Britain under pressure to crack down on corrupt Russian money
As Russian troops ravage cities in Ukraine, the West tried to punish President Vladimir Putin, cutting off the finances his closest allies, super-rich oligarchs who live abroad in luxury for decades. While Europe and the U.S. have taken over superyachts and mansions, frozen bank accounts, and banned travel, the U.K. seems to be in the laggard.
Britain has actively sought out Russian billionaires for years, ignoring reports that some their wealth was questionable. The capital is now known as “Londongrad” because there is so much Russian money in Britain today. British Intelligence warned that the money of oligarchs is helping to finance the war in Ukraine and supporting Putin’s regime. We reported that the U.K. is being pressured to show its Western allies that it can stop corruption.
Dominic Grieve – Money has been flowing into Britain — there is no doubt about that — but it often had what I can only call a tainted supply. Russia is a mafia country.
Dominic Grieve was a former conservative member. He served as an attorney general and headed Britain’s intelligence committee. His 2019 report on Russian interference in U.K. politics, found Britain was awash in Russian oligarchs’ money — much of it from untraceable sources.
Dominic Grieve: So one has to face up to the fact that if you’re going to live in Russia or do business in Russia, you have to dance to the tune of the mafia boss. The mafia boss, President Putin, is the one.
Bill Whitaker – You don’t get rich in Russia by being an oligarch.
Dominic Grieve : Many Russian businessmen have close ties to the Kremlin. Others don’t. However, as long as you have a relationship to Russia, the risk is that you won’t be able to comply with the Russian state’s requirements.
Since the collapse of Soviet Union, the United Kingdom has been open to oligarchs without asking about their fortunes. Instead, hundreds of oligarchs were granted citizenship by obtaining special visas for PS2 million investments. Russian tycoons went on an unprecedented buying spree, with billions of pounds pouring in. Andrey Guryev was an oil billionaire who bought Witanhurst. Only Buckingham Palace in London is larger. Roman Abramovich bought the champion Chelsea soccer team. Dominic Grieve claims that there was so much money it was difficult to distinguish legitimate investors from crooked. The 2019 report found it was so easy to wash dirty cash in Britain, the visa program was known as the “laundromat.”
Bill Whitaker: It sounds quite alarming, what you found in this report.
Dominic Grieve. Everyone on it agreed that the United Kingdom was at risk of being complacent about Russia’s threat in the round. One aspect of this was the fact that we had allowed large amounts of Russian money into our country and to invest here.
Bill Whitaker – Was this all a strategy to allow the oligarchs to gain influence in the U.K.
Dominic Grieve : In some cases, I think it was. It is unclear if the influence is being used in order to soften the reactions of Western democracies to the Russian actions.
While the oligarchs may be living in luxury abroad, most of them owe their fortunes and success to Vladimir Putin. Mikhail Khodorkovsky says
Putin is able to make them do almost anything. He was once the richest billionaire of Russia. Now he is a millionaire living in exile in London. Khodorkovsky said that many of the oligarchs prosper and survive under the influence of the Kremlin.
There’s no doubt about it, he told us, Putin will give the order to recruit mercenaries, transfer money or spread fake news on social media. He told us that Putin uses oligarch funds to fund the war in Ukraine. He said that Putin’s foot soldiers — the oligarchs he calls them – simply obey.
“They feel a noose around the neck tied by Putin,” he said to us, translating from Russian. “I can only explain this. “
In 2003 Khodorkovsky, an oil titan, dared to publicly criticize Putin. He was charged with fraud and was taken into custody. The lion of industry was tried and convicted in a courtroom cage and spent 10 years in prison. Bill Whitaker: Why aren’t more people speaking out against Putin?
“Yes,” we were told by him, translating from Russian. “Putin wanted us to send a message that nobody was allowed to criticize his actions. You can be imprisoned if you don’t follow the Kremlin’s orders. “
Khodorkovsky told us the oligarchs’ links to the Kremlin should have set off alarms. Instead, the infusions of money sparked a London realty boom. According to a government report, buying a house is one of the best ways to convert dirty money into a legal asset.
Oliver Bullough was a journalist in Russia. He now writes books about financial crimes. He showed us around the “laundromat” to explain its operation.
Bill Whitaker – This is the neighborhood of Russian oligarchs’ choice?
This is Belgravia. These neighborhoods are among the most expensive in the world, and they surround Eaton Square. …
was once the exclusive domain of barons and dukes.
Oliver Bullough – This nickname is for Eaton Square. Red Square is because there are so many Russians. It’s a somewhat ironic name, I suppose, because Red Square is often associated with communism.
Transparency International, an anti-corruption organization, estimates that Russian oligarchs have at least $2 billion in property in London.
Bill Whitaker : This would allow an oligarch to clean his name and money.
Oliver Bullough: Yeah. If you are the type of person who can buy a house on Eaton Square you are seamlessly slipping into a tradition aristocracy or nobility.
Bill Whitaker: It’s powerful.
Oliver Bullough: It’s powerful. Right? You are someone who has robbed a Russian company. Vladimir Putin is your friend and you are rich. But, look at this. Take stock of what you have. Look around at where you are. This is London’s core sector. This is what we do. Transforming thugs into aristocrats 24 hours a day.
Oligarch care in London is worth an estimated $350 million a year. They have made a fortune as tax advisors, real estate agents, and bankers. To protect them, high-powered lawyers use the British legal system. Bullough said that most British politicians were unaware of the situation.
Oliver Bullough. There was a general belief that if money was coming in and paying taxes, that it was building schools, roads, hospitals, and so on, then we didn’t care about where it came. But it seems extraordinary now, looking back, that the murder of Alexander Litvinenko in 2006 did not occasion a national conversation at least about what we were doing. A former KGB spy, Alexander Litvinenko worked with British police to expose Russia’s mafia. The Kremlin assassins placed a radioactive poison in his teacup. In 2018, Russian double agent Sergei Skripal and his daughter survived an attack with a Soviet-era nerve agent on British soil. Bullough said that the laundromat continued to operate as normal. With Russian missiles descending on Ukraine, Britain is now seriously questioning the amount of money that oligarchs have been lavishing on them for years.
Oliver Bullough: It was pretty obvious what Russia was like by 2018. Yet, it was still there — prime ministers were saying, “It is time we finally got rid off the dirty money in that country.” It’s now! It was a decade ago that it was not time. We have become dependent on the money generated by London, certainly.
Leader of the opposition, the Right Honorable Keir Starmer: For too long Britain has been a safe haven for stolen money. Putin believes that we are too corrupt to do the right things and end it. Do you agree that now is the right time to sanction all oligarchs and open every shell company in order to prove Putin wrong?
Prime Minister Boris Johnson: Yes, Mr. Speaker, and that is why this government has brought forward the unprecedented measures that we have. The government of Boris Johnson cancelled the visa program after Russia invaded Ukraine. it banned travel and froze the assets of 24 oligarchs. It will soon establish an anti-corruption police force. Both political parties — Labor and Conservative — have courted Russian money but Conservatives have gotten the lion’s share — at least $4 million in political donations since 2012, including almost $1 million from Alexander Temerko, a former Russian arms tycoon, now a British citizen. He is not on the sanctions list.
Ian Blackford – How can our allies believe this prime minister will clean up dirty Russian money in Britain when he refuses to clean up his political party?
Boris Johnson : Mr. Speaker. I think it is very important to let you know that we don’t raise money from Russian oligarchs. People who give money to this, to this, to this [interruption from House of Commons]. People who are registered to vote on U.K. registers of interests raise money. That’s it, that’s how we do it.
But nothing inflamed Johnson’s critics more than his 2020 appointment of media mogul Evgeny Lebedev, a dual citizen, to the House of Lords. Despite warnings by British security services that the son a former KGB agent could pose a security threat, Lord Lebedev from Hampton and Siberia donned his ermine robes. He can now watch as other British lords race for the Russian company boards.
Dominic Grieve – You may have noticed that in the last two weeks, there has been a huge bailout of people who are leaving boards of Russian companies. It’s socially unacceptable, quite apart from political, for them to be on it. In the past, there were many such facilitators.
Bill Whitaker – What made it acceptable? I mean, there have been many incidents that should have raised alarm bells.
Dominic Grieve : That’s certainly my opinion. We were concerned about these things and the threat Russia poses to our national safety.
An ex-oligarch Mikhail Khodorkovsky said that he believed the sanctions were necessary but not sufficient.
” What drives me crazy,” he said to us, translating from Russian. “It’s the cowardice of western leaders that say we can’t do this, and we can’t do it because Putin might retaliate.” This appeasement is precisely the same tactic that the West used against Hitler, and that resulted in millions of deaths.
Pressure is building on the oligarchs in Britain. They are now being called out by anti-war protestors. Roman Abramovich (a close Putin ally), was forced to sell the soccer club he owned. He may have been poisoned in Kyiv. In March, squatters occupied Oleg Deripaska, an industrialist in Belgravia. Oliver Bullough revealed London’s dirty secrets to us.
Oliver Bullough: It’s amoral. It doesn’t care.
Bill Whitaker : What’s at risk if this continues?
Oliver Bullough – I think it’s important to remember that an oligarch does not cease to be an oligarch when they fly to the U.K. They want the same things in England as they do at home. This includes rigged access for government auctions. They want preferential access for politicians, and I think we should be very cautious about allowing that to occur here. It’s very difficult to go back once you have started down this path.
Produced by Heather Abbott. Associate producer, LaCrai Mitchell. Broadcast associate, Emilio Almonte. Edited and written by Sean Kelly.
I’m a journalist who specializes in investigative reporting and writing. I have written for the New York Times and other publications.