February 28, 2013
On Wednesday, the Organized Crime and Corruption Reporting Project (OCCRP) filed a motion to dismiss a lawsuit filed against it by Maxim Stepanov, a Russian national who is the owner of Midland Consult, a Cyprus based company registration firm that was mentioned in the Proxy Platform series.
OCCRP stands by its story and will aggressively defend itself in the litigation.
Based primarily on public records, OCCRP reported that Midland Consult registered a number of businesses that allegedly have since been used by organized crime, and that it, in some circumstances, appointed proxy directors of those companies. These companies allegedly have been used for criminal activities including hiding the proceeds of the Magnitsky tax scandal that led to the death of Russian lawyer Sergey Magnitsky. Midland Consult, whose representative was quoted in OCCRP’s reports, argues that it is not responsible for the activities of the companies it registers.
OCCRP believes that there is absolutely no basis to this lawsuit and considers this harassment for having told an unpleasant truth. Knowingly or unknowingly, Midland Consult’s business activities helped alleged criminals hide their activities. It is common business practice for a director of a company to take responsibility for the actions of their company. Why should that not apply to proxy directors?
Company registration agents, lawyers, bankers, hedge fund operators and other businesses have long been part of the criminal services industry, the “legitimate” businesses that have empowered organized crime by providing services that help them launder money, evade taxes and hide ownership in offshore companies.
OCCRP is asking important questions. Banks now are required to know their customers to prevent money laundering. Why shouldn’t registration agents? Shouldn’t they know whether the companies they set up are being used to perpetrate massive fraud? Shouldn’t they be required to identify the real owners if such fraud exists?
