5th December 2019
Written by Erica Salowe, Researcher
Edited by Harriet Moll, Creative Director
This year, my blind holiday cheer nearly led me to participate in an online gift exchange called “Secret Sister,” advertised in a Facebook post by a friend of a friend. In theory, I would ship out a $10 gift to a woman I’d never met, and I could receive quite a few gifts in return if I provided my address. Yet something about this solicitation smelled fishy, and after a quick Google search I discovered a warning issued by the Better Business Bureau that the seemingly heartfelt “Secret Sister” gift exchange was actually a pyramid scheme intended to gather personal data.
My close encounter with this con taught me that appearances can be deceiving, and the best defence against any sort of fraud is to proactively arm oneself with knowledge. These same takeaways can be applied to The Times’ recent undercover investigation of Formations House, a British family-owned company-formation agent under fire for allegedly facilitating the business dealings of fraudsters and organised criminals.
Formations House helps register and manage companies, offering a collection of “shelf” companies available for purchase with historic incorporation dates. For a fee, clients can also acquire a trading address on one of London’s most famous streets (though they may share that address with thousands of other companies). These two services seem problematic, as they create the illusion that a newly acquired company is longstanding and more successful than it may be. Formations House also facilitates offshore company formation and boasts that it has contacts to open bank accounts in Belize, Puerto Rico, Mauritius and the British Virgin Islands, affording “privacy and confidentiality.”
And though Formations House owner Charlotte Pawar claims that her business does not offer nominee director services, The Times revealed that Pawar’s grandmother, Edwina Coales, had been listed as director of dozens of companies and was signing off accounts…post-mortem.
Either Coales’ business acumen was death-defying, or something fraudulent was afoot.
The Times and a consortium of other actors launched an investigation after obtaining a leaked database of Formations House’s worldwide operations, which contained documents detailing how its services could be abused.
The plot thickened for Formations House after undercover reporter Katie Gibbons caught Pawar on camera discussing cash banking and avoidance of money-laundering checks.
So far, The Times investigation has linked Formations House to a global web of fraud. In Croatia and Slovenia, a company incorporated by Formations House is central in a gang operation smuggling luxury cars. In the US, a Hollywood actor’s company used Formations House’s Marylebone address while scamming two businesses out of $2 million. Pawar’s company also created accounts for customers of a Latvian bank which was later fined €80 million for tax avoidance and money laundering.
The key issue, expressed by HM Revenue & Customs, is concern over the company-formation agent’s lack of procedures to prevent criminal misuse. While many of Formations House’s clients may be legitimate and there is no evidence in the leaked database that Pawar knew criminals used her services, the agent nonetheless has a prolific history of fraudster and money-laundering clientele.
Over half a million companies are created each year in the UK, and the vast majority are incorporated through company formation agents—the government even has a recommended list, which includes Formations House! The deep dive into Pawar’s business is not meant to insinuate that all company formation agents are corrupt. However, it does highlight why the UK and our “see no evil, hear no evil” business incorporation laws have a reputation for being a fraudster’s favourite.
Today, France is braced for its biggest national strike in years as millions of workers plan to protest being forced to retire later or face reduced pensions. Some trade union leaders have warned that the industrial action will last as long as necessary until President Emmanuel Macron abandons his plans to overhaul the retirement system. Unions from the transport sector have also agreed to strike, and only 10% of intercity and high-speed TGV trains will run throughout the day today, while some regional services will not run at all. Nurses, lawyers, police officers, postal workers and refuse collectors are also expected to partake in the strike.
Germany will expel two Russian spies operating under diplomatic cover after the Kremlin allegedly ordered the murder of a dissident in Berlin. Chancellor Angela Merkel has given the spies one week to vacate Germany, and accuses Moscow of trying to block investigations into the murder. Western intelligence agencies have also discovered a Russian spy base in the French Alps, which 15 of Russia’s GRU intelligence spies used to move around Europe and enter the UK. The German government said it reserves the right to take further steps against Russia, and further expulsions are expected to follow.
A measles outbreak in Samoa has left 60 dead, and the number of reported cases climbs past 4,200 as islanders begin a mass vaccination campaign. Medics are carrying out door-to-door visits, asking infected families to stay indoors and hang red flags outside their home so that officials can come to administer vaccinations. Authorities believe a traveler from New Zealand was the first to spread the virus.
Business and economy
As he unveiled his plans for the first 100 days of a new administration, Boris Johnson announced he would offer a tax-cutting Brexit budget within weeks of Britain leaving the European Union. In the spending plan, Johnson commits to increasing the threshold at which UK citizens start paying national insurance to £9,500 from April, which would save individuals £85 per year. The announcement will attempt to galvanize his party in the wake of a narrowing lead one week before voting.
Japanese Prime Minister Shinzo Abe has launched Japan’s first fiscal stimulus since 2016, a ¥13.2tn ($121bn) budget planned for 15 months which seeks to recover from a drag in rise of consumption tax and avoid the risk of a slowdown after next summer’s Tokyo Olympics. The package implicitly acknowledges the vulnerability of Japan’s economy, and comes amid a global shift toward looser fiscal policy employed by governments to counter sluggish private demand.
Chinese tech company Huawei has filed a lawsuit challenging a recent FCC mandate prohibiting American carriers from using federal subsidies to purchase Huawei equipment. Huawei claims that the FCC decision was made purely because Huawei is a Chinese company, and argues that the order is unlawful because there is no evidence that Huawei presents a national security threat. Washington argues otherwise, claiming that the installation of Huawei equipment in US networks could enable Chinese spies to eavesdrop on sensitive communications.
Columns of note
In The Guardian, expat Rob Delaney provides an American perspective on the NHS as a “marvel” and expresses gratitude for the above-and-beyond services they provided for his youngest son, who was diagnosed with a brain tumour. Although his son ultimately succumbed to his illness, Delaney commends the NHS for providing his family with caretaker training and palliative care services. Growing up with the for-profit private American healthcare system, Delaney recalls high stress induced by fear of not being able to afford the bill from a medical emergency. He urges the people of the UK to consider that the answer to sustaining Britain’s free healthcare and social safety lies with holding the rich accountable and campaigning to elect a government that prioritises the NHS.
The Telegraph’s Pieter Cleppe recounts statements and leaks from Brussels on a number of negotiations the EU may introduce regarding its future relationship with the UK. Allegedly, the EU will have five major demands: that Boris Johnson will extend the 11 month transition period to make a proper trade deal; that before the end of June, the UK will grant the EU access to British fishing waters; that there will be a “level playing field,” and the UK will not attempt to gain competitive advantage after Brexit by undercutting European social, tax and environmental standards; that there be EU-UK security cooperation regarding access to crime-fighting databases; and finally, that the EU-UK relationship will be governed by a single overarching deal instead of many bilateral agreements. Cleppe also adds that the EU will offer the UK tariff-free market access in exchange for the UK agreeing to freedom of movement. Cleppe believes these demands are quite ambitious, implying they exemplify the “unicorn thinking” that the UK is often accused of employing.
What happened yesterday?
Reports that China and the US may be close to a trade deal rejuvenated risk assets, with US stocks bouncing back on Wednesday and Treasury yields also rising.
The S&P 500 closed 0.6%, after a cumulative loss of 1.5% over the last two days due to global heightened trade tensions. The Nasdaq Composite was up 0.5% thanks to gains in semiconductor shares. The Dow Jones Industrial Average was up 0.5%.
European markets also recovered, with Stoxx 600 rising 1.2% after snapping four straight days of losses. However, markets are still quite sensitive due to the trade dispute between the world’s two largest economies.
The FTSE 100 ended on a high with a somewhat sharp rise in the last few minutes of trading, closing at 7,188.50 after rising 29.74 or 0.42%. The wider FTSE 250 closed at 20,665.48 after gaining 164.55, or 0.80%.
What's happening today?
Character I-nexus Global. Impax Asset Man Ixico Numis PCF Bank Stock Spirit Unicorn Asset Management AGMs Ceres Power Frontier Ip Gabelli Merger
Interims Albion En. Vct Albion Venture Augmentum Fint. Jpmorg.eur Loungers Plc Monks Inv Quiz Sdcl Energy Ef. Seneca Glbl Sutton Harbour Holdings Tricorn Vp
Int. Economic Announcements (08:55) PMI Composite (GER) (08:55) PMI Services (GER) (09:00) PMI Composite (EU) (09:00) PMI Services (EU) (12:00) MBA Mortgage Applications (US) (14:45) PMI Composite (US) (14:45) PMI Services (US) (15:00) ISM Non-Manufacturing (US) (15:30) Crude Oil Inventories (US)
UK Economic Announcements (09:30) PMI Services
Did you know?
The ancient Egyptian sky god of infinity, eternity, and endlessness is called “Huh.”
TODAY House of Commons The House will next sit on Monday 16 December 2019 House of Lords The House will next sit on Monday 16 December 2019
First Minister's Questions
Member's Business S5M-19957 SCAN Art in Action Campaign
Portfolio Questions Transport, Infrastructure and Connectivity
Scottish Government Debate Disability Sport and Participation
Scottish Parliament No business scheduled.