Julia Wallace is deputy editor in chief of the Organized Crime and Corruption Reporting Project (OCCRP). Ilya Lozovsky is A senior editor and staff writer at OCCRP.
High in the Austrian Alps sits the ultra-luxe Hotel Tannenhof. A stay in one of its seven suites – the most expensive at $6,000 a night – has been described as “like if your closest billionaire friend decided to build an insanely luxurious and yet personal alpine retreat.”
Until last summer, however, there was no way to prove that this particular resort was linked to VTB – a state-controlled Russian bank that has been dubbed the “piggy bank” of President Vladimir Putin.
After years of pressure from the European Union and corporate transparency campaigners, Cyprus finally made public its corporate ownership registry in June, enabling us Organized Crime and Corruption Reporting Project (OCCRP) to expose Half of the hotel is owned by a Canadian who has been spending years with VTB chairman Andrei Kostin, an oligarch loyal to Putin.
As Russian missiles plunge Ukrainian cities into darkness, cases like this are a timely illustration of a different kind of battlefield. It shows how secretive corporate structures are routinely used to hide the ownership of lucrative assets in the heart of Western democracies, as well as corporate transparency – in this instance, the “ultimate beneficial owners” of a Cyprus shell firm. Access to Exposing Records (UBOs) – Enables journalists, activists and investigators to expose them.
At least it did until recently.
If the opening of the Cyprus Registry represented a clear victory for transparency campaigners, they have since suffered a crushing defeat. Court of Justice of the European Union (CJEU) after a lawsuit was launched by a powerful London law firm on behalf of an anonymous client in Luxembourg hit down The 2015 Anti-Money-Laundering Regulation, which mandated all European countries to set up public databases of who actually owns companies – otherwise known as “beneficial ownership registries”.
But the Hotel Tannenhof case illustrates how important it is for the public to know who is really behind corporate structures – and the lengths to which the Russians went to hide their ties to the hotel show they value their secrecy. How much importance is given to ,
VTB, which once owned the hotel relatively openly, was sanctioned by the United States and the European Union in 2014. Later, its Cypriot holding company was owned by another Cypriot firm whose owners were hidden behind corporate nominees – people whose job it is to stand in for its real owners.
Even when Austria opened its corporate register in 2018, the hotel was still able to exploit a loophole: as its ownership was divided equally between the two ultimate shareholders, it was not considered a beneficial owner, which prevented journalists from establishing who was behind, And, of course, the country closed public access to its UBO registry just days after the CJEU’s decision.
But this case is one of many.
Take Serbia, for example, where journalists have been tracking the career of Nikola Petrovic, the president’s longtime best friend. Until our colleague Dragana Peko got access to Luxembourg’s new UBO registry, they didn’t know that Petrovic was using a Luxembourgish shell company to invest in several major Serbian businesses, or that he had ties to organized crime. She had secret dealings with a notorious businessman who owned her.
story Pećo wrote about Petrović that it may not have been big international news, but it made headlines in Serbia, where cooperation with criminal gangs has severely compromised the government. “If the Luxembourg UBO register didn’t exist, the public would never have known about it,” he told us.
This is why the gradual opening of UBO registries since 2019 was a boon.
“It looked like a game changer for the work we do,” said Myra Martini of Transparency International. “Activists and journalists who have been at a dead end trying to connect questionable properties to their rightful owners for years can now finally start connecting the dots.”
And those points have taken reporters to some dark places.
In Hungary, our colleagues at news outlet Atlatzó have been trying for years to find out who owns the Lady Mrd – a €21 million luxury yacht on which they spotted several senior Hungarian government officials sunning themselves Was.
And though they eventually managed to learn that it was owned by a Maltese shell company, they hit a wall: The company was not linked to a human. Rather, it was registered to act as a proxy by another company, PKF Fiduciaries International Ltd.
Hungarian journalists could see that PKF also owned about 200 other companies, suggesting that it had been hired by the true owner of the ship to hide his interest, but they could do nothing about it – A common situation in European privacy jurisdictions such as Malta, Cyprus and Luxembourg prior to the requirement to create registries. Massive data leaks like the Panama Papers and Pandora Papers revealed who had what.
When the Maltese UBO registry finally went live in 2020, however, the real owner of the shell company became approx. immediately visible, It turned out to be a wealthy construction tycoon, László Szij, who had made a fortune on Hungarian government contracts.
Something similar happened in Lebanon, where the OCCRP was trying to confirm long-standing rumors that the governor of the central bank had vast wealth that he was hiding offshore and in various European countries. just after the luxembourg registry came online we were able to see The governor was the “beneficial owner” of three companies that had around $100 million in assets around Germany, Belgium and the United Kingdom – most of which were frozen by EU authorities following our revelations.
But now all this progress is in jeopardy.
Although the European ruling mandated that journalists should be able to access corporate registries in certain circumstances, it is unclear what this might mean in practice – and the requirements will certainly be more onerous.
Denying the public the right to know who is buying the most expensive real estate in their countries, or taking their politicians on yacht trips, is not wise or ethical. And in the absence of an accidental leak of internal documents, it would now be impossible to track down the next Hotel Tannenhof.