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United Kingdom: The decline of the oligarchs precipitates the fall of ‘Londongrado’ | Business

At number 16 Kensington Palace Gardens, the most expensive street in the United Kingdom, stands the 15-bedroom white mansion of Roman Abramovich, former owner of the Russian oil company Sibneft. It has a doorbell labeled “House” and another labeled “Personal” that nobody touches today: the house is the most valuable in the Russian oligarch’s real estate portfolio in the country, immobilized by the British authorities. This property has become one of the symbols of the fall of londongrade: the nickname garnered by the British capital after decades of welcoming the fortunes of Russian millionaires with open arms.

“In the past, the role that the UK played was to take their money [de los oligarcas] and let them live here, and we were very aggressive in hoarding it: we let them buy visas without asking where the funds came from,” says Jamison Firestone, a British-American lawyer who has campaigned for years for the seizure of oligarchs’ assets as a method of pressure. over Moscow. “Today, everything is different. We have become one of the countries that has issued the most sanctions.”

More than 1,000 individuals and companies have been penalized by the British government since Russia began its invasion of Ukraine in late February. But determining what your assets are in the country is not an easy task. According to Transparency International, the properties on British soil of Russians accused of corruption or of being linked to the Kremlin add up to around 1,800 million euros and at least 55% of this value is in the name of companies registered in British overseas territories or dependencies of the Crown, making it difficult to trace the true owner.

“If you see the properties of Mijaíl Fridman [oligarca sancionado, dueño de los supermercados Dia]one of them is in his name but the other belongs to a trust on the island of Jersey [una dependencia de la Corona]. We only knew about it because he put his name on it when he applied for a building license,” Firestone recalls. King’s Business School economics professor Filipa Sà encountered the same problem when she investigated the effect of foreign investment on house prices in the UK in 2014: “It’s hard to know where they come from. Russia did not even appear in the top 10 [sedes de entidades con inmuebles británicos]: number one was Jersey, followed by British Virgin Islands, Guernsey, Luxembourg, Isle of Man, the Bahamas…”

The Russian war offensive has caused a radical turn in the British Executive. In February, it eliminated the investor visa, the scheme that more than 12,000 millionaires have used since 2008 to obtain residence in the country. It was reserved for those who could inject more than two million pounds into British companies. Of those, more than 2,500 were Russian, according to The Guardian. At the beginning of March, the Government of Boris Johnson passed the Economic Crime Law, a measure that David Cameron had promised in 2016. The law will force offshore companies with properties in the United Kingdom to declare who their true owner and usufructuary is.

Foreign investment in real estate has been pointed out for years as one of the main factors in the increase in housing prices in the United Kingdom. In his study, Sà found that just two London boroughs, Westminster and Kensington and Chelsea, accounted for more than half of the residential transactions registered by foreign companies in the entire country. In addition, his calculations showed that, if the purchase by foreigners had remained at the rate it had in 2000 instead of skyrocketing, the average price of housing in 2014 would have been between 16% and 28% lower.

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Precisely in those districts are exclusive areas such as Eaton Square, renamed “Red Square” by local newspapers due to the number of Russians who live there. Although the real estate market often draws attention due to its visibility, Gulnaz Sharafutdinova, professor of Russian politics at King’s College London, says that it was the British legal system that most attracted Russian oligarchs and other millionaires to London: “It is largely Known for its reputation, the English courts are used for international litigation. One of the most famous cases was Berezovsky vs. Abramovich. Boris Berezovsky, a disgraced oligarch, accused Abramovich of forcing him to sell off his half of Sibneft. The court ruled in favor of Abramovich.

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Firestone agrees that the firms that offer legal services will be the most affected by the brake on the arrival of great fortunes: “There were more people outside the real estate sector who benefited from them: the people who did visa marketing for Russians, the people who laundered their money and made it look clean to get residency, their lawyers and accountants, they made a lot of money.”

Stephen Denyer, director of strategic relations at the Law Society of England and Wales, insists that the money of the Russian oligarchs in the UK is “clean”: “For many years we have had very rigorous anti-money laundering laws… [Este dinero] It has passed exhaustive controls, so I do not think that the reason why these sanctions are being given is related to the origin of the money.”

Denyer admits that his sector, which last year entered close to 50,000 million euros according to official data, depends a lot on international clients, whose most demanded services are contracts and commercial litigation. Still, he doesn’t think sanctions and an end to investor visas will have a big impact on the industry, as its constituencies are often more multinational than individual, he says.

The legal sector was, however, the first to react to the sanctions against oligarchs. Foreign Minister Liz Truss told him in February to the sundaytimes, this was why his office was taking the time to thoroughly prepare each sanction file: “We have already received letters from lawyers threatening us.”

Other clearer and more immediate results of the impact of the sanctions on the British economy are the blockade on the London Stock Exchange of the 36 properties with Russian capital that were listed on it, as well as large companies and even SMEs trying to get rid of their Russian investors.

Firestone admits that closing the door on Russian fortunes will initially mean “less money in the system.” But he is confident that this will end up strengthening the British economy: “The costs of running a dirty system like this, in the long run, are more expensive. So we will suffer a little for now, but that will make us richer later.”

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