Icelandic bank's dealings with Kevin Stanford company questioned

Details of loans made by failed Icelandic bank Kaupthing to a company owned by British retail entrepreneur Kevin Stanford have been sent to criminal investigators in Iceland by the local financial regulator amid allegations of market manipulation before the bank's collapse last October.

The focus of the allegations concerns whether Kaupthing entered into transactions that moved the price of certain complex derivatives indicating the bank's financial health. These prices had been among the first warning lights flashing over Kaupthing's stretched finances.

There is no suggestion of illegality on the part of Stanford or his companies. Stanford could not be reached for comment. The entrepreneur owned stakes in chains including fashion retailer All Saints, House of Fraser and Mosaic Fashions. Many of his holdings are believed to have been taken back by the bank.

The move underlines how a handful of high-profile British entrepreneurs and businesses may have been drawn into a labyrinthine web of poorly collateralised loans and cross-investments that increasingly came to characterise the dangerously outsized Icelandic banking system in the years before the meltdown.

Other British names to have suffered, directly or indirectly, following the Icelandic banking collapse include property expert Robert Tchenguiz, Kaupthing's largest customer; former JJB chief executive Chris Ronnie; West Ham Football Club; and the Baugur empire of UK high street chains, including Hamleys, French Connection, Karen Millen, Oasis and Principles.

This week leaked internal papers revealed Stanford had been one of Kaupthing's largest clients with borrowings of €519m (£443m) as at September last year. He was also the bank's fourth largest investor, holding 30.9m shares.

The focus of Icelandic regulators' attention has been trades in Kaupthing credit derivatives carried out last summer by Trenvis, a Stanford-owned British Virgin Islands company. The firm had been set up by Kaupthing and received loans from the bank of €41.7m. The regulator is understood to be examining allegations this was an attempt on the part of Kaupthing to manipulate rapidly deteriorating investor confidence in the bank, Icelandic newspaper Morgunbladid reported.

A banking source with detailed knowledge of the trades said the intention was in fact to counteract what Kaupthing believed were the activities of hedge funds set on stirring up investor panic around Iceland's largest bank.

A letter from former Kaupthing chairman Sigurdur Einarsson, containing a candid explanation of the strategy, was leaked to the Icelandic media this year. In it, he explains how, last summer, certain prices for Kaupthing credit derivatives had suggested rising concerns about its finances despite measures taken to reduce risks.

"At the same time we received numerous indications that credit default swaps on the bank were being played with. Journalists abroad let us know that false information and rumours about the bank were being [repeatedly spread], often by public relations people which seemed to have been hired for that purpose. A debate on whether the credit default swap market was being manipulated became more common and not just limited to Iceland."

Credit default swaps are bought by investors as insurance against a company defaulting on its debt. They are also widely traded and their pricing gives an indication of investors' view of a firm's creditworthiness.

Einarsson said he had compelling evidence that Kaupthing credit derivative prices were showing sharp movements despite little or no genuine trades taking place. "Those increases and others became reason for negative reports about the bank's position, both domestically and abroad," he said.

Einarsson said the idea of arranging an intervention in the market for Kaupthing credit derivatives had come from Deutsche Bank, though Deutsche is understood to dispute this. Einarsson said: "On a proposal from Deutsche Bank it was decided to put to the test what would happen if the bank itself would start buying these credit default swaps. It was, however, not a simple issue, as the bank cannot buy credit default swaps of itself. Therefore [we] resorted to getting clients we trusted well and had long-standing relations with based on trust and loyalty to engage in these transactions on behalf of the bank.

"Of course we would never have engaged in these transactions had it not been for those unique circumstances. The transactions were made with the interests of the bank as a guiding light and fully in accordance with laws and regulations."

Authorities had initially ruled Shelley Tyre's death an accident and turned her body over to husband David Swain

A US scuba shop owner and former town councillor goes on trial this week accused of drowning his wife 10 years ago while on a diving trip in the British Virgin Islands.

David Swain has been in jail in Tortola for more than two years, since authorities on the tiny Caribbean British overseas territory reopened a murder inquiry after initially ruling Shelley Tyre's death an accident.

Swain, 53, maintains his innocence and says he does not know what happened to his wife after the pair separated under the warm water.

In March 1999, Swain and Tyre, both experienced divers, took a holiday on Tortola with another couple. The two families chartered a yacht and spent an idyllic week diving off the coast of the lush, mountainous island. Tyre, a 46-year-old teacher, was Swain's second wife; they had been married about five years.

On the last day of the voyage, Swain and Tyre slipped into the water over two tugboat wrecks. Swain resurfaced alone several minutes later. The couple's travelling companion dived under and spotted Tyre's yellow fin embedded in the sand about 80 feet below the surface. He found Tyre's body a few minutes later, facing up, her eyes open and her scuba mask missing. Tortola authorities ruled the death an accident and released the body to Swain, who returned to the state of Rhode Island in the US, where the couple lived.

By 2002, Tyre's family remained unsatisfied with Swain's explanation of her death, and filed a civil suit accusing him of killing her.

At the trial, Tyre's parents' attorney said that Swain cut off Tyre's air supply and held her underwater until she drowned. The lawyer said Swain killed her because he was pursuing a relationship with another woman and knew Tyre would leave him with no money if they divorced.

Expert witnesses testified that Tyre's broken mask and missing fin, as well as other evidence, indicated she had been deliberately killed.

"Terminal violence ... deprived her of her air supply," testified Bruce Hyma, a Florida medical examiner who put Tyre's death down to "homicidal drowning".

Swain put up little defence, presenting only one witness: his daughter from a previous marriage who testified to his peaceable character. After deliberating for less than three hours, a jury found that Swain intentionally killed Tyre and awarded her family nearly $5m (£3.1m).

Authorities in Tortola reopened a criminal investigation and charged Swain with murder. His family says he is well respected by fellow inmates and he has taught some of his younger cellmates to read.

"I've listened to Dad pour his heart out many times about how much he loves and misses Shelley," his daughter Jennifer Bloom wrote on a website to raise money for his defence. "He is a kind, thoughtful man who enjoys the smaller details of the outdoors, completely incapable of acts of violence."

The affair echoes a case in Australia, where American Gabe Watson was jailed for a year and a half after pleading guilty to manslaughter in connection with the 2003 drowning death of wife Tina on their honeymoon. Australian prosecutors said Watson turned off his wife's air supply and held her underwater. Back in the US, officials in Alabama plan to seek capital murder charges against Watson when he is released.

US scuba shop owner David Swain found guilty of 'near perfect murder' during holiday in the British Virgin Islands

A US scuba shop owner and former town councillor was convicted yesterday of drowning his wife during a diving trip 10 years ago in the British Virgin Islands.

David Swain was found guilty of what prosecutors called "a near perfect murder", after jurors on the island of Tortola heard evidence that he swam up behind his wife, Shelley Tyre, tore off her scuba mask, shut off her air and held her until she drowned.

Swain maintained that Tyre drowned accidentally. The jurors convicted him unanimously on expert testimony and circumstantial evidence.

No DNA evidence or eyewitness testimony tied him to the death, and defence lawyers argued that a botched autopsy report could not rule out a heart attack or other natural causes. Swain now faces life in a Caribbean prison.

"My father is an innocent man," said his son, Jeremy Swain.

Tyre's father, Richard, who with her mother came to suspect Swain's role in their daughter's death when he was unable satisfactorily to explain to them how she died, addressed the court after the verdict.

"We're old, we're in our 80s, and when Shelley was killed our life pretty much ended," he said, according to the Associated Press.

In March 1999, Swain and Tyre, both experienced divers, took a holiday on Tortola with another couple. The two families chartered a yacht and spent an idyllic week diving off the coast of the lush, mountainous island. Tyre, a 46-year-old teacher, was Swain's second wife; they had been married for about five years.

On the last day of the voyage, Swain and Tyre slipped into the water over two tugboat wrecks. Swain resurfaced alone several minutes later. The couple's travelling companion dived under and spotted Tyre's yellow fin embedded in the sand about 25 metres below the surface. He found Tyre's body a few minutes later, facing up, her eyes open and her scuba mask missing.

Tortola authorities ruled the death an accident and released the body to Swain, who returned to the state of Rhode Island, in the US. In 2002, Tyre's family filed a civil suit accusing him of killing her. The trial foreshadowed much of the criminal case Tortola prosecutors built against him. After deliberating for less than three hours, a jury found that Swain intentionally killed Tyre and awarded her family nearly $5m (£3.1m).

Authorities in Tortola reopened the criminal investigation and charged Swain with murder. He was arrested and extradited to the island about two years ago.

Swain is expected to be sentenced next Wednesday. He faces life in prison.

A British Virgin Islands judge says David Swain must serve at least 25 years of a mandatory life sentence

A British Virgin Islands judge ruled today that a former Rhode Island dive shop owner must serve at least 25 years of a mandatory life sentence for killing his wife on a Caribbean scuba outing in 1999, rejecting his lawyers' bid for leniency.

Justice Indra Hariprashad-Charles said the premeditated nature of the crime bound her to deny a defence request that David Swain become eligible for parole after 18 years in prison.

"It is my view that this murder was carefully planned and premeditated and calls for stiff punishment," the judge said.

The judge granted Swain about two years credit for time served. The 53-year-old is to serve his sentence at a Balsam Ghut prison on Tortola, a mountainous island about 90 miles east of Puerto Rico.

A jury unanimously convicted Swain on 27 October of murdering Shelley Tyre in what authorities portrayed as a near-perfect crime.

Tyre's drowning near an isolated shipwreck at a depth of 24 metres (80 ft) was initially ruled an accident, but authorities in the British Virgin Islands charged Swain with murder after a 2006 civil trial in Rhode Island found him responsible for her death.

The civil jury awarded Tyre's family $3.5m (£2.1); Swain filed for bankruptcy and has not paid the sum.

In the criminal trial, prosecutors argued that Swain killed Tyre to pursue a romance with another woman and get his hands on his wife's money.

Swain's lawyers plan to appeal the verdict. His daughter, Jen Swain Bloom, said evidence that would have helped her father was improperly barred from the trial.

"My family, and my father's friends and colleagues are still 100% in support of my father, and his innocence," Bloom wrote in a letter to local journalists. "No one that has spent any time with or actually knows my father thinks he should spend one more second behind bars."

No eyewitnesses or DNA evidence linked Swain to the murder. The prosecution's case rested largely on experts who testified they believed Swain wrestled his wife from behind, tore off her scuba mask and shut off her air supply while they swam near the shipwreck.

Her mask was damaged, the mouthpiece of her snorkel was missing, and her fin was found embedded in a sandbar all signs of a struggle, prosecution witnesses said. The defence called it a weak case that lacked physical evidence and was built on speculative theories and circumstantial evidence designed to roil the emotions of the jury.

Quintessentially, a concierge service set up by Prince William's friend Ben Elliot, is under fire for helping clients move assets to the notorious British Virgin Islands tax haven

A luxury lifestyle company founded by the Duchess of Cornwall's nephew, Ben Elliot, is under fire for offering to help Britain's richest individuals avoid tax by shifting their affairs to the offshore haven of the British Virgin Islands.

Quintessentially, founded 10 years ago by Elliot and two associates, calls itself a private members' club with a 24-hour "concierge" service providing anything from fine wines to opera tickets, hotel bookings, art advice and wedding planning to thousands of rich individuals. Celebrity users reportedly include Scarlett Johansson, Sir Richard Branson and Gwyneth Paltrow.

A network of 23 partnership firms in 56 countries, Quintessentially claims an annual turnover of £50m and profits of £7.85m. But in a new venture, it has set out plans to found Quintessentially BVI for "facilitating financial services opportunities" in the Caribbean enclave, including advice on registering companies, establishing offshore trusts and applying for flags of convenience for yachts. "If people want to set up companies in the British Virgin Islands, we can assist there," said Elliot, who described offshore arrangements as "a sensible way to look after your assets".

Elliot brushed aside questions about tax avoidance, describing offshoring assets as something that has "happened since the beginning of time". Elliot, a friend of Prince William, has close links to the royal family – the Duchess of Cornwall visited Quintessentially's club in Soho after it opened last year.

The firm's BVI plan was criticised by John Christensen, director of the Tax Justice Network, who said: "It's just become the norm that wealthy people don't see themselves as part of society and aren't prepared to contribute like the rest of society in paying tax."

Christensen described the islands as a classic tax haven: "It's a very secretive place and it's very popular with high net worth individuals who want to avoid tax. It's very poor in terms of international co-operation in financial investigations … it's a stereotypical offshore jurisdiction."

Quintessentially BVI is promoted on its website and has been extolled by Elliot in an interview. But after enquiries by the Observer, the firm played down the venture, saying it would work instead with a local company in the islands rather than setting up its own Caribbean business "after reviewing demand".

• Banks have control over web of property interests
• One firm, Peverel faces £2.6m claim for alleged overcharging

A complex offshore corporate structure created by Mayfair real estate tycoon Vincent Tchenguiz to hold Britain's largest property maintenance and residential freeholds business, has been quietly surrendered to lending banks.

The freeholds and maintenance contracts are spread across the UK and include thousands of McCarthy & Stone retirement home developments as well as several luxury residential complexes on the banks of the Thames such as St George Wharf in Vauxhall, Charter Quay in Kingston-Upon-Thames and Putney Wharf Tower.

Tchenguiz effectively forfeited shares in a web of holding companies valued at more than £220m two years ago having pledged them, just months earlier, as collateral in an ill-fated attempt to stop Icelandic bank Kaupthing calling in a £1.8bn loan to his brother Robert.

Despite Vincent's efforts, the loan to his brother continued to sink into negative equity and was called in as Kaupthing itself collapsed in October 2008. The collateral backing the Tchenguiz loan was later seized by the bank's liquidators.

The assets underlying shares surrendered by Vincent Tchenguiz amount to a multibillion-pound property empire. It includes a portfolio of residential freeholds which earns hundreds of thousands in ground rents from tenants and leasehold transfer fees from those who sell.

Vincent has also effectively lost control of Peverel, a controversial group of companies which offers property maintenance, repairs and other additional services such as CCTV and buildings insurance.

Accounts filed by UK companies do not make clear that the property tycoon has lost control of holding company shares but the full picture is laid bare in court papers filed as part of a legal claim being brought by trustees to the Tchenguiz Family Trust (TFT) against Kaupthing.

As reported in Saturday's Guardian Money, recent years have seen a groundswell of frustration among tenants, variously claiming unreasonable rises in service charges, buildings insurance charges and leasehold transfer fees.

Some disgruntled tenants claim Peverel companies have also failed to adequately carry out maintenance and repairs. A website, thetruthaboutsolitaire.co.uk, set up by angry tenants, has had almost 160,000 visitors in the last 16 months. Solitaire Property Management is part of Peverel.

Meanwhile, residents at St George Wharf, a 900-apartment luxury riverside development overlooking Parliament, have for years been in dispute with landlord companies, including Tchenguiz-linked firms, and Peverel group service companies. A claim for £2.6m in alleged overcharging, supported by more than 300 residents, is to go before the leasehold valuation tribunal in May.

Much anger has been directed at Vincent Tchenguiz as company accounts for relevant UK-registered businesses state that the ultimate controlling party is the TFT, where the property tycoon is an adviser and a beneficiary.

But court papers from an ongoing case reveal shares in 14 holding companies incorporated in the British Virgin Islands, and a further four UK firms, are under the control of receivers acting for Kaupthing.

Unfortunately for Kaupthing creditors, however, the shares may not hold the value they appeared to promise three years ago. The vast majority of assets within the complex web of companies are already pledged to other banks – Deutsche Bank, Bank of Scotland (now part of Lloyds Banking Group), Merrill Lynch, BayernLB and Allied Irish Banks (UK) – under pre-existing long-term senior loan agreements.

Moreover, these agreements contain so-called "change of control" clauses which give these banks the right to call in loans if Tchenguiz fails to keep control of the corporate structure. Receivers from Grant Thornton, appointed by Kaupthing, could therefore officially take control of the underlying businesses at will. They have not technically done so, however, for fear of triggering a chain of defaults which could leave the shares that Kaupthing took as security from Vincent Tchenguiz three years ago valueless.

According to court papers filed by TFT trustees, Kaupthing's decision to appoint joint receivers over several companies' shares has already triggered various events of default. The papers claim Vincent had repeatedly warned Kaupthing liquidators of "the ruinous impact of … the appointment of receivers … on Kaupthing's security position."

The document claims that, while negotiations are still ongoing, "in effect Merrill Lynch have, as a direct result of the events of default, assumed control of the underlying portfolio, [the parent company behind the Peverel group]."

The bank has converted the loan from a long-term agreement to an overdraft repayable on demand. A 1% additional default rate of interest is being charged, adding pressure on the group to maximise the earnings it can extract from tenants' service charge contracts.

Similarly another big loan, arranged by Lloyds and advanced against part of the ground rents empire, has drifted into trouble. Lloyds, the taxpayer-backed bank, is charging a 1.75% additional default interest on the loan. According to court papers filed by TFT trustees, despite ongoing attempts to restructure the Lloyds loan, the bankers "in effect have … assumed control".

Two of party's biggest corporate donors are controlled from British Virgin Islands, while senior Lib Dems have links to havens

Vince Cable's pledge at the Liberal Democrats' autumn conference to work with allies to close down tax havens may not go down well with two of the party's most generous corporate donors.

The business secretary told delegates he would crack down on those who used secretive, low tax jurisdictions: "No one keeps their cash in tax havens for the quality of investment advice; these are sunny places for shady people," he said.

Danny Alexander, the chief secretary to the Treasury, will on Tuesday announce further measures that he claims will retrieve £3bn hidden from the UK government in one European tax haven.

Alpha Healthcare and its sister company C & C Alpha Group, part of a venture capital group in the private health sector, have together donated £970,000 to the Lib Dems since 2004. Alpha's parent company, Harberry Investments, is based in a small office in Tortola in the British Virgin Islands – named as a tax haven by Congress in the US. Bhanu Choudhrie, a director in both donor companies, has also given a personal donation of £35,000 to the party. His father, Sudhir Choudhrie, who was once involved as a director of companies in the Alpha group but has now stepped down, has given a further £95,000 to the party since 2006.

The Choudhrie family, originally from India, was first introduced to the party by Simon Hughes, the Lib Dem MP for Bermondsey in south London.

Both Choudhries said in 2010 that they were domiciled outside Britain for tax purposes. If this is still the case they can, if they wish, avoid British tax on any income or gains from their overseas assets.

Contacted on Monday, one of the company's directors, Dhruv Choudhrie, declined to comment on Cable's speech, saying he was abroad. A spokesman for the company did not respond to emails or telephone calls.

Some senior Lib Dems have maintained close links to offshore havens. Lord Razzall, a former Lib Dem trade and industry spokesman, sits on the board at a firm called Ardel Holdings. The company is based in Guernsey and offers services including tax mitigation for clients, promising that "income can be rolled up tax free". Ardel helps with tax mitigation through "fiduciary structuring" for businesses and individuals. It also helps non-domiciled UK residents exploit non-taxable offshore funds.

Its website says: "The benefits and flexibility delivered by offshore companies make them a highly attractive option for clients."

Razzall said: "As an adviser to the owner of Ardel Holdings for the last 25 years I have always been satisfied that the business does not engage in activities of the type criticised by George Osborne."

The former Liberal leader Lord Steel is a non-executive director of General Mediterranean Holdings, a Luxembourg-established company set up by Nadhmi Auchi, an Iraqi-born billionaire. Steel said the company's headquarters were in Luxembourg and it held most board meetings there.

At the party's conference in Brighton Alexander will set out new resources to help tackle what he calls "tax dodgers". He will say: "With that extra effort we can recover much more from those who think they can hide their money offshore. Up to three times more – £3bn."

A spokesman for the Liberal Democrats said: "Liberal Democrats are committed to targeting companies and individuals who are using aggressive tax avoidance measures by hiding money off shore. In some cases, there are legitimate reasons for global companies to not base themselves in the UK, and even corporations such as the Guardian Media Group have on occasion used the Cayman Islands.

Regarding the donations from Alpha and C & C, he added: "They are part of global groups which have UK based businesses, paying full UK tax and employing British workers.

"But as Vince Cable and Danny Alexander have made clear, Liberal Democrats will be cracking down on anyone using tax havens to solely avoid paying a fair share of tax in the UK."

From the Caribbean to Cyprus, former Channel islanders are taking money to disguise the ownership of thousands of companies

Many Britons who make a living from "the signing", as they call it, originate from the tiny Channel island of Sark, a notorious British tax haven. Following scandals more than a decade ago over the "Sark Lark", the group scattered, setting up residence in far-flung jurisdictions such as Cyprus, Dubai, Vanuatu, Mauritius, or Nevis in the Caribbean. Many still keep in touch on Facebook.

They make up teams of sham company directors, according to documents the Guardian has seen, taking money to disguise the real ownership of thousands of international companies. This is not illegal, and they generally say they are helping owners preserve legitimate privacy.

Sarah and Edward Petre-Mears, who moved from Sark to Nevis, worked through an agency in Northamptonshire. Some of their companies have been registered in the UK at Companies House in Cardiff.

A Petre-Mears neighbour on Sark, Jesse Hester, went to Cyprus to launch a similar operation called Atlas Corporate Services. He then moved on to Dubai with his colleagues Damien Calderbank and Matthew Stokes, and eventually onward to the small Indian Ocean island of Mauritius.

Hester offers his customers "anonymity of the ultimate owners". He tells them: "The prime advantage … is to place the 'management and control' issue firmly outside a high tax jurisdiction." This allows the owners to claim the company is being run from an overseas tax haven, rather than from where they live.

Hester says he is a genuine director. His lawyer said: "Our client has the right not to execute documents, can alter bank mandates, can enter into contracts, and is free to resign." The accountants and intermediaries he works for carry out identity checks on their clients, he said, and he complied with all legal requirements.

Atlas is associated with 12 people who between them have held directorships of 1,578 companies in the British Virgin Islands (BVI) as well as 4,460 UK companies. They frequently work for Cornhill, a company formation agency run in London by Mark Lance.

Lance said his provision of "non-resident directors for legitimate purposes" for occasional clients was not a significant part of the business. "Cornhill does not deny that the use of non-resident directors is open to abuse," but, he said, he obtained "full proof of identity" from all customers.

A second Cyprus nominee operation is run by Sean Lee Hogan, 41, who has put his name to nearly 100 BVI and 743 UK companies. He often works for a north London offshoring agent, the Stanley Davis Group. Hogan did not respond to invitations to comment.

Two other Britons who share a flat in east London, Ted Cocks and Joseph Sparks, signed up with a Moscow agency, GSL, to put their names and UK addresses on more than 450 BVI entities. The companies were subsequently sold on to anonymous Russians. They say their activities were legitimate.

Geoffrey Taylor and his son Ian have acted as directors for 291 BVI companies and a further 442 in the UK. From the Pacific island of Vanuatu, they offer clients an extra choice of UK or New Zealand addresses. "You can pick the jurisdiction that best suits you," Geoffrey Taylor emailed one potential customer.

Taylor's brochure even offered the opportunity of having him on their letterhead as "Lord Stubbington", a UK manorial title he purchased.

"He can act as director and shareholder for clients without arousing suspicion that he is a nominee only," it said. "In this way he can act as your frontman and attract attention away from you. Lord Stubbington provides your activities with credibility."

Ian Taylor said his father had now retired. "Only a small handful" of the companies they acted for were misused, he said. Nominees were used for various legitimate reasons. "Clients of certain nationalities are discriminated against only due to their citizenship. Some clients require privacy to avoid problems from jealous family members."

As long ago as 1999, Britain's sham director industry was officially struck down – or so it seemed. The minister Kim Howells, in the Department of Trade and Industry, boasted: "The government today struck a fatal blow against the practice of so-called 'nominee directorships'."

The government went to court to disqualify one Sark islander, Philip Croshaw, who was signing his name on company documents thousands of times. Howells said: "The trade in providing 'nominee director' services from the island of Sark has been a scandal … The courts have now effectively outlawed this abuse."

The DTI quoted Mr Justice Blackburne, pronouncing at Manchester crown court: "The message must go out that the office of director is one which carries responsibilities ... The court would not tolerate the situation where someone takes on the directorship of so many companies and then totally abrogates responsibility. If tolerated, it would undermine the whole basis of corporate management."

But the investigation shows that Sark's "nominees" simply moved elsewhere, and were never policed by the DTI or its successors, including the Department for Business, Innovation and Skills.

Microstate is now the world's biggest provider of offshore entities, yet the UK refuses to step in and force it to reform

The British Virgin Islands (BVI) is a micro-state whose national anthem is God Save the Queen. It consists of little more than a few stretches of tropical beach, with a population about the same size as that of the Berkshire town of Windsor.

British lawyers first realised during the 1980s that they could make money by selling financial secrecy there. Margaret Thatcher's abolition of exchange controls allowed British capital to move around freely.

When Panama, the traditional location for obscure offshore entities, was disrupted by the 1990 US invasion, worldwide demand for the corporate anonymity on offer from the BVI took off. More than 1m BVI companies have now been incorporated, according to the latest figures, and it is the world's biggest provider of offshore entities.

The secrecy that is the BVI's stock-in-trade operates at multiple levels. The BVI government normally has no idea who actually owns the tax-free companies or what they do. The only significant information supplied to the official registry is the name of the company's agent – one of the local firms who arrange incorporations and collect the hefty annual fees. The agents will rigidly refuse to release further facts to anyone.

There is only one narrow legal gateway through which it is sometimes possible to squeeze. If shown definite pre-existing evidence of criminal fraud, rather than tax-dodging, the BVI courts will sometimes order a local agent to disclose what it knows.

Even such a rare courtroom victory can be illusory, however. The agents may even then only produce the names of sham nominee directors or shareholders, based in Nevis or Vanuatu or Dubai, where the British legal system is powerless.

The agents may also claim they have no knowledge of the real buyer of the company, because they took all their instructions from a so-called "introducer" based in yet another country, such as Cyprus or Panama. The paperchase can often be costly and almost endless, giving suspects time to empty their accounts and cover their tracks.

British-based offshoring agencies heavily market BVI secrecy. It is not illegal for them to do so, and all insist they never knowingly assist wrongdoing. A typical sales pitch comes from Pendragon Management in London, with an office address in Regent Street. Pendragon is run by a Dutch lawyer, Gerard Kelderman, who has provided Dutch, Belgian and Russian clients with BVI companies through London. He advertises: "You need to find a tax haven with a good record in … financial privacy." The legend on his website reads: "I want to be invisible."

One of the bigger British agencies is the Stanley Davis Group, a family firm with offices behind Euston station, London. It, too, offers BVI secrecy: their services include "nominee officers and shareholders when confidentiality is a key issue".

Another is Fletcher Kennedy, run by Charles Fletcher from Haslemere, Surrey. He promises potential BVI customers: "The names of directors and shareholders do not appear on any public documents."

Johnsons, an accountants' firm in west London owned by Shaukat Murad, is one of the most frank. BVI companies, he claims, provide "Maximum confidentiality and anonymity … Unlike many other jurisdictions, there are no disclosure requirements."

Injections of offshore cash have become a drug on which the BVI is hooked. Last year the territory, presided over by a British governor, Boyd McCleary, collected $180m (£112m) from registration fees, more than 60% of total revenue. The BVI's Its current prosperity depends utterly on the money.

The UK government refuses to step in and make reforms. One reason was candidly spelled out by Michael Foot, a former Bank of England official and Financial Services Authority managing director. He reported to the then Labour chancellor, Alistair Darling, in a Treasury paper published in 2009, saying that to abolish the BVI's secrecy regime "would be likely to result in a loss of business".

Despite the protests of concerned NGOs that corporate secrecy could lead to crime and tax evasion, he rejected transparency, although he conceded it was "attractive in principle". He said the UK should merely "press for improvements" in disclosure by all overseas tax havens simultaneously, at unspecified future international discussions. This was seen by critics as a classic recipe for inaction.

The diplomat Sir Edward Clay, who won plaudits for crusading against corruption in Kenya, gave his opinion to the Times in September about the BVI's secrecy jurisdiction: "The money held in such places comes from all over the world and probably doesn't bear examination– which is why it doesn't get much.

"But it conveniently looks after our payments deficit, and saves us the cost of running our small dependencies … The cost and damage inflicted on other countries by our louche regime at home and abroad makes us vulnerable to charges of hypocrisy and worse."

Three pieces of paper are vital in setting up ready-made companies

Nominee directors are not illegal and can sometimes be useful, for example in preparing "off-the-shelf" ready-made companies. But the legal conjuring trick behind the British Virgin Islands nominee system opens the way to abuses. It depends on three pieces of paper:

1. A promise by a nominee director only to do what the real owner tells them.

A characteristic "nominee director declaration", used in 2010 by the Vanuatu-based Taylor organisation, reads like this: "I, Ian Taylor, Director BRAD LAND LTD, having agreed to the appointment as Director of a company duly incorporated under the laws of the British Virgin Islands [BVI] … hereby declare that I shall only act upon instruction from the beneficial owners."

2. A "general power of attorney".

The nominee secretly hands back all control to that real owner. Typically, "To transact, manage and do all and every business matter … To open any bank account and to operate the same … To enter into all contracts … To collect debts, rents and other money due."

That example, signed by a Nevis-resident nominee director in 2005, gives back control of a BVI offshore company, Kordwell Holdings, to its secret Russian owner, Vladimir Bugrov, in Moscow. One typical agency, the Haslemere-based accountants Fletcher Kennedy, explicitly advertise: "Both the power of attorney and nominee director agreement are confidential documents designed to ensure our clients' privacy." They told us that the website was "a historic one dropped by us some time ago".

The more brazen nominees favour residence in self-ruling havens such as Vanuatu or Nevis because they aim to be beyond the reach of the developed world's tax and legal authorities. But they avoid the BVI itself. Because the BVI recognises British law, local residents could in theory be vulnerable to claims of legal liability from creditors and others. One offshoring agency owner told Russians, his biggest customers according to our sources, that the only people prepared to provide such secret general powers of attorney were those Britons who had emigrated from Sark to more far-flung jurisdictions.

3.A signed, but undated, director's resignation letter.

This supposedly enables a nominee to duck liability in the event of any trouble. Ted Cocks and Joseph Sparks, for example, who share a flat in the East End of London, say this was the only one of the three documents they ever signed, as nominee directors of more than 200 Russian firms, and that they were never involved with the more exotic nominee practices.

In name, Sarah Petre-Mears runs a global empire. In reality it is a sham, an offshore network of porn sites and luxury property vehicles linked by PO boxes and letter drops

At the age of 38, Bradford-born Sarah Petre-Mears is running one of the biggest business empires on earth. Or so it would appear.

Official records show her controlling more than 1,200 companies across the Caribbean, the Republic of Ireland, New Zealand and the UK itself. Her business partner, Edward Petre-Mears, is listed as a director of at least a further 1,000 international firms.

But the true headquarters of this major businesswoman remains mysterious. The UK companies register lists 12 addresses for her, several in London. None are real homes: several are PO boxes, collecting mail for hundreds of locations, while others merely house the offices of incorporation agencies.

Only one listed address, a cottage on Sark, seems genuinely residential. Sark is a remote self-governing tax haven in the Channel Islands, a nine-mile ferry-ride from Guernsey.

Sark indeed was once the Petre-Mears' family home. But inquiries reveal the family left town more than a decade ago. As neighbours and friends working within the local offshore financial industry in Sark scattered across the globe, the couple moved to the Caribbean.

John Parker, the owner of a British incorporation agency, explained in an email: "Sarah and Edward Petre-Mears have dual residence – Sark and Nevis … The reason for this is that the UK government is trying its hardest to stop the 'Sark Lark', as it is known, and they decided to do something about it before it was forced upon them."

Nevis is a tropical dot in the Caribbean, more than 3,000 miles from Sark. A volcanic outcrop plagued by hurricanes, it is barely five miles across and its 12,000 population is smaller than that of many English towns.

Getting to Nevis from Sark requires a long, indirect and infrequent flight to the slightly bigger nearby island of St Kitts, followed by an hour's sea-voyage on the Mark Twain, an ageing boat. Donkeys, goats and chickens roam the Nevis streets. The low houses outside the tiny capital, Charlestown, are commonly roofed with corrugated iron.

But even in this very intimate spot, the Petre-Mears' ghostly business empire is hard to pin down. One possible address corresponds simply to a small PO box in the Charlestown post office. Another, called the Henville Building, turns out to be a branch of the local First Caribbean bank.

Finally, a clue emerges. One local responds: "You mean the English lady? Works with the offshores, right?"

On the far side of the island, the Guardian finally finds a prosperous-looking villa, quite deserted for the summer, with spectacular sea views and a noisy, unchained dog in the garden.

This is Sarah Petre-Mears' home in the sun, where she officially claims to be masterminding battalions of international firms. She also finds time to run marathons and cycle races in New York, Florida and Hawaii, and to bring up her two children on the island.

We tried to ask her about the allegations against nominee directors. But she didn't respond to requests for comment. However, the evidence we have gathered suggests her impressive directorships are a complete sham.

A DHL courier has for years been making regular overseas runs, carrying batches of company papers for Petre-Mears simply to sign in return for cash.

John Parker is one of her UK connections, who registers offshore entities for anonymous clients with her as nominee director. Petre-Mears does not appear to need to know much about the people for whom she passes resolutions, allots shares and helps set up bank accounts. All she has to do is sign her name.

Those names appear on activities ranging from Russian luxury property purchases, to porn and casino sites. Sometimes, such nominees even act as shareholders as well as directors.

Two Nevis islanders, Kellee France and Stanley Williams, were also recruited to sign up as nominees in recent years, adding apparent variety to the list of names for sale.

Parker, the owner of Offshore Incorporations Ltd, who says he is a former special constable in Northamptonshire, posted a photograph of himself online in police uniform this month. After the Guardian confronted him with questions, the picture appears to have been removed. He told us: "Sarah Petre-Mears has acted as nominee for BVI [British Virgin islands] companies which this company has formed … As far as we are concerned, she has acted as a genuine nominee."

He added: "The nominees [the legal owners] act on behalf of the beneficial owners … Every large financial institution in the world uses exactly the same arrangement."

He said: "All arrangements can be used for fraud and theft but we would not accept any client if we knew or suspected that was their intention."

The government of Nevis, a former UK slave colony that now largely runs its own affairs within the Commonwealth, shows no wish to interfere with the nominee trade.

The Nevis premier's spokeswoman Deli Caines talked frankly about the regime's attitude, while a herd of goats wandered into the grounds of her government offices, housed in a former hotel opposite a derelict petrol station.

"The offshores are one of the reasons Nevis and St Kitts are doing well," she said. "Is it locals complaining, or those from overseas? It's not the locals! If Britain is crying about its tax dollars, that's not really a problem for us."

The Guardian/ICIJ offshore investigation has identified 'nominee' directors controlling thousands of companies across the world. But just how many are there?

The Guardian and the Washington-based International Consortium of Investigative Journalists have been investigating the offshore industry and secrecy surrounding it, uncovering a network of individuals willing to appear on official records as directors of companies while acting only on the instructions of its real owners, who stay invisible and off-the-books.

The main story from Monday's Guardian sets out the position:

More than 21,500 companies have been identified using this group of 28 so-called nominee directors. The nominees play a key role in keeping secret hundreds of thousands of commercial transactions. They do so by selling their names for use on official company documents, using addresses in obscure locations all over the world.

This is not illegal under UK law, and sometimes nominee directors have a legitimate role. But our evidence suggests this particular group of directors only pretend to control the companies they put their names to.

The companies themselves are often registered anonymously offshore in the British Virgin Islands (BVI), but also in Ireland, New Zealand, Belize and the UK itself. More than a score of UK agencies sell offshore companies, several of whom also help supply sham directors.

The directors first came to light as a result of the Guardian's investigations into the British Virgin Islands, and it is not possible to get the company lists or totals published below using the official records made publicly available.

Having obtained for the first time total company counts for dozens of individuals, the Guardian then cross-checked the same names at other registries around the world (UK, Ireland and New Zealand) to examine the international nature of these activities.

It is possible some or all of the individuals named below have more companies in further countries, which do not make interfaces available to find directors' companies.

We've published the full table below, showing total numbers of current and former companies across four countries for 28 individuals acting as nominee directors.

If you've got any comments or thoughts on their activities, leave a comment on our main news story today, or (if you'd prefer to comment confidentially), email me at james.ball@guardian.co.uk.

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Latest part of investigation into offshore firms comes as government promises to investigate sham directors

The real identities behind British property deals previously cloaked in secrecy are revealed in the latest part of a major investigation into offshore firms, which prompted the government on Monday to promise that it would investigate any abuses revealed involving sham nominee directors.

Previously secret owners are identified in a sample of almost 60 UK homes and offices, ranging from multimillion-pound commercial premises in the heart of London to a small hotel in Southend, Essex.

They typify the 100,000 such purchasers who have set up offshore companies, largely registered in the British Virgin Islands (BVI), since 1999. The owners of BVI entities use them to hide their dealings in UK property and to take advantage of tax loopholes.

New disclosures about property ownership follow a pledge by Vince Cable, the business secretary, that his department would look at evidence of sham directors putting their names to thousands of anonymous offshore companies.

"We are not complacent or naive. We recognise there are individuals who will seek to abuse or evade," he said. "We will investigate fully any specific allegations and ensure appropriate action is taken … If we identify a need for further action as a result of that review, we will not be afraid to take it."

Cable was responding to a worldwide investigation into offshore abuses by the Guardian, the BBC's Panorama programme and the US-based non-profit group, the International Consortium of Investigative Journalism.

It is not illegal in Britain to use offshore companies to buy property or to exploit tax loopholes. Capital gains tax, inheritance tax or stamp duty on property purchases can often be avoided by offshore owners. The tax breaks open to offshore buyers have attracted a flood of foreign property money into Britain, particularly into central London. This has forced up the capital's house prices in defiance of the recession, often to levels that are unaffordable for ordinary British residents. According to the estate agent Knight Frank, the price of prime residential property in London has increased by 49% since March 2009 – five times more than the UK as a whole.

But, until now, the full scale of this invasion has been hidden by the anonymity conferred on the owners of BVI companies. Britain's land registry controversially allows offshore property owners to keep their true identities secret, despite its official status as a public record.

Owners identified by the Guardian on Monday include:

• Peter Vastardis, who used legal loopholes to sell a London flat to a Latvian businessman without paying stamp duty;

• Raheem Brennerman, a 29-year-old of Nigerian extraction, who borrowed £118m from the Royal Bank of Scotland;

• A Hertfordshire businessman, Lawrie Alderman, whose BVI entity bought London office premises;

• Sir Sam Jonah, former president of Ashanti Goldfields in Ghana, who bought a luxury flat near Regents Park

• Bruce Rockowitz, billionaire head of a Hong Kong garment firm, who used a Cook Island trust as well as a BVI company

• Bobby Wahi, who said he was a United Nations "goodwill ambassador" and acquired 42 properties around Skegness, Lincolnshire before going bust;

• Andreas Stavrinides, who owns care homes and the Skylark Hotel in Southend;

• Yoram Yossifoff, an Israeli lawyer who has acquired more than £1bn of UK property for himself and clients;

• A Rotherham builder, Keith Wilson, who set up two BVI companies to carry out a barn conversion.

The Land Registry's chief executive, Malcolm Dawson, said: "Our register records the legal owner of property, both residential and commercial, whether that is an individual or a company and regardless of whether that company has been registered in the UK or not."

He said the Land Registry was to look into "our practice for capturing price paid" but had no evidence that it was being deliberately concealed.

Investigation names investors exploiting offshore tax and duty loopholes allowing overseas purchasers to buy up UK property

The UK is increasingly turning into a property speculators' haven, thanks to tax loopholes and the offshore secrecy offered by the British Virgin Islands (BVI) that hides many property transactions. We disclose the identities of some of the people secretly buying up Britain.

The Guardian's investigation with the Washington-based International Consortium of Investigative Journalists (ICIJ), covering nearly 60 sample premises, shows how anonymous buyers are taking over more and more blocks of luxury housing.

Some purchasers live abroad; other buyers live in the UK itself while they build up property empires using these artificial structures.

In 2011 alone, more than £7bn of offshore money flooded into potentially tax-exempt purchases of UK houses, flats and office blocks. Most buyers snapped up property in central London. These offshore buyers are a driving force of the capital's spiralling property prices versus the rest of the UK: since March 2009, property prices in prime central London have increased by 49% – five times more than the rest of the UK, according to estate agents Knight Frank.

In our findings, the majority of the offshore transactions used entities registered in the BVI, which accounted for £3.8bn of the total: a continuing steep rise from £2.7bn in 2010 and £1.5bn in 2009, according to Land Registry data. Smaller amounts came from similar entities registered in Jersey and the Isle of Man.

Among the commercial premises in London which have been acquired via offshore entities is the £97m Riverside House, where the Ofcom HQ is on Southwark Bridge, which was bought by Ahron Frenkel through the BVI firm Alphagem, and the £30m The Ark in Hammersmith, whose owner Murray Richards bought it through Centenary Financial Holdings.

Reckless bank loans to offshore entities have fuelled much of the historic property boom, handed over by lenders who subsequently had to be bailed out. British banks had £14.1bn outstanding in loans to BVI and associated offshore entities at the end of 2009, according to UK Treasury figures.

The UK government allows property buyers to hide their identities on the official Land Registry, which is becoming meaningless as a result. Every year, ever more houses are being listed there as owned anonymously offshore.

Since 1999, 94,670 offshore entities have been set up purely to hold UK property. Purchasers pay £800-£1,000 fees to offshoring agencies for the privilege of not having their names made public.

A trenchant government report by a Treasury official, Andrew Edwards, called for an end to this abuse in 2001. He wrote: "Parliament has decided that ownership of property should be in the public domain ... The ability of owners to register land and property under names which conceal rather than reveal who they are flies in the face of the principle which parliament established."

He said a truthful land register would be "invaluable for law enforcement, regulatory and tax authorities", it would "deter the unscrupulous from putting the proceeds of crime into property assets" and would be "helpful in tracing bankrupt persons and combating mortgage fraud". He added, tartly: "If public policy emphasises privacy above transparency, the greatest beneficiaries are likely to be criminals."

The then Blair government rejected his recommendations.

Three major tax loopholes are currently fuelling the secretive offshore property boom:

• No capital gains tax. Offshore entities, provided they are genuinely controlled and managed outside the UK, do not pay any tax on the proceeds of property speculation, unlike resident Britons.

• No inheritance tax. People living abroad, and "non-doms" who say they are only living in Britain temporarily, can legally avoid inheritance tax by buying a house in the name of an offshore entity. It is then considered to be a tax-free holding in a foreign company, not a British asset.

• No stamp duty. Anyone, British or foreign, can legally avoid up to 5% stamp duty being imposed on the next purchaser by holding their house in an offshore company. Upon sale, the company shares are transferred, not the house. The company has to be managed offshore, which also saves 0.5% duty on UK share transfers. These artificial techniques were partly outlawed by George Osborne in this year's budget, but only for the small minority of UK houses worth more than £2m.

Stamp duty loopholes

The London-based developer Peter Vastardis is typical of those we discovered who have used such a technique. He set up VKT Investments, a BVI company with bearer shares that did not show the owners' names. With a bank loan of around £750,000 he bought a house on Park Road near Regents Park, central London, in 2002, with partners from Athens, George Konstantopoulos and Nikolaos Trivyzas. Five years later, the trio sold the company shares to a businessman in Latvia, Valdis Bergins, for more than £1m. No property sale was recorded at the Land Registry, so the SDLT (stamp duty land tax) saved could have been a hefty £40,000.

Vastardis told us: "Everything was proper, nothing illegal about it."

Such loopholes continue to be legal despite the government reform proposals this year, which only apply to mansions worth more than £2m.

Capital gains tax loopholes

The software engineer Yair Spitzer from Golders Green, north London, went into the buy-to-let business with an opaque offshore structure that appears to have sheltered him from capital gains tax. His three north-west London flats made more than £280,000 gross profit over three years.

One flat at Landau House in Kilburn was bought in 2004 for £140,000, with a £100,000 loan from the Kleinwort Benson private bank in Jersey. Let for £1,000 a month, it was resold in 2007 for £185,000. The second flat, at Parade Mansions, Hendon, bought for £140,000, was resold for £207,000. The third flat, at Charlbert Court in St Johns Wood was bought in 2005 for £270,000, let at £1,516 a month and sold on in 2007 for £440,000.

The flats were purchased by BVI companies called Grassedge and Archcourt. Jesse Hester, a professional nominee in Dubai, was listed as director, and the shares were in turn owned by Spitzer's BVI-based Rocklea Trust. As the designated "managing agent", Spitzer continued to control the business. He told us: "We were advised at the time by UK accountants that this structure was appropriate for our circumstances and that it was perfectly legal. Rent was declared to the UK tax authorities."

Complex structures

Some of the British owners that we identified used particularly complex structures. The Yorkshire property developer Keith Wilson, for example, carried out a barn conversion in Rotherham, South Yorkshire, in the name of a BVI offshore company called HMP Ltd. HMP was in turn owned by a second BVI company called Shortgrass, which he also controlled. Jesse Hester in Dubai was nominally recorded as the director. Wilson originally lived close to the farmhouse site, then moved into a £495,000 home in Retford, Nottinghamshire, in 2001. He borrowed £735,000 in 2009 to finance the development. He hoped, according to sources we have consulted, it would become worth more than £1.3m. Wilson did not respond to invitations to comment.

Behind another BVI entity, the so-called Inkwood Property Group, we found a Hertfordshire businessman, Lawrie Alderman, chairman of an advertising services agency, TPS Visual Communications. He set up Inkwood in 2001 and used it to purchase the freehold of central London office premises at Bakers Yard in Clerkenwell. He appears to have then arranged to set up an offshore Barclays account to pay in rents of up to £15,000 a month for sub-letting the offices. Alderman did not respond to invitations from us to discuss these arrangements.

Wealthy foreigners

Some anonymous buyers prove to be wealthy overseas businesspeople, straightforwardly using the generous inheritance tax and capital gains tax advantages offered by Britain. Sir Sam Jonah, the Ghanaian former president of the Ashanti Goldfields company, for example, turns out to be behind the BVI-registered Windsor Properties Holding. He bought a flat in the company's name at Alberts Court, near Regents Park, for £640,000 in 2003. It was later transferred into a Jersey-based offshore family trust. He told us: "I do not reside in the UK, so I was advised to use a BVI company for legitimate tax efficiency."

Another businessman, the billionaire chief executive Bruce Rockowitz, who runs the Hong-Kong-based garment wholesalers Li & Fung, bought a luxury London flat in Cadogan Square, Knightsbridge, and transferred it to an associate using an exceptionally opaque offshore technique.

The flat was held in the name of a BVI entity, Billion Choice Investments Ltd. The BVI company was in turn placed in the ownership of an offshore trust, the London Trust, set up in the far-flung Cook Islands, in the Pacific, with Rockowitz himself named as the trust's beneficiary. The beneficiary was then switched, the flat sold for £790,000, and the cash placed in his associate's bank account. Rockowitz did not respond to invitations to comment.

Property empires

One of the most striking discoveries unearthed by the Guardian/ICIJ survey involves the number of anonymous property empires that mushroomed in Britain during the boom years, behind the screen of BVI offshore companies. British banks were willing to lend very large sums to these entities, some of which subsequently came to grief.

Huge loans were made by the RBS bank in 2007 to a slew of offshore companies controlled by a 29-year-old Nigerian living in London, Ayodeji Soetan, also known as Raheem Brennerman and Jefferson Brennerman.

With £118m from RBS and a further £18m from HBOS, he bought property in Knightsbridge and the former Red Cross offices in Grosvenor Crescent, one of Belgravia's most expensive streets, aiming to develop flats for rich Russians and Chinese costing up to £50m each. A Rolls-Royce was, he claimed, to be on permanent standby to chauffeur residents around the corner to shop at Harrods. We discovered that all the BVI companies trace further back to an entity called Nuevitas registered in the tiny Indian Ocean jurisdiction of the Seychelles. Nuevitas in turn controlled an offshore trust called Trigon, of which Soetan was the beneficiary.

When his dreams of a tax-free property fortune stalled in 2009 with receivers being called in, Soetan moved to New York, where he now says he heads an oil exploration and energy trader firm called Blacksands Pacific Inc. He told us that our information was "garbage", but declined to put any details in writing.

Another unlikely character who amassed houses by the score in eastern England was Bobby Wahi. Operating from a local trading estate, he bought at least 42 premises that we have identified, in the Skegness, Mablethorpe and Boston area of Lincolnshire. Acquired in the name of a dozen different BVI companies, the purchases were fuelled by loans from RBS (again) and the then Britannia building society.

Wahi, a former car dealer, told prospective customers he was a UN "goodwill ambassador" and styled himself LL.B [Hons] and "His Excellency". In the Caribbean, he also registered the short-lived "Private Capital Bank" of Dominica, whose licence was revoked following a change of local regime.

After the credit crunch in 2007, the Co-operative Bank, which took over Britannia, appointed receivers, and was forced to keep Wahi's repossessed properties on its books. With a last-known address in Spain, he did not respond to the Guardian's attempts to contact him.

The biggest and most reckless offshore bank loans of all went to a Briton living in immense style in London, who cannot currently be named for legal reasons. European banks which subsequently had to be bailed out by their taxpayers, handed over a total approaching £1bn in loans to scores of his BVI companies.

He acquired in this way some of London's most prominent buildings, before coming to grief. According to those who eventually lost millions, it was the anonymity provided by offshore firms which enabled him to make fools of so many bank executives.

A luckier offshore tycoon was Andreas Stavrinides, of Cypriot origin but living in Essex. He is now the owner of the Skylark hotel in Southend, purchased for £2.3m in 2010 in the name of the BVI-registered Elite Property Holdings. He built up his fortune with a string of care homes, largely financed with loans from Barclays to his two offshore companies: Elite, and Decolace Properties.

The homes specialise in residents with dementia or psychiatric disorders, and charge at least £615 a week.

His UK company Health and Home Ltd runs the care homes, paying rent to the landlord companies. Stavrinides told us: "If I was recorded as a director and shareholder, [of the BVI entities] it would have been on a fiduciary basis. I don't know who the shareholders are. I believe it might have been a family trust".

Some wealthy Israelis have also traded heavily in tax-free UK property behind the offshore screen. The art collector Joseph Hackmey, heir to an insurance business in Israel, moved to Kensington Palace Gardens in London, and set up more than 20 BVI companies with names such as Frentforth, Breezeknoll and Solsdeck.

His purchases included: the Intrepid Fox music pub in Soho, since converted into flats, and an upmarket burger restaurant; the old Leinster Hotel in Ossington Street, Bayswater, west London, now a smart gym; and a luxury apartment in Palace Court, Notting Hill, west London.

A second major behind-the-scenes Israeli operator we discovered is the lawyer Yoram Yossifoff.

He has been involved in more than £1bn of London property raids. An expert in what he calls "creative tax planning", Yossifoff not only speculates on his own behalf, but, with his Tel Aviv-based Mydas Fund, fronts deals for consortia of other Israeli investors.

A source familiar with his transactions justifies them, saying: "The exemption from capital gains tax formed part of policies promoted by the [UK] government of the day to encourage inward investment."

Most of block's hyper-luxury flats, costing from £3m to £136m, have been sold to offshore entities – most registered in BVI

•Interactive: owners registered in the British Virgin Islands

A single block of flats in central London presents the most blatant case of British Virgin Islands secrecy in Britain. The four towers of One Hyde Park, designed by the architect Lord Rogers and backed by the Qatari ruling family, are aimed at what some would call the obscenely rich.

Almost 80% of the 72 hyper-luxury apartments have been bought, at prices ranging from £3m to £136m, in the name of anonymous offshore entities – the majority of them registered in the BVI.

A possible explanation for offshore secrecy in one case emerged this year, when the alleged true owner of a £3.6m flat, the bankrupt Irish property developer Ray Grehan, was identified and accused of an attempt to cheat his creditors.

The Irish "bad bank", Nama, is owed €269m (£216m) by Grehan and is pursuing him though the courts. Grehan denies wrongdoing: he maintains the flat is not really his, but belongs to a family trust.

Nama has secured a freeze on any sale. According to the court hearings, it alleges the Irish property tycoon deliberately transferred his original interest into an offshore company, Postlake Ltd, registered in the Isle of Man. Postlake in turn was owned by Purcey Ltd, an entity registered in the BVI, on behalf of a Manx trust set up by Grehan. The trust beneficiaries, it is claimed, turned out to be Grehan and his family.

Also now identified, although not accused of such wrongdoing, is the owner of the most extravagant of the flats at One Hyde Park. The BVI-registered company Water Property Holdings Ltd paid £136m in 2007 for a pair of penthouse flats to be knocked together. Behind the anonymous entity is Rinat Akhmetov (pictured), the richest man in post-Soviet Ukraine.

But this still leaves a further 30 or so BVI owners who are allowed by the Land Registry to hide their names, along with others registered in even more controversial secrecy jurisdictions, such as Liechtenstein, St Vincent and Liberia.

Such techniques will enable the residents of a total of £760m worth of property to avoid British capital gains and inheritance tax.

Some of those whose origins lie abroad will also be able to avoid the attention of their own tax authorities, and of local citizens who might wonder where such wealth came from.

Head of UK's biggest cosmetic surgery chain, Harley Medical Group, initially denied any links with company in British Virgin Islands

The millionaire head of a controversial cosmetic surgery chain, the biggest in the UK, owned a secret offshore company linked to the clinic, it can be revealed.

Mel Braham's Harley Medical Group has attracted criticism for refusing free replacements to women during the PIP silicone breast implant scandal. The Guardian/International Consortium of Investigative Journalists (ICIJ) inquiry has now identified Braham, who has an address in London, as the man behind an anonymous offshore entity registered in the British Virgin Islands under the name The Memphis Company Ltd.

When asked about the tax advantages of having an offshore account, Braham at first denied any connection between his clinic and the British Virgin Islands entity. He wrote: "This Memphis company that you refer to, has not, nor ever has had, any connection with the Harley Medical Group. To the best of my knowledge it has never traded or had any business transaction with the Harley Medical Group."

However, when the Guardian provided detailed evidence that the Memphis Company was in fact administered from the London headquarters of his Harley Medical Group, at 11 Queen Anne Street near Oxford Circus, Braham did not respond with any further comment. He would not explain the role of the Memphis Company.

Braham's cosmetic surgery chain is easily Britain's biggest, with a turnover of around £30m. Braham, who formerly ran a hair transplant clinic in New Zealand, and now lives in a luxury flat at Chelsea Harbour, is recorded as having made large sums out of the business. His UK-registered company, the Harley Medical Centre Ltd, paid him director's fees of more than £500,000 in 2010 and 2011.

In addition, a cash dividend of more than £1m was paid out to his interests in 2010, via an offshore nominee company in Guernsey.

According to the Washington-based ICIJ's research, the Harley Medical Group's then financial controller, Simon Brazier, dealt with The Memphis Company's routine affairs, but Braham signed some correspondence personally. After Brazier's return to New Zealand, his successor as financial controller at the Harley Medical Group, Toni Culverwell, took over the role in 2010. Braham also set up a sister BVI company with an "Irish Branch" called the Harley Medical Group (Ireland) Ltd, which is openly registered in Dublin.

Braham faced controversy when he insisted in January this year that the Harley clinics could not afford the surgery for free replacement of the silicone implants they had inserted into almost 14,000 British women. The French supplier of the cheap PIP implants, which contained industrial-grade silicone instead of the much dearer medical-grade gel and had proved prone to rupture, is in jail in France, awaiting trial.

Braham, who described himself as "the innocent party", was quoted as saying: "We don't have the number of surgeons, the hospitals and the anaesthetists and we don't have the financial capacity to do it for nothing."

"We do roughly 5,000 to 6,000 operations a year and are not capable of adding another 13,900 on top of that."

Braham demanded the NHS pay for the bulk of the costs.

Faced with a legal class action from a group of aggrieved women demanding compensation, it was disclosed this month that Braham has now put the Harley Medical Centre Ltd into administration, while reopening and carrying on operations under another name, Aesthetic and Cosmetic Surgery Ltd. A Harley spokesman was quoted as saying: "Legal claims against Harley Medical Centre will no longer be able to take place." He added: "We were ... faced with liabilities arising from a class action that we simply wouldn't have been able to survive."

Companies making use of offshore secrecy include firm that supplied surveillance software used by repressive regimes

A number of nominee directors of companies registered in the British Virgin Islands (BVI) have connections to military or intelligence activities, an investigation has revealed.

In the past, the British arms giant BAE was the most notorious user of offshore secrecy. The Guardian in 2003 revealed the firm had set up a pair of covert BVI entities. The undeclared subsidiaries were used to distribute hundreds of millions of pounds in secret payments to get overseas arms contracts.

Today the investigation by the International Consortium of Investigative Journalists (ICIJ) and the Guardian uncovers the identities of other offshore operators.

Louthean Nelson owns the Gamma Group, a controversial computer surveillance firm employing ex-military personnel. It sells bugging technology to Middle East and south-east Asian governments. Nelson owns a BVI offshore arm, Gamma Group International Ltd.

Gamma's spyware, which can be used against dissidents, has turned up in the hands of Egyptian and Bahraini state security police, although Nelson's representative claims this happened inadvertently. He initially denied to us that Nelson was linked to Gamma, and denied that Nelson owned the anonymous BVI affiliate. Martin Muench, who has a 15% share in the company's German subsidiary, said he was the group's sole press spokesman, and told us: "Louthean Nelson is not associated with any company by the name of Gamma Group International Ltd. If by chance you are referring to any other Gamma company, then the explanation is the same for each and every one of them."

After he was confronted with evidence obtained by the Guardian/ICIJ investigation, Muench changed his position. He told us: "You are absolutely right, apparently there is a Gamma Group International Ltd. So in effect I was wrong – sorry. However I did not say that Louthean Nelson was not associated with any Gamma company, only the one that I thought did not exist."

Nelson set up his BVI offshoot in 2007, using an agency, BizCorp Management Pte, located in Singapore. His spokesman claimed the BVI company was not involved in sales of Gamma's Finfisher spyware. But he refused to disclose the entity's purpose.

Earlier this year, computer researchers in California told the New York Times they had discovered Finfisher being run from servers in Singapore, Indonesia, Brunei, Mongolia and a government ministry in Turkmenistan. The spying software was previously proved to have infected the computers of political activists in Bahrain, which Nelson visited in June 2006.

The Finfisher programme is marketed as a technique for so-called "IT intrusion". The code disguises itself as a software update or an email attachment, which the target victim is unaware will transmit back all his or her transactions and keystrokes. Gamma calls itself "a government contractor to state intelligence and law enforcement agencies for … high-quality surveillance vans" and telephone tapping of all kinds.

Activists' investigations into Finfisher began in March 2011, after protesters who broke into Egypt's state security headquarters discovered documents showing the bugging system was being marketed to the then president Hosni Mubarak's regime, at a price of $353,000.

Muench said demonstration copies of the software must have been stolen. He refused to identify Gamma's customers.

Nelson's father, Bill Nelson, is described as the CEO of the UK Gamma, which sells a range of covert surveillance equipment from a modern industrial estate outside Andover, Hampshire, near the family home in the village of Winterbourne Earls, Wiltshire.

In September, the German foreign minister, Guido Westerwelle, called for an EU-wide ban on the export of such surveillance software to totalitarian states. "These regimes should not get the technical instruments to spy on their own citizens," he said. The UK has now agreed that future Finfisher exports from Andover to questionable regimes will need government permission.

Other types of anonymous offshore user we have identified in this area include a south London private detective, Gerry Moore, who operated Swiss bank accounts. He did not respond to invitations to comment.

Another private intelligence agency, Ciex, was used as a postbox by the financier Julian Askin to set up a covert entity registered in the Cook Islands, called Pastech. He too did not respond to invitations to comment.

An ex-CIA officer and a South African mercenary soldier, John Walbridge and Mauritz Le Roux, used London agents to set up a series of BVI-registered companies in 2005, after obtaining bodyguarding contracts in Iraq and Afghanistan. Le Roux told us one of his reasons was to accommodate "local partnerships" in foreign countries. Walbridge did not respond.

A former BAE software engineer from Hull, John Cunningham, says he set up his own offshore BVI company in the hope of selling helicopter drones for purely civilian use. Now based in Thailand, he previously designed military avionics for Britain's Hawk and Typhoon war planes. He told us: "That account was set up by my 'friend' in Indonesia who does aerial mapping with small UAVs [unmanned aerial vehicles]. He was going to pay me a commission through that account … However, this was my first attempt to work in Asia and as I have found, money tends to be not forthcoming. I have never used that account."

The military and intelligence register

Gerry Moore

Company: GM Property Developments, LHM Property Holdings Story: south London private detective sets up BVI companies with Swiss bank accounts Details: Moore founded "Thames Investigation Services", later "Thames Associates", in Blackheath, south London. He opened a Swiss bank account with UBS Basel in 1998. In 2007, he sought to open another account with Credit Suisse, Zurich, for his newly registered BVI entity GM Property Developments. He sought to register a second offshore company, LHM Property Holdings, using his wife Linda's initials.

Intermediary: Netincorp. BVI (Damien Fong)

Comment: No response. Thames Associates website taken down after Guardian approaches.

John Walbridge and Mauritz le Roux

Companies: Overseas Security & Strategic Information Ltd, Remington Resources (Walbridge), Safenet UXO, Sparenberg, Gladeaway, Maplethorpe, Hawksbourne (Le Roux)

Story: former CIA officer and South African ex-mercenary provide guards in Iraq and Afghanistan Details: John H Walbridge Jr says he served with US special forces in Vietnam and then with the CIA in Brazil. His Miami-based private military company OSSI Inc teamed up with the South African ex-soldier and Executive Outcomes mercenary Mauritz le Roux to win contracts in Kabul in 2005. Walbridge set up his two BVI entities with his wife, Cassandra, via a London agency in June and August 2005, and Le Roux incorporated five parallel BVI companies.

Intermediary: Alpha Offshore, London Comment: Le Roux told us some of his offshore entities were kept available "in case we need to start up operations in a country where we would need to have local partnerships". His joint venture with OSSI was based offshore in Dubai, he said, but used BVI entities "to operate within a legal framework under British law, rather than the legal framework of the UAE". Walbridge did not respond to invitations to comment.

Julian Askin

Company: Pastech Story: exiled businessman used a private intelligence agency to set up covert offshore entity in the Cook Islands Details: Askin was a British football pools entrepreneur. He alleged Afrikaner conspiracies against him in South Africa, when his Tollgate transport group there collapsed. The apartheid regime failed to have him extradited, alleging fraud. He hired the Ciex agency to report on ABSA, the South African bank which foreclosed on him. Ciex was founded by the ex-MI6 senior officer Michael Oatley along with ex-MI6 officer Hamilton Macmillan. In May 2000, they were used to help set up Pastech for their client in the obscure Pacific offshore location of Rarotonga, in the Cook Islands, with anonymous nominee directors and shareholders. Askin now lives in Semer, Suffolk.

Intermediary: Ciex, Buckingham Gate, London Comment: he did not respond to invitations to comment.

Louthean Nelson

Company: Gamma Group International Story: Gamma sells Finfisher around the world, spying software which infects a target's computer.

Details: Nelson set up a UK company in 2007 on an Andover industrial estate to make and sell Finfisher – a so-called Trojan which can remotely spy on a victim's computer by pretending to be a routine software update. He set up a parallel, more covert company with a similar name, registered in the BVI, via an agency in Singapore, using his father's address at Winterbourne Earls, near Andover. He also sells to the Middle East via premises in Beirut. He ran into controversy last year when secret police in Egypt and Bahrain were alleged to have obtained Finfisher, which he denies knowingly supplying to them.

Intermediary: Bizcorp Management Pte Ltd, Singapore Comment: his spokesman declines to say what was the purpose of the group's BVI entity.

John Cunningham

Company: Aurilla International Story: military avionics software engineer from Hull with separate UK company launches civilian venture in Indonesia Details: Cunningham set up a BVI entity in 2007. His small UK company, On-Target Software Solutions Ltd, has worked on "black boxes" for BAE Hawk and Typhoon war planes, and does foreign consultancy. He also has interests in Thailand in a drone helicopter control system.

Intermediary: Allen & Bryans tax consultants, Singapore Comment: Cunningham says the offshore account was never activated. "I actually make systems for civilian small UAVs (unmanned aerial vehicles). I have never sold to the military. That account was set up by my 'friend' in Indonesia who does aerial mapping with small UAVs. He was going to pay me a commission through that account."

Offshore secrets

Guardian team: David Leigh, Harold Frayman and James Ball.

The project is a collaboration between the Guardian and the International Consortium of Investigative Journalists (ICIJ) headed by Gerard Ryle in Washington DC. The Guardian's investigations editor, David Leigh, is a member of the ICIJ, a global network of reporters in more than 60 countries who collaborate on in-depth investigative stories that cross national boundaries. The ICIJ was founded in 1997 as a project of the Center for Public Integrity, a Washington DC-based non-profit.

Fraud trial heard how a crook under an assumed name was able to cite forged accounts from two BVI companies he controlled

The Achilleas Kallakis case is a graphic demonstration of the way in which the British Virgin Island's regime of offshore secrecy has served to facilitate fraud.

Kallakis, a crook with a criminal record operating under an assumed name, was able to cite forged accounts from two BVI companies he controlled, the Oregon Finance Corporation and Causeway Capital, as apparent evidence that he had billions in shipping assets and the discreet support of a major Chinese property company. The Allied Irish bank lent him an almost unbelievable £740m as a result.

He used anonymous BVI companies to buy a Challenger private jet and a yacht, the Mercator II, the last coming courtesy of another loan from the Bank of Scotland. His spread of prominent London property purchases were conducted through a separate batch of at least 100 anonymous BVI vehicles. One of them, Zirfin Investments, was able to borrow £18m from Barclays bank in 2004 to buy a sumptuous residence at 31 Brompton Square, Knightsbridge.

Many of the tax-free offshore firms were set up by Kuzniecky & Co, a so-called introducer based in the central American tax haven of Panama, and administered by an incorporation agency, Commonwealth Trust. The only company director they were informed of was frequently Kallakis's Swiss lawyer, Michael Becker, alleged by the crown during the Kallakis trial to be a co-conspirator.

At trial, Kallakis's central defence was that the complex web of offshore firms that had received the loans were owned by the Hermitage Syndicated Trust, to which he was only a humble adviser. While he received a considerable salary from the trust and the beneficiaries were his children, it was Becker, the trustee, who called the shots.

This kind of family trust structure is a common arrangement for internationally wealthy London-based tycoons. Not only does it provide a convenient tax shelter, but also it can allow super-rich investors to distance themselves from controversial deals should they need to.

The authorities in Tortola, the capital of the British Virgin Islands, allow offshore companies to be set up and maintained without possessing any information as to their true beneficial ownership. The companies are allowed to operate through nominee fronts without registering any accounts or details of true directors or owners.

Although in recent years the use of free-floating bearer shares, the most obvious vehicle for fraud, has been curtailed, the island authorities still fail to demand sight of any due-diligence documentation before granting company status.

Even if direct evidence of crime is supplied to the BVI Financial Services Commission by overseas authorities, they can generally do no more than request information from the local agent. The agent in turn will refer inquiries to the introducer who dealt with the original customer, who is generally based in yet another jurisdiction.

The BVI's system of offshore secrecy is underwritten by the UK government, which ultimately controls the behaviour of the Caribbean islands. It is popular among property firms in the City of London, which are allowed by the British government's Department for Business, Innovation & Skills to conceal the identities of owners on the UK's public Land Registry, by putting premises in the name of such BVI vehicles.

More than 1m BVI companies have now been incorporated since the launch of their offshore system in the 1980s, according to the latest figures, and it is the world's biggest provider of offshore entities.

A Guardian investigation into the BVI last year revealed that the territory depends heavily on collecting revenue from offshore companies, some of which may be fraudulent or dodging taxes. Last year, the BVI, presided over by a British governor, Boyd McCleary, collected $180m (£112m) from registration fees, more than 60% of the administration's total revenue.

Michael Foot, a former Bank of England official and Financial Services Authority managing director, reported to the then Labour chancellor, Alistair Darling, in a Treasury paper published in 2009, that to abolish the BVI's secrecy regime "would be likely to result in a loss of business".

Despite the protests of concerned NGOs that corporate secrecy could lead to crime and tax evasion, he rejected transparency, although he conceded it was "attractive in principle". He said the UK should merely "press for improvements" in disclosure by all overseas tax havens simultaneously, at unspecified future international discussions. This was seen by critics as a classic recipe for inaction.

The diplomat Sir Edward Clay, who won plaudits for crusading against corruption in Kenya, wrote in September last year of the BVI's secrecy jurisdiction: "The money held in such places comes from all over the world and probably doesn't bear examination– which is why it doesn't get much.

"But it conveniently looks after our payments deficit, and saves us the cost of running our small dependencies … The cost and damage inflicted on other countries by our louche regime at home and abroad makes us vulnerable to charges of hypocrisy and worse."

Living it up in Las Vegas and Monte Carlo

In the early hours of a Las Vegas morning in May 2003, most spectators at the World Series of Poker had sloped off to the gambling tables rather than watch Achilleas Kallakis take on the former world champion, Phil Hellmuth Jr.

Hellmuth sensed he could knock this rookie out of the tournament, only for Kallakis to cockily call the professional's $3,000 (£1,900) bet.

Hellmuth was holding ace-jack against Kallakis' pair of kings, so when the dealer flipped out another king, Kallakis had three of a kind – plus a stack of chips that once belonged to the former champion.

This was my introduction to a man we now know was one of Britain's most audacious conmen, a man who had just paid $10,000 for his seat alongside the world's top poker players while claiming he had never played the game in his life.

Whether that was another bluff or not, nobody really cared. It was a cracking yarn made more intriguing by the fact that Kallakis could actually play. Out of almost 840 entries in the main event that year, the "beginner" finished narrowly outside the top 100.

He threw money around everywhere that week – once handing a flunky a $100 bill to pay drinkers in an ostentatious Bellagio hotel bar to move out of his favoured seat.

Similarly, he was revelling in his own largesse when competing in the world backgammon championships in Monte Carlo later that year, where he fell out with the chef of an upmarket restaurant after insisting on having his meat well-done.

At that same dinner, he launched into a tirade about an impertinent media invading the privacy of the world's elite (despite possessing a penchant for hinting at society sex scandals himself).

All of which added up to an odd package that many found hard to trust, unless you worked at Allied Irish Banks that is.

Simon Goodley

Charity headquarters in Belgrave Square, London, were sold for £6m then immediately resold for £15m profit

Sir Arthur Conan Doyle, the creator of Sherlock Holmes and an ardent spiritualist, could have turned it into a detective story and called it The Case of the Extra Millions.

The Charity Commission is examining concerns about the curious way £15m has departed offshore, after the Spiritualist Association of Great Britain sold its London headquarters in 2011.

The chair on which Conan Doyle reputedly sat to write his Sherlock Holmes stories used to have pride of place at the association's headquarters, which were until recently at one of London's most grand addresses, 33 Belgrave Square, alongside the embassies of Bahrain, Portugal and Mexico.

The lease of the Georgian mansion was purchased in 1955 for what now seems the ludicrously low sum of £24,500, and the building was opened by another fan of clairvoyancy, Air Chief Marshal Lord Dowding, who led Fighter Command during the Battle of Britain.

Then in 2010, the spiritualists realised that although their world of seances and mediums was no longer so fashionable, they were sitting on a goldmine due to the rise in central London property prices.

The 1,300 members were told the running costs were "becoming onerous" and the building closed in December 2010. It was sold, and the spiritualists decanted into rented rooms behind Victoria station.

But a Guardian investigation has discovered the sale had unusual features. One was that the spiritualists' trustees sold the 1,400sq m (15,000sq ft) mansion to a secret buyer.

The charity's manager, Annie Blair, daughter of its then secretary, Stella Blair, told us: "We were asked to sign a confidentiality agreement by the purchasers … We are unable to provide you with any information, or discuss anything concerning the sale."

The Guardian has established, however, that Belgrave Square was sold for what now appears to be the relatively low sum of £6m to an anonymous offshore entity registered in the British Virgin Islands (BVI), called Platinum Prime Property Investments Ltd. The BVI is notorious for allowing UK property owners to conceal their identities.

The second unusual feature was that, according to records obtained by the Guardian, Platinum Prime agreed immediately to resell the property. What was most unusual of all was that it was to be sold on to a third party for the massively increased sum of £21m.

According to Land Registry records, the £21m was paid by a second BVI entity, Rose Season Enterprises Ltd. This is controlled by the family interests of the Barclay brothers, owners of the Ritz Hotel in London and the Daily Telegraph. Property sources say it was envisaged as a possible London home for Howard Barclay, David Barclay's son.

Sources close to the Barclays say they purchased the 31-year lease of the Belgrave Square house in good faith from Platinum Prime, but have no knowledge of the true identity of the owners. The family are expert property investors, who subsequently put Belgrave Square on the market for approximately £26m. There is no suggestion of any wrongdoing by the Barclays.

As a result of these opaque transactions, a £15m profit appears to have travelled anonymously offshore, and the members of the spiritualist association, the SAGB, seem to have gained only a fraction of the apparent market value of their asset. Platinum Prime did not respond to invitations to comment sent via its local agent in Tortola in the BVI.

We asked the current president of the SAGB,civil servant Charles Hutchinson, and each of the unpaid trustees, about these transactions. All declined to comment.

Julian Goulding, a Guildford solicitor representing the trustees, wrote saying the sale was conducted in accordance with an "independent valuation" and "in the knowledge of" the Charity Commission. He denied that the SAGB had acted in an inappropriate manner. He declined to disclose the identity of the independent valuer; whether the sale process had been advertised; and what exact details had been supplied at the time to the Charity Commission.

A commission spokesperson said: "The Charity Commission is looking into your concerns regarding the Spiritualist Association of Great Britain."

The commission, which is the official regulator for such tax-exempt organisations, takes a close interest in sales of charity assets. If it thinks concerns are substantiated, it has the power to embark on an official investigation or to refer the sale to other authorities.

Origins of spiritualism

At the core of spiritualism are the beliefs that the spirit transcends the death of the body and that mediums can act as conduits between the physical world and a spirit world.

The movement, which began in the US in the mid-19th century and spread to Britain soon after, is variously described by its adherents as a religion, a philosophy or a science. Though different traditions have their own set of beliefs, they share a handful of key principles: that there is an infinite and all-governing intelligence; that individual identity survives physical death; that the spirit continues to learn after physical death; that communion exists between the physical and the spiritual realms; that all of humanity is spiritually linked, and that everyone is responsible for how they live their lives.

Although the Spiritualist Association of Great Britain, which traces it origins back to 1872, is disdainful of the phrase mission statement, it describes its purpose thus: "To offer evidence to the bereaved that man survives the change called death and, because he is a spiritual being, retains the faculties of individuality, personality and intelligence, and can willingly return to those left on earth, ties of love and friendship being the motivating force.

"To offer spiritual healing to those suffering from disease, whether in mind, body or spirit, in a warm and loving environment. With both of these objectives in mind, to offer only the best and highest so that those on both sides of the veil can progress in a truly spiritual sense."

According to the 2011 census, 39,061 people in England and Wales define themselves as spiritualists. Sam Jones

• This article was amended on 28 January 2013. The size of the property at 33 Belgrave Square is 15,000sq ft, which converts to 1,400sq m, not 4,600sq m. This has been corrected.

Doctors claim patients suffered side-effects, but company's offshore base prevents UK regulator from intervening

A parliamentary commission in the remote and impoverished post-Soviet state of Kyrgyzstan is examining claims that a British pharmaceutical company has supplied it with poor-quality drugs.

Dialysis patients were switched this year to a cheap new drug, Repretin, which they were assured came from a British pharmaceutical firm. According to local doctors, they began to complain of unpleasant side-effects.

Evidence obtained by the Guardian shows that the company, Rotapharm Ltd, is not regulated by any British medical authority, but benefits from loopholes in UK law and the existence of the secretive UK offshore industry.

It advertises itself on its website as "a British pharmaceutical company created with the aim to improve people's health … established in 2005 as a British generic pharmaceutical company by pharmaceutical professionals". It is said to have its headquarters in Saffron Walden, Essex. The firm has been successfully selling its drugs in a number ofvarious former Soviet republics, including Moldova and Turkmenistan, and in Romania.

Rotapharm is, in fact, owned by a Belarussian businessman living in Turkey, has no British employees, was set up offshore in the British Virgin Islands and buys its supply of the dialysis drug Repretin from a manufacturer in Egypt. The company is allowed to advertise itself as British because it maintains a British-registered company, with a small office on UK territory. British regulators are powerless to intervene.

Dr Dinara Aiypova, a kidney specialist in the Kyrgyz capital, Bishkek, said: "Rotapharm registered here in 2009. It declared itself to be a British company and boasted of European quality."

Virtually all dialysis centres switched from a Roche product, NeoRecormon, to Rotapharm's cheaper drug, she said. "After the transfer of patients on dialysis to Repretin, they began to feel bad. This affected blood pressure, decreased haemoglobin, etc. I did some comparisons with other erythropoietins. I saw the difference and reported at a conference."

A campaigning MP in Kyrgyzstan, Shirin Aitmatova, took up the case, but the health ministry continued to buy Repretin through a state tender, she said, "despite the numerous complaints of the patients who are on dialysis that they were experiencing severe side-effects".

Aitmatova has been leading the calls for an investigation into the award of the contract and claims that doctors were given gifts as inducements by the company to prescribe Repretin and other Rotapharm drugs. A parliamentary commission has begun looking into the allegations.

Aiypova says protesters were threatened with legal action by Rotapharm, unless they retracted.

Repretin is a version of the generic drug epoetin, known as EPO, which the disgraced cyclist Lance Armstrong recently admitted to taking as a performance enhancer. It is a hormone that boosts the production of red blood cells and is used to help kidney dialysis patients.

Rotapharm Ltd and a sister company, World Medicine, owned by Belarussian citizen Raushan Tahiyeu, were set up anonymously in 2005 in the British Virgin Islands. These offshore entities, under the UK-sponsored secrecy regime for which the BVI is notorious, reveal no owners, publish no accounts and pay no taxes.

Two parallel firms with identical names were legally registered in the UK at Companies House, originally with concealed ownership and sham nominee directors with addresses in the Caribbean micro-state of St Kitts and Nevis. Later, they were re-registered with Tahiyeu named as owner.

The Rotapharm company in the UK has a small office in Essex. It declares small amounts of business in its annual accounts, which are not audited, and pays small sums of British tax.

But during a visit by the Guardian, this "international headquarters" seemed to have no employees. Behind the locked door and the Rotapharm sign, the only person in residence was the listed company secretary, Zafer Karaman, who lives locally. He refused to answer any questions about Rotapharm.

Britain's drugs regulator, the MHRA, says it cannot intervene. "If [Repretin] is indeed licensed in the respective eastern European countries it is sold in, then those countries' regulatory bodies have made a decision that the product is acceptable, safe, effective and manufactured to a good standard. As such the MHRA would have no cause to, or precedent to take any action against the company."

It was put to Tahiyeu that his pharmaceutical business was not genuinely British. His lawyer said: "You do not have an accurate understanding of our business. Rotapharm is registered and actively operates in the jurisdiction." He otherwise declined to comment on the allegations or to explain the purpose of the BVI offshore entities.

In its recent series Offshore Secrets the Guardian, in collaboration with the International Consortium of Investigative Journalists in Washington DC, exposed the way British property speculators and Russian businessmen were hiding their activities behind front companies in the BVI, and sham nominee directors. The business department promised an investigation.