The Toddlers of Oligarchs Who Own Corporations

17th February 2022 / Global
Toddlers of Oligarchs Who Own Corporations

When Luxembourg opened up its register of beneficial owners in 2019, the new data revealed a surprising fact: that hundreds of children, many the children of oligarch’s own or hold significant stakes in companies based in the grand duchy

A one-year-old Mongolian toddler who owns part of a major coal company in the Gobi Desert. An eleven-year-old Azerbaijani profiting from state contracts with Turkmenistan and China. A Russian teenager who counted investments in Canadian and Californian pension systems among her billions of dollars of assets.

These are just a handful of the nearly 300 minors who owned or controlled significant stakes in Luxembourg companies as of 2020, an investigation as part of the OpenLuxproject has found.

While it is not illegal for children to own companies in Luxembourg, some of the names identified by OCCRP and its partners should have raised red flags. They included minors whose parents are oligarchs, criminals, and people with close ties to politically influential figures. A quarter of them were even younger than the entities they owned.

In 2019, Luxembourg published a register of “ultimate beneficial owners” — the true owners of companies, as opposed to proxies or nominees — for the first time, giving an unprecedented look into who has benefited from the country’s financial secrecy.

At the time, authorities offered a three-year exemption to any owners considered to be at risk of fraud, abduction, blackmail, extortion, or harassment if their names were published. That means the tally of minors is likely to be an underestimate since children could easily request such an exclusion. A further 290 Luxembourg company owners were just 18 or 19 years old when they were declared to the registry, making it possible that they were also minors when they took ownership.

Why would children own companies, including some with many millions of dollars worth of assets? In a family-run business, parents might want to give their children shares as part of a long-term inheritance plan. But the fact that many were not even born at the time the companies were founded — and parents sometimes nowhere to be seen in company documents — hints at another possible reason: To add a layer of secrecy ahead of Luxembourg’s deadline to publicly declare assets.

Roman Borisovich, a transparency campaigner, told OCCRP that with inheritance plans you would expect to see trustees or others acting on a child’s behalf included in the registry.

“One-year-olds are not making decisions and running these companies.,” he said. “[I]t’s clearly smoke and mirrors [masking] the real owners.”

Although the country’s banking regulators are scrupulous, he said, many Luxembourg companies exist only to hold assets abroad — meaning they aren’t subject to oversight from those regulators.

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“Assets can be owned by six-month-olds, or by FBI most-wanted criminals. But nobody is checking as long as it’s an asset and not cash. Everything else just goes straight under the radar.”

In just one example of many, exposed by the OCCRP report entitled – “Boss Babies: The Children Who Own Hundreds of Luxembourg Corporations” a Russian family shows how it’s done using the tax havens of the British Virgin Islands (a British overseas territory), Panama and Luxembourg.


Russian oligarch Sergei Adoniev

For years, the identity of the owners of the Luxembourg-based company Felicity International S.A. proved too secretive for even French authorities to crack. In 2014, amid a probe into a multi-million-dollar fraud scheme, investigators wrote to the British Virgin Islands (a British Overseas Territory) seeking information about the company’s founding shareholders.

Felicity had been incorporated by two offshore shell companies, one based in the British Virgin Islands and the other in Panama, but they had been dissolved in 2011. The trail went cold.

It was only in 2019, when Luxembourg compelled companies to begin listing their beneficial owners, that Felicity declared it was owned by three siblings with Bulgarian citizenship. At the time, the youngest was 15 years old.

OCCRP has since identified them as the children of Russian telecoms oligarch Sergei Adoniev, who obtained Bulgarian citizenship under the country’s golden passport scheme in 2008, then had it revoked in May 2018 after authorities there discovered his criminal record. In 1998, Adoniev was convicted in the United States of defrauding the Kazakh government out of $4 million through false sales of Cuban sugar.

In 1999, he was deported from the U.S. to Russia, where he was able to establish a telecommunications empire while receiving investment and support from various figures linked to the Kremlin and state-owned companies, according to OCCRP partner Bivol. In 2000, the LA Times reported that the FBI also suspected Adoniev of being behind a 1.1-ton shipment of Colombian cocaine seized at the Russian-Finnish border in 1993.

Felicity International was set up the same year Adoniev was deported — before two of its three current owners were even born.

According to annual accounts, the Luxembourg firm — and thus Adoniev’s children — are the owners of the 25-million-euro Villa Violettes, a four-story property overlooking the sea on a headland in Cap d’Ail on the French Riviera. Felicity bought the property in 2006 when the three were approximately 9, 3, and 2 years old. In 2015, the company also purchased a “computer database” for 450,733 euros, which today counts among the oligarch’s children’s assets.



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