May must tackle 'corrupt' Russian money in UK, say MPs
The British government should impose sweeping sanctions on oligarchs and officials close to Vladimir Putin and apply punitive laws to counter the âfull spectrum of the offensive measuresâ being used by Russia, a report by the Commons Foreign Affairs Committee has demanded.
âThe use of London as a base for the corrupt assets of Kremlin-connected individuals is now clearly linked to a wider Russian strategy and has implications for our national security: combating it should be a major UK foreign policy priority,â claim the MPs.
The report, âMoscowâs Gold: Russian Corruption in the UKâ, accuses the British government of failing to follow up condemnation of Kremlin aggression with credible action. âThe robust rhetoric from the prime minister following the attempted murder of Sergei Skripal and his daughterâ it says âhas been undermined by the âbusiness as usualâ sig n hanging on the UKâs front doorâ.â
The committee wants to see tough action from the government including:
- stopping companies which are sanctioned in other countries from trading in London
- closing of âloopholesâ which allow debt issuance to be used to go around sanctions
- individuals close to President Putinâs government sanctioned
- a crackdown on money laundering focusing on ownership of luxury property in the UK and dependant territories.
âThe assets stored and laundered in London both directly and indirectly support President Putinâs campaign to subvert the international rules-based system, undermine our allies, and erode the mutually-reinforcing international networks that support UK foreign policyâ, says the report. âTurning a blind eye to Londonâs role in hiding the proceeds of Kremlin-connected corruption risks signalling that the UK is not serious about confronting the full spectrum of Pr esident Putinâs offensive measures.â
Campaigners against the Putin government has been pressing the UK to adopt a version of the Magnitsky Act which was brought in by the Obama administration following the death of Sergei Magnitsky, a Russian lawyer and whistleblower, under violent suspicious circumstances in a Moscow prison. The US legislation allows the targeting of Russian state personnel who are deemed to have been involved in Mr Magnitskyâs death.
The UK parliament is in the process of passing a version of the Magnitsky Act under which Russian nationals responsible for human rights violations as well as engaging in activities against Britain such as the Salisbury poisoning can be prosecuted.
The Foreign Affairs Committee points to the London flotation of EN+ an energy company part owned by VTB, a Russian state-owned bank which has been sanctioned by the US and EU. EN+ was owned by Oleg Deripaska, an oligarch who is close to Mr Putin, who has sinc e stepped down from the board of the company in an attempt to lift American sanctions.
The report charts how, just days after the UK expelled 23 Russian diplomats following the Salisbury attack, the Russian government was able to raise Â£3bn in Eurobond issuance and the Russian energy multinational Gazprom PJSC made a Â£500m sale followed by the Russian embassy in London tweeting âbusiness as usualâ.
The Sanctions and Anti-Money Laundering Bill is currently in the final stages of passing through the Commons after going through the Lords. The MPs state: âWe welcome the billâs broad definition of the purpose of sanctions regulations, which will give the government the power to introduce sanctions for a range of reasons...â But the MPs want a register of overseas owners of properties in this country to be brought forward from the proposed date of 2021 and naming and shaming of individuals âcomparable to the US Magnitsky Listâ to be made public and updated by the Foreign Office.
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The wealthiest Russian oligarchs who call London home
The committeeâs chairperson, Conservative MP Tom Tugdenhat, said: âWe must be united in our efforts to match rhetoric with action â" in the City, through government policy and among allies in the US, G7 and EU. We call on the Foreign and Commonwealth Office to set out a coherent strategy on Russia that clearly links together the diplomatic, military and financial tools that the UK can use to counter Russian state aggression.â
The report, however, does not reveal any new information about Russian money and corruption in the UK, drawing instead on existing public material, and statements by journalists, academics and researchers. There is a degree of scepticism about whether Theresa Mayâs government will rush to investigate and prosecute on this issue near future; laws which already exist to do so have not been much used.
Successive British governments have actively encouraged rich foreigners to come to this country and a slew of prosecutions, which, to apply the law equitably, would mean targeting of other nationalities as well as Russians is likely to result in money being moved out, capital flight, at a time of economic uncertainty and trepidation following Brexit.
Widespread international support for further punitive action is also unlikely. The British government has suspended senior level interaction with Moscow, but other Western states have not. Although a number of allied countries expelled Russians working under diplomatic accreditation following the Skripal attack, contact has continued as normal at the highest level.
Angela Merkel has just met Mr Putin in Sochi where topics under discussion included Nord Stream 2, a project to pipe Russian gas to Germany. French President Emmanuel Macron will meet Mr Putin in St Petersburg this week, and the populist coalition due to form Italyâs next government has stated that it will lift sanctions placed on Russia over Ukraine.
In the US, Donald Trump â" under investigation over claims that Moscow helped to put him in the White House â" recently signed a new set of congressional sanctions on Russia, only after resisting doing so for months. And although America threw out 60 Russian diplomats over the Skripals, the US president is reported to have claimed subsequently that he had been misled into expelling a far larger number than he has intended.
World news in pictures
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World news in pictures
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17/50 2 May 2018
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20/50 29 April 2018
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42/50 7 April 2018
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43/50 6 April 2018
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45/50 4 April 2018
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46/50 3 April 2018
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47/50 2 April 2018
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48/50 1 April 2018
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49/50 31 March 2018
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50/50 30 March 2018
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The Russian ambassador to London, Alexander Yakovenko, acknowledged that his countryâs relationship with Britain is now worse than with any other Western state. âThis Conservative government should really examine its policy towards Russia and why it has reached this level. Some British politicians should also think about the kind of language they use, there are some people who are determined to make matters worse instead of better,â he said.
âIf the British government brings in these laws targeting Russians in the UK then the Russians can take the matter to court, I believe a lot of them are preparing for this already and preparing legal cases. This is something which should be open to them, after all we keep being told that the UK is a country of laws.â
Mr Yakovenko wanted to stress that although the British government had chosen to break off high level liaison, other heads of state have maintained âlinks which are so essentialâ in the troubled international political climate. The Japanese Prime Minister Shinzo Abe will be in Russia at the same time as Mr Macron.
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