‘Kleptocracy Tour’ highlights UK’s role in global corruption

Bus tour visits London properties owned by dubious foreign oligarchs and officials

The London skyline. A new bus tour wants to show how money routed through secret accounts in places like the British Virgin Islands is later laundered through London’s  property market. File photograph: Dominic Lipinski/PA Wire

The London skyline. A new bus tour wants to show how money routed through secret accounts in places like the British Virgin Islands is later laundered through London’s property market. File photograph: Dominic Lipinski/PA Wire

 

The bus tour starts near Whitehall, across the river from the London Eye and around the corner from the Palace of Westminster, Big Ben and Westminster Abbey.

Our tour will ignore these sights, however, taking us instead to see some of the expensive London properties owned by dubious oligarchs and public officials from Russia, Ukraine and the Arab world.

This is the Kleptocracy Tour, organised by a group of anti-corruption activists, investigators and journalists in conjunction with the Henry Jackson Society, a right-wing think tank.

The Panama Papers have turned a global spotlight onto the use of offshore funds and other financial vehicles to hide wealth from tax authorities, law enforcement agencies or international sanctions.

The activists behind the Kleptocracy Tour want to show how money routed through secret accounts in places like the British Virgin Islands is later laundered through London’s booming property market.

“The only countries capable of trying to stop these criminals are those where they keep their wealth, where they open bank accounts, float their companies on stock exchanges or buy properties.

“And London obviously is the champion in all of these Kleptosports,” said Vladimir Ashurkov, a Russian opposition politician and the executive director of the Russian Anti-Corruption Foundation.

The tour begins outside an apartment owned by Igor Shuvalov, the fifth most powerful government official in Russia and an architect of Vladimir Putin’s economic policy.

The property overlooking the Thames was originally two apartments which were bought in 2003 by an offshore vehicle controlled by Mr Shuvalov.

It was later combined into a single flat and sold in 2014 for £11.4 million (about €14 million) to a company controlled by Mr Shuvalov and his wife.

The purchase price was more than 100 times Mr Shuvalov’s official annual income and the stamp duty alone was eight times his declared earnings in 2014.

The transaction took place while Russia was suffering economically from falling oil prices and the impact of economic sanctions, a crisis that prompted Mr Shuvalov to make a televised appeal to his fellow citizens to tighten their belts.

“We will overcome any deprivations inside our country. We will consume less food, electricity and other essentials which we are used to.

“But if we feel that someone from the outside wants to change our leader against our will, we will simply unite as never before,” he said.

Mr Shuvalov’s flat is a modest hovel compared to the Belgravia mansion owned by Russian aluminium oligarch Oleg Deripaska.

When we arrived, the drapes were drawn and nobody was home at 5 Belgrave Square, an 11-bedroom, six-storey, Grade I listed Regency house Mr Deripaska bought through a firm based in the British Virgin Islands for a reputed £25 million (about €31 million).

“Over the past decade-and-a-half, Putin has build a grotesque kleptocracy in which the government and business elites loot Russia without limit,” said Andrew Foxall, director of the Russia Studies Centre at the Henry Jackson Society.

“These elites like the system they have built so much that they don’t want to live in Russia, they don’t want their children to live in Russia and most importantly, they don’t want to keep their money in Russia.

“Instead, they would rather keep it in the West. In particular they would rather keep it in London.”

Putin ally

The next stop is a property owned by Dmytro Firtash, one of Putin’s Ukrainian allies.

Mr Firtash made his fortune creaming off commission on the gas trade and held a monopoly on supplying Russian gas to Ukraine.

Currently in Austria fighting extradition to the US on bribery charges, Mr Firtash is welcomed in the most exalted British circles as a generous philanthropist.

Cambridge University established a school of Ukrainian studies in his name, while Prince Philip gave him a medal for outstanding philanthropy and funded the All-Party Parliamentary Group on Ukraine.

In 2013, Mr Firtash bought a house off the Brompton Road for £60 million (about €75 million), which is equipped with two basements, the second of which has a swimming pool - because everyone needs a swimming pool in their second basement, 10m below the level of the pavement.

The following year, he put his eye on the building next door, the old Brompton Road tube station, which he bought for a further £53 million (about €67 million).

The vendor was Britain’s Ministry of Defence.

Labour MP Margaret Hodge, a former chair of the Public Accounts Committee, has pursued the issue of tax havens and corporate tax avoidance more vigorously than any of her colleagues.

Joining the tour towards the end of its three-hour circuit, she pointed out that nobody knows who owns one in 10 houses in the borough of Westminster.

“Its so simple to do using the tax havens. And you can see the attraction of London. Nobody’s going to nationalise housing tomorrow so you’ve got a pretty stable market here.

“On the whole prices are going up, it’s a pretty easy market in which to sell your house if you ever want to get hold of cash.

“And London is full of the professionals you need to undertake the corrupt acquisition of property here and the laundering of money into the UK,” she said.

“The answer to all this is transparency. You need to know who owns what and once you uncover that, I think everything else flows from it.”

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