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From Russia With Roubles

by Denis Lyons



MI6 HQ, Albert Embankment, London Photo: Denis Lyons



Kate Simpson, a rising star at MI6 and thrilled to be back in London after her Moscow posting, studies James Oliphant, the improbably handsome young man sitting in front of her.


The meeting had been suggested two weeks earlier by Rupert Colefax-Villiers, her dishevelled - and sporadically brilliant - rugby-mad boss.


Kate was still riding the wave of popularity which had greeted her on her recent return from Moscow where she had “scored a couple of spectacular tries” as Colefax-Villiers put it.


Modestly, Kate had tried to explain to Colefax-Villiers - or Loopy Rupy, as he was widely known - that the “tries” had not been all that difficult. After all, she had been extremely well trained. “Also,” Kate added, “our targets are usually male and, frankly, when a women cultivates them as a source, their guard just seems to be a couple of notches lower than it is for my male colleagues.”


“Nonsense,” Colefax-Villiers had snorted, keen to avoid any hint that he considered Kate was playing with an unfair gender advantage. Such a slip would have blown his cover as a fully paid-up member of the oppressive male patriarchy. Anyway, advantage or not, she was still more effective than most of her male contemporaries.


“Piece of advice, Kate? If there’s any credit going - take it!”


“Fine,” Kate agreed in a ‘discretion is the better part of valour’ sort of way. “Thanks, but what is this Oliphant thing about?”


“PM’s getting his Armani boxers knotted over this endless dirty Russian money saga. Putin’s old oligarch cronies fell out of favour, converted their ill-gotten gains into palatial Belgravia properties, you know the sort of thing. Jibes about Londongrad, Moscow-on-Thames, the London Laundromat, Eaton Square becoming Red Square, ritzy neighbourhoods becoming graveyards at night because the Russian owners don’t actually live there - that sort of stuff.”


“But that’s been going on for a long time.”


“Yes, but when Russia invaded Ukraine last year we brought in a slew of new laws to sanction Russian oligarchs and freeze their assets here, including their mansions.”


“Let me make a wild guess - the PM’s shorts are knotted because the laws aren’t working?”


“Correct. Not fast enough anyway.”


“But everyone knows that. Why is he getting worked up now?”


“Why? The rapidly approaching General Election is why. Dirty Russian money is back on his ‘To Do’ list. The PM already has so much sleaze to contend with that he can do without the opposition renewing headlines like ‘Boris’s alleged close encounter with glamour model's cleavage at Italian villa owned by Russian spy’s son.’ Particularly when it was Boris who nominated Lebedev, the Russian spy’s son, to a seat in the House of Lords.”


“So, essentially you need to give our spreadsheet-loving PM some happy hard numbers about freezing Russian properties, in order to distract from sleazy Russian-related cleavage stories which Labour might resurrect during the next General Election campaign?”


“Exactly.” Colefax-Villiers beamed. “I knew I’d picked the right person for the job.”


What is the job?”


“Ah, yes. James Oliphant. I want you to do your thing, Kate,” Colefax-Villiers had instructed her. “Reel him in. He knows more about funny Russian money in London properties than anyone. Theoretically the new laws should help us identify every Russian owner and in many cases they do. But you can still drive a bus through the loopholes available in corporate and trust ownership structures. And it doesn’t help that we happen to have a world-leading treasure island archipelago of tax havens, starting with the British Virgin Islands, Bermuda and a dozen others.”


“So Oliphant can help us pierce the ownership veils?”


“Possibly. Here’s his file. Just source him at this stage. Absolutely no need to recruit him. Not yet anyway.”


“You’ve cleared this with Millbank?”


“Of course. And with the Cabinet Office, and the Met, and the NCA, and Uncle Tom…”


“Thanks, Rupert."



Curzon Square, Mayfair, London Photo: Denis Lyons



So here was Kate two weeks later, in her new office on the top floor of a discreetly opulent building on Curzon Square, a sleepy little enclave tucked away at the Park Lane end of Curzon Street. The premises were just large enough for Kate and her three colleagues who were there to help with research and generally lend credibility.


The brass plate on the door of her office suite read simply, ‘Curzon Business Services’.

“Apart from raising chickens,” Colefax-Villiers had said, “it should cover pretty much anything you need to get up to. Especially this Russian thing.” It also served as a cover for Colefax-Villiers’s regular visits to Mayfair - a much more congenial habitat for him than dingy old Vauxhall and the bomb-proof HQ fortress which, he often thought, could easily pass for an Art Deco shopping mall.


And the Vauxhall citadel would obviously not have worked as a venue for this morning’s interview with James Oliphant, the young man sitting opposite Kate, draped stylishly in the Annibale Colombo armchair salvaged from Colefax-Villiers’s country house.


Kate already knew that Oliphant was an Etonian but, mercifully, she thought, his personality and presentation were more Eddie Redmayne than Jacob Rees-Mogg. To enhance his good looks, Oliphant had assembled an artful package of self-deprecating humour, carefully disarranged hair and expensively curated casual togs which had proved irresistible to his wealthy real estate clients - especially the female ones. “Full marks for working the gender advantage,” Kate noted appreciatively to herself.


What Kate also knew about Oliphant, this quintessential English gentleman in his late 30s, was that his name wasn't really Oliphant. And that he wasn’t really English. She wasn’t sure about the gentleman bit, but she had her suspicions.


James Oliphant was born Konstantin Komarov in St Petersburg where his father, Oleg, made one of the early fortunes in the media sector during the 90s after the Soviet Union collapsed. As Oleg built his media empire in St Petersburg, he kept a wary eye on another local boy called Putin, who was ruthlessly building his own shadowy empire. Some sixth sense told Oleg that the good times under Yeltsin could not last forever. And so, in 1998, before Putin became Tsar, Oleg quietly moved most of his money to assorted tax havens, took his family to London and never appeared on the UK sanctions list.


Assisted by private tutors, school placement consultants, discreet name changes, hard work and, perhaps, the tacit promise of future endowments, Oleg was eventually able to steer clever young James to a place at Eton and his equally clever sister Larisa to Wycombe Abbey. Like butterflies from their chrysalises, they both duly emerged from school with socially reliable English manners and accents.


Kate was well aware that the ladies buying Oliphant’s act and his properties were often wives, sisters, daughters and mistresses fronting for their relatives, the anonymous buyers. There might still be willing buyers, Kate reflected, but the recent tide of sanctions and anti-money laundering laws must be cramping his style. “Oliphant is certainly decorative, but how useful is he likely to be?” she wondered.


As if on cue, Oliphant flashed her a winning smile and asked, “How can I help you?” An impish voice at the back of Kate’s mind whispered that, in another life, and another place, she might just have been tempted to tell him. He went on, “Your assistant told me that you have a wealthy client looking to invest in luxury London properties in the £10 million and upwards range, but that’s about it.”


“Actually, it’s the opposite.”


“Meaning?”


“Our client wants to sell a UK residential property portfolio of around £100 million. You have a successful track record helping wealthy overseas investors and we’d like to see how you might do the same for our client.”


Despite his easy smile, Kate could tell that she had thrown his mental gears into reverse.

“Selling...that’s different. You might be a bit late. Is your client connected with Russia in any way?”


“The client is a company, not an individual but, for the sake of discussion, why would a Russian connection be relevant?”


“A company, a trust, an individual – it makes no difference if there is seen to be any sort of Kremlin link. The UK has sanctioned over 1,600 individuals and 238 entities thought to be connected with the Russian regime. And 129 oligarchs with a combined net worth of over £145 billion have also been targeted. Their bank accounts, properties, and businesses are frozen - so they can’t sell or rent their properties.”


“And it’s illegal for you to act on their behalf?”


“Yes.”


“But how do they live if their assets are frozen?”


“Well….the talk is tough, but occasionally the laws have been applied more tentatively. Take Mikhail Fridman of Moscow and Highgate, for example. He features on the sanctions list for ‘carrying on business in a sector of strategic significance to the Government of Russia, namely the Russian financial services sector.’ For a while he was allowed to pay £1,974.43 monthly for CCTV and £24,083 monthly for seven security staff at his Highgate house which he bought for £65 million in 2016. But last month the High Court confirmed an earlier decision denying him access to the cash he needed to pay over £30,000 in monthly running costs. Last I heard he was back in Moscow.” Oliphant smiled wryly. “That’s one house sale I wouldn’t want to handle.”


“What about properties owned by corporations or trusts? Don’t the ultimate owners remain anonymous?”


“Some still are, but the net is tightening. The UK’s new Register of Overseas Entities means that anonymous foreign owners are supposed to disclose their identities. But there is still a glimmer of hope for the larcenous. I’ve seen a report that said ‘for 35 per cent of the 152,000 properties owned via overseas shell companies, even law enforcement agencies do not know the true identities of the beneficial owners.’ Not entirely surprising given that the laws relating to companies - and companies owned through trusts - are eye-watering enough here in the UK, before you even get to the offshore tax havens.”


“But you might know some of those owners?” Kate smiled as innocently as she could.


“Absolutely not.” Quick as a flash, indicating that he absolutely did.




Late the next day, Kate surveyed the rumpled form of Colefax-Villiers which was draped uncomfortably in the Annibale Colombo armchair.


“Never did like this thing,” he muttered. “Anyway - bottom line?”


“Bottom line is that there is no quick headline fix for the PM. Oliphant knows what we all know, and probably a lot more, but the problem is enormous. Transparency International identified nearly £7 billion in questionable international funds invested in UK property between 2016 and 2022 - £1.5 billion of it by Russians accused of corruption, or Kremlin links. And this could be just the tip of the iceberg given that over half the properties identified were held here by opaque companies in offshore tax shelters. Even worse, at the start of the war in Ukraine, another analysis identified 1,895 Russian-owned properties in London alone - over three times higher than the official figures.”


“What else?” Colefax-Villiers winced. He was definitely not looking forward to his next chat with the Cabinet Office intelligence team.


“Well, Transparency International identified 2,189 companies registered in the UK and its Overseas Territories and Crown Dependencies which were used in 48 Russian money laundering and corruption cases involving ‘over £82 billion worth of funds diverted by rigged procurement, bribery, embezzlement and the unlawful acquisition of state assets.’ But we’re already aware of most of that, so there’s undoubtedly a lot more.”


Colefax-Villiers grunted. Or possibly sighed. Kate couldn’t tell which.


“Kate, I’m still waiting for the good news.”


“You could say that the new laws are beginning to work, but slowly. Our friends at the National Crime Agency’s new Combating Kleptocracy Cell are doing what they can despite resource pressures, but it’s an uphill struggle.”


“What about the UWOs?”


“Ah, yes. The High Court can issue an Unexplained Wealth Order in suspicious cases but only a handful have ever been requested. For example, it is not generally known if Vladimir Gruzdev’s 8-year old daughter was ever the subject of an UWO or, if so, what her reaction might have been. Vladimir is a Russian billionaire who bought a Kensington flat for £2.3 million in 2000 - probably worth about £8 million today - through a Cayman Islands company. Then little Miss Gruzdev became the owner of the flat in February 2022, coincidentally about three weeks before Russia invaded Ukraine.”


“It might also help that they are making it compulsory for companies to do identity verification checks before they notify Companies House that they are appointing a new director. Many people mistakenly thought this was happening already. But there have been subtle clues that the system is not watertight. Like the case of the company with a Soho address and a director with an Italian name meaning ‘The Chicken Thief’ whose occupation was listed as ‘Fraudster’. Imagine the surprise when it was discovered that the company was Mafia-related.”


Colefax-Villiers was now thoroughly depressed. “So you’re telling me that, with a little gentle pressure, Oliphant could probably lead us to a few anonymous Russians, but it would only be a drop in the ocean and we simply don’t have the resources to track them all down?”


“Yes, precisely.” Kate paused and, as if in answer to Colefax-Villiers’s gloomy silence, she continued, “And, looking at all this, doesn’t it make you wonder how seriously the government is actually thinking about the billions being laundered here by non-Russians as well? They don’t need us to tell them we have a problem – just look at all the leaks about money laundering in the Panama papers, the Paradise Papers, the FinCEN Files and the Rotenberg Files among others.”


“And what are we doing about all the foreign money being infiltrated into British politics by donors with questionable links? If UK political parties are supposed to be transparent about their sources of funds, why have they accepted £14 million over the past five years, funnelled to them via the ‘unincorporated association’ loophole which is only lightly regulated, and one where the source of funds can be fiendishly difficult to identify?”


“And why, for example, did the government recently kill an amendment to the national security bill requiring political parties to identify the true source of donations?”


Colefax-Villiers smiled glumly. “Steady, Kate. Ours is not to reason why.”


Unwinding himself painfully from the offending Annibale Colombo, Colefax-Villiers sloped off, consoled by the prospect of a companionable gin and tonic along the road at Boodle’s.





Endnote:


For security reasons, I understand that Rupert Colefax-Villiers’s name does not appear on the membership list of any London club. It is likely, therefore, that he was visiting Boodle’s (left) as a member’s guest.




Photo: Denis Lyons

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