An anti-corruption strategy is promised for next year, some time. Nobody is holding their breath. The priority for this government is economic growth, not cleaning up one of Britain’s most lucrative and dirtiest industries. Pursuit of Russian assets held in Britain has been feeble but that could change this week
Edward Lucas
December 16, 2024
The Times
Britain talks a good game. When it comes to sanctions on Russia, we are working with other countries to “exert relentless pressure on the Kremlin, disrupt the flow of money into its war chest, erode its military machine, and constrain its malign behaviour worldwide”.
But the real test is not rhetoric, as in those stirring words last month from the foreign secretary, David Lammy, but reality. If sanctions were working, Russia would not be grinding forward in Ukraine. It would have already lost. This government, like the last one, only nibbles at the problem. It imposes sanctions but does not punish those who help the Kremlin evade them. It freezes Russian assets but will not use them to help Ukraine.
Take, for example, the £2.5 billion proceeds from the sale of Chelsea Football Club two and a half years ago. Its owner, the Russian oligarch Roman Abramovich, was made to sell it to fund a charitable trust for “victims of the war”. But not a penny has been spent. In January, a House of Lords committee said the delay was “incomprehensible”. A government minister in October promised to “double down” on efforts to reach agreement with Abramovich’s lawyers.
I asked the Foreign Office how that was going. Still doubling. Still down. I asked the grandee running the trust, the former Unicef boss Mike Penrose, for an update. No answer. Britain is even sitting on the comparatively trivial £50 million raised by our police efforts against sanctions-busters and Russia-backed criminals. So much for the “relentless pressure”.
As Lyra Nightingale, of the Redress campaign for victims of torture, points out, any of this money could bring immediate help to Ukrainians who have experienced “soul-destroying” rape, mutilation and other horrors in Russian captivity. Their country, the front line of our defence, is bleeding to death before our lethargic gaze.
MPs on Wednesday have what may be a last chance to nudge the government into action, as the Financial Assistance to Ukraine Bill reaches the committee stage. This provides the legal basis for lending more money to Ukraine. But a cross-party amendment would give the government the power to seize Russian central bank reserves held in UK bank accounts.
These, according to detective work by the American-Ukrainian lawyer Yuliya Ziskina and colleagues, amount to £27 billion. Russia is obliged under international law to pay for the damage it has done in Ukraine, which amounts to at least 20 times that sum. The Kremlin can hardly invoke property rights in its defence when it flouts them in Ukraine.
Action here would embolden other countries. Canada and the US last year passed the necessary laws (drafted by Ziskina). But both governments have dithered. The incoming Trump administration is more likely to pull the plug on Ukraine than pull the trigger on Russia.
Central bank reserves are only part of the story — the Russian state owns a lot more in this country. But the government says the details are secret. So British taxpayers are paying for aid to Ukraine, while our rulers shelter the aggressor’s assets from scrutiny.
This feeble, legalistic approach to the Kremlin’s assets is just one facet of a broader problem: Britain’s ingrained inability to deal with murk and sleaze. This is the subject of a sizzling forthcoming book, Indulging Kleptocracy: British Service Providers, Post-communist Elites and the Enabling of Corruption, by the University of Exeter professor John Heathershaw, Tena Prelec and Tom Mayne. It paints a devastating portrait of hypocrisy and greed. Some of the most supposedly respectable people in Britain enable some of the worst people in the world to launder their fortunes, buy influence, polish their reputations and silence their critics.
Again the government talks a good game, pledging to make Britain a “hostile environment for the corrupt and their ill-gotten gains”. But action is another story. The most recent disappointment came at a summit of crown dependencies and overseas territories last month. The dodgier fragments of the empire, such as the British Virgin Islands, were again let off the hook on the question of providing open, public registers of beneficial ownership, something agreed in 2018 with a deadline of 2020.
These sunny places for shady people claim that pressure from Britain amounts to “neo-colonialism”. But the truth is that the webs of untraceable, shape-shifting offshore shell companies they spawn are integral to the City of London’s money-laundering industry. In opposition Lammy campaigned loudly on this issue. In government he is soft-pedalling it. An anti-corruption strategy is promised for next year, some time. Nobody is holding their breath. The priority for this government is economic growth, not cleaning up one of Britain’s most lucrative and dirtiest industries.
It is a similar story with the foreign influence law, toothless against China until the government formally designates Xi Jinping’s regime as a threat. It won’t, because that would offend the Chinese Communist Party and be bad for business.
These issues are not regulatory sideshows. They are central to national security. Britain’s inability or unwillingness to act shreds our reputation at home and abroad. Who wants to defend a country run by the dodgy rich, for the dodgy rich? How can we lecture other countries on anti-corruption when we run a cesspit? Worst, it allows our enemies to influence our decision-making, whether it is donating to political parties, buying media outlets — or cosying up to royalty to snare sources and steal secrets.