Analysis

Welcome to the Kleptotour: Sightseeing Russian corruption in heart of London

Russian oligarchs own some of London's most exclusive real estate as a way to launder their money. In the wake of the poisoning of a former spy on U.K. soil, Britons are looking at ways to put pressure on the oligarchs to rein in Putin.

Pressure on in U.K. to crack down on Putin cronies hiding money in real estate

A silhouette of the Houses of Parliament and Elizabeth Tower containing Big Ben, centre, at dusk, in Westminster, London. This is the London tourists know, but many of its most exclusive addresses are owned by Russian oligarchs. (Yui Mok/Associated Press)

"Welcome to Red Square."

As the tour guide says this, our bus was actually pulling into London's posh Eaton Square in Belgravia, just a short drive from Buckingham Palace. But the speaker, author and journalist Mark Hollingsworth, also likes to call this city Londongrad.

Both labels nod to the fact that so much of the real estate is owned by inordinately wealthy Russians: oligarchs and businessmen alike.

The oligarchs and what they own are the reason some 70 journalists, politicians and activists are crammed onto the tour bus roaming around London's poshest neighbourhoods.
A protest banner and flag hang from a flagpole and the balcony of a mansion in Eaton Square. The Kleptotour dubs it 'Red Square' because of the amount of real estate owned by Russians. (Neil Hall/Reuters)

The invitation-only tour isn't of the London you and I know: the London of famous bridges, Buckingham Palace and Big Ben.

The Kleptocracy Tour is sightseeing with an eye-opening political agenda, and it follows the money: the stops are at the multi-million dollar mansions and apartments believed to have been bought by cronies of Russian President Vladimir Putin — to launder dirty money.

The concern about dirty money, and the group behind the tour (called the Committee for Legislation Against Moneylaundering in Properties by Kleptocrats) have been around for years.

Russian role in attack on former spy

But this particular tour's timing is no accident.

The people behind it sent out an invitation one day after Prime Minister Theresa May announced in a speech it was highly likely that Russia was culpable in the brazen, daytime nerve-agent assassination attempt of an ex-spy for Russia and his daughter.

Since then, many here have insisted that one of the best levers for the government to hit back at Russia is right here in London.

May hinted in that speech she may well take the advice — going beyond turfing Russian diplomats in retaliation, and finally going after the corrupt, moneyed oligarchs in Britain's midst.

There is "no place for these people or their money," in the U.K., she said.

Going after Russian money

Local reports indicate the U.K.'s problem with the influx of unquestioned, dirty Russian money may even soon be taken up by a parliamentary committee. An earlier government effort to introduce a register for foreign property buyers is also in the works.

Russia denies any link to the attack and, in a rare press conference, its ambassador to London suggested Britain was the source of the nerve agent.
Britons are thinking of ways to put pressure on Putin through his oligarch friends. (Yuri Kabodnov/Associated Press)

Russia "can't take British words for granted," said Alexander Yakovenko.

"History shows that British statements must be verified." 

Russian politicians and media have also accused Britain of Russophobia. They wouldn't be too pleased with the one-sided message from the tour operators or their political guests.

Buying up London real estate

"What the Russian regime has done over the last 20 years is it's found the soft underbelly of British society," Labour MP Chris Bryant, who chairs the All-Party Parliamentary Russia group, said to launch to the tour.

"You will find it absolutely fascinating and frightening in equal measure," he said of the tour. "Because unfortunately London has become the home of dodgy money. And we need to change that."

Using open sources, Transparency International (TI) estimates there is more than $8 billion Cdn worth of property in the U.K. with "suspicious" owners — more than a fifth of them are Russians.

"This could be people that already have corruption convictions or there are allegations against them," says Rachel Davies Teka, head of advocacy at TI, says during the tour.

Or, "suspicious" could mean something just isn't sitting right.

The example she points to is two properties at a prestigious building next to the British Defence Ministry that activists say are owned by Russia's first deputy prime minister. TI says it was apparently bought for £11.4 million, or near $20.8 million. The official's annual income, adds Davies Teka, is about $200,000 a year.

"So it would take him 76 years to save up all his salary, not spending a single penny, to afford that property. Now you have to ask where did that extra money come from?

"It certainly raises suspicions." Such suspicions are longstanding and predate the Salisbury attack.

Safe haven for money

London has long rolled out the carpet to foreign nationals from around the world looking to hide suspicious money.

It's a global hub that, notwithstanding the repeated assassinations of Russian spies and businessmen, is seen as a safe haven for individuals and their money: a place where you can easily launder millions in a single transaction, and buy property without revealing your identity.

"They don't live here," says Hollingsworth. "Russian oligarchs love buying property in the most prestigious areas of London which they regard as epicentres of the British establishment... It's like a symbol of them being accepted by the British establishment."

So it is actually quite a small area of London, mostly within a stone's throw of Buckingham or Kensington Palaces.

Over nearly three hours, a roster of expert "tour guides" — including a close aide of Russian opposition leader, Alexei Navalny — point to plenty of examples.

The property Hollingsworth singles out in Eaton Square is believed to be owned by a mid-ranking official at Russia's Gazprom, and Hollingsworth believes he may be acting on behalf of one of Russia's richest men who is "particularly" close to Putin and is under U.S. sanctions.

Navalny's aide, Vladimir Ashurkov, is introduced as the leader of the Russian opposition in exile. He told us he once worked for an oligarch. Now he fights corruption from London.
British Foreign Secretary Boris Johnson has proposed boycotting the World Cup in Russia over the poisoning of a former Russian spy. (The Associated Press)

He said pressuring the oligarchs would work better against Putin than boycotting Russia's upcoming World Cup, as foreign secretary Boris Johnson threatened.

"The way Russia is governed now is built on political and economic corruption," said Ashurkov. It is a system that Putin built, he says, and enables Russia to be "aggressive outside of its borders."

Oligarchs like the rule of law

He added that if oligarchs are forced to take their money out of convenient, rule-of-law Western cities like London, the "foundations for autocracy and corruption in Russia will be heavily undermined."

They're also likely to pressure Putin to change tactics and improve relations with the West.
Guardian journalist and author Luke Harding says London properties are so expensive Londoners are squeezed out. (Nahlah Ayed/CBC)

While London has benefitted from the influx of cash, properties have become so expensive the prices are prohibitive for most British nationals, says Guardian journalist and author Luke Harding. That's been the source of longstanding resentment.

And now with the poisoning in a British cathedral town, the thinking at Westminster is shifting, he says.

"I think actually there's a growing recognition on all sides of British politics that this is corrosive and actually it's that one vulnerability that the Putin government has."



More from CBC

CBC’s Nahlah Ayed went on a Kleptocracy “Dirty Money” Tour offering a glimpse of sites of Russian corruption in London. 3:06