We’ve created an automated search tool that crawls Companies House data to find companies with fraudulent accounts. It’s found hundreds of dubious companies, the worst of which claims £100 trillion of assets.
Our findings suggest that Companies House is asleep at the wheel. But they also show that it would be straightforward to clean things up, and stop the widespread abuse of UK companies by international fraudsters.
We published a report on Saturday on Avis Capital Limited. It claims to be a “bank” and to have £58bn of net assets and 150,000 employees. But none of that is true; it filed fake accounts as part of what we believe was an international fraud.
Our search tool draws up a shortlist of suspicious companies by looking for characteristics similar to Avis Capital: companies that claim to be carrying on a regulated activity, aren’t in fact regulated, and claim vast – and unbelievable – cash holdings, whilst also claiming to be dormant.
There are a large number of such companies.
We’ll be publishing more lists of these companies in the next few days; we’ll then publish the search tool and full instructions so that others can use it.1
40 fake venture capital companies
Here’s how to find companies with false accounts:
- Chose a category of business that’s attractive to a fraudster. Today we’ll pick venture capital: the business of raising funds from investors and using it to fund early-stage startups.
- Search every company registered with Companies House that has a venture capital standard industrial classification (“SIC”) code. (Companies can pick whatever SIC they like.)
- Look for “venture capital” companies that aren’t regulated by the Financial Conduct Authority. Fraudsters usually steer clear of the FCA.
- Of those, find the companies with accounts claiming they’re holding a large amount of cash, over £10m.2
- Finally, see which of the cash-rich unregulated “venture capital” companies claim to be inactive (or “dormant“). A company that really had £10m would have entries in its accounts: income on the £10m, tax, and fees and other expenses. And that means it wouldn’t be dormant.
The result is a list of 40 “venture capital” companies with impossible accounts:
(Click here to view fullscreen; you can download a spreadsheet version here. You can click on the company numbers to jump straight to the Companies House entry and see the full accounts.)
Top of the list: Novateur International Group Ltd. It claims to have £49 trillion cash, and net assets of £100 trillion. That makes it thirty times more valuable than Apple.
Novateur’s website says it’s “an emerging conglomerate providing innovative solutions to businesses and public sector organizations”. It’s owned by a Nigerian man called Kelvin Adejo.3
Two commentators below pointed out that the various “Bandenia” companies on the list were part of an substantial Italian/Spanish money laundering operation which was mostly shut down in 2022/23.
We can’t know at this point how many of the others are frauds. They might be mistakes (although it’s hard to see how). They could be people playing games, or even just showing off to friends. But when we see companies with names like “US Fidelity and Guaranty Financial Group Ltd” and “BBP Banqueros Privados Ltd“, with obviously false balance sheets claiming hundreds of £m in cash, it’s hard to see any purpose other thank to defraud people.
We know fraudsters create accounts like this deliberately, to fool people into thinking their companies are valuable. We’ve spoken to someone who lost a large sum of money to Avis Capital after being shown its UK accounts. Many people, particularly people outside the UK, assume that if accounts are on Companies House then they must be correct. In fact, Companies House applies no standards at all.
What should Companies House do?
Nobody expects Companies House to undertake a detailed audit of the millions of registered companies. But they should be able to use an approach similar to ours to identify companies with obviously false accounts.
Swift action can then be taken:
- The Companies Act imposes civil penalties where the accounts rules are not followed. A company that’s filed false accounts for years will have incurred multiple £3,000 penalties. These should be immediately charged.
- The directors have committed a criminal offence unless they can show they “took all reasonable steps” to comply with the rules. That defence seems unlikely to be available for companies with false billion pound balance sheets. The consequence is an unlimited fine, and potentially imprisonment.
- Most importantly: Companies House has a duty to ensure the integrity of its records. It should use its powers to remove the false accounts from the register.
- It would be sensible for the false accounts to be still available for viewing, but with a prominent health warning that they have been withdrawn.
- And, for the future, Companies House should flag companies with anomalously high balance sheets for manual review.
One thing is for sure: the fraudulent use of UK companies will continue until there are clear adverse consequences for fraudsters.
Many thanks to the accountants and forensic accountants who assisted with this report, particularly P and J.
And thanks to Companies House and the Financial Conduct Authority for their commitment to public access and open data. Companies House has a woeful history of policing its own register. But its technology is excellent, one of the best in the world, and the access it gives researchers (for free) is laudable.
Footnotes
It’s quite rough at the moment and not very usable; we hope to take it to the stage where anyone familiar with the Mac/Linux command line will be able to use it – it may or may not work on Windows as well. Unfortunately the amount of storage and processing power required means it would be too expensive for us to turn it into a web app. ↩︎
By this we mean “cash at hand and in bank” rather than share capital which is issued and unpaid. “Cash” for this purpose can include liquid securities like bonds. ↩︎
There are signs someone is trying to tidy up the company’s filings, for good reasons or bad. A recent application reduces its share capital to £1,000. However there has been no attempt to correct the historic accounts showing £100 trillion. ↩︎
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