Shell companies are aggravating some of the world’s worst conflicts through the role they play in illicit arms deals, according to human rights group Amnesty International.

A recent investigation has revealed that UK-registered company S-Profit Ltd was involved in a deal worth $169 million that appears to be the largest publicly disclosed arms transfer to South Sudan since the outbreak of civil war in 2013 – a conflict that has displaced over 2.4 million people.

Although ‘shell companies’ – registered businesses without many assets that function as vehicles for other deals – are known for their use in financial crimes, like tax evasion, their role in illicit arms deals is less well known.

‘By their nature, these companies are opaque,’ says Oliver Feeley-Sprague, programme director for Amnesty UK’s work on arms control. ‘If your business is pedalling guns to the world’s hotspots then operating under the radar is an advantage.’

‘[Facilitating arms transfers in South Sudan] can result in the death of hundreds if not thousands of people,’ Feeley-Sprague adds. ‘In other places…it’s arming security forces responsible for widespread disappearances, unlawful detentions, torture, harassment and the shooting of demonstrators.’

While Amnesty could not verify whether the weapons were delivered, S-Profit’s involvement as an alleged ‘supplier’ to South Sudan could violate Britain’s arms embargo against the African state.

The investigation also revealed how regulatory gaps in Britain make it easy for arms dealers to register sham companies.

‘It is unbelievably easy to set one of these companies up,’ says Feeley-Sprague. ‘It’s £12 ($16) and an online system; you can literally set up a UK registered company with fewer checks than it takes to join a gym.’

‘It then gives you a UK address, providing a sense of legitimacy and prestige. But this is also not just a 
UK problem. The use of shell companies is global.’

The day S-Profit was formed, the sole shareholder was listed as New Zealand/Aotearoa-national, Ian Taylor. When Amnesty questioned him he denied any knowledge of the company.

Taylor used to be a company-formation agent and, through a business he ran with his father, GT Group, set up numerous shell companies in foreign countries.

His family made headlines in 2009 when an aircraft, leased by a New Zealand/Aotearoa registered shell company they set up, was found to be flying 30 tonnes of weaponry to Iran, in breach of UN sanctions.

The Panama Papers investigations have documented the role of other shell companies in the global arms trade, such as the case of a British banker who is alleged to have helped North Korea sell arms.