How London became a haven for the world’s fraudsters

By Robert Seiler

Earlier this month, more than 100 UK millionaires were outed as tax dodgers by the Paradise Papers, which have blown yet another lid off the secret offshore structures where the elite hide their wealth. The list of British investors read like a rollcall of the institutions at the heart of the establishment: the Duchy of Lancaster, the UK parliamentary pension fund, the endowments of Oxbridge… and last but not least, the estate of the Queen herself. 

The Paradise Papers, like the Panama Papers before them, are a stark reminder that our political and business classes are more than willing to siphon their money offshore while expecting the British taxpayer to pick up the tab.

We shouldn’t be surprised, of course. Secrecy and obfuscation is a key feature of the British financial sector, which has long sought to maximise returns on investment – by means foul or fair.  Unsurprisingly, the shadowy nature of Britain’s financial sector and well-developed infrastructure for avoiding taxes has made the City of London a key destination for foreign investors looking to do the same.

TLE

Super-rich (and often corrupt) moneyed interests from around the world have flocked to make their homes in London, causing property prices to surge and driving anyone of more modest means out to the edges of town. In 1986, the average property in the capital cost  £55,000; at the end of last year, that number stood at £473,000 (an increase of 760 percent). For the sake of comparison, the average price in Manchester (where prices have “soared” 7.3 percent this year) currently stands at just over £188,500.

Even if Brexit put a damper on the sector, billions of pounds have already poured in from Hong Kong, Qatar and Russia as Gulf princes and Russian oligarchs bagged themselves a London postcode. Much of that money is ill-gotten: UK property has become a key mechanism through which overseas kleptocrats can launder their money with ease. As a Home Affairs select committee put it last year, the controls meant to prevent the UK property market from being exploited in this way aretotally inadequate” and have effectively “laid out a welcome mat” to criminals.

The committee estimated that £100 billion of questionable provenance – the equivalent of the GDP of Ukraine – is processed via the London property market every year.

And this isn’t just about avaricious estate agents turning a blind eye for the sake of a commission cheque. Russian money and commercial interests exercise so much sway that, following an exhaustive investigation, a team of Buzzfeed journalists suggested UK police have turned – or been ordered to turn – a blind eye to nine possible assassinations of people who had “made powerful enemies” in Russia. London, the report claimed, has been allowed to turn into a “crucible of Russian secret service and mafia activity” where operatives of the Kremlin can poison and shoot people with near-impunity.

Alongside the real estate sector, there is also the incredibly lucrative “reputation laundering” business typified by firms like the disgraced Bell Pottinger. The UK doesn’t only attract unsavoury characters; British consultants, lobbyists, and newspapers are perfectly willing to champion them. Take the case of Alexander Adamescu, a Romanian magnate indicted in his home country on fraud and bribery charges. From the UK, Adamescu has depicted himself as a persecuted playwright.

In his telling, the Adamescu family’s opposition newspaper angered the Romanian government, provoking corrupt authorities to imprison his late father and then persecute him in order to get its hands on the elder Adamescu’s considerable wealth. Attracted no doubt by the strongly anti-EU narrative in Adamescu’s story – which centres over whether a European Arrest Warrant in his name should be enacted – right-wing media and political figures have gamely taken up his cause.

In reality, Adamescu’s father was implicated in some of Romania’s most spectacular corruption cases. In the course of his court proceedings, it emerged Dan Adamescu had sought the services of notorious Israeli intelligence firm Black Cube (the same Black Cube that helped Harvey Weinstein harass his victims) to spy on the head of Romania’s anticorruption agency. Four Romanian judges were sent to prison after taking bribes from the elder Adamescu’s lawyer – who threw himself inunder a train after the scheme was exposed.

The disgraced billionaire’s son has received a surprisingly favourable hearing in the British press, considering how the industry typically depicts foreigners suspected of wrongdoing. In terms of coverage relating to Middle Eastern and African asylum seekers, outlets like the Daily Express typically limit themselves to the criminal immigrants they portray as flooding German streets.

The media is one thing, but it is Westminster and Whitehall that bear responsibility for changing the status quo. Conservative leaders typically like to portray themselves as tough on crime. It seems, though, that it’s only certain types of crime that attract their ire. When it comes to white collar crime, the Tories are liberalism embodied. Even as Transparency International ranked Britain in the top 10 of “countries perceived least corrupt“ globally, the organisation’s UK executive director warned there were “good reasons why people are sceptical about whether Britain really merits a top 10 ranking”.

The political will may not be there, but these are not necessarily difficult issues to solve. Effective measures have already been suggested within government, such as requiring foreign companies that buy property in the UK to disclose who actually owns them. Giving the Serious Fraud Office the funding it requires to do its job and guaranteeing its independence are also vital steps that need to be taken.

Then again, given that Brexit may even cost British police and courts access to European crime databases, perhaps we shouldn’t hold our breath.

RELATED 

Why the Bitcoin bubble is going to end in tears

Pay in real terms won’t be back to 2007 level until 2025

Study reveals fascinating inter-generational split over trust of economy

Related Posts

European leader watches as Theresa May fails to exit her own car
EU president Juncker says there is “no room” to renegotiate as No Deal Brexit looms
Crossrail needs another £1.7bn…and there is no completion date

Leave a Reply