Vladimir Putin’s invasion of Ukraine has united liberal, democratic nations in a way few thought possible. And there is now a growing effort to erode support for the Russian president by sanctioning the billionaires who have propped up his regime for decades.After initial hesitation, Britain recently announced new sanctions against seven Russian oligarchs—bringing the total number sanctioned by the UK since the start of the invasion to eighteen. Roman Abramovich, whose fishy funds have enabled Chelsea Football Club to win 18 major titles, is the highest profile name on the list. But his inclusion obscures the UK’s general reluctance to stand up to Putin’s regime. Oleg Deripaska, for example, one of those most recently sanctioned by the UK government, has been facing sanctions in the US for the better part of four years. And even with this latest tranche of sanctions, the UK is yet to punish almost 100 oligarchs who have been targeted by other western nations.
Nor is Britain’s sluggish response to Putin’s war limited to its sanction regime.
“Of course we’re going to take refugees,” promised Boris Johnson as Russian missiles began flattening residential areas across Ukraine. “The UK is way out in front in our willingness to help.” Yet, while EU countries have granted blanket asylum to those fleeing the conflict, Britain’s Home Secretary, Priti Patel, has promised only that Ukrainian refugees might be granted safe haven if they already have family in the UK. And the Home Office has only now made it possible to complete the byzantine visa application process online.
Even as the US, Britain’s most important ally, announced an immediate ban on all Russian energy imports, the UK contented itself with a plan to phase out Russian oil by the end of the year. But a nine-month weening off period does little to help the people of Ukraine. It simply gives Putin an opportunity to find new buyers—just as the delay in sanctioning Russian oligarchs gave them the chance to shift their assets to avoid incoming legislation.
According to Foreign Secretary Liz Truss, the House of Lords is to blame for the UK’s sluggish response. On Monday, Truss told a parliamentary select committee that amendments introduced in the Lords following Brexit had “made it harder to get sanctions agreed.” This is a questionable explanation at best. There were no laws preventing the government from sanctioning Russian oligarchs. There has been no recent change in legislation to facilitate this. The well informed have been recommending such measures for years. In reality, the UK has been lethargic in targeting corrupt Russian business interests because Britain has become accustomed to profiting from tainted foreign money. Experts estimate that £100 billion a year is laundered through UK markets.
This problem started with the Eurodollar market of the 1950s and ’60s, when British banks helped Soviet politicians squirrel their wealth away in US dollars. The problem was exacerbated when colonial enclaves like the Cayman Islands, rather than pursue independence, sought to attract foreign wealth by offering a refuge to tax dodgers and economic criminals. This constellation of offshore tax havens, which benefit from the legal and financial expertise of the City of London, has been dubbed “Britain’s second empire.” In this rabbit warren of secretive shell companies and mailbox offices, Putin’s cronies have found a hospitable home.
In addition, British politicians have actively advertised the nation’s capital as a home for Russian business since the 1990s. The golden visa scheme, introduced by John Major’s Conservative government in 1994, kickstarted this trend by offering residency rights to anyone who invested at least £1 million in the UK. Rebranded as the Tier 1 investor visa by Gordon Brown, this cash-for-residency policy was only discontinued in February of this year. And even Ken Livingstone, the supposedly left-wing mayor of London between 2000 and 2008, declared that he wanted “Russian companies to regard London as their natural base in Europe.” Many now do. More than 2,500 Russian millionaires have been granted residency since the scheme was relaunched in 2008. And according to a 2020 parliamentary report, the UK has become a “laundromat” for tainted Russian money.
This is not surprising. There are many features of Britain’s financial and legal system that make it attractive to kleptocratic customers.
UK legislation offers property holders some of the strongest protections in Europe. Under existing legislation, the government is powerless to capture real estate registered as owned by anonymous offshore businesses. Around 85,000 UK properties are owned by foreign entities of this kind. British authorities have traditionally been far less likely to sign off on significant asset seizures than their European counterparts—thus reassuring oligarchs that their loot is safe in British hands. As a result, London’s extravagant property market has long served as a place to stash dodgy Russian dough. Roman Abramovich owns around £200 million worth of property in London alone. And at least £1.5 billion of UK property is now owned by shady Russian investors.
Britain’s plaintiff-friendly libel and privacy laws also make the UK an ideal destination for crooked billionaires who prefer to avoid awkward questions. Since the introduction of the 1998 Human Rights Act, for example, British judges have introduced a legal right to privacy that often trumps the right to free expression. And unlike the free-speech-obsessed United States, the UK’s Law of Defamation makes it easy for anyone, even private corporations, to sue for libel. When they do, English courts habitually place the burden of proof on the defendant. So, when a journalist or academic publishes something that an oligarch doesn’t like, it is the author who must demonstrate that a given statement is both true and in the public interest—as Catherine Belton discovered when she was sued by Roman Abramovich for claims made in her award-winning 2021 book Putin’s People, which takes aim at the dubious dealings of some powerful Russian businessmen.
Mounting a legal defence against a libel claim can prove extraordinarily expensive. Recruiting the help of silver-tongued British PR firms, who are happy to polish the image of their kleptocrat customers, oligarchs of all stripes are often happy to roll the dice in an English court. British politicians have frequently encouraged them to do so. The current prime minister, during his stint as the mayor of London, explicitly invited Russian oligarchs to make full use of Britain’s courts.
The toothlessness of the UK’s anti-money laundering and anti-corruption agencies has also added to Britain’s allure as a base of operations for shady businessmen. The charity Spotlight on Corruption has estimated that the organisations aimed at targeting economic crime have a combined budget of just £850m—less than 1% of the amount estimated to be laundered through the country every year. As a result, British authorities are regularly outgunned by financial criminals.
The UK has no equivalent to the burly anti-corruption agencies that dominate the American market. This, combined with the luxuries available in central London, help make Britain a prime destination for the world’s most established kleptocrats.
The UK’s Companies House, a public registry of company owners, set up in 1844, is designed to increase transparency. But the organisation can barely afford to investigate the reports that come its way—let alone probe reclusive billionaires for more information.
In 2019, the former director-general of the National Crime Agency, Dame Lynne Owens, asked the government for a more than 50% budget increase to be able to effectively tackle economic crime. Instead, the NCA’s budget was reduced by 4% between 2016 and 2021.
In addition, many Russian financiers have managed to cultivate good relationships with members of the British establishment, who may, in return, be helping to shield Kremlin assets from more stringent sanctions. The wife of one of Putin’s former ministers once famously paid £160,000 to play tennis with then prime minister David Cameron, for example. And until he resigned on 7 March 2022, Greg Barker—who holds a life peerage in the House of Lords—was the chairman of EN+, the mining company Oleg Deripaska uses to steal the mineral wealth of the Russian people. In 2019, Deripaska paid Lord Barker more than $5m to use his status as a UK lawmaker to campaign for the lifting of US sanctions on the oligarch’s companies.
We can only speculate as to why Boris Johnson so actively sought to suppress the Russia Report, commissioned by British Intelligence, which has revealed the extent of Russian influence at the highest levels of UK politics. What we do know is that Ben Elliot, the co-chair of the Conservative party, co-owns a concierge company whose website, until recently, gloated about its success in providing Russian oligarchs with VIP access to the highest levels of British society.
Evgeny Lebedev—the son of an ex-KGB agent and owner of the Evening Standard—is reportedly good friends with the prime minister. He also holds a peerage in the House of Lords, which Boris Johnson was allegedly instrumental in granting him, despite a warning from the security services that this would pose a threat to national security.
One might wonder what it will take to break the UK’s addiction to Russian finance. Putin’s crimes in Chechnya, Syria and Crimea proved inadequate. Meanwhile, Britain’s openness to tainted Russian money could be seen as complicity in Russia’s growing list of crimes.
After years of dithering, the Russian invasion of Ukraine has finally prompted the government to implement a new economic-crime bill that will force foreign owners of British property to reveal their identities. There is, however, good reason to question whether the laws in question will be rigorously enforced. After all, only around 0.09% of the government’s budget is spent on fighting economic crime.
But perhaps UK politicians are finally beginning to value principles over profit. All it took was a war in Europe.