by Jonathan Coulter (+ article below by Cory Doctorow)
While CAMPAIN is mainly concerned with misrepresentation and gross misinformation in Britain’s public affairs, we also keep an eye on the corruption that sustains such abuse.
As Britain moved towards confrontation with Russia in recent weeks, Chatham House published a report called The UK’s Kleptocracy Problem, that describes the connections between Russian and Eurasian kleptocrats and the UK political system, its finance sector, its charities, its libel laws, its property market, and its luxury goods sector. Much of it is about the role of British enablers, particularly mega law firms, that assist in laundering dirty money and reputations, and whose business model is predicated on attracting the kleptocrats and helping them circumvent controls. It is also about venal cooperation between British elites and post-Soviet kleptocrats. It is no coincidence that the UK and its overseas territories consistently top the Tax Justice Network’s annual ‘Financial Secrecy Index’.
Below we reproduce a Byline Times article, by the Canadian novelist Cory Doctorow, that spells out in simple language the key issues highlighted in the Chatham House report, saying that the UK and particularly the City of London, has become “a key enabler and concierge to the world’s filthiest money”.
Chatham House is a 100-year-old research and advisory body largely focused on international affairs and security, so it is significant that it should make such a strong statement on this topic. Much of these financial flows come from states like Kazakhstan and Azerbaijan which pose little security concern to the UK, but Putin’s Russia is another matter. Not only has it brought violence to British streets, but it is currently on a war footing with Ukraine and demands the loyalty of globalised oligarchs who buy influence through their involvement in charities, universities and political parties – notably the governing Conservatives. The report conveys deep concern about the risks stemming from servicing all these post-Soviet elites and advocates for measures to address the problem, both as a matter of both domestic and foreign policy.
The report points to the ineffectiveness of our money-laundering controls, and the poor enforcement of those that exist. It contains some particularly telling statements: firstly that “the National Crime Agency (NCA) continues to lose staff to a private sector which pays a premium for employees who have worked for regulatory and enforcement bodies”, and secondly that: “without actively complicit service providers facing prison and negligent ones facing punitive fines, it is hard to see how transnational kleptocracy can be arrested in the UK, however well-drafted the law”.
Notwithstanding the introduction of a sanctions regime to address the problem in April 2021, the report shows the UK Government to be a reluctant actor lagging way behind President Biden’s USA in its anti-kleptocracy drive.
The reader will no doubt be asking: why is Chatham House so focused on oligarchs and money flows from the post-Soviet countries? After all, Britain fostered the development of tax havens long before the collapse of the Soviet Union, and these help plutocrats from the West, African politicians and others to hide their millions. As we highlighted in a previous blog, they also help channel funds to entities that buy influence and frame right-wing media narratives in the UK and elsewhere. However, please note that the authors of the Chatham House report conclude with a tough nine point anti-kleptocracy strategy that would target corrupt capital from diverse sources. Significantly, the ninth point provides for “the amendment of charity law to require all registered charities, including think-tanks, to publish a list of all significant donors”.
Given the money involved, you may reasonably ask whether we in the United Kingdom, and particularly London, can ever escape the lifestyle to which we have become addicted. However, we can only start making that transformation if we face the reality of how things are and own up to our immoral earnings.
How does this relate to Britain’s current stand-off with Russia?
Readers will doubtless be asking this question at a time when Russia, Ukraine and NATO prepare for hostilities with potentially terrible consequences.
The first thing I would say is that the military confrontation is helping focus UK on the problem of dirty money which it has been failing to address. We now learn that “sweeping new financial sanctions” have been tabled to dissuade a Russian invasion. However, we ought to be addressing the dirty money problem for its own sake, to clean up our own act, not simply as a way of deterring an invasion of the Ukraine. The implication is that if Russia backs off in response to these sanctions, it will be business as usual, and we can continue living off our immoral earnings.
Secondly, here are some thoughts about the conflict with Russia, about which I have been avidly reading and exchanging documents and ideas with other CAMPAIN members (whom I thank).
The collapse of the Soviet Union was a potentially cataclysmic episode, which was bound to greatly test the judgement of western leaders like George H.W. Bush, James Baker and Helmut Kohl. While recognising this, it is worth considering the findings of the distinguished Cold War historian Mary Elize Sarotte. She argues, based on meticulous research, that the West bears much responsibility for its current standoff with Russia, because it pushed the eastward expansion of NATO too hard in the decade following the fall of the Berlin Wall.
By saying this I am not excusing Putin and the gangster regime over which he presides, but I am recognising that the opposition to this expansion springs from deep nationalistic sentiment that goes far beyond Putin, and bitterness over the collapse of the Soviet/Russian empire. Sarotte says in her introductory chapter that “Russia’s loss of empire and international standing - - - is widely shared among other displaced servants of the Soviet state”. She goes on to say that “it is not surprising that someone of his views becomes a serious contender for power once Russian reforms yield economic chaos”.
Given the dangers of endless conflict and even nuclear accidents, one can reasonably argue that our leaders should have acted more cautiously, and that we needed our mainstream media to encourage much more debate about the eastward expansion of NATO.
Jonathan Coulter is the Secretary of CAMPAIN; see brief bio HERE
THE JACKPOT: How London Became A Concierge for Kleptocrats
by Cory Doctorow, 22 January 2022.
You can read the original in Byline Times
Novelist Cory Doctorow tracks Britain’s domestic scandals back to the capital’s reliance on laundered money from overseas, and the feasting of so many professions on the proceeds
In his 2014 novel, The Peripheral, William Gibson plunges us into a far-future London: radically depopulated, quietly authoritarian and under the iron thumb of “the Klept” – a fusion of the British chumocracy with post-Soviet Eurasian kleptocracy.
The origins of this society – its neo-aristocracy, its captivity to inscrutable AIs called “the Aunties” – are lost to history. They all took place during a time called “The Jackpot” – an interregnum in which huge swathes of records simply vanished amid social breakdown, climate emergencies and cyberwar.
Gibson will be the first to tell you that he is not attempting prophecy with his work, but it cannot be denied that he has an eerie ability to reflect back our latent, inchoate fears about the future through his fiction – something he calls “predicting the present”.
When I emigrated from the UK to America in 2016, I explained my reasons for doing so in a piece called ‘Why I’m Leaving London’. The main driver was the increasing obviousness that the city existed primarily to launder vast, corrupt fortunes, and only incidentally was a place where Londoners could live and thrive.
Since then, the UK – and particularly the City of London, home of the nation’s finances – has doubled-down on its role as an enabler and concierge to the world’s filthiest money, and the psychopaths who come with it. The UK and its overseas territories consistently top the Tax Justice Network’s annual ‘Financial Secrecy Index’.
Not all corrupt money comes from the former Soviet republics of Eurasia, but these countries – and Russia – embody a special kind of corruption: kleptocracy (“a political economy dominated by a small number of people/entities with close links to the state”).
This form of corruption is closely related to the ‘chumocracy’ that dominates British politics as can be clearly seen in the ruling Conservative Party. Thus, it should come as no surprise that the UK, with its Thatcherite and New Labour emphasis on finance, and its political compatibility with kleptocracy, is a linchpin in global kleptocratic money-laundering and corruption.
The Enablers
The connections between Eurasian kleptocrats and the UK political system, its finance sector, its charities, its libel laws, its property market, and its luxury goods sector, is rigorously explored in ‘The UK’s Kleptocracy Problem‘ – a report by the Chatham House think tank.
It shows how the UK is a one-stop-shop for corrupt, wealthy public officials from Eurasian kleptocracies; how the UK’s finance sector launders their money; how the Home Office sells them citizenship via ‘golden visas’; how the country’s estate agents convert their money into multi-million-pound mansions and super-flats; how its charities launder their reputations, recasting them as philanthropists; how its billion-pound mega-law firms and ‘reputation managers’ can destroy their critics and terrorise their publishers, cleansing these people of sin with expert use of Britain’s notoriously bully-friendly libel laws. And it shows how, while this is all going on, the country’s luxury department stores will offer such individuals white glove service as they spend millions on gem-crusted, bespoke trinkets.
But not only do oligarchs buy influence with British governments and regulators, they also use their London-washed money to funnel bribes to politicians around the world. Think here of the Azerbaijani Laundromat, in which $2.9 billion was funnelled through four UK shell companies and converted, in part, into bribes paid to EU politicians.
UK politicians – both Labour and Conservative – have managed to divert interest from this influx of unsavoury plutocrats and instead focus on hard-working, everyday people who come to the UK to do hard, every-day work.
For 40 years, British politics has been dominated by a xenophobic terror of ‘economic migrants’ (a major factor in Brexit), with complaints about foreigners competing for housing and resources. Meanwhile, the issue of ultra-wealthy kleptocrats coming to Britain to buy its football teams, entire swathes of its major cities, its newspapers, and its politicians has largely gone unremarked upon.
Neoliberal economists describe the UK as a post-industrial nation focused on ‘services’ – not the ‘service sector’ (plumbers, waiters, cab drivers), but high-ticket services like wealth management, legal strategy, investment counsel, reputation management, property management, and so on. These ‘service-providers’ should more properly known as ‘enablers’.
The reputation management industry – which draws on all these services – describes its role in helping clients create ‘coherent narratives’ about their identity and wealth, helps them steer clear of ‘out of place’ investments, and identifies foundations and think tanks that they can support to be known as ‘philanthropists’.
Enablers don’t just help craft a public-facing narrative for oligarchs though – they’re just as skilled at creating an opaque bubble of secrecy around the parts of oligarchs’ lives that are less savoury. Britons are fire-hosed with information about kleptocrats’ philanthropic activities and endorsements by members of the British elite, but we almost never hear about the klepts’ private wealth, investment and assets.
Britain’s borders are notoriously hostile to working people, but they are extremely porous when it comes to the klept. The “tier 1 investor visa” is a golden passport by another name – a way to spend a pittance for freedom of motion between the looted, authoritarian states of Eurasia and the UK. Don’t let the “investor” fool you: there is no good evidence that the ‘investments’ required under the scheme have a positive effect on the UK’s real economy.
Eroding the Rule of Law
The British political class will tell you the UK has advanced anti-money laundering controls, with scrutiny of politically exposed persons and those holding passports from high-risk countries. These laws are deceptive.
A ‘high-risk’ nation, for example, is one without good money laundering regulations – including countries like Jamaica, which are not particularly prominent in the global corruption industry. Meanwhile, Eurasian countries with strong anti-laundering laws that are never enforced are considered ‘low risk’ – because risk is calculated based on the existence of a law, not its enforcement.
The rules that require estate agents, bankers, and luxury goods dealers to report transactions from ‘politically exposed persons’ (PEPs) are riddled with loopholes and primarily enforced through non-existent self-regulation. A politician’s immediate family, for instance, cease to be PEPs the day the politician leaves office – so a corrupt dictator’s kids can buy a £60 million Knightsbridge property the day their dad steps down, with no reporting requirement.
Even when solicitors, estate agents and other covered professionals are caught ignoring the reporting rules, they face tiny fines and no lasting penalties. Many offer the defence that they didn’t know they were working for PEPs – thus there’s an incentive to simply not ask any questions when someone shows up looking to spend eight or nine figures through your firm.
Perversely, the finance sector goes overboard in the other direction, with an approach that is ‘risk-averse’ and also ‘risk-insensitive’. UK banks flood the financial regulator with “suspicious activity reports” (SARs), filing these whenever a transaction has even a glancing contact with Eurasia. The regulator – grossly under-staffed – ignores nearly all of these SARs and the transactions proceed, with the banks’ asses now covered by dint of having filed the SAR.
Another failing of UK anti-corruption law is its emphasis on identifying and blocking the proceeds of ‘crime’ rather than ‘corruption’. When an oligarch loots, it’s only a crime if the state decides that it is. The Kazakh oligarch Nurali Aliyev loaned himself $65 million from the bank he chaired and used it to buy a Highgate mansion (“there is no evidence to suggest the loan was repaid”). Kazakh authorities did not classify this as a theft, so UK anti-corruption law has little to say about it.
The flip side of this is that when oligarchs fall out of favour and go into self-exile in London, their adversaries back home can use the UK authorities to exact revenge at a distance, by selectively classifying their wealth as criminal assets and ratting them out to the British authorities.
(Of course, oligarch-on-oligarch warfare isn’t limited to pitting rivals against UK tax authorities – there’s also spectacular acts of violence, including assassination by nerve agent and radioactive poison).
The Poison Spreads
Akey enabler of the klept in the UK is the nation’s great law firms, with waves of mergers producing chambers that generate more than £1 billion in annual billings.
These firms offer full service – papering over the purchases of giant mansions; and suing the newspapers, publishers and reporters who write about them. Britain’s libel laws – much-admired by Donald Trump – are a great help here.
I’ve been on the receiving end of these threats, personally, and was forced to delete a truthful account of a billionaire’s financial stake in a firm that is implicated in human rights abuses around the world. The report cites a British journalist who estimates that “upwards of 50% of critical material about oligarchs ends up on the cutting-room floor” as newspaper lawyers force redactions of materials known to be true.
The British charitable sector is also a favourite source of reputation laundering for kleptocrats, particularly charities associated with the Royal Family, but also great universities and prominent think tanks. Charities and universities have come to depend on private money more and more over the past 20 years as austerity has starved them of public money. That makes them especially vulnerable to co-option by kleptocrats.
As interested as oligarchs are in being associated with the charitable sector, they’re even more interested in funding the UK Conservative Party itself.
The Conservative co-chairman, Ben Elliot, has formalised a ‘cash for access’ arrangement whereby major donors are invited to private events and dinners with ministers and the Prime Minister. Elliot is a natural to court oligarchs for the Conservatives – his day job is running a “luxury concierge service” called Quintessentially, which provides “services” to the ultra-wealthy. Elliot’s spokesperson says that this work is “entirely separate” from his work as co-chair of the Conservative Party.
The Made-in-Britain enablers of the klept will tell you that the fortunes they facilitate are not criminal fortunes, and the Home Office will tell you that its focus is on Eurasian criminal gangs. But, as the Pandora Papers – and other vast finance leaks – show us, the criminal wealth of the former Soviet Union is minute when compared to the oligarchs’ fortunes.
The klept isn’t criminal, because the klept writes the laws.
This is how The Jackpot starts.
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