Posts Tagged ‘london’
Why London turns a blind eye to Russia’s adventurism
Threats to Russia over its actions in Ukraine are undermined by the warm welcome its billionaires continue to receive in the west.
The kleptocracies that have replaced the old Soviet empire are vulnerable, I wrote on these pages as the Ukraine crisis began. The freezing of their assets was a non-violent response to the threat to the integrity of a sovereign state that had not committed genocide or developed weapons of mass destruction; that had not threatened to invade a neighbour or provided any other casus belli beyond having a revolution against a fantastically corrupt government.
We might have threatened Putin’s elite support and made his backers realise that they had to choose between supporting Russian adventurism or holding on to their loot. I believed we had a fair idea of what their choice would have been.
Russia is exposed. Putin’s central bank estimated that two-thirds of the $56bn moved out of Russia in 2012 might have been the proceeds of crimes, bribes to state officials and tax fraud. English bankers and lawyers, British and Dutch tax havens in the Caribbean, and estate agents in Mayfair, the Cote d’Azur and Manhattan launder the loot.
Never mind asset freezes and visa bans; a vigorous investigation into immoral earnings by the European and north American authorities would have spread panic among the crime bosses. David Cameron sniffed weakness. He warned Moscow at the beginning of March that Russia would pay “significant costs” if it did not back down.
The crisis escalates today as Crimea votes on an anschluss with Russia under the eyes of Putin’s troops. The failure to date to impose sanctions on or make believable threats against Russian assets tells us much about Britain and the wider west, none of it flattering.
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How London turned into Richistan
The city with more super-rich than anywhere else proves Putin had a point when he taunted PM about losing his capital to oligarchs.
It is 3am on a warm Tuesday in Cadogan Square, Belgravia, and a £200,000 orange Maserati screeches to a halt.
The driver revs the engine for several minutes, and the car – with Arab script on its registration plate – roars off into the night. By the time the sleepless residents reach their windows to peer out, the car has long gone.
For the next month the streets of the capital will be dominated by Ferraris and Maybachs in often garish colours, driven by the over-indulged sons of the Emirates aristocracy.
Sometimes the cars come straight from the Park Lane showroom. Sometimes the playboy owners fly their favourite vehicles – heavily customised, from gold-plated interiors to velvet-covered bodywork – more than 3,000 miles for a few weeks of fun in the London traffic.
It is an annual sojourn, delayed this year by Ramadan. With temperatures reaching 110F in Kuwait, Qatar and Abu Dhabi, the ruling families have flocked to the temperate if polluted air of Knightsbridge for shopping and leisure.
And for the younger men – nights of boozing and ostentatiously bad behaviour impossible back home.
Welcome to super-rich London, the city with the highest number of multi-millionaires in the world, according to the respected Wealth Insight analysis – more than 4,000 individuals with more than £20 million per head, placing London ahead of Tokyo, Singapore and New York.
Last week, speaking at the G20 Summit, Vladimir Putin described Britain as ‘a small island’. Nobody, said his spokesman, pays attention to it – except of course the Russian ‘oligarchs who have bought Chelsea’.
To that list he might have added the Khazakhs, Azerbaijanis, Malaysians, Chinese, Indians and even Greeks and Italians who are all scrambling to buy up London in ever greater numbers.
The tide of foreign wealth seems unstoppable. ‘Super-prime’ homes, usually defined as the top 5 per cent of the most valuable properties, are being sold to international buyers at a rate of almost 85 per cent, while 60 per cent of newly built property in London is bought by overseas investors, mainly from the Far East.
Greek and Italian investors are said to be buying £500 million of British property a year.
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The yoga guru and the British firms at the heart of Sergei Magnitsky’s death
To her students Lana Zamba is simply an experienced yoga teacher, expert in a 500-year-old form of the mystic Eastern discipline. But Mrs Zamba is equally pliable, it appears, when it comes to choosing business directorships.
The yoga instructor, who lives in Limassol in Cyprus, has been a director of no fewer than 24 British-based companies including one at the centre of an alleged multi-million-pound fraud uncovered by Sergei Magnitsky, the Moscow lawyer whose death in a Russian jail became an international cause célèbre.
Quite why a yoga instructor, who describes herself on the internet as “the leading teacher and representative of the Patanjali International Yoga Foundation”, should head so many different businesses is unclear.
But Mrs Zamba, 47, is named in a series of letters sent to authorities demanding a criminal investigation in Britain into a fraud that led to Mr Magnitsky’s death.
Mr Magnitsky, 37, who worked for Hermitage Capital Management, a British-based hedge fund, had uncovered evidence of a £150 million fraud committed by Russian tax officials and an organised crime syndicate.
He was then arrested on tax evasion charges and held in the notorious Butyrka prison for 358 days before his death in 2009, developing pancreatitis for which he did not receive proper medical treatment. He was also beaten in jail.
Despite being dead for four years – and to the anger of the outside world – Mr Magnitsky is being tried posthumously in Moscow for tax evasion.
Hermitage’s investigations into the fraud suggest as much as £35 million was laundered through 10 British companies. One of those companies – Nomirex Trading Ltd, based in an office block in Birmingham – lists only two directors: Mrs Zamba and a company based in Cyprus.
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William Hague criticises Russia over Sergei Magnitsky case
Foreign Secretary William Hague has criticised Russia’s handling of the death of whistle-blowing lawyer Sergei Magnitsky, saying the case was “of utmost concern” to the Government.
Speaking ahead of talks in London with his counterpart Sergei Lavrov on Wednesday, Mr Hague said the Magnitsky affair was “one of the highest profile examples of failings in Russia’s judicial and prison systems”.
“Mr Magnitsky died more than three years ago in pretrial detention, and to date there has been no meaningful progress towards establishing the circumstances surrounding his death,” the Foreign Secretary told Russian news agency Interfax. “I have urged my Russian counterpart to ensure that those responsible are brought to justice without further delay, and measures are put in place to prevent such cases from happening again.”
Mr Magnitsky, a lawyer, died of heart failure at the age of 37 in a Moscow jail in 2009 after being denied vital medical treatment for pancreatitis. He had earlier exposed a £140m tax fraud involving senior state officials and policemen, but was jailed by the same officers whom he accused.
No one was convicted over his death and Kremlin critics say a trial of the dead man for fraud – due to begin in Moscow next week – is a Kafkaesque attempt to blacken his name and dampen dissent.
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Magnitsky was a martyr, trampled by a corrupt system, says Boris Johnson in the Telegraph
In today’s Daily Telegraph, Boris Johnson writes about the trial of Sergei Magnitsky, held after his death. Boris begins: “Today, in Moscow, there begins the trial of a 37-year-old accountant by the name of Sergei Magnitsky. Mr Magnitsky is accused of tax offences dating back perhaps 10 years.”
“What is astounding about this case is that Magnitsky is not only innocent of all charges. He is also dead. He died in prison in November 2009, after almost a year in which he was kept in squalor, denied family contact and deprived of medical treatment — detention that culminated in a savage and fatal beating by his captors.
It says something about the Russian state that it should now put this ghost on trial, in what must be the most grotesque parody of legal proceedings since the animal trials of the Middle Ages. It says something about Russian justice that Magnitsky — and his family — are now being persecuted by the very legal establishment whose corruption he exposed. And that message is that there are no lengths to which the Russian kleptocrats will not go to protect themselves and their ill-gotten loot, and to grind the faces of their enemies.
Magnitsky was a whistleblower. He uncovered a scam, a gigantic criminal conspiracy by which the Russian police and tax officials colluded with the judiciary and mafia to steal millions from the Russian state. When he refused to change his evidence and give in to his interrogators, they killed him – only eight days before they would have been legally obliged to bring him to trial or let him go.
Magnitsky’s tragedy was to be hired by a US-born British citizen called Bill Browder, who runs Hermitage Capital Management — a fund that used to be one of the biggest investors in Russia. Bill Browder’s misfortune was to fall out with Vladimir Putin, and in a big way. To understand the Magnitsky affair, you have to go back to the collapse of communism and the decision of a semi-inebriated Boris Yeltsin to allow the assets of the Russian people, and incalculable wealth, to fall into the hands of about two dozen more or less cunning and opportunistic businessmen — the oligarchs.”
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Moscow-on-Thames
When most people think of British-Russian relations, they imagine Bond films, iron curtains, Cambridge double agents, irradiated dissidents, and billionaire oligarchs who dress like Evelyn Waugh but behave like Tony Soprano and then sue each other in London courts. But there’s another element underwriting this not-so-special relationship.
British elites, elected or otherwise, have grown highly susceptible to the unscrutinized rubles that continue to pour into the boom-or-boom London real estate market and a luxury-service industry catering to wealthy Russians who are as bodyguarded as they are jet-set. This phenomenon has not only imported some of the worst practices of a mafia state across the English Channel, but it has had a deleterious impact on Britain’s domestic politics. And some of the most powerful and well-connected figures of British public life, from the Rothschilds to former prime ministers, have been taken in by it. Most surprising, though, is how the heirs to Margaret Thatcher’s fierce opposition to the Soviets have often been the ones most easily seduced by the Kremlin’s entreaties.
On Aug. 21, a new lobby group called Conservative Friends of Russia (CFoR) was launched at the London home of Alexander Yakovenko, the Russian ambassador to Britain. The launch was attended by some 250 guests, including parliamentarians, Conservative Party members, businessmen, lobbyists, NGO representatives, and even princes. Yakovenko and Member of Parliament John Whittingdale, who chairs the Culture Select Committee in Parliament and is an “honorary vice president” of CFoR, both delivered keynote addresses. The lavish do in the backyard of the Kremlin envoy featured, as the Guardian reported, a “barbecue, drinks and a raffle, with prizes of vodka, champagne and a biography of Vladimir Putin,” and it came just days after the Pussy Riot verdict. It was an open invitation to controversy. If CFoR wanted to portray itself as merely a promoter of “dialogue” between Britain and Russia, it was an odd beginning for a group born looking and sounding a lot like “Tories for Putin.”
CFoR was founded by Richard Royal, a public affairs manager at Ladbrokes, a popular chain of betting parlors in Britain. He also owns his own company, Lionheart Public Affairs, which has no website but shares a registered address with the new pro-Russia lobby group. Responding to the storm of criticism his new project has provoked, Royal took to the Guardian’s website to defend the initiative against what he called “armchair critics on Twitter,” in language you’d expect from a PR professional. “Whether we like it or not,” Royal wrote, “Russia is an influential and essential part of the international community and its importance will only grow over time. We need to stop making decisions based on misconceptions that are decades old, and deal with reality.”
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It matters where Russian money comes from; Oligarchs find it easy to settle in Britain. But more questions should be asked about them
A huge stream of money has flowed into Britain from the old Soviet Union since the end of Communism. The British public seems used to the fact that, from time to time, another flamboyant or publicity-shy oligarch whom nobody had previously heard of pops up on the radar as if descending from another planet.
All he has to do is buy a stake in a high-profile business or make a record-breaking bid on a house or country estate and a Russian billionaire or millionaire can easily break into elite British society.
Very little is required to establish oneself as a plutocrat in this country. Local banks apply meagre “know your client” procedures to vet applicants: a passport copy and a utility bill are all that is needed to open an account at any London-based private bank. Then, as if by magic, funds pour into the UK as clean capital, free from any taxation or further scrutiny. Getting the right to stay permanently in the UK with an investor visa is just as easy; all that is needed is a minimum of £2 million in personal assets.
Most rich Russians living in the UK have made their wealth honestly, but there is money sloshing around Britain tainted by corruption. Yet few new arrivals can expect to be challenged on where the money came from, or what they had to do back in Russia to acquire it.
Many in the British Establishment aren’t bothered by this laxness. After all, few Russian billionaires have so far parlayed their fortune into politics — particularly after the fuss caused when George Osborne and Peter Mandelson enjoyed the hospitality of Oleg Deripaska on his yacht off Corfu.
But you should be bothered. Evidence in the court case brought by Boris Berezovsky against Roman Abramovich gave us an insight into how those who amass (and lose) fortunes in Russia, however upright or law-abiding, have to do so against a backdrop of corruption and political interference. This case introduced British lawyers to krysha (the Russian for roof) — the protection money many businessmen pay to do business.
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Biziness and justice, Russian style: The cost to our society could be far worse than the wealth these men bring
William Browder is head of Hermitage Capital in London’s Golden Square. He is a naturalized British citizen, the grandson, as it happens, of Earl Browder, the head of the US Communist Party in the 1940s. That link did neither him nor his mathematician father no favours in life.
In the last year he has received 11 death threats – a text message quoted the Godfather about history showing that ‘there is no one so powerful they cannot be killed’. The calls were traced back to Russia. They probably did not come from gangsters, but from the senior figures in the Russian police, or more worryingly the FSB secret police. They are the ones who poisoned the late Mr Litvinienko with polonium in the middle of London.
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London play honours lawyer who exposed Russian fraud
A play about the last moments of an anti-corruption lawyer who challenged Moscow will be performed for the first time outside Russia.
One Hour Eighteen details the killing of Sergei Magnitsky, who challenged the authorities over a £140 million racket. The father of two was working for investment fund Hermitage Capital when he uncovered the biggest tax fraud in Russian history and pointed the finger at senior officials, police and politicians. But he was accused of fraud himself, imprisoned without trial and tortured. In 2009, a group of men beat him to death in his cell.
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