Revealing the Beneficial Ownership of Offshore Companies (Part 2)

Several rounds of U.S. sanctions have targeted Russia’s super wealthy class of oligarchs for ties to the Putin regime. Tracking these individuals’ holdings often leads to “dead end” offshore companies in locations that don’t require disclosure of company ownership.

But these offshore companies aren’t always dead ends. In a previous post, we described how finding ownership data on offshore companies can be possible. The strategy is to search for the target in other jurisdictions that require companies to disclose ultimate ownership or control.

We can use the same strategy to find the beneficial ownership of offshore companies owned by Russian individuals.

First, determine whether you want to start with an offshore company and find its ownership, or start with an individual and find offshore companies he or she owns.

Either way, the Ukraine corporate registry and the Russian Central Bank are important resources. Both require entities to disclose beneficial owners—natural person(s) who ultimately own or control a company. We’ll describe below how this works.

As examples, we will look at the offshore holdings of Arkady and Igor Rotenberg. The father-son billionaires are under U.S. sanctions for their close ties to Vladimir Putin and, by some estimates, hold billions of dollars in offshore assets.

First, we will search for an offshore company in jurisdictions where it might do business to try to find its beneficial owners. This is what we’ve called the “needle in the haystack” approach.

According to media reports, the Ocean Plaza shopping complex in Ukraine was part of Igor Rotenberg’s network of real estate holdings when he was sanctioned in April 2018. Media reporting like this can be useful for generating leads. However, every good analyst will want to confirm findings with official documentation.

The Ukraine Ministry of Justice corporate registry is the logical place to start this investigation. Not only is the Ocean Plaza complex located in Ukraine, but the Ukraine registry requires companies to list beneficial owners. If Ocean Plaza appears on a Ukrainian record, it will disclose its beneficial owners.

However, searching for Ocean Plaza in Ukrainian (Оушен Плаза) in the Ukraine corporate registry does not yield any results. This is because the native Ukraine corporate registry is only searchable by Ukrainian company name, identification number, or individual proprietor name—turns out Ocean Plaza is not registered in Ukraine.

Fig. 1: Querying the Ukraine corporate registry for the term Оушен Плаза (Ocean Plaza) yields the message, “Unfortunately, no results were found for your query. Try another search term.”

Next, we’d want to see whether Ocean Plaza appears as a shareholder of a Ukrainian company instead. Since the registry doesn’t allow searches by shareholder, we’ll turn to Sayari Graph. A query for Ocean Plaza (“Оушен Плаза”) in Sayari’s fully text-searchable copy of the Ukraine corporate registry returns a record for Avangard-Vilarti LLC.

Let’s take a look at Avangard-Vilarti’s record. Indeed, its majority shareholder is Ocean Plaza Project (Cyprus) Ltd.

Fig. 2: Avangard-Vilarti LLC’s shareholder is Ocean Plaza Project (Cyprus) Ltd.

Even better, the record names Igor Rotenberg as the ultimate beneficial owner of Ocean Plaza as of the date of record (see Fig. 3).

Fig. 3: Underlined in blue is the Cypriot company Ocean Plaza Project (Cyprus) Ltd, and underlined in red is Igor Arkadyevich Rotenberg listed as the beneficial owner.

Since we now know Ocean Plaza is a Cypriot company, we could pull its Cyprus records to see if Igor Rotenberg appears. He doesn’t. The Cyprus record leads to a classic dead end: a British Virgin Islands company and two Hong Kong companies that do not disclose beneficial ownership.

In other words, Igor Rotenberg owned Ocean Plaza via a series of offshore intermediary companies. By querying a jurisdiction that requires beneficial ownership disclosures—in this case, Ukraine—we are able to link Ocean Plaza to its beneficial owners without even looking at its Cyprus record, let alone the records from Hong Kong or the BVI.

You can repeat this exercise with any offshore company linked to individuals in Russia or Ukraine.

We previously described the strategy of casting a wide net to search for beneficial ownership disclosures as “panning for gold.” We can use targeted search terms to implement this approach with Russia’s Central Bank website.

Central Bank documents provide ownership information for banks registered in Russia. Helpfully, these documents disclose not only who ultimately owns the bank but also any/all intermediary companies through which they own it.

In this case, we are starting with individuals of interest, not companies. Instead of looking for a specific bank’s shareholders, we want to find any documents where the Rotenbergs appear as beneficial owners.

With this intention, we will site search the Central Bank website with the following parameters:

Fig. 4: In this query, “site:cbr.ru” limits our search to documents hosted on the Central Bank’s website; “filetype:pdf” restricts the results to PDF documents; and “Ротенберг” is the Russian spelling of Rotenberg.

This search yields fewer than 10 results, several of which show Arkady and his brother Boris Rotenberg’s ownership of SMP Bank. Although this is interesting, it’s not what we want to find: these documents show Arkady and Boris Rotenberg’s direct ownership of the bank. What we are looking for is the Rotenbergs’ offshore holdings.

Among the search results is a document disclosing shareholding and beneficial ownership information for BNKB Joint-Stock Commercial Bank. Igor and Arkady Rotenberg are listed as ultimate beneficial owners (see Fig. 5).

Fig. 5: PJSC Mostotrest owns 3.96% of BNKB Joint-Stock Commercial Bank, and Marc O’ Polo Investments Limited owns 38.6% of PJSC Mostotrest. Sunstone Holding Limited and Honeycomb Holdings Limited jointly own Marc O’ Polo Investments (both 50%). Sunstone is beneficially owned by Igor Rotenberg and three other individuals, and Honeycomb is beneficially owned by Arkady Rotenberg.

Igor and Arkady Rotenberg own BNKB Bank through three intermediary companies. Although their jurisdictions are not disclosed, some quick internet sleuthing reveals that Marc O’ Polo Investments and Sunstone Holding are registered in Cyprus, and Honeycomb Holdings is registered in the BVI.

In just one Central Bank document, we found three offshore companies that the Rotenbergs own. This exercise can be repeated with any individual who may directly or indirectly own shares in Russian banks.

Think of offshore locations not as “dead ends” but as opportunities to get creative in your investigative strategy. Look for offshore companies’ activities in third party jurisdictions that disclose beneficial ownership and information on intermediary companies. You may just strike gold!

Sayari Graph provides access to the fully text-searchable Ukraine corporate registry and other public records! If you’re curious how this data could drive insights for your team, please reach out here.