https://www.nytimes.com/2018/05/21/world/europe/uk-russia-money-laundering-london.html
LONDON
— After the poisoning of a former Russian spy, Sergei V. Skripal, on English
soil, the British government expelled 23 Russian diplomats. Its foreign
secretary, Boris Johnson, compared the upcoming World Cup tournament in Russia
to the Nazi Olympics in 1936. And Prime Minister Theresa May promised there
would be no place for “serious criminals and corrupt elites.”
Yet,
despite the heated declarations, business continues as usual for wealthy
Russians who hide and launder corrupt assets through London, a parliamentary
committee said Monday in a scathing assessment that warned of “inaction or
lethargy” over dirty money from Moscow.
The
report, from the influential House of Commons foreign affairs committee, said
there was no excuse for Britain “to turn a blind eye” while associates and
allies of the Russian president, Vladimir V. Putin, “use money laundered
through London to corrupt our friends, weaken our alliances and erode faith in
our institutions.”
Britain’s
financial and legal firms have been big beneficiaries of Russian capital
flight, and London, less than four hours flying time from Moscow, is a popular
destination for the country’s oligarchs, some of whom have invested in luxury
property, soccer teams and other assets.
With
a deep chill in relations between Britain and Russia after the poisoning of Mr.
Skripal and his daughter, Yulia, the British government has been under pressure
to make life harder for allies of Mr. Putin by making sanctions and anti-money
laundering rules more effective.
Yet
the committee report suggests that Britain’s financial center has so far found
it impossible to resist the large sums of money that flow from Russia, even if
there are troubling questions about the source of some of these assets.
“Despite
the strong rhetoric, President Putin and his allies have been able to continue
‘business as usual’ by hiding and laundering their corrupt assets in London,”
said the report, which entitled one section of its findings “closing the
‘laundromat.’”
Though
the proportion of dirty money in London was estimated to be small, relative to
the size of the financial sector, the committee said, “the damage that this
money can do to U.K. foreign policy interests, by corrupting our friends,
weakening our alliances and eroding trust in our institutions is, however,
potentially enormous.”
The
document raised concerns about so-called “tier 1,” or investor, visas, which
are open to those able to invest $2.7 million in the country, hinting that it
plans to study the issue in more detail. Over the weekend it emerged that Roman
Abramovich, the billionaire Russian owner of Chelsea soccer club, is
experiencing delays in renewing his investor visa.
Since
2014, the British government has been empowered to refuse applicants for these
visas if there are reasonable grounds to believe the money to be invested was
obtained unlawfully or if there are concerns about the character of investors.
After that change, applications dropped by 84 percent.
Now
existing visa holders are being checked against the tighter requirements, the
government says.
The
committee also had harsh words for Linklaters, a prestigious British law firm,
that refused to give evidence to the lawmakers over its work on deals involving
Russian companies. In the report the committee asked whether such deals had
left Linklaters “so entwined in the corruption of the Kremlin and its
supporters that they are no longer able to meet the standards expected of a
U.K.-regulated law firm.”
In
a statement Linklaters said it was “very surprised and concerned” at the
criticism, adding that it has the “highest standards of business conduct,
ensuring we comply with applicable laws and professional rules, including with
respect to anti-bribery and corruption, anti-money laundering and sanctions.”
There
was also veiled criticism of Mr. Johnson, who was asked by lawmakers what his
department could do to stop the flow of corrupt money. “He appeared to suggest,
however, that there was no real role for government in the process,” the report
said.
While
noting that Mr. Johnson and other ministers were right to assert that they
cannot order law-enforcement agencies to investigate individuals without any
evidence, the committee added that observing due process “cannot be an excuse
for inaction or lethargy.”
Lawmakers
noted that Russia itself did not seem overly worried that Britain’s aggressive
rhetoric would be put into practice. On March 15, after the expulsion of
Russian diplomats from Britain, Russia’s embassy in London drew attention on
Twitter to a bond sale by Gazprom, the Russian energy company, with the words “Business
as usual?”