Will Coxon looks at the extent of money from Russian oligarchs in London, suggesting why regulation of foreign investment is needed.
Londongrad, a 2015 Russian crime comedy television series about Russian expats living in London, opens its premiere episode introducing the drunk Oleg Dorokhov. Oleg often violates numerous laws of the United Kingdom but manages to avoid justice for three reasons. Reason number one is that Oleg has a lot of money. Reason number two is that Oleg’s father’s love for him is directly proportional to the distance between them. And reason number three is that Oleg has a good fixer.
There in the opening scenes of a failed TV-show is a reflection of London as seen by many Russian oligarchs. For years Britain has welcomed the influx of foreign money with open arms, disregarding where it might have come from or the influence it may have on our politics and our lives. The real-life Londongrad is much less humorous and a much greater cause for concern.
The ‘golden visa’ scheme, introduced by the Conservatives in 1994 and happily continued by the following Labour government, allowed anyone with a lot of money, anyone investing £1m to be precise, to be granted residency in the UK. Russian oligarchs poured into London.
And why wouldn’t they? Buying assets in London, especially property, is not only a sound investment but it is also a great way to clean your cash. An estimated £100bn of dirty money is laundered through London’s financial institutions every year, and these institutions have become very good at it. The law may require the details of companies transferring money to the UK to be recorded with the government, however this is poorly enforced. Launderers register shell companies with false or misleading details to hold their money. They then conduct complicated transactions to make it harder for agencies to keep track of the money’s origin. Finally, the launderers integrate their money into the system, in the form of buying assets. Houses in Kensington as an example. This can apply not just to money from Russian oligarchs, but any money flowing into the UK.
But how do they get away with this? Much like Oleg, they have good fixers. The UK, and London especially, prides itself on the strength of its services. When a case is filed against a launderer, they can call upon a small army of accountants and lawyers to defend them. If the launderer is in the public eye a legal case could be seen as problematic. Luckily the numerous PR agencies are also on hand to clean up their image. And just to be sure that the launderers are kept safe, the UK’s stringent libel laws keep the media at bay and donations to the major parties reduce any further scrutiny.
This has left the UK in a woeful situation. As described in the title of Oliver Bullough’s book, the UK has become the ‘Butler to the World’, taking up its position at the elbow of the worst people on Earth: the oligarchs, kleptocrats and gangsters.
The Londongrad show ultimately failed due to the ruble falling in the wake of Russia annexing Crimea as it was unable to afford to film on site. Much like the show, the real-life Londongrad is falling too. Russia’s invasion of Ukraine has seen the government sanction many Russian businesses, including some based here in the UK, making their previous operations distinctly more difficult. This shift, however, does not solve the root of the issue the UK faces.
The British infrastructure has been built over many years to accommodate dirty money, and other players are already looking to pick up where the oligarchs have left off. The ‘golden visa’ scheme may have been scrapped in early 2020, but the underlying problems persist.
Without substantial change to the way we regulate foreign investment we will stay just the ‘Butler to the World’. Another ruling class will take the place of the Russian oligarchs, and years from now another poor soul will be trawling the depths of Youtube trying to find a different country’s failed TV-show on which to base their blog.
Will Coxon works in communications, supporting infrastructure and construction projects in the UK. He has a background in government and the third sector. Will is interested in the economy, constitutional reform, and equality of opportunity. You can follow him on Twitter at @Will_Coxon.