Wikimedia Commons
Show Hide image

I took a “Kleptocracy tour” around London and discovered the corruption capital

A sightseeing trip around central London properties revealed just how much dirty money there is swimming around the city.

London is a globally leading city, bustling with culture and educational capital, a booming economy, and abiding by the rule of law. But, combined with regulations allowing for the anonymous purchase of real estate, it’s for these reasons that the UK’s capital is one of the world’s largest laundromats, a city where money from corruption is being poured into property.

The scale of money laundering

The amount of money laundered through the UK is estimated to be at £48bn, or two per cent of GDP, while it estimated £120bn worth of UK property is owned by offshore entities and up to 36,000 properties in London exist where offshore havens were used to hide the true buyers’ identities.

That’s important, given the comprehensive report released last year called Corruption on Your Doorstep, issued by Transparency International, which found that “75 per cent of properties whose owners are under investigation for corruption made use of offshore corporate secrecy to hide their identities”.

Such is the extent of the laundering that we don’t know who owns nearly one in ten houses in Westminster. In the City of London we don’t know who owns 4.5 per cent of properties.

How they get away with it

“This is a real problem,” Simon Farrell QC, an expert in money laundering and corruption, says. “The only reason for corporate ownership is to disguise the true ownership and for those with dubious funds and who have avoided tax to shelter profits in London, a safe haven where the rule of law prevails. It’s a disgrace.”

So now, “London is now the premier location worldwide for corruption-based money laundering,” says Ben Judah, author of a book about Russia called Fragile Empire (2013).

And that’s not just bad because the money could be spent by the government on building schools, hospitals, roads, or in developing countries. It’s also pricing Londoners out of their native city, says Roman Borisovich, an anti-corruption campaigner with links to the Russian opposition leader Alexey Navalny. He organises the guided Kleptocracy Tours of London.

It’s not just a bunch of anti-corruption fanatics who put forward his view. Donald Toon, director of the National Crime Agency’s economic crime command – otherwise known as Britain’s FBI – last year warned: “I believe the London property market has been skewed by laundered money. Prices are being artificially driven up by overseas criminals who want to sequester their assets here in the UK.”

He was alarmed by the sheer number of homes registered to complex offshore corporations, some of which may have been bought with laundered money.

These offshore corporations are registered in havens, such as the British Virgin Islands, where details about company shareholders are not collected, making it nearly impossible to discover who is veiled behind them.

Given that the owners are hidden, it can’t be said that all properties purchased are being bought with the proceeds of corruption. Yet, given nearly 90 per cent of foreign company-registered properties in London are located in offshore havens, Transparency International says it is likely.

That’s why Transparency International wants offshore havens to introduce their own registers of beneficial ownership. That’s where property rights belong to a verifiable known person even though the legal title of the property nominally belongs to another person.

It also calls for the UK to introduce a register of beneficial ownership for properties owned by foreign companies in the UK, as only then will there be greater transparency around who is investing in the property market and where their funds come from.

Labour’s London mayoral candidate Sadiq Khan is calling for the government to make all property ownership in London transparent, pushing for all foreign companies to be as transparent as UK companies over their ultimate beneficial ownership if they wish to hold property titles in the UK.

Will anything be done?

The government and property industry say they will crack down on the issue. Mark Hayward, who runs the National Association of Estate Agents says estate agents are meant to submit suspicious activity reports if they notice something does not seem right.

“The industry is largely doing what it can to make these checks on individuals,” he says. “But the real difficulty is that they are unable to trace how and where the illegal funds come from and where they are going.”

Last July, speaking in Singapore, David Cameron called transparency key in tackling corruption, as “the corrupt, the criminals, the money-launderers – they need anonymous company structures to hide, to move and to access their money”.

He added: “We need to stop corrupt officials or organised criminals using anonymous shell companies to invest their ill-gotten gains in London property, without being tracked down.”

To the Prime Minister’s credit, Robert Barrington, director of Transparency International UK, said legislation has been passed by his government that means all UK companies need to declare from June 2016 who their beneficial owners are. “But this had already been announced before the Singapore speech. It’s not new, even though it’s good.”
Hayward believes that, since Cameron’s speech, HMRC and the NCA have upped their game in terms of policing his sector. But he says nothing major has happened since Cameron’s pledges.
Barrington laments: “The Prime Minister announced in July last year they would consult over whether foreign companies that own properties in the UK should have to say who the beneficial owners are, but the consultation was only launched last week.  After the consultation there may need to be legislation. The feeling is that this is not quite being treated with the sense of urgency it warrants.”
These consultations have only just been launched, almost eight months after the speech, with no action yet taken. That effectively means people can still hide behind foreign corporations and buy property with dubious funding.
When I asked the Cabinet Office about its progress, its spokesperson would not comment on when policy could be introduced, instead saying that it is “committed to the measures laid out in the Prime Minister’s speech”.

“Hopefully the government will do something about it very soon to avoid the embarrassment of admitting that nothing has happened in almost a year at the time of the global Anti-Corruption Summit it is planning to hold in London in May 2016,” Borisovich says.

Otherwise London will continue to act as a paradise for money laundering, where poorer countries get ripped off and Londoners are priced out of the capital.

Show Hide image

Rarely has it mattered so little if Manchester United won; rarely has it been so special they did

Team's Europa League victory offers chance for sorely needed celebration of a city's spirit.

Carlo Ancelotti, the Bayern Munich manager, memorably once said that football is “the most important of the least important things”, but he was only partly right. While it is absolutely the case that a bunch of people chasing around a field is insignificant, a bunch of people chasing around a field is not really what football is about.

At a football match can you set aside the strictures that govern real life and freely scream, shout and cuddle strangers. Football tracks life with such unfailing omnipresence, garnishing the mundane with regular doses of drama and suspense; football is amazing, and even when it isn’t there’s always the possibility that it’s about to be.

Football bestows primal paroxysms of intense, transcendent ecstasy, shared both with people who mean everything and people who mean nothing. Football carves out time for people it's important to see and delivers people it becomes important to see. Football is a structure with folklore, mythology, language and symbols; being part of football is being part of something big, special, and eternal. Football is the best thing in the world when things go well, and still the best thing in the world when they don’t. There is nothing remotely like it. Nothing.

Football is about community and identity, friends and family; football is about expression and abandon, laughter and song; football is about love and pride. Football is about all the beauty in the world.

And the world is a beautiful place, even though it doesn’t always seem that way – now especially. But in the horror of terror we’ve seen amazing kindness, uplifting unity and awesome dignity which is the absolute point of everything.

In Stockholm last night, 50,000 or so people gathered for a football match, trying to find a way of celebrating all of these things. Around town before the game the atmosphere was not as boisterous as usual, but in the ground the old conviction gradually returned. The PA played Bob Marley’s Three Little Birds, an Ajax staple with lyrics not entirely appropriate: there is plenty about which to worry, and for some every little thing is never going to be alright.

But somehow the sentiment felt right and the Mancunian contingent joined in with gusto, following it up with “We’ll never die,” – a song of defiance born from the ashes of the Munich air disaster and generally aired at the end of games, often when defeat is imminent. Last night it was needed from the outset, though this time its final line – “we’ll keep the red flag flying high, coz Man United will never die" – was not about a football team but a city, a spirit, and a way of life. 

Over the course of the night, every burst of song and even the minute's silence chorused with that theme: “Manchester, Manchester, Manchester”; “Manchester la la la”; “Oh Manchester is wonderful”. Sparse and simple words, layered and complex meanings.

The match itself was a curious affair. Rarely has it mattered so little whether or not United won; rarely has it been so special that they did. Manchester United do not represent or appeal to everyone in Manchester but they epitomise a similar brilliance to Manchester, brilliance which they take to the world. Brilliance like youthfulness, toughness, swagger and zest; brilliance which has been to the fore these last three days, despite it all.

Last night they drew upon their most prosaic aspects, outfighting and outrunning a willing but callow opponent to win the only trophy to have eluded them. They did not make things better, but they did bring happiness and positivity at a time when happiness and positivity needed to be brought; football is not “the most important of the least important things,” it is the least important of the most important things.

0800 7318496