Last year one of the world’s most corrupt and least democratic countries announced substantial “foreign investment”. From Scotland.
Authorities in Uzbekistan, in a series of stock exchange bulletins, said two businesses based in Edinburgh had taken important equity stakes in a series of cottonseed oil mills.
This, from a Scottish perspective, does not sound like big news. But it should be.
Uzbekistan’s cotton industry has been widely criticised for mass human rights abuses. Over a million people a year are forced to work its fields, according to Amnesty International. As a result the country ranked second highest in the World Slavery Index.
So any Scottish investment in the industry would be potentially open to scrutiny, particularly as the equity stakes were being sold by the Uzbekistan’s authoritarian government under a partial privatisation scheme. However, Uzbek state-controlled media, which was ranked among the least free in the world this year by Reporters without Borders, showed little interest.
Yet Uzbek authorities can have no official idea who now owns chunks of the country’s most important industries. Because the firms concerned were two Scottish limited partnerships, or SLPs, called Ternesy Development and Newgen Trade, both registered at maildrops in the capital. Their ownership is entirely opaque.
They have failed to comply with new UK Government requirements that they reveal their real owners, their “persons of significant control” or PSC, if they had them.
Ternesy can be traced back to partners which are shell companies in Panama. Newgen has its nominal parents in equally opaque Belize.
There is no way to know how successful their investments were. SLPs do not need to file accounts. Or pay tax.
An English limited liability partnership or LLP last year also bought in to a Uzbek cottonseed mill. Its anonymous parents were in the Seychelles. But it did issue a PSC statement. Where was its owner from? Uzbekistan.