‘HE works on the night shift and is probably asleep,” says an elderly woman as she walks past us and opens the door to her ground-floor flat.
She’s referring to her neighbour across the landing whose front door has empty beer bottles outside, and a large bag of garden fertiliser on the doormat. We knock on the door. No response. We wait a few moments and chap again. Still nothing.
The Ferret is in Edinburgh on a dank winter’s day trying to track down a “company” linked to an international money laundering scandal – involving an estimated £770 million.
We’re in Muirhouse to be precise, a housing estate in Scotland’s capital made famous by its favourite son, Irvine Welsh, who immortalised the working class area in his 1993 novel, Trainspotting.
Royston Mains Street is our second stop today. We drove here after doorstepping another nondescript tenement flat, a few minutes drive away in Granton Terrace, also in Muirhouse. There was no-one there either, nor any sign of the “company” we’re investigating which is registered as a Scottish Limited Partnership (SLP), a legal entity under UK law. There are 1156 SLPs registered at this address.
SLPs date back to the Limited Partnerships Act of 1907. They are used by thousands of legitimate businesses – but some have been used by money launderers, tax evaders and fraudsters, prompting calls for reform to laws to crack down on criminality.
SLPs are easy to set up and can hold assets and enter into contracts, which helps to obscure ownership and facilitate activities like money laundering.
They’ve been of interest to The Ferret for some years now. In 2023, for example, we found that only three out of 631 SLPs had been formed by residents of Scotland.
Two years prior, we revealed that a couple of Edinburgh addresses had been cited as the official headquarters for businesses that use opaque financial structures linked to alleged money laundering and tax abuse.
Now, as part of our finance project, The Money Trail, SLPs are in sharp focus again.
In Edinburgh, the SLP we’re trying to track down is called Octmedia and its registered address is the top-floor flat we visited in Granton Crescent. We want to speak to the people behind this SLP because it was used to launder money generated in an international scam co-run by a man who called himself the “King of Fraud”.
According to court documents seen by The Ferret, Octmedia was used to hoard much of the ill-gotten gains of an internet fraud scheme. The operation saw fraudsters set up advertising companies to sell online ads, and charge clients proportionate to the number of views the ads received. They also generated millions of artificial views from 650,000 IP addresses that were leased.
The conmen infected 1.7 million computers with malware, which covertly accessed the internet to generate ad views. Their complex scheme was powered by 1900 computers that were rented from a Texas data centre and used remotely to post ads onto 5000 spoof websites.
In November 2021, Aleksandr Zhukov, the self-described “King of Fraud” who helped set up two ad networks in 2014, was found guilty and sentenced to 10 years in prison in the US. Two other individuals pled guilty.
While the court indictment refers to revenues of £28m generated by the fraud, some estimates put the total at £770m.
Our investigation found that Octmedia was founded in 2016 by two firms based in Seychelles – a so-called “secrecy jurisdiction” where company owners can eschew public registers. The following year, new UK regulations made it mandatory for SLPs to disclose their owners.
A legal loophole
But Octmedia simply named another SLP, Johnson and Brothers LP, as its owner – a legal loophole used to avoid disclosing the names of individuals. Johnson and Brothers – also registered at the Granton Crescent flat as a SLP – was itself owned by a pair of Seychelles companies during the fraud operation.
But leaked documents seen by The Ferret reveal Octmedia’s owners. They were Sergey Ovsyannikov and Aleksandr Isaev – two of the eight people indicted in the fraud scheme.
Ovsyannikov was arrested in October 2018 in Malaysia and extradited to the US where he pled guilty to charges. Isaev remains at large. Some £11.7m was recovered by authorities from Octmedia’s bank account – reportedly the main recipient of the scammers’ takings.
We presented the findings of our investigation to Phil Brickell MP, a member of the all-party parliamentary group on anti-corruption and responsible tax at Westminster. He said economic crime costs the taxpayer “billions of pounds” every year, and there “remain gaping loopholes” for scammers, money launderers and tax evaders to exploit.
“We need full transparency in company registers, so that law enforcement can trace dirty money and drive illicit wealth out of our economy,” Brickell told The Ferret.
“UK regulators need to get on top of this, and the existing, well-known loopholes urgently need to be closed.”
Companies House, the UK’s register of businesses, declined to comment on specific firms but said that it “pursues non-compliant SLPs and works closely with relevant enforcement bodies to determine the appropriate action”.
The National Crime Agency, which assisted the US Justice Department in its investigations, also declined to comment.
Our broader investigation into SLPs for The Money Trail took us to another Edinburgh address where 102 SLPs are registered – 5 South Charlotte Street. A firm called A&A Investments LP uses this address and we discovered it has continued to name a man linked to organised crime and environmental pollution as its co-owner, years after his reported death.
Adam Fryderyk Stross, who was reported as dead to Malta’s business registry in 2021, remains one of two listed controllers of A&A Investments LP. Since his reported death, A&A has submitted three confirmation statements, which are supposed to show any notable changes within the partnership. The latest statement, filed on October 9 last year, did not state that Stross had ceased to be an owner.
A Polish national based in Malta, Stoss held a senior role in a company that ran a plastic landfill in Poland which contaminated groundwater water and crops.
His LinkedIn profile links to a non-existent website for A&A. But an archived version of his personal website shows that he advertised tax, legal and other services.
He was also CEO of a firm which offered services such as the bulk commodity trading of oils and fuels.
In 2016, he was arrested on suspicion of being part of a transnational criminal organisation which sold counterfeit fuel produced in Poland to Italy.
The case, along with two others, which implicated Stross in a VAT fraud scheme, was dropped, however.
Commenting on The Ferret’s findings, Steve Goodrich, head of research and investigations at Transparency International UK, said that if a trust and “company service provider” knows their client’s circumstances have changed, they should be checking what’s happened and updating the registrar accordingly.
“As recent reforms bed in, there are fewer and fewer excuses for inaccuracies on the UK corporate register,” he told The Ferret.
Glasgow is also home to SLPs, and a couple of weeks earlier, we visited Scotland’s largest city on the trail of a company linked to organised crime and a man sanctioned for aiding Russia’s war on Ukraine.
We sought Alfa Consulting LP, which is registered at a business address on Dumbarton Road, adjacent to a Tesco minimarket. The address is also home to a roofing firm, a cleaning company and a financial services firm.
We visited the finance firm and asked if it knew of Alfa Consulting, but a man with a tattoo on his neck said he’d “never heard” of it. I emailed later to ask if the firm provides SLP services but received no reply.
Alfa Consulting was created in 2015 by two companies based in Seychelles. It is owned by a Ukrainian called Diana Bidniak who is linked to a politician from a pro-Russia political party in Ukraine that has been banned.
Documents from the leaked Paradise Papers files, which were obtained by the International Consortium of Investigative Journalists and passed to The Ferret, reveal that some of Bidniak’s clients have been embroiled in controversy. They include a man sanctioned by Ukraine after accusations of tax evasion and collusion with Russia.
Bidniak was also an intermediary for AVE Group, the owners of which have been mired in criminal allegations, according to reports from Ukraine’s Anti-Corruption Action Centre (ACAC).
OUR investigation into Alfa prompted Juliet Swann, nations and regions programme manager at Transparency International UK, to express concern that “SLPs remain attractive” to those allegedly involved in criminal activity.
“Despite no longer being secrecy vehicles thanks to owners now being named, the weak controls over who can form and administer SLPs means it is still far too easy for criminals and sanctioned individuals to make use of them,” Swann told The Ferret, adding it is “disappointing that relevant reforms introduced in the Economic Crime and Corporate Transparency Act 2023” are not due to be enacted until Spring 2026.
These changes next year will mean that only UK-regulated service providers can set up SLPs.
But Swann argues they “are not a silver bullet to end the abuse of these vehicles” and should be implemented as soon as possible, adding that “a concerted crackdown on rogue professionals is desperately needed to ensure UK companies no longer fall into the hands of criminals seeking to launder money”.
Back in Muirhouse, Edinburgh, at the registered address of Octmedia, we knock on the door of the ground floor tenement flat again in our search for people linked to the “King of Fraud”.
No-one stirs inside. We try one last time but silence – so we head back out into the cold.
