openDemocracyUK: Opinion

How the UK helps the world’s kleptocrats and crooks – deliberately

‘Financial skulduggery isn’t just something that happens in the UK; there has been a concerted and decades-long effort to encourage it to do so’

This is an extract from ‘Butler to the World: How Britain Became the Servant of Tycoons, Tax Dodgers, Kleptocrats and Criminals’ by Oliver Bullough, published by Profile Books at £20 hardback, ebook and audiobook on 10 March

Oliver Bullough
8 March 2022, 5.56pm
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A couple of years ago, Andrew, an American academic, asked me to meet for a coffee. He was researching Chinese money and he wanted to hear about Chinese-owned assets in London and what the British government was doing to ensure their owners had earned their wealth legally. I get these requests every now and then, thanks to my role as a guide on the London Kleptocracy Tours, which show off oligarch-owned properties in the pricier parts of Knightsbridge and Belgravia, and I like to help if I can.

We met at a café in a rather grand building on Trafalgar Square – a building that, funnily enough, considering the topic we had met to discuss, Ukrainian oligarchs had swapped between them in 2016 to settle an argument, in the way that my son might give a rare football card to a friend after they’ve fallen out in the playground. Andrew had come well prepared for the meeting and had a checklist to work through, which was clearly designed to generate a list of names of other people he could speak to.

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Which law enforcement agency was doing the most to tackle the threat of Chinese money laundering? Who was the best person to talk to at that agency? Which prosecutors had brought the best cases? Who had done the most robust research on the volume of Chinese-owned money in the UK, and what assets did that money tend to buy? Which politicians were most alert to the question, and how did they organise themselves?

When I do research in the United States, I am consistently amazed by the willingness of officials to sit down with me, trust me and talk through their work and share access to documents. American journalists complain about their working conditions, just like everyone does everywhere, but for me doing research into financial crime in the US is as heady an experience as letting a child loose in a Lego shop. Andrew, however, was discovering that the pleasant surprise sadly does not work in the opposite direction. I think he had been hoping that I would share a few contacts and it’s possible that he had been concerned I would refuse to open my address book to him, but it seemed not to have occurred to him that I would have no address book to open; that essentially the people he was looking for would not exist.

There was no concerted law enforcement effort against Chinese money laundering, I told him, so there was no investigator who could talk to him about it. There have been essentially no prosecutions so none for him to look into, and there is almost no research into where the money has been going, how it’s been getting there, or indeed how much of it there is.

But where was the equivalent of the FBI’s International Corruption Squad? Who was doing the work of the Kleptocracy Team at the Department of Justice? What about Homeland Security Investigations; did Britain have something like them? Were prosecutors building cases, in a British version of the Southern District of New York? Was bringing down a big Chinese money-laundering ring the kind of case that would make someone’s career? Which parliamentary commissions were probing this? Surely, someone was?

As he talked, I began to see the situation through his eyes, which gave me a perspective I’d never had before. The problem was that he could keep trying different passwords until the rocks rotted away, but it wouldn’t help: there was no cave of treasures for him to open. If he wanted to find out how much Chinese money was entering the UK, who was moving it and what it was buying, he was going to have to start from scratch and do all the work himself. Andrew had come to London to discover how Britain was fighting illicit finance, but he was discovering that this was not happening at all. Quite the reverse, in fact.

It is of course not just Britain which helps kleptocrats and criminals to launder money. The shadow financial system used by Chinese criminals is transnational by its nature. It transcends any one jurisdiction, and derives its power and resilience from the fact it does not rely on any one place: if one jurisdiction becomes hostile, money effortlessly relocates to somewhere that isn’t. And the system grows all the time, as lawyers, accountants and others persuade politicians to give them access to the kind of fees they can generate by moving money around. You can find it as much in Dubai, Sydney, Lichtenstein and Curaçao, as you can in Switzerland or New York. But you find it most of all in London.

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Britain is so much more invested in this business than all those other places. Financial skulduggery isn’t just something that happens in the UK; there has been a concerted and decades-long effort to encourage it to do so. This is hard to comprehend, because it is so at variance with Britain’s public image: as the country of Harry Potter, Queen Elizabeth II and Downton Abbey; a place defined by irony, tradition and substantial breakfasts. Mob bankers are vulgar, and if there’s one thing we know about Britain, it’s that it’s not vulgar. However bad other countries are, Britain has for decades been worse. It operates as a gigantic loophole, undercutting other countries’ rules, massaging down tax rates, neutering regulations, laundering foreign criminals’ money.

It’s not just that Britain isn’t investigating the crooks, it’s helping them too. Moving and investing their money is of course central to what the UK does, but that’s only the start: it’s also educating their children, solving their legal disputes, easing their passage into global high society, hiding their crimes and generally letting them dodge the consequences of their actions.

‘Britain is like a butler,’ I said at last, as I tried to explain to both of us what was going on. ‘If someone’s rich, whether they’re Chinese or Russian or whatever, and they need something done, or something hidden, or something bought, then Britain sorts that out for them. We’re not a policeman, like America, we’re a butler, the butler to the world. That’s why we don’t investigate the issues that you’re talking about – that’s not what a butler does.’

He looked at me for a few beats, perhaps trying to work out if I was being serious.

‘How long has this been going on?’ he asked at last, and the answer came to me without me having to think about it. It was suddenly obvious.

‘It started in the 1950s. We needed a new business model after America took over as the world’s superpower, and this is what we found.’

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