“I don’t think any government could conceivably be doing more to root out corrupt Russian money – and that is what we’re going to do, and I think we can be proud of what we’ve already done and the measures we have set out”.
– Boris Johnson, speaking in the House of Commons, 23 February 2022
For Boris “BoJo” Johnson, Russia’s invasion of Ukraine is both an opportunity and a potential trap.
A possible trap, because £1.9m/$2.5m has been given to the Tory party by Kremlin oligarchs since BoJo came to power.
London/”Londongrad” property markets and banks are flush with Russian money, while BoJo has turned a blind eye during this time.
Many, including some in his own party, say BoJo has in fact turned 2 blind eyes, while he cavorted at oligarch parties, pocketed their donations, and did nothing to regulate the inflow of dirty money into the UK.
The Ukraine war is opportunity for BoJo because he was on the verge of losing his job as PM as a consequence of the Partygate scandal, until the Ukraine war created a potential diversion that has come to his rescue (so far) where Partygate is concerned.
Social media postings contain trolling images of BoJo phoning Putin apologetically, saying he appreciates the fact that the Tories are in the pockets of Kremlin oligarchs. At the same time, BoJo says to Putin, since the UK is a NATO member, it has no alternative but to toe the NATO line on Ukraine.
BoJo has therefore to play a game of “On the one hand, but on the other….”
On the one hand, signal to the Londongrad Kremlin oligarchs that the steps taken against them will be cosmetically rendered as far as possible, the “fierce” appearance of these steps notwithstanding.
On the other hand, at least give the appearance that Ukania is now doing NATO’s bidding in the Ukraine war.
BoJo gives the impression that now is the time to ditch his Kremlin oligarch benefactors; albeit as slowly as possible, while allowing them the time and loopholes to move their loot and superyachts to less vulnerable locations.
Friendly Dubai, where transactions in cryptocurrencies are welcomed, is becoming a favourite destination for oligarchs looking to relocate their dough.
This “slowly does it” approach is for now BoJo’s preferred option. Some oligarchs, those less directly connected to the Tories, will be sanctioned, and their yachts and private jets sequestered if they are docked or housed in territories under British jurisdiction (e.g. Gibraltar).
The Labour MP Chris Bryant, a member of the Commons foreign affairs select committee, has said the following about this “slowly does it” tack espoused by BoJo:
“The Russian banks that Boris Johnson put on the sanctions list… aren’t the major players: they’re the spare change in the Russian economy. The three individuals he named have already been sanctioned in the US since 2018. So, we’re picking off the minnows but allowing the basking sharks to swim freely. Johnson didn’t even know whom we had already sanctioned, claiming that Roman Abramovich was on the list and refusing to correct the recordwhen I asked him about it. Later in the day, his office had to own up that he was wrong. Is it too much to expect that a prime minister at a moment of international crisis would actually know some of the details?”.
So far, no British-based Kremlin oligarchs have had their massively-expensive Ukanian luxury properties impounding by BoJo’s government.
Italy, by contrast, has imposed a freeze on Alisher Usmanov’s $18 million resort compound in Sardinia. The step taken by the Italian government does not involve a confiscation of Usmanov’s resort (that would create a minefield of legalities), but only a ban on its use or sale and transfer—the property is still owned by Usmanov.
In addition to these legal intricacies, there is another Ukanian complexity when it comes to tracking the assets of oligarchs, not just the ones who are Russian, but also those from Nigeria, the Central Asian ex-Soviet republics, and even Ukraine.
The dirty money flooding into London is deeply embedded, some would say buried, in its vast financial sector, where a horde of lawyers, tax experts, accountants, financial advisers, investment brokers, real estate agents, and luxury car dealers provide the requisite “laundering” for the tainted money streaming into Londongrad.
The legacy of Empire then provides access to another level of opacity for the possessors of dirty money.
Eight of the top 10 tax havens in the world are to be found in British territories– the British Virgin Islands, Bermuda, the Cayman Islands, Turks and Caicos Islands, Anguilla, the Isle of Man, Jersey and Guernsey provide a surfeit of shell companies which make the true ownership of assets all but impossible to establish.
The UK has 87,000 properties whose ownership is wedged into these overseas shell companies.
Even the later Mrs Thatcher, who prided herself on her stern adherence to “Victorian values” (whatever they are), lived for 20 years in a London house “owned” by a company called Bakeland Property Company Ltd registered in the British Virgin Islands.
This arrangement was to the ultimate benefit of Thatcher’s 2 children—it was estimated at that time the house was worth £6m/$8m, so both inheritance tax at 40% (£2.4m/$3.17m) as well as Stamp Duty Land Tax at 7% on any subsequent sale (£420,000/$553,000) were avoided.
There is a notion going round today that Thatcher would have been horrified at the prodigious largesse extended by her presentday Tory counterparts to those depositing their corrupt monies in these off-shore shell companies.
Her own example shows that optimism on the part of those who peddle this view is probably misplaced.
Oliver Bullough, an investigative financial journalist once based in Moscow, has a very recent book– Butler to the World: The Book the Oligarchs Don’t Want You to Read – How Britain Helps the World’s Worst People Launder Money, Commit Crimes, and Get Away with Anything—which provides the indispensable context for the inroads made by dirty money in the UK’s economy.
Bullough has indicated why we should not be confident about the UK’s ability to stem the influx of such money. He says that where the UK is concerned, extremely recent reverences to financial rectitude notwithstanding, eradicating laundered money is akin to trying to remove the eggs from a cake after it has been baked.
BoJo’s posturing during the Ukrainian crisis was not well-received by other leaders in last week’s NATO summit in Brussels. A dishevelled and bleary-eyed BoJo showed-up looking as if he had slept in his car the night before.
While the other leaders shook hands with each other no one bothered to greet the arch-proponent of Global Britannia. Even the normally sycophantic BBC News reported that the visibly uncomfortable BoJo seemed “lonely” at the meeting.
The participants in the summit are well-aware that BoJo’s stunt at repristinating his supposed hero Winston Churchill in the Ukraine war is a wretchedly contrived and probably doomed attempt to mask his several problems at home.
One such problem includes of course his longtime ties with Kremlin oligarchs now being sanctioned by the European and North American countries represented at the NATO summit.
BoJo’s connections with Russian oligarchs are not recent. They go back to the time (2008-2016) when he was mayor of London.