Blacklisted
The Seychelles government reacted angrily last month when the European Union added the country to its blacklist of tax and secrecy havens, along with Belize and Antigua. Being on this list is more than just a public shaming: it can discourage foreign investment and damage a country’s international relations.
Finance minister Naadir Hassan led the complaints. He accused the EU of punishing the Seychelles unfairly because it had struggled to deal with an unexpected flood of inquiries from overseas tax inspectors in the wake of the 2016 Panama Papers scandal, a high-profile leak of confidential offshore files obtained by investigative journalists.
This surge in inquiries was made especially challenging after the 2018 closure of Mossack Fonseca, the firm at the heart of the scandal. Staff at its Seychelles offices left the country, taking all records with them, Hassan explained.
“It is inexcusable that historic deficiencies, which have been fully remedied, should continue to have such a significant impact,” he said.
But when journalists at SBC shared their latest findings with Randolf Samson, chief executive of the Seychelles Financial Services Authority, he conceded there was still work required to repair the reputation of the offshore industry.
Asked about Seychelles citizens fronting large numbers of UK firms, Samson warned: “The Seychellois need to understand whatever is put in front of them, particularly when it comes with remuneration.”
He said the FSA had already dealt with cases in which unqualified people such as drivers and cleaners had signed documents not knowing their significance. “We’ve had to take strong enforcement action,” he said “It’s not fair on those people because, generally, they don’t understand what they are doing… My message to everyone in the Seychelles who is being approached is that they need to think very, very, very carefully about it.”
Valkovskaya told reporters that Alpha Consulting provided all nominees with “clear and comprehensive information regarding their roles, responsibilities and associated risks.” She said nominees were also indemnified by the agency’s clients.
Dark fleets
Last year, Russia’s invasion of Ukraine prompted a surge in the number of high-impact sanctions issued by the United States, the European Union and other powerful bodies. With these threats, however, have also come lucrative opportunities for unscrupulous actors. In fact, a large number of the world’s ageing oil tankers have now turned their attention to the high risk, high reward business of shipping sanctioned oil from countries such as Iran, Venezuela and more recently Russia.
Lloyd’s List, the shipping news and data provider, believes a “dark fleet” of more than 450 large, ageing tankers — representing 10 percent of the internationally trading fleet — are now known to move oil to or from sanctioned countries, deploying a myriad of evasive schemes in an effort to hide their movements and the identities of those involved.
One of the warning signs Lloyd’s List analysts look for is the use of anonymous shell firms to own or manage a tanker.
One such anonymous firm is Cilkon PC, another UK limited partnership set up and fronted by Luther Denis on behalf of a hidden owner. It is the third of our three case studies.
In February 2021, less than a month after Russian shipping firm Rustanker LLC was put on the US sanctions list for helping bust America’s ban on lifting oil from Venezuelan ports, there was a flurry of changes aboard the Nostras, a 150-metre-long tanker that Rustanker helped manage — and which, at the time, was sailing near Venezuelan waters.
In a hasty makeover, the Nostras dropped the first and last letters of its name, becoming the “Ostra”. The ship’s Russian flag came down, replaced by the flag of Cameroon. And Rustanker stepped back from carrying out important regulatory roles on board relating to safety and maintenance.
Instead, these roles, known in shipping jargon as “technical manager” and “ISM manager”, were assigned to an opaque firm called Cilkon PC, newly registered just five months earlier.
Cilkon’s general partner was Luther Denis. And like all limited partnerships registered in England, Wales or Northern Ireland, it has never had to name its ultimate owner.
While the hidden owners of heart pill seller Green Line and of ship owner Mister Drake were revealed in the Pandora Papers, that was not the case with Cilkon.
Reporters nevertheless studied the voyage history of the Ostra for the year and a half during which Denis fronted Cilkon. At first glance, the data showed the ship shuttling around the Caribbean, sometimes skirting close to Venezuela.
But on closer inspection, there were peculiarities.
The first concerned large gaps in data transmitted from the Ostra. For two long spells — one of 98 days and another of 20 days — its location signal “went dark”. On both occasions, the ship disappeared from the record only to reappear, weeks or months later, in almost exactly the same spot. Both times, the vanishing act took place between the island of Aruba and the nearby Venezuelan coast.
The second oddity was that the Ostra’s passage at times looked implausibly perfect. For months at a time, the data suggested the ship was travelling at a perfectly steady speed of just one knot.
Michelle Wiese Bockmann, senior analyst at Lloyd’s List Intelligence, said this was clear evidence of “spoofing”, the term used to describe a vessel sending out false location data. “It’s exactly even. And there are large tranches where everything is like that,” she said. “Ships just don’t do that.”
In 2020, the US Treasury officials warned that “spoofing” and “going dark” were tactics increasingly used by ships avoiding sanctions. They also warned that sanction-dodgers often switched oil loads between vessels while at sea in an attempt to avoid detection.
On this point too, a study of the Ostra’s movements raised concern. With the help of Geollect, a firm specialising in geolocation, journalists found data suggesting that, on December 20 2021, the Ostra and a larger tanker called the Orion were positioned alongside each other, in waters between Aruba and Venezuela. In the halflight just before dawn, it would have been hard to capture the two ships together on satellite photos, but they were detectable on alternative imaging technology using radar.
Location signal data here shows the Orion and Ostra meeting in waters near the Venezuela (Source Geollect’s Geonius platform). This is confirmed, right, by satellite radar imaging (Source: Sentinel 1 satellite)
Two days later, location data for the Orion also showed signs of spoofing. For 54 days its local signal came from exactly the same spot, again in between Aruba and Venezuela. This was strong evidence of spoofing, analysts at Geollect said.
Finance Uncovered tried to contact the owners of both the Ostra and the Orion, both of which are companies registered in the Marshall Islands, but received no response.
When Denis was asked about the Ostra’s suspicious movements while he was in charge of Cilkon PC, the ship’s technical and ISM manager but he did not respond. Meanwhile, Denis’s boss Valkovskaya said: “We are not aware of any of your claimed activities in relation to this company.”
The Ostra has been through several makeovers in its 21 years at sea. In the last seven years it has switched its name and flag three times. And in 2019, the US Treasury Department accused the vessel — then called the Sincero — of helping transport oil to the sanctioned Syrian regime of Bashar Assad.
Taking care of business
As Denis goes about his life on Mahe, the main island in the Seychelles, the far away actions and consequences of the many UK firms that bear his name are rarely in his thoughts. He considered it perfectly ordinary for Alpha Consulting’s end clients to want to hide their identity.
“Picture this: tomorrow I become a millionaire and I do not want people to know I own a company,” he explains. “So I will get somebody to front it so that people do not know that I own the company. It does not mean that I am doing something wrong. Some people just want to be discreet.”
There were a few occasions when he wanted to know more about businesses using his name. “Sometimes I asked Alpha questions,” he recalled. “They always told me it would be ok.”
With these assurances, he has been happy to sign documents for more than six years and has got to know other Seychellois who do the same. “There are around 10 to 12 people. We talk. For us this is something totally normal. We are used to doing it.”
“Being a nominee … is a normal service which offshore companies provide.” he said. “I am a general partner but I do not know what is happening.”
