BOris Johnson is credited with having done so much to help Ukraine, but Britain is like a doctor treating a patient’s symptoms after causing the infection in the first place. Weapons shipments are crucial, as are band aids and painkillers when someone is feeling unwell, but there is still no evidence that Downing Street recognizes how to treat the underlying condition.
The Kremlin is solely responsible for the horror it inflicts on Ukrainians, but its ability to wage war stems from the wealth it has accumulated. And it’s something we share responsibility for, and something we need to address urgently as we supply Kyiv with missiles to destroy Russian armored vehicles.
For too long Britain has welcomed Kremlin corporations and oligarchs and allowed them to raise funds in our financial markets. Our lawyers defended their interests, our accountants filed their accounts and our front companies protected their assets. Our professionals may have abandoned their oligarchic clients over the past six weeks, but the damage was already done: the Russian state would have nothing to do with the wealth it has today, and therefore would not be in able to fight this war without the help they provided. And does anyone really believe that once the memories of Bucha, Kramatorsk and Mariupol fade, the City will no longer sell their services to the Kremlin elite?
If we want to degrade the influence of the oligarchs and undermine the Russian military in the long term, we must prevent them from doing business in this country again.
There are two reasons why Britain allowed Russian kleptocratic wealth to flow through the City of London in such large quantities. The first is that we only cared about the fees it incurs, not how it was earned.
The second reason is more complex and relates to the nature of Vladimir Putin’s regime. The Kremlin controls everything in Russia and indiscriminately uses all available tools – the military, the FSB, the economy, organized crime, embassies, the media – alone or in combination, for the task it wishes to tackle. . This is fundamentally different from the way the British state operates, and it has allowed the Russians to easily slip through the cracks of our system: the threat is not purely criminal, so it is not the police accountability; it is not military, so the Ministry of Defense does not intervene; it is not managed by spies, so our security services do not intervene.
For too long, the threat posed by Russia has always been – for British officials – “someone else’s problem”, and has therefore never been sufficiently taken into account. It’s a shame, because there is a vulnerability in Putin’s system that the UK is perfectly placed to fix. The Kremlin’s ability to move illicit wealth seamlessly through the offshore financial system, and thus through London, underlies all aspects of its behavior.
When British screen structures were used to conceal the ownership of billions of pounds laundered out of Russia, the government did nothing about it, thanks to its failure to appreciate the security threat inherent in the anonymous wealth that pours into our country. When Russian state enterprises raised capital in the City, British politicians failed to recognize that we were indeed funding the Kremlin’s war machine and instead hailed the business we were generating. When the oligarchs bought up swathes of West London, we didn’t consider that we were providing them with a stable home for their wealth, so they could build a looting machine at home, and instead welcomed all the stamp duty they were paying.
Foreign Secretary Liz Truss this week lectured Europeans about buying so much oil and gas from the Russians. But in protecting and managing the money of the Kremlin elite, Britain has been at least as complicit as Germany in helping Putin build his aggressive regime.
To expose, investigate, and block Kremlin money, we need three things, all of which are easily achievable if the political will can be found: good shell company transparency, so we know who owns what; strong regulation of professional facilitators, so that crooked lawyers and accountants can be prosecuted; generous funding for law enforcement, so that we can confiscate suspicious wealth.
And these three policies should be coordinated by a fourth: one person who is in charge of fighting illicit funding, who can force agencies to act and can confront dragging politicians, and who can prevent Kremlin infiltration. in our economy. “someone else’s problem”. We need to take kleptocracy as seriously as we take terrorism, and that takes more than just an MP named “anti-corruption champion.”
So far, the government has relied on sanctions to lock in the wealth of the oligarchs, but the sanctions do nothing to destroy the networks that moved that wealth in the first place. Taking more substantial action will mean imposing greater regulation, which will undoubtedly cost us money, just as preventing one of the oligarchs’ companies from listing on the London Stock Exchange would have cost us money. But it will help protect our society from infiltration by kleptocratic wealth, undermine the Kremlin’s ability to threaten others, and – in the long run – weaken Putin’s grip on power.
In the past, such policies have been blocked by the Treasury, which has prioritized maintaining the under-regulation it sees as crucial to the City’s competitiveness over defending the integrity of our financial system. And the new regulations will no doubt be unpopular with the rich, who for decades have been using exactly the same tricks as the oligarchs to minimize their taxes and hide their wealth.
The question facing government ministers now is: are they prepared to put their support for Ukrainians ahead of tax breaks and tax loopholes enjoyed by their friends, donors and – in the case of Rishi Sunak – their wives? ? Because until they are, they will not help Ukrainians at all.
Oliver Bullough is the author of Butler to the World: How Britain Became the Servant of Tycoons, Tax Dodgers, Kleptocras and Criminals