According to a BVI Finance-funded report published last November, investment mediated by BVI Business Companies generated $14 billion each year in taxes for governments worldwide. Additionally, BVI Business Companies hold an estimated $153 billion in assets in the United Kingdom alone, with $3.5 billion of tax revenues generated for the British government, the report stated (as reported in the Nov. 24 Beacon article “BVIF-funded report touts financial industry”).
On March 14, however, Freedom for Eurasia — a non-profit organisation dedicated to monitoring fundamental civil and political human rights in the Eurasia region — published a very different sort of report, titled “Who Enabled the Uzbek Princess?”
That report —which focused largely on five properties purchased in the London area and now worth some £50 million — alleges that Gulnara Karimova, the daughter of Uzbekistan’s former president, used UK and VI companies to buy homes and a jet with the proceeds of crime.
Her alleged associates — listed in official documents as the “beneficial owners” of companies based in the UK, Gibraltar and the VI — were accused of serving as proxies for Ms. Karimova, who allegedly used the firms to launder hundreds of millions of dollars.
Arrest
Ms. Karimova, who has denied wrongdoing, was detained on corruption charges while her father was in power and sentenced in December 2017, after his death. Prosecutors accused her of belonging to a criminal group that controlled assets of over $1 billion in 12 countries, including the UK, Russia and United Arab Emirates. In 2019 she was sent to prison for breaching the terms of her house arrest.
Tom Mayne, a research fellow at the University of Oxford involved in the Freedom for Eurasia report, described the “Karimova case” as “one of the largest bribery and corruption cases of all time.”
The report does not allege that the accounting firms involved in the deals were aware of any connection to her nor that the source of funds could have been suspicious, but it states that the ease with which she obtained UK property was “concerning.”
Russia’s Facebook
Meanwhile, in September 2022 Apple removed VK, which has been described as “Russia’s Facebook,” from its App Store to comply with UK sanctions. VK develops e-commerce and Russian-language social networks and messengers, and it participates in businesses like social networking and communications, delivery services, online marketplaces and developing games.
On Feb. 13, the Directors of VK Company Limited, a Cyprus-based company quoted on the London Stock Exchange, approved its re-domiciliation to the Russian Federation in the light of the current environment and on the grounds that the vast majority of its assets were now based and generating revenue in Russia — and that vacating offshore jurisdictions is also considered to be among the best practices for listed companies.
VK will become an International Public Company under Russian law, and it will be able to continue operating as a legal entity in Russia. Ironically, it will now have to pay taxes to the Russian Federation.
Supplementary review
Here in the VI, we must await the Organisation for Economic Co-operation and Development’s supplementary review of the VI to see whether the European Union will remove the territory from its list of non-cooperative jurisdictions for tax purposes as requested by the VI government.