https://www.theguardian.com/politics/2018/may/21/russian-dirty-money-is-damaging-uk-security-mps-say
A
powerful committee of MPs has warned that the government is putting national
security at risk by allowing “kleptocrats and human rights abusers to use the
City of London to launder their ill-gotten funds to circumvent sanctions”.
The
foreign affairs select committee said the government’s lax approach to tackling
international money laundering is putting money “directly into the hands of
regimes that would harm the UK, its interests and its allies”.
In
a hard-hitting report titled Moscow’s Gold: Russian Corruption in the UK, the
committee said the government was failing to follow through on the prime minister’s
“robust rhetoric” in the wake of the Skripals’ poisoning.
“Despite
the strong rhetoric, President [Vladimir] Putin and his allies have been able
to continue ‘business as usual’ by hiding and laundering their corrupt assets
in London,” the report said.
“These
assets, on which the Kremlin can call at any time, both directly and indirectly
support President Putin’s campaign to subvert the international rules-based
system, undermine our allies, and erode the mutually reinforcing international
networks that support UK foreign policy.”
Conservative
MP Tom Tugendhat, the committee chair, said: “We can no longer allow ‘business
as usual’. The UK must be clear that the corruption stemming from the Kremlin
is no longer welcome in our markets and we will act.
“The
scale of damage that this ‘dirty money’ can do to UK foreign policy interests
dwarfs the benefit of Russian transactions in the City. There is no excuse for
the UK to turn a blind eye as President Putin’s kleptocrats and human rights
abusers use money laundered through London to corrupt our friends, weaken our
alliances, and erode faith in our institutions.”
The
report said the UK’s weakness to act to stem the flow of potentially
questionable Russian money was exposed just days after the UK expelled two
dozen Russian diplomats following the attempted murder of Sergei and Yulia
Skripal in Salisbury.
“On
16 March – two days after the government announced the expulsion of 23 Russian
diplomats from the UK – Russia raised $4bn (£2.97bn) in eurobond issuances,
nearly half of which were bought by investors from the UK,” the report said.
A
day earlier Russian energy company Gazprom raised €750m (£656m) in a bond sale,
some of which were bought by UK investors according to VTB Capital, a Russian
bank subjected to US sanctions.
Following
the sale, the Russian embassy in the UK tweeted:
“The
ease with which the Russian government was able to raise funds in London
despite the strong measures that the government took in the wake of the
Salisbury attack raises serious questions about the government’s commitment to
combating Russian state aggression,” the report said.
The
committee also said the flotation of En+, a Russian energy company controlled
by oligarch Oleg Deripaska on the London Stock Exchange last year, was also an
example of “the contradictions inherent in UK government policy towards
Russia”.
Tugendhat
said the government must be “clear that the Kremlin is no longer welcome in our
markets. We must be united in our efforts to match rhetoric with action – in
the City, through government policy and among allies in the US, G7 and EU,” he
added.
“We
call on the Foreign and Commonwealth Office to set out a coherent strategy on
Russia that clearly links together the diplomatic, military and financial tools
that the UK can use to counter Russian state aggression.”
The
committee recommended that the government close gaps in the sanctions regime
that have allowed companies to use London markets while being sanctioned in
other jurisdictions. It also suggested that sanctions be extended to target
more individuals who are closely linked to President Putin’s regime.
Deripaska
has previously described the grounds for including him on a US sanctions list
as groundless, ridiculous and absurd.
Speaking
before the report’s publication, the Russian ambassador to London, Alexander
Yakovenko, said: “We believe that the statements like ‘someone is a friend of
somebody’ is not the legal basis for taking decisions against someone.”
He
warned that Russian citizens based in London “could go to the courts and put
certain things in front of the courts. They are going to complain – some of
them are preparing these moves and the government should think twice.”
He
added Britain had a reputation to protect as a believer in the rule of law.