in the back
London’s Chinese laundry
Dirty money, Issue 1444
bank-notes.jpg “IT IS a golden era of relations between China and the UK,” announced Theresa May at last September’s G20 meeting in Hangzhou, her declaration following years of kowtowing to Beijing by former chancellor George Osborne.

Alas, what neither she nor her predecessors have ever thought much about is the danger of large amounts of dirty Chinese money washing through Britain, which Osborne wanted to turn into an “offshore” centre for the renminbi. Clues to the possible extent of this can now be revealed.

The Eye has obtained Companies House board minutes from earlier this year which report that a renewed focus on suspicious shell companies (which came about after the Eye had exposed thousands of them laundering stolen eastern European money) revealed “an issue with Chinese nationals setting up 4,000 companies at an address in London”. This almost certainly refers to a down-at-heel office known as The Chase Business Centre on Chase Side in Southgate, north-east London, just up the road from Southgate police station.

Dormant
Among the 4,300 companies registered at the address is Sky Charm Secretarial Services Ltd. Although it declares itself dormant, it acts as company secretary to 3,700 separate shell companies, 1,500 of which are also located at the Chase Business Centre and almost all of which – as far as can be judged from looking at a sample – are dormant and have never shown any activity.

All show remarkably similar accounts: often significant share capital issued but not paid for and thus empty of any real assets. All also have one further director in the person of a Chinese national usually giving an address in one of the major cities on the country’s east coast, including many from Hangzhou.

Other shell companies, with names such as UK International Company Service Ltd and UK Secretarial Services Ltd, also act as secretaries to thousands of shell companies located at the Southgate offices and elsewhere – many in Purley, south London, and above a restaurant on Wardour Street in London’s Chinatown. Another, set up in September 2015 at an address on Purley High Street, Yunma Tianlong International Consulting Ltd, is already the corporate secretary of 2,750 new companies. Again, all appear to be dormant.

Often the shell companies move between such addresses, even while remaining dormant. Tellingly, most have appeared since former chancellor Osborne began wooing the Chinese in earnest. Of the 4,300 shells at The Chase Business Centre, 3,600 have been formed since 2012, when Osborne began touting for renminbi business.

Dubious small-time operators
All told, analysis performed for the Eye by openCorporates found there are 13,800 dormant companies registered in England and Wales with a single Chinese national director. If those recently dissolved are included, the figure rises to 16,000.

The usual dubious small-time operators appear to be behind this sprawling paper exercise. When an Eye hack visited The Chase Business Centre, he discovered that half a dozen Chinese people had physically operated there as CHD Management (UK) Ltd until leaving around three years ago. Since then, one person turns up every week or two to collect the post. Oddly, the company still has a website claiming to be at the Southgate address and a telephone number which is never answered.

The departure of the CHD personnel may be related to a spot of trouble the company’s director, a UK qualified accountant called Dayong Ding, found himself in when trading standards officials called to question him about a company registered at his office that had been subject to complaints (it appears some of the companies are used for real if nefarious trading).

A subsequent accountancy disciplinary panel found Ding had “taken it upon himself to amend the registered office address of [the company] to a random address in Bridgend which he had selected randomly and without the knowledge or consent of the [company]”. Ding’s professional body gave him a severe reprimand but allowed the business to carry on.

Vast network
Those nominally responsible for the most important shell companies administered by CHD are equally elusive. The owner and director of Sky Charm Secretarial Services Ltd, itself responsible for 3,700 companies, is a 32-year-old Chinese national named Lang Huang, who gives his correspondence address as The Chase Business Centre but has also given an address in Changsha in China’s southern Hunan province.

The vast network of suspect Chinese-backed companies poses more difficult questions for the government’s approach to money laundering. Its answer so far is to require UK companies to declare the real people behind them. The Chinese ghost companies do this automatically. But whether the names behind many of them are real or not is anybody’s guess. And there is no mechanism to investigate the supposed owners or what their companies are used for. Companies House documents say it is “collaborating” with the Insolvency Service. The news is unlikely to strike any fear into anybody.

More top stories in the latest issue:

TIDAL ENERGY AND THE GREEN STUFF
The man behind the Swansea tidal lagoon gives his wife’s company first call for getting money out of the project if it should ever hit financial difficulties.

NO HELP AT HOME?
The social care watchdog finds a litany of failure at an Essex-based care agency yet the county council is still paying the agency to look after the vulnerable.

FREEDOM OF INFORMATION: STORAGE WARS
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ACADEMIES: RICH PICKINGS
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MCTnovo GUILTY VERDICT
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UNCLE SHAM
Two key weapons systems show how subservient the UK is to US corporations and US intelligence – who can snoop on almost everything we do.

WAR GAMING
Is the British Army fit enough to fight an actual war? Its creation of a so-called ‘warfighting division’ seems more like a desk-based PR exercise.

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Private Eye Issue 1443