23 May 2018

Is Britain finally getting tough on Russian oligarchs?

By Andrew Foxall

Roman Abramovich’s visa issues will set alarm bells ringing for his fellow oligarchs. For years, this group of extraordinary rich politically-connected business owners have jet-setted between Russia and the West.

They have enjoyed the fruits of the Western system, while Russia has slowly turned into a grotesque kleptocracy. They don’t want to live in Russia. Nor do they want to keep their money there or educate their children there.

The UK has long been a favoured destination. The rule of law (good for business), Stucco-fronted townhouses (good for investment), Michelin-starred restaurants (good for socialising), and world-leading private schools (good for the children) has made London a popular place for the rich to call home.

And the UK welcomed the oligarchs with open arms. The City of London allowed their companies to list on its Stock Exchange. Bankers, financiers, lawyers, accountants, and company formation agents helped funnel their money through off-shore accounts. Estate agents eased their real estate purchases. Pin-striped lackeys facilitated their buying of everything from artwork and antiques to cars and yachts.

Successive British governments enabled all of this. In 2008, Tier 1 visas – so-called “golden visas” – were launched to encourage individuals from outside of the European Union (and Switzerland) to invest at least £1million here. The scheme existed until 2015. According to Transparency International, almost a quarter of all visas handed out over this seven-year period went to Russians, accounting at least £729 million in investment.

Few questions were asked of the individuals who took advantage of the scheme. Like the other oligarchs, Abramovich made his fortune in Russia in the decade that followed the fall of the Soviet Union. It was a time when state-owned assets – from utility providers to gas and oil companies and everything in between – were rapidly privatised.

Within a decade, Abramovich was a billionaire, with significant recently-privatised assets – which he later sold back to the Kremlin, at a huge profit – and connections to the highest levels of power in Russia.

Belatedly, the UK has woken up to the issues that scheme created. Speaking in March, then-Home Secretary Amber Rudd said that Britain would review all Tier 1 visas handed out. The qualifying amount has now been raised to £2million, and applicants are required to prove that that sum was acquired lawfully.

According to The Telegraph, it is that second stipulation that means Abramovich is yet to be granted his visa, although that does not necessarily suggest any wrongdoing on his part.

The British government, post-Salisbury, announced its intention to look more closely at wealthy Russians who owe their wealth to their ties with President Putin. Earlier this year, Abramovich was named in the US Treasury Department’s “Kremlin Report” of individuals and entities closely linked to Putin.

Of course, there may be entirely innocent reasons for the delay in Abramovich renewing his visa. It may be caught up in regular Home Office delays, which have intensified over recent weeks owing to the recent scandal affecting the Windrush generation. It may be caught up in delays at the British Embassy in Moscow, which has 23 diplomats fewer than usual as a result of the tit-for-tat expulsions that followed the poisoning of Sergei and Yulia Skripal.

But it is potentially telling that, when approached for comment, the Home Office provided a statement not from the Immigration Minister, Caroline Noakes, but from the Security Minister, Ben Wallace.

The same day, Parliament’s Foreign Affairs Committee – a powerful committee of MPs – warned that the government is putting national security at risk by allowing “President Putin and his allies… to continue ‘business as usual’ by hiding and laundering their corrupt assets in London”.

If it turns out that the UK is asking Abramovich – the UK’s 13th richest person, with a £9.3 billion fortune – to explain how he acquired his fortune, then it is unlikely that he will be the only oligarch asked to do so.

Dr Andrew Foxall is Director of the Russia and Eurasia Studies Centre at The Henry Jackson Society, the London-based international affairs think tank.