Diamonds and school fees: How Russian cash ‘laundered by UK banks’ was spent
DIRTY cash laundered by British banks for Russian criminals has allegedly been spent on diamonds and a £29million townhouse, leaked documents reveal.
They show £600million came into the UK through lenders including statebacked RBS and HSBC in a scheme dubbed ‘The Laundromat’.
Lloyds, Barclays and the Queen’s bank Coutts were also among 17 British banks said to have processed payments.
The scheme, which saw at least £16billion moved out of Russia, was run by criminals with links to the Kremlin and KGB. Detectives believe the true figure could be £65billion.
Documents suggest a firm at the cen- tre of the allegations paid more than £10,000 to £35,000-a-year Millfield School in Somerset. The money – which the school thought legitimate – was used to pay fees for the son of property mogul Vadim Zadorozhny, though it is not known if he is linked to the scandal.
It also paid £216,000 for two Bentleys, with one ending up in the possession of Russian celebrity stylist Elina Cobaleva.
Ministers vowed to crack down on money-laundering, while regulators and the National Crime Agency are investigating. Documents obtained by the Organised Crime and Corruption Reporting Project, and seen by The Guardian, show HSBC handled £437million, RBS £90.6million and Coutts £26.3million.
Another firm linked to the scam bought a townhouse in Kensington, West London. And a Russian customer spent £260,000 at Bond Street’s Graff Diamonds store. There is no suggestion Graff knew the money was suspicious.
HSBC said the case showed more information-sharing was needed between the public and private sectors. RBS, which also owns Coutts, Barclays and Lloyds, said that their procedures were all in line with their legal obligations.
TO be a Treasury minister was once quite something. They were intellectuals, silken, a good bet for eventual promotion to Cabinet. Junior Treasury ministers at present are: Chief Secretary David Gauke, watertight Commons performer; Financial Secretary Jane Ellison, nannyish tendencies; Commercial Secretary Lady NevilleRolfe, former supermarket big-shot whose air of competence is not entirely undone by a flash of blue in her fringe; and Economic Secretary Simon Kirby, geezer.
It was the geezer who was sent to address the Commons yesterday about allegations that British banks have helped Russian money laundering. The Guardian newspaper devoted thousands of words to allegations of a c.£500million scheme called Global Laundromat, under which 17 British banks allegedly helped rich Russians to palm their money into the West. Such was the pong that Shadow Chancellor John McDonnell yesterday summoned a Treasury minister to the despatch box to say what the Government was doing about the matter.
Mr Kirby stood there, peering through thick spectacles. Messrs Hammond and Gauke, shrewdly, had stayed away. Miss Ellison, usually no slouch at avoiding trouble, was on the front bench but said nothing. The geezer was on his own. Uh-oh. He wore the sort of grey suit, tightly buttoned, that would not have disgraced the bookies’ enclosure at an East End greyhound track. He started speaking and out came an unusually strangulated voice. Part Janet StreetPorter, part John Major, part turkey.
We must not hold a chap’s accent against him too much. There are Scots Nats (one Brown from Ayrshire, in particular) who are almost completely incomprehensible. There is a burly lad on the Labour front bench with a Wearside brogue as chewy as whelks.
But the political reality is that Mr Kirby’s nasal whine is more likely to make onlookers think of Peter Cook’s comic EL Wisty than of, say, Pericles. Harsh but true.
‘We are determined to make the UK the most difficult place in the world for international crime networks,’ intoned this reedy voice.
Did grunty Moscow mafia bods, listening, quiver by their samovars? Or did they wheeze with manic laughter?
‘We are world leaders in financial regulation,’ hee-hawed sometime Brighton nightclub impresario Mr Kirby, without producing much evidence. Occasionally he removed his glasses to look more statesmanlike. In his hands he held a sheet of paper, soon much-crumpled.
Labour MPs accused him of ‘appalling complacency’. He peered at them with a moony smile.
John Mann (Lab, Bassetlaw) said: ‘To counter the impression that he has been promoted beyond his competence, can he tell us which banks have been convicted of money laundering over the past five years? What has he learned from reading those judgments?’ Gulp. Judgments? Reading? Mr Kirby blustered that ‘a number of enforcement actions’ had been taken.
Philip Hollobone (Con, Kettering): ‘How many money launderers have been sent to prison in the past five years?’ Mr Kirby: ‘I am not aware.’ Fiona Mactaggart (Lab, Slough): ‘Ha!’
JONATHAN Djanogly (Con, Huntingdon) said there was an ‘unwritten deal that Russians and others of dubious means come to this country, send their kids to our school, buy our real estate or our sports clubs, on the basis that they do no wrong while they are here’.
It might be time to rethink that arrangement, said former Justice Minister Djanogly. Mr Kirby called this ‘an interesting point’.
Ardent Remainer Ben Bradshaw (Lab, Exeter) naturally thought Russian money might have backed the Leave campaign in the EU referendum. But at least little Alan Mak (Con, Havant) was there to ask a patsy question about training for compliance officers. A ministerial PPS turned to Mr Mak and gave him a little ‘well done, buddy boy’ nod.
As a tricky session ended, Mr Kirby left the Chamber in high spirits, convinced he had played a blinder. I am afraid he did no such thing. All he did was make one wonder how a figure of so little parliamentary polish ever reached the Treasury. Nice chap and all that. But hopeless.