By Simon Basketter
Downloading PDF. Please wait... Issue 2795

Thick as thieves—how London has lured the oligarchs

Russia’s elite got rich off privatised property—so it’s only natural British politicians want a share of the spoils
Issue 2795
Liz Truss, Theresa May and Russian oligarch Lubov Chernukin on a fancy night out

Lubov Chernukin (circled) has paid to spend time with top Tories

Robber barons or “oligarchs” as they are known, became notorious as Communism collapsed in Russia and eastern Europe at the end of the last century. The post-Soviet period saw the seizure of assets and the creation of what in Russian is known as obshchak—the “shared treasure” used by a criminal gang. The oligarchs grew rich on obshchak, but the sharing group was very small.

The thin lines between the state—notably the security services—profits and criminality were blurred. The state assets of Russia were stolen and sold off in scams. So for bailing out then Russian leader Boris Yeltsin, oligarchs were allowed to buy huge natural resource companies at rock-bottom prices in rigged privatisation auctions.

These were accompanied by a wave of intimidation and murder. It was only in cases where an oligarch had fallen out of favour that they were convicted of any offence or fled abroad. Political figures acted as a krysha—protection, literally “roof”—for those lower down the chain whose job it is to send money upwards.

Putin came to power in 1999 with the support of oligarchs, promising stability and increased Russian influence. He relied on force and fraud to do it, and he has done so since. The oligarchs are a cash cow for Putin when he needs quick funds. But mostly the wealth flows up and out. And he has a habit of falling out with them, as thieves often do over spoils. Some oligarchs are in Britain to launder money. Some are here to launder money and avoid Putin.

The superyacht and the mansions are just the trappings of the trillions shipped into offshore bank accounts. The Western rich follow exactly the same process. The oligarchs gained their initial wealth through the type of asset stripping of the state that the Tories could only dream of. But that’s not the only reason they get on.

The British parliament’s intensely conservative intelligence and security committee noted last year, “Successive governments have welcomed the oligarchs and their money with open arms, providing them with a means of recycling illicit finance through the London ‘laundromat’, and connections at the highest levels with access to UK companies and political figures.”

The Tories have worked closely with Russian money to escalate a process started by Labour’s Tony Blair to open up the fancier bits of London as tax-free bolt holes. Labour’s government set up a visa scheme that meant you got a British passport if you threw £2 million in the tin. It was dumped in 2017, but it opened a lucrative line in political donations and has kept Chelsea and Surrey estate agents in business ever since. It also opened the door to the occasional machinations of the Russian government.

So Lubov Chernukhin is a Russian banker and married to Putin’s former finance minister. She has spent a fortune buying time with politicians, including £160,000 to play tennis with David Cameron and Boris Johnson. She paid £135,000 for “a night out with Theresa May”. The most recent donations—last quarter—to the Tory party include £80,000 from Chernukhin.

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