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For the past 18 years, John Devitt has been campaigning to “give crooks fewer places to hide”. He was among the founders of the Irish chapter of the Transparency International network in 2004, along with the likes of former taoiseach Garrett Fitzgerald and economist Colm McCarthy.
He still runs the organisation today and, on this week’s podcast, he discussed renewed interest in the use of Irish corporate structures by shady interests in the light of growing international sanctions against Russia.
“I think that the invasion of Ukraine has just focused minds on the direct impact that corruption can have on ordinary people,” Devitt said. He has years of experience working across the former Soviet Union and believes the millions of refugees and thousands of deaths recorded so far are just the beginning.
“This conflict will run on for some time, I’ve no doubt that Putin will turn Ukraine’s cities to dust if he can get away with it. And it’s in large part as a direct consequence of corruption in Moscow. We could see a pattern of decisions made in Moscow, which point to an attempt to exert control not just at a national level in Russia, but also regionally, in large part because of attempts, most notably in Ukraine over the last eight years or so, to move towards a more liberal democratic model of governance, to open up government to greater public scrutiny.”
Devitt said that an asset register for public officials in place since 2017 and published information on public contracts reach further than in most European countries – a model the Kremlin did not want to see develop so close to Russia. “A move towards liberal democracy in Ukraine poses as much if not bigger a threat to the established order in Moscow than any Nato enlargement.”
And when you follow the money, you often end up in Dublin. “We’ve known for years that Ireland and other offshore financial centres have been used as vehicles to launder the proceeds of corruption in Russia and elsewhere in the former Soviet Union,” said Devitt.
Before the latest round of sanctions and their Irish connections analysed by The Currency, Devitt said past examples included between $100 and 300 million frozen by the High Court in 2015 in an Irish company ultimately owned by the daughter of the former president of Uzbekistan and believed to be the proceeds of bribes associated with a mobile phone licence in the country.
He adds that Ireland is the second biggest home for private investment funds in the EU, identified by the FBI as a channel of choice to launder the money of various “threat actors”. So, what has Ireland done to keep those financial flows and the Irish vehicles channelling them under watch? Precious little, according to Devitt.
“We calculated that is in the region of 1,700 suspicious transaction reports each member of the gardaí has to inquire into each year, it’s impossible.”
He pointed out that the Garda Financial Intelligence Unit in receipt of nearly 30,000 suspicious transaction reports every year had 17 staff. “We calculated that is in the region of 1,700 suspicious transaction reports each member of the gardaí has to inquire into each year, it’s impossible. They don’t have the resources to deal with it.” This compares with 700 per officer in Australia, while Sweden has around 40 staff to deal with a similar number of reports to Ireland’s, he added.
This is complicated by the fact that many Irish entities handling assets on behalf of overseas companies or individuals do not disclose their ultimate beneficial owners, Devitt added – because they are legally owned by trustees, and returns filed to the Register of Beneficial Ownership and to the Companies Registration Office are not verified in any systematical way.
To address this issue, Transparency International has called on the Irish authorities to make all such company filings freely available to the public. “The State isn’t going to invest enough resources to deal with this, we need to apply the many eyes principle here,” Devitt said.
While the typical €2.50 charge per document download is a deterrent to scrutiny by journalists, shareholders, activists and other members of the public, Devitt believes it hardly covers the administration cost of recovering those charges in the first place. “It makes absolutely no economic sense, but also serves as a barrier to that information, which doesn’t serve any public interest,” he said.
“We shouldn’t need to have a smoking gun for us to understand the risk that crime might be committed, we need to take a proactive approach to risk management and that involves not just having those resources in place for investigation and due diligence, but also making the corporate information freely available, so as to reduce the burden on state agencies.”
In the meantime, Devitt warned that the lack of monitoring and enforcement in the financial services industry meant international criminal or political operatives could continue to use Ireland as a base. “I don’t think we really understand the national security risk posed by the use of these vehicles to launder the proceeds of crime or to fund non-state actors who might undermine democracy, fund political parties in the US or campaigns such as Brexit,” he said.
Coming back to the war in Ukraine, he added: “We’re not going to be able to impose meaningful sanctions on Russia or on those oligarchs if we don’t close loopholes that allow them to hide behind shell companies or intermediaries that act on their behalf.”
Transparency International Ireland operates a helpline for whistleblowers seeking to report financial wrongdoing in a safe way. Its freephone number is 1800 844 866 (+353 1 554 3965 from outside of Ireland) and further contact information is available at www.speakup.ie
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