Email This Post - Print This Post Print This Post

black_hole

By John Helmer, Moscow

A mystery company in London, doing millions of dollars’ worth of mystery business for United Company Rusal, has reappeared after being struck off the UK Companies Register in June for failure to report its annual accounts. Except that now the company auditor says he can’t explain the revenue and cost claims, debts, loans, investment outlay and losses, and administrative expenses of $2.4 million for a company with zero employees and two empty shell companies as “members”. The auditor, a one-man, three-year old business with no telephone number, has also pulled a fast one, telling UK Companies House he has lodged accounts for the years to October 31, 2011, and the following year 2012; in fact there is just one set of accounts for 2012, filed twice, while the file for 2011 is missing.

Koros Trading Limited Liability Partnership (LLP) was struck off the Register on June 25 of this year for failing to report the required financial accounts, and ignoring the 3-month warning to do so from Companies House. Since Koros was created in October 2009 it has been warned twice for non-disclosure. Under UK law limited liability partnerships are lawful front companies created to conceal the kind of business they do. They pay no UK taxes; they hide the beneficiaries of their income. In the case of Koros, it was established by Jesse Grant Hester, a Mauritius-based Englishman specializing in offshore company formation. The two founding members of Koros are shell companies with addresses in Tortola, British Virgin Islands – Imex Executive Ltd. and CLS Secretaries Ltd. BVI records show that seven years before, on October 11, 2002, Imex Executive was incorporated. On the same day CLS Secretaries was incorporated by change of name; the previous name was LCS Impex Corp.

In establishing Koros, Imex is signed for by Hester. Another signatory on the original papers named Cocksedge, who is associated with CLS Secretaries, is the signatory of the form to restore the LLP to the register; this was filed on October 5 and recorded on October 18.

There is also a Russian trail to lawyers in Moscow. This leads to the original applicant for incorporating Koros in 2009: a company called G.S.L. Law & Consulting (UK) Limited, with an address at 60 Cannon Street, London EC4. This turns out to be a UK subsidiary of a Moscow outfit called the GSL Group of Companies run by Alexander Alekseev, a Moscow-trained engineer and lawyer.

According to his firm’s website, Alekseev specializes in “registration of companies abroad”. The UK branch of GSL, according to the website, provides “services in the fields of offshore company incorporation, bank account opening, registered office address services since 2001.” GSL’s address on Cannon Street in London is the same as Koros’s address.

Alekseev describes the London office as a data processing unit, while all consulting work for clients is done at GSL’s main office in Moscow. “Eighty percent of our clients are Russians,” Alekseev says, “mainly trading companies, some holding companies.” Asked if he had set up companies for Rusal, Alekseev replied: “this is confidential information – who are clients, and who are not clients.”

Alekseev confirmed that for company formations in the UK, GSL provides an accountant or auditor. In its first financial report for the year to October 31, 2010, Koros did not identify either one. Instead, Hester signed on behalf of Imex, “a designated member”. In that first year Koros reported that its assets consisted of debts owed of $1.3 million, plus cash in the bank of $1.04 million. On the liability side, it owed unnamed creditors $259,378 payable within one year, plus $657,800 repayable after more than a year. The initial financial report does not identify Koros’s line of business; its turnover is for “goods and services supplied”.

Rusal records reveal that one of its Russian companies paid Koros just over $13 million in the second period for which Koros was obliged to file a financial report in the UK – November 1, 2010 to October 31, 2011. Until last week Koros was refusing to disclose its income and balance-sheet for this period. By filing the information at Companies House last week, the company has qualified for reinstatement. According to the profit and loss account, in the 2011 period Koros had “turnover” of $32.4 million, and “gross profit” of $11.5 million.

Koros confirms that it receives its money at Credit Suisse at Paradeplatz 8, Zurich. Rusal records confirm paying Koros to Credit Suisse at that address.

The newly disclosed Koros records name as auditor, Caudex Corporate Auditors, at an address on Bedford Street, London. Signing for Caudex is its principal (possibly its sole) accountant, Saeed Ahmed. He defines turnover in the auditor’s notes as “revenue recognised by the LLP in respect of goods and services supplied during the year, exclusive of Value Added Tax and trade discounts.” Caudex and Ahmed have nothing to say about what is missing from the balance-sheet between the turnover line and the gross profit line. A normal profit and loss statement would disclose the cost of revenues, plus expenses of marketing, trading, selling, and administration, plus depreciation and amortization. By inference and subtraction, these appear to have been more than $10 million. But the balance-sheet goes on to list separate items for “distribution costs” ($7.3 million) and for “administrative expenses” ($38,516). These items are deducted to get to an operating profit figure of $4.3 million. A small amount of interest income is added to this number, but no tax is paid. Profit comes to $4.4 million.

It’s quite legal under Section 449 of the UK Companies Act for limited liability partnerships to produce “abbreviated accounts”. The rules require full financial accounts to be prepared before the abbreviation is reported. It is less lawful if items of account are missing, inexplicable, or false.

According to the Rusal records, over the year November 1, 2011 to October 31, 2012, Koros received payments of another $11 million at least. According to the latest disclosures by Koros, “turnover” for the 12-month period came to three times as much — $37.9 million. Whatever the business was, it was up a lucrative 17% on the turnover reported for the previous period. The costs numbers are still missing, while the “gross profit” is $11.9 million, not much bigger than the 2011 figure. “Distribution costs” were down slightly to $7.03 million, but there is a whopping increase in “administrative expenses” to $2.4 million. That item slashed profit to $2.7 million, down 39%.

Just what the “administrative expenses” were is impossible to say because there is nothing to clarify them in the auditor’s notes. That is, except for the disclosure that “the entity [Koros] has no employees other than the members [the two BVI fronts] who did not receive any remuneration.” Auditor Ahmed is listed as being paid $5,937 for his audit of 2011 and $$6,856 for 2012.

There is no trace of the Koros money in the Rusal accounts for the time period, according to the company’s published, audited reports. They are insignificant numbers in Rusal’s multi-billion dollar accounting. But if the beneficiary is an individual not legally entitled to receive the money — if the Koros transactions are a screen, then the payoff is a big violation for Rusal – and more, it’s a big problem for the beneficiary.

Although the 2011 Koros file is missing from the new submissions to Companies House, the 2012 report provides some previous-year data for comparability. These new records also reveal very large increases over the 2011 amounts Koros claims it is owed by “debtors” — $9.4 million falling due after one year, $8.9 million falling due within one year, for a total of $18.03 million ($5.12 million is the comparable figure for 2011). Almost all the debt itemized is said to be owed by “trade debtors”. Cash in the bank as of October 31, 2012, came to $1.6 million.

In contrast, Koros had run up a comparably sized increase in its obligations to “creditors” — $12.84 million (compared to $1.34 million the year before). Creditors mostly mean “trade creditors”, according to the auditor’s notes. The report also identifies “investments” of $500,001 (note the extra one dollar) and “loans and debts due to members” of $483,840. If the members, Imex and GLS, are empty shells, this loan money apparently went somewhere else, presumably to the individual or individuals for whose benefit Koros was created in the first place, and whom the entire structure is hiding.

The signatory for the 2012 accounts is a person calling himself Willem Marthinus de Beer who signs on behalf of Imex. De Beer is a director of at least 56 companies. If — a big but sensitive if — he is in league with some of the names on some of these boards, once again the trail leads back to Russia and to allegations of money laundering.

Ahmed the accountant is embarrassed to record in the latest papers that he can’t account for any of the big numbers Koros is reporting. “We were unable to satisfy ourselves in respect of the recoverability of debtors totalling $9,801,609. We were also unable to obtain all the evidence we required to verify cut-off in respect of revenue and costs. Furthermore, we did not receive all the information and explanations we required in respect of certain investment transactions entered into by the LLP. This meant that we could not verify the loss of 42,367,512 on these investments or the related balances.”

Koros cannot be found, which stands to reason because it has no employees, no operating address, no identifiable trade, no beneficiary. When Elsie Leung Oi-Se, a non-executive director on the Rusal board and member of Rusal’s audit committee was asked whether she has investigated Rusal payments to UK-registered LLPs suspected of money laundering, she refused to answer beyond saying: “no comment.”

Leave a Reply