrum Ltd offers a range of offshore company formation packages for a fee.BC Business Centrum Ltd offers a range of offshore company formation packages for a fee.

Nigerian corruption

The former governor of Nigeria's Delta state, James Ibori, was handed a 13-year jail sentence by a London court in 2012 after admitting to fraud of nearly £50million.

He and associates used a constellation of British bank accounts and shell companies to launder their share of £167m stolen from the Nigerian state.

A leaked 2007 Metropolitan Police statement asserts Mr Ibori's then-house in Westover Hill, Hampstead was quietly bought for £2.3m in 2001 through an offshore entity he owned, Haleway Properties Limited.

Financial investigator Paul Gardiner wrote: "This company was registered in Gibraltar by a company formation agent called BC Centrum, 788 Finchley Road, London.

"A production order was served upon BC Centrum who have provided a number of original files to the police."

In 2004 Ibori appointed his mistress Udo Amaka Okoronkwo to instruct another company, Boyd Properties Limited, to buy a £388,077 apartment in Maida Vale.

'Initial directors' lend their names to companies during incorporation and then resign quickly afterwards.'Initial directors' lend their names to companies during incorporation and then resign quickly afterwards.

In 2010 the owner and founder of BC Centrum, David Pearlman, confirmed to a court that BC Business Centrum had also provided this company to Ibori.

The Ukrainian dictator

Viktor Yanukovych, the ousted former leader of Ukraine, stole around $40billion in state assets and was sentenced to 13 years in prison in absentia by a Ukrainian court earlier this year.

He and associates used shell companies to launder $700 million between 2008 and 2014, according to the court.

Documents retrieved from the presidential palace cited Yanukovych's ownership of three UK companies including Navimax Ventures Limited, which was incorporated via A1 at 788-790 Finchley Road in 2008.

The company, dissolved in 2014, was part of the ownership structure of a Donetsk coal trading company which traded coal from illegal mines.

It also shared a Marylebone address and several directors with Technomark Business Ltd, another company formed through A1 in 2007.

James Ibori, the former governor of Nigeria's Delta state, who laundered his millions in part through shell companies set up via agents at Finchley Road. Picture: Metropolitan PoliceJames Ibori, the former governor of Nigeria's Delta state, who laundered his millions in part through shell companies set up via agents at Finchley Road. Picture: Metropolitan Police

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Technomark was part of a global criminal 'laundromat' exposed by Russian lawyer Sergei Magnitsky before his death in 2010. It held a bank account at Latvia's Privatbank used to launder $43m of Russian funds.

In February 2018, yet another A1-formed company, Pompolo Ltd, was identified in US charges against Donald Trump's ex-campaign manager Paul Manafort and deputy Rick Gates.

The indictment alleged that between 2006 and 2015 the pair generated (and hid) tens of millions of income lobbying for Yanukovych and the Government of Ukraine.

Part of a police report into James Ibori's money-laundering activities, originally leaked to SaharaReporters.Part of a police report into James Ibori's money-laundering activities, originally leaked to SaharaReporters.

Just shy of $200,000 was reportedly laundered through Pompolo Ltd, of which Gates is the sole director. Registered in 2013, the company never filed any accounts and dissolved the next year.

Afghanistan fuel shipping

Mina Corp Ltd was formed in 2003 through agents at 788-790 Finchley Road, where around 30 staff were based at the time.

A cargo plane being re-fuelled at the Manas Transit Centre in Kyrgyzstan, where Mina Corp's fuel contracts were subject to a US congressional probe. Picture: SSGT S.C. Felde, U.S. Air ForceA cargo plane being re-fuelled at the Manas Transit Centre in Kyrgyzstan, where Mina Corp's fuel contracts were subject to a US congressional probe. Picture: SSGT S.C. Felde, U.S. Air Force

The company's Gibraltar-based entity was subject to a US congressional probe in 2010 over $3bn in jet fuel contracts it received from the US Defense Department to fuel the Manas Transit Centre in Kyrgyzstan, a key supply hub throughout the Afghanistan war, from 2003 onwards.

The Kyrgyz government claims Mina Corp was a "front" to channel illicit payments to deposed President Kurmanbek Bakiyev.

US investigators found no hard evidence for this. But they did find Mina Corp had aided in evading a Russian ban on military fuel exports.

The block of flats in Battersea where a series of companies thought to be linked to the Italian Premium scam were based. Picture: Google StreetviewThe block of flats in Battersea where a series of companies thought to be linked to the Italian Premium scam were based. Picture: Google Streetview

The Premium telecoms scam

In June 2008 eighteen people were arrested by Italian police for suspected involvement in a telecoms scam allegedly backed by the Mafia, Italian media reported.

Prosecutors claimed €55m had been laundered through shell companies including several in London, based at flats in Battersea.

One of those arrested was Niki Aprile Gatti, a computer technician who worked for Oscorp.

Deposed Ukrainian president Viktor Yanukovych, centre, pictured in 2013. Picture: IAEA Imagebank/FlickrDeposed Ukrainian president Viktor Yanukovych, centre, pictured in 2013. Picture: IAEA Imagebank/Flickr

Four days later on June 24, the 26-year-old was found dead at in Sollicciano maximum security prison. His mother insists he intended to testify.

Two now-dissolved companies bearing Niki Gatti's name were set up at 788-790 Finchley Road in 2006: Unwired Media Limited and Wired UK Limited.

Both were incorporated through Temple Secretaries and Company Directors Ltd and were based at addresses in Battersea, SW11.

Another six companies based in Battersea and Kensington bear the names of people linked to the scam in Italian media, and were formed through the same agents between 2006 and 2008.

Researcher and 'dark money' expert Graham Barrow said company formations agents were often the 'only guardians' between would-be criminals and their ability to form a UK firm. Picture: Graham BarrowResearcher and 'dark money' expert Graham Barrow said company formations agents were often the 'only guardians' between would-be criminals and their ability to form a UK firm. Picture: Graham Barrow

There is no suggestion the ex-occupants of 788-790 Finchley Road knew how the entities they sold would be used.

But Graham Barrow, a researcher into 'dark money' in the British financial system, said it was imperative formation agents carried out proper due diligence.

At the moment Companies House, the body tasked with holding 4m public records in the UK, is only staffed by around six people.

It does not carry out its own checks on whether the information filed is accurate.

Mr Barrow said: "Whether a bank opens 260,000 bank accounts or 200, you expect the bank to check that whoever opens it does so for legitimate reasons.

"Everything in a company can be located somewhere else in the world provided you have a UK-registered address.

"These agents are sometimes the only guardians between people with criminal intent and their ability to create a company."

'A minor embarrassment'

We contacted the owner of BC Business Centrum, David Pearlman.

The 81-year-old Hampstead resident has been involved in offshore and UK formations since the 1970s.

Ten years ago, his business split with A1 and sister companies, which were bought in June 2017 by industry giants Stanley Davis after the cases in this article had taken place.

Mr Pearlman told the Ham&High that in his view, his business was "small stuff" compared to the wider industry in the UK.

He said that BC Business Centrum's past criminal clients were "a minor embarrassment" that in every case had been reported to Action Fraud.

He said: "Even though the number of companies [we formed] sounds astonishing, it's not. Every day 30, 40, 50 companies are created, and out of this enormous number, a few rogues slip through.

"We never purported to promote anything illegal. In all the cases where clients misled us or we discovered fraud, we reported it immediately.

"We are no more complicit than the hardware shop that sells a knife. They are not complicit in the stabbing of someone that comes down the street."

Since 2016, all UK private companies are obliged to name people or entities with "significant control" of their business.

Agents are also bound by the Anti-Money Laundering Regulations of 2017 to check the identities of their clients.

In recent years BC has hired more dedicated staff to carry out anti-money laundering and terrorism financing checks, using the same expensive software as high street banks.

Mr Pearlman added: "Now, it's more obvious we must question those who come to us.

"But even today, Companies House don't bother to question who's on the forms. Any member of the Mafia could go to Companies House and set up a company, and no-one would object. The reforms are not strong enough."

Next week: How north London inadvertently facilitated fraud in the UK - and what the formations industry titans have to say.

With thanks to Paul Gardiner, Graham Barrow and Transparency International.

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