Special thanks to Chris Albon for his contributions to this research.
Ukraine has a mafia problem. The country was already overrun with gang activity shortly after it declared its independence, and, for most of the country’s formative years, business oligarchs, mobsters and corrupt officials all merged to build a fundamentally corrupt government run by organized crime.
Perhaps more troubling is that criminal syndicates throughout Ukraine have close ties to some of the largest and most powerful Russian mobs. This is the same infamous Russian mafia that was allegedly instigating and organizing much of the recent violence in eastern Ukraine, and is closely tied to the Russian political elite. They are incredibly powerful, well protected, and very rich.
However because the mafia generates revenue by drug smuggling and human trafficking, their money needs to be laundered, and since the 1980s it’s been increasingly common to do that abroad. While the mob launders its money in many places around the world, London has traditionally been a popular choice.
That’s no accident. Britain lets businesses move money into offshore companies in the British Virgin Islands. These “BVI” institutions are tax-free, and operate almost entirely in secrecy — even the Virgin Islands government doesn’t know who really owns the companies or what they do. Not surprisingly, prominent Russian billionaires have been exploiting these offshore tax havens for years, and the assumption is that less public members of the mafia are doing the same thing.
The Mob, the Money, and the Mayhem
Working off a hunch, Eliot Higgins, an open data journalist and founder of Bellingcat, suspected that the Russian/Ukrainian mob was funneling their cash through just this sort of quasi-legitimate British company. He’s been investigating Ukraine since Russian-backed troops began annexing eastern Ukrainian cities late last year, and is closely monitoring the organized crime syndicates operating in the region.
Using Eliot’s tip and a public database of registered UK companies, we started digging for the smoking gun — sham companies, shady business connections, or at least organizations with the capacity for offshore money laundering.
Anyone doing business in the UK, even in the British Virgin Islands, has to register their company with the government. The most common way to do this is by forming a “private limited company.” Like the name implies, these organizations aren’t accountable to public shareholders. They’re also independent legal entities, which means the owners aren’t liable from any of the company’s debts or financial obligations. There are plenty of legitimate reasons to form a limited company, but they’re also a handy structure for legally stashing cash without raising eyebrows.
Every limited company registers with a unique name, an address, and at least one employee to serve as its director. However people can be directors of multiple companies, companies can be directors of other companies, and of course both people and companies can be associated with multiple addresses. Basically it’s a mess, but it’s important to untangle this complex web of relationships to understand how the money might flow.
Untangling the Web
Another way to think of a web is a network. The concept of a network is simple — it’s just a way to model how some things are connected to other things — but behind this basic idea is a powerful way to understand and unravel a system of complex relationships. For example how websites are linked to one another across the World Wide Web, or the cliques that form amongst high school students, or even the links between dozens of shady sham companies that might launder money for the mob.
The network of registered UK businesses contains over 18 million people, companies and addresses. Some of these companies are massive institutions with many locations and subsidiaries, while others are tiny businesses with a single director and no connection to anything else. Neither companies with thousands of connections nor those with only one or two are likely hubs for ill-gotten gains, but right in the middle of the network there’s a sweet spot — people well-connected enough to have access to large sums of money, but not so prominent that they’d draw unwanted attention.
This is where you’ll find a guy named Damian Calderbank.
We learned about Damian from Eliot, but he’s been known to the UK government for awhile now. Back in 2014 the Telegraph reported that his businesses were under investigation for their part in a £20 billion money laundering scheme. In 2010 the Guardian suggested that his association with a handful of companies was essentially a sham. He’s listed as the director of a number of different UK businesses, but his LinkedIn profile lists him as a mere “event consultant” based in Dubai. Other websites suggest that Damian is an avid guitarist, or perhaps even an aspiring photographer.
Does this mean some guy in Dubai with artsy hobbies is a titan of business in his spare time? For the sake of argument, let’s assume that Damian’s entrepreneurial endeavors are, in fact, a facade. If that’s true, his network profile can be a template — essentially a fingerprint for fraudulent business practices that can help identify other dubious directors (i.e. people like Damian) buried deep in the network.
Of course, it might be that mafia-friendly money launderers look just like anyone else on paper. If that’s true, Damian probably won’t stand out in the network of UK people, places and companies. However if Damian’s network profile is a little odd when compared to his peers, chances are higher that people with similar profiles are at least suspicious, if not equally nefarious.
So where does Damian stick out?
The majority of people and businesses are connected to less than 20 addresses. Damian, however, is associated with 123. That’s a relatively large number of connections, which is odd, but things really start to get interesting when we look at how he’s connected to everything else.
It turns out that, in addition to being associated with a weirdly large number of addresses across the UK, Damian is a kind of bridge between otherwise unconnected pockets of the network. He, along with a tiny fraction of the other people, places and companies, are central hubs of information — they’re hyper-connected anomalies in a network of otherwise entirely isolated little clusters.
Most people, places and companies are so disconnected from the rest of the network that their blue dots are too tiny to see, whereas this small group of super-connectors dominates the graph. Damian is indeed an oddball, although he’s clearly not alone. This isn’t enough information to suggest that all the little blue dots are hiding money for Ukrainian hit men, but let’s take a closer look and see who else matches Damian’s unusual network profile.
Most of the people on this list have legitimate explanations for their prominent place in the network. They’re directors of financial institutions, like Geoffrey Melamet, established property developers, like Vincent Goldstein, or well-connected entrepreneurs, like Ian Houghton. Daniel Levy is practically a public figure as the chairman of the Tottenham Hotspurs, a celebrated soccer team in England’s Premier League.
However, when the people on this list are compared against those connected to the highest number of addresses (like Damian), we’re left with the four names highlighted in red. A closer look reveals that, unlike hedge fund managers and real-estate tycoons, the network profile of these four people simply doesn’t add up.
Jamie Thompson, despite being a seemingly well-connected, prominent entrepreneur, has almost no online presence except for his mention in Offshore Leaks. That’s a database that tracks the flow of funds to offshore companies, maintained by the Washington-based International Consortium of Investigative Journalists.
Peter Mwanje is another mystery. He’s supposedly the director or former director of dozens of companies, but yet practically absent from the Internet — except for his UK Companies House registration and a short mention on a website titled “Fraud and Corrupt Practices in Prague and in London.”
Of course we’ve covered Damian Calderbank at length. The hobby guitarist and photography enthusiast is the director of multiple businesses while somehow invisible to the Internet outside of his artistic pursuits and ties to billion-dollar money laundering scandals.
Most notable though, is Brenda Cocksedge, the woman with the most direct ties to eastern Europe. In 2012 she was accused of lying about her ownership stake in one of many companies suspected of secretly transferring Russian and Ukrainian funds to the UK.
Where We Go From Here
It looks like it’s possible to identify sham directors and shady businesses by investigating their relationship to other people, companies and addresses in the network of registered UK businesses. However it’s a big leap to assume that just because people might be able to disguise funds transfers and launder money that they in fact are running front companies for the Ukrainian mafia. So to be clear: we are not accusing Damian, Jamie, Peter or Brenda of anything other than looking suspicious.
That said, given that three out of the four people our analysis identified were independently accused of fraud, money laundering or directly assisting the transfer of Russian and Ukrainian funds into UK businesses, anyone matching the network profile we’ve established and the companies they’re associated with are good candidates for further scrutiny.