Brokers in £13 million fraud probe

THREE leading Scottish financial institutions are at the centre of a £13 million money laundering investigation, The Scotsman has learned. Detectives are examining investments in accounts with Scottish Life, Scottish Mutual, and Scottish Provident, held on the Isle of Man. Norwich Union is also involved, say police sources.

The inquiry is in its early stages and could last up to 18 months. It is led by the Police Service of Northern Ireland’s Economic Crime Bureau, which has secured two of only four UK convictions for money laundering, helped by the Financial Services Authority, the industry’s independent regulator.

The probe was prompted by suspicious transactions at an insurance brokerage, Northern Ireland Insurance Brokers Ltd (NIIB), in Belfast.

The inquiry team has identified a number of people in Northern Ireland and the Irish republic suspected of trying to launder undeclared cash by taking out investment bonds through the brokerage. They expect the figures involved to rise.

Some investors were allegedly supplied with false addresses in Northern Ireland which enabled them to avoid declaring the income in their own countries. The investment bonds were taken out in clients’ real names to protect their claim to the money.

A police source told The Scotsman: "The accounts have to be in the clients’ real names or they risk never getting their money back.

"They were opened using false addresses and all correspondence between customers went to the broker’s office."

The source added: "Financial institutions rely on the information given them about investors by the insurance brokerage.

"They have to take them on their word because to check out every detail themselves would be too time-consuming and costly."

Michael Aiken, the chairman of NIIB, and his son, Michael junior, the company’s managing director, have been questioned by police and released without charge.

Mr Aiken snr is involved in two firms, NIIB in Belfast, and Aiken and Company in Dublin. Both have been raided by police and sources confirmed the pair are due to be charged with money laundering soon. If convicted, they could face up to 14 years in prison.

There have been no arrests in the republic but police have been checking the addresses of individuals thought to be linked to the suspected fraud.

Among NIIB’S clients is Ben Dunne, one of the most prominent businessmen in Ireland, whose father, Bernard, founded the billion-pound supermarket retail empire Dunnes. There is no suggestion he is connected to any alleged criminal activity.

Ben Dunne was a secret benefactor of the ex-Irish prime minister, Charles Haughey, who faced a criminal charge for not cooperating with a previous judicial inquiry which found he received a 1 million payment from Mr Dunne.

Several clients of NIIB and Aiken and Company whose files have been seized are well-known entertainers and business figures.

Police have questioned Joe Dolan, Ireland’s leading cabaret star, and his brother, Ben, about alleged tax avoidance on two 300,000 investments with Scottish Provident. There is no suggestion they are involved with money laundering.

Among the clients under investigation for alleged money laundering is John Hunter, an Ulsterman jailed earlier this month over one of Northern Ireland’s biggest fuel smuggling rackets. Detectives plan to question him in jail.

A spokesman for Scottish Life said it was aware of the investigation but declined to say how much money was involved.

He added: "I am unable to say anything at this time because I understand legal action is pending."

A spokesman for Scottish Mutual, which also acts as an agent for Scottish Provident, said it was not aware of the police investigation.

A spokesman for Norwich Union said it was aware of the police investigation and was carrying out its own internal inquiries.

Mr Aiken junior refused to comment on NIIB’s alleged involvement.

Mr Dunne was unavailable for comment.