1 Address, 2,000 Companies, And The Ease Of Doing Business In The U.K. : Parallels The U.K. likes to boast about how easy it is to do business there, but a profusion of shell companies hides many that are fronts for fraud and corruption. Now the U.K. wants more scrutiny.
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1 Address, 2,000 Companies, And The Ease Of Doing Business In The U.K.

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1 Address, 2,000 Companies, And The Ease Of Doing Business In The U.K.

1 Address, 2,000 Companies, And The Ease Of Doing Business In The U.K.

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AILSA CHANG, HOST:

Starting a company used to be time-consuming and expensive. Now, in many developed countries, it can be done with the click of a mouse. But in its race to be business friendly, Great Britain is finding it has unintentionally created opportunities for corruption. NPR's Lauren Frayer reports from a particular address in London.

LAUREN FRAYER, BYLINE: This is Harley Street, one of the most expensive in all of London - Georgian row houses, brass plates, exclusive medical clinics. Number 29 was once the home of a wealthy surgeon. Now, it's the headquarters of more than 2,000 companies. Here's investigative journalist Oliver Bullough.

OLIVER BULLOUGH: If you say, my business is based on Harley Street, it's like, oh, OK, he's got to be doing all right. But if you don't have an office on Harley Street, obviously all you're doing is paying, you know, 200 quid a year, and you get to say you do. The whole thing is a front.

FRAYER: A front office for companies around the world that want a prestigious address in London but aren't actually here. The only company physically at 29 Harley Street is Formations House. They'll help you set up shop in London or form an offshore company in a tax haven. That's all perfectly legal. And up until now, you didn't even have to say who the owners are.

BULLOUGH: You know, you're supposed to have a - as a director, you have to have a real person, not just another company. You have to have an actual living, breathing person as a guard against fraud. But they've essentially automated this whole system. I registered my own company. I called it Crooked Crook Crook because I've got a silly sense of humor. And it took me nine minutes. There you go.

FRAYER: More than half a million companies are created in the U.K. each year. Most go through agencies like this, and most are legitimate. But Google 29 Harley Street, and warmings pop up about scams. It was the mailing address for a convicted multimillion dollar swindler in Las Vegas and an offshore company linked to the ornate palace of Viktor Yanukovich, the former president of Ukraine. One of the directors of Formations House was charged in a fraud case, but he died last year before the trial. Charlotte Pawar is the company's U.K. manager. She says it's unfair to blame Formations' agents for their clients' actions.

CHARLOTTE PAWAR: If I'm honest, I think that they're putting the blame on Formation agents for people overseas being able to buy properties here and register them. We just provide a platform to incorporate companies.

FRAYER: They can't police what those companies do after that, she says, but British Prime Minister David Cameron can.

(SOUNDBITE OF ARCHIVED RECORDING)

PRIME MINISTER DAVID CAMERON: If you don't know who owns what, you can't stop people stealing from poor countries and hiding that stolen wealth in rich ones.

FRAYER: So next month, the U.K. will launch a public register of true company ownership. That will mean a lot more due diligence.

RICHARD LANGRIDGE: Yeah, my name's Richard Langridge, and I'm the compliance officer here, making sure any dishonest clients are being reported to the National Crime Agency.

FRAYER: Langridge works for Servcorp, another company that offers virtual offices for clients around the world. He has to vet them if they want to do business in the U.K.

LANGRIDGE: We can look at their latest annual return, for instance. You know, who owns the shares in the company? Anyone who's a beneficial owner, we need to know who they are.

FRAYER: Servcorp has 40,000 clients. Langridge is the company's only compliance officer for the U.K. The British government soon may be similarly stretched, trying to vet millions of companies. By streamlining business regulation, the U.K. has climbed to number six on the World Bank's ease-of-doing-business index. The government is proud of that. Now, it has to decide whether it's willing to make a similar effort to halt the corruption that came with it. Lauren Frayer, NPR News, London.

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