The Atlanta Journal-Constitution
U.K. tightening laws on oligarchs, but critics say it’s too little, too late
Eighteen months ago, Evgeny Lebedev was ushered into the clubby inner circle of aristocratic Britain: the House of Lords, to which he had been nominated for a life peerage by his good friend, Prime Minister Boris Johnson.
This past week, Lebedev, a 41-year-old Russian-british newspaper baron, found himself on far less comfortable ground. Writing on the front page of his paper, London’s Evening Standard, Lebedev implored President Vladimir Putin of Russia to call off his brutal invasion of Ukraine.
“As a Russian citizen I plead with you to stop Russians killing their Ukrainian brothers and sisters,” said Lebedev, whose father was once a KGB officer. “As a British citizen I ask you to save Europe from war. As a Russian patriot I plead that you prevent any more young Russian soldiers from dying needlessly.”
Lebedev’s carefully calibrated message reflected the suddenly tricky landscape for wealthy Russians in Britain. Putin’s assault has thrown a harsh spotlight on oligarchs. Most amassed their fortunes thanks to their ties to the Russian leader. They have used London, with its laissez-faire regulatory climate, as a haven to stash wealth or to launder ill-gotten gains.
Now, with most of the Western world uniting against Putin’s aggression, Britain is moving to plug an embarrassing loophole to which it has long turned a blind eye.
On Tuesday, the government introduced new legislation in Parliament to try to curb the gusher of dirty money into Britain. Under the law, known as the Economic Crime Bill, foreign companies that own property would have to declare the true owners or could ultimately risk confiscation of their assets.
“They are beginning to feel the heat,” Misha Glenny, author of “Mcmafia,” a book on organized crime that inspired a popular TV series, said of the oligarchs. But he said of the plans to tighten the rules, “There is an element of shutting the stable door after the horse has bolted.”
The new legislation is targeted directly at elite Russians, who have hired battalions of lawyers, bankers and accountants to help them hide their wealth, much of which was amassed through cronyism. Many shield their identities behind shell companies that own property in London’s gilded neighborhoods.
Transparency International, which campaigns against corruption, estimates that 1.5 billion pounds ($2 billion) of British real estate has been bought by Russians accused of corruption or of having links to the Kremlin. Of that, almost 430 million pounds of property is in Westminster, near the heart of government, while 283 million pounds is in affluent Kensington and Chelsea.
The new legislation also aims to strengthen the use of “unexplained wealth orders,” a legal tool allowing the government to seize assets owned by people who cannot prove they were bought with legitimate funds. Since 2018, such orders have been invoked only nine times in four cases. Prosecutors have been reluctant to press cases because they can incur huge legal costs if the prosecutions fail.
“This is a significant step forward in terms of tackling Russian money,” said Rachel Davies, head of advocacy at Transparency International U.K. “These are long overdue promises from the government which are finally coming to fruition.” But she added, “there are gaps that the government needs to address.”
Among them is an exemption for real estate purchased more than 20 years ago. And there would be an 18-month transition period before the law came into effect, giving wealthy owners ample opportunity to sell out.
In an interview with ITV Tuesday, Johnson, striving to claim the higher ground on this issue, said of those oligarchs who had not spoken out about Ukraine that their “silence is inexplicable.”
To critics, Britain’s action is too little, too late. The government first committed to making these changes six years ago. Yet before Russia moved against Ukraine last week, Johnson had been expected to push off the measures until at least 2023.
“The flow of dirty money into the U.K. and U.S. has been undermining our national security for years,” said Tom Tugendhat, a Conservative who is chair of the foreign affairs committee in the House of Commons. “Since 2018, I’ve been warning that we’re paying for our enemies’ weapons.”
Tugendhat, whose name has surfaced in recent weeks as a potential successor to Johnson, has said Britain needs to move away from targeting individuals with “vague” sanctions. Instead, he said, it must impose penalties with teeth, like barring Russian companies from British markets and expelling family members of Russians linked to Putin.
Skeptics wonder how hard the government will push, not just because legal, financial and other firms have benefited hugely from Russian cash, but also because donations have flowed to Johnson’s Conservative Party.
Since he became prime minister in 2019, the party, or its individual constituency associations, have received 1.93 million pounds ($2.5 million) from donors who are either Russian or who made money from Russia, according to calculations by the opposition Labour Party, based on disclosures to the Electoral Commission.