“A rising Tory MP warns that government inaction on laundering is a gift to Putin and has let rich Russians think they own Britain.
The Tory chairman of the foreign affairs select committee has launched a withering attack on the government’s failure to tackle the effect of Russia’s “dirty money” on Britain, ahead of the publication of a damning report this week.
Tom Tugendhat, one of the Conservative Party’s brightest hopes, criticised the UK’s “lethargic response” to Russian money-laundering and organised crime that has been enabled by London’s financial and property markets.
The MP said the government had failed to deal with oligarchs who cleaned their illicit wealth by buying townhouses in Belgravia and Mayfair, while also allowing Russian companies to raise money in London despite being under sanctions.
Writing on The Sunday Times website, Tugendhat said the regime of President Vladimir Putin had been emboldened: “Our lethargic response . . . is taken as proof that we don’t dare stop them. This is no longer just a financial problem,” he writes. “Over the years Moscow has turned from being a corrupt state to an exporter of instability. London’s markets are enabling the Kremlin’s efforts.”
Tugendhat spoke out ahead of an excoriating select committee report tomorrow entitled Moscow’s Gold: Russian Corruption in the UK. The findings will embarrass Theresa May’s government, which has professed to take a tough line with Moscow over the poisoning of the Russian double agent Sergei Skripal and his daughter, Yulia, in Salisbury.
However, the MP for Tonbridge and Malling points out that Gazprom, the Russian gas giant, was able to “trade bonds in London days after the attempted murders”.
He said there was a link between “oligarchs’ wealth and the power of the Kremlin” and highlighted evidence to his committee that some rich Russians now believe “they own Britain”. “Russian corruption and influence has become a matter of national security,” he writes.
Tugendhat is particularly concerned about lax controls fostering Russian influence including the London flotation of EN+, an energy company controlled by Oleg Deripaska, one of Russia’s wealthiest men who is closely linked to Putin.
MI6 is known to have been enraged when the firm was able to use the London Stock Exchange last year to raise an estimated £1bn. The company, chaired by Lord Barker, a former Tory energy minister, has been linked to the Russian military, including the production of a Buk missile that Dutch investigators said downed flight MH17 over Ukraine in 2014, killing 298 people.
The float was waved through by regulators despite EN+ being part-owned by VTB, a Russian state-owned bank subject to EU and US sanctions. The bank lent the firm £697m to help fund the flotation.
Deripaska was himself hit by tough US sanctions imposed after the Skripal poisoning. Last week, he stepped down from the EN+ board in an attempt to free it from sanctions.
“Oligarchs, who depend on Putin no matter how rich they are, have been encouraged to invest in everything from real estate to pharmaceuticals, providing Russia with leverage,” writes Tugendhat.
“It isn’t just about theft through tax evasion but enabling entire nations to be robbed of their democratic rights.”
Garry Kasparov, the Putin critic and former world chess champion, said the flow of corrupt money from Russia into the West was part of a “subtle” Kremlin strategy to “launder and spread influence”. Kasparov, who stood for the presidency in his homeland in 2007, also criticised Europe for failing to wean itself off Russian oil and gas reserves following the war in Ukraine in 2014. He said this had handed Putin leverage over the EU.
“Much of Europe still depending on Russian energy over four years after Putin invaded a European country is damning, as is the willingness of many in Europe to continue with pipeline plans that would only increase Putin’s leverage and cash flow,” Kasparov said. “It’s a war, and your enemy cannot be your partner at the same time if you want to win.”
Source “The Sunday Times” (pay wall)