Day 6

Follow the money: How billions in suspect Russian cash is influencing London

Misha Glenny, author of 'McMafia: A Journey Through the Global Criminal Underworld,' says the British government needs to do more to track the Russian money sloshing around London.
Organized crime experts say a high volume of suspect Russian money is funneled into London every year. (AFP/Getty Images)
Listen8:19

This week, Prime Minister Theresa May announced the expulsion of 23 Russian diplomats from the U.K., blaming the Kremlin for the poisoning of former Russian spy Sergei Skripal. Skripal and his daughter Yulia were found unconscious in Salisbury, England, on March 4.

Since then, Russian exile Nikolai Glushkov has been found dead in his home in London. Glushkov was an associate of Boris Berezovsky, a Russian oligarch and Kremlin critic who died under disputed circumstances in 2013.

Britain's Home Secretary, Amber Rudd, has said police will also review the suspicious deaths of 14 other men who had links to Russia.

Organized crime experts have long known that the U.K. is a battlefield for Russian intelligence officers and the Kremlin's enemies. Part of Britain's allure is the sheer volume of suspect Russian cash sloshing through London, according to Misha Glenny, the author of the book McMafia, which is now a TV drama on AMC.

Glenny talked to Day 6 host Brent Bambury about how this money is being funnelled into London and about how much influence it's having in Britain.

Many homes in Mayfair, one of London's most expensive neighbourhoods, are owned by shell companies, Misha Glenny says. (Getty Images/iStockphoto)

Brent Bambury: What is the best estimate of how much suspect Russian money is in London.

Misha Glenny: There's no definitive figure. And one of the reasons why there's no definitive figure is that the United Kingdom still accepts various mechanisms and instruments of finance whereby people can hide their money.
Glenny says the U.K.'s lax financial regulations allow suspect money from other countries to be invested in London. (AFP/Getty Images)

You can invest into the United Kingdom, you can buy property ... through an anonymous company, whereby the beneficial owner of that company remains unknown to the public, to the government, and to everyone except to the real people behind it.

We've had some people who tried to research the amount of money coming in from Russia and it's estimated to be four or five billion a year.

But there is a popular understanding that there's a lot of Russian money in London. It seems that people know, on a street level basis, that there's an awful lot of investment and there are Russian interests everywhere. When you walk around the city, how do you assess that there is money parked there?

Well, first of all, you go to Mayfair, or you go to around Harrods in Knightsbridge, and you listen to the languages being spoken. It would usually be either Russian or Arabic.

There are several famous rich Russians in London, including Roman Abramovich, who owns the Chelsea Football Club. (Getty Images)

We have famous Russians here like Roman Abramovich, who owns Chelsea Football Club, and we have Evgeny Lebedev, who owns the Evening Standard newspaper here. The people who are here from Russia are the elite, the very wealthy ones.

If you go to somewhere like Mayfair — this is the most expensive part of London — and walk around at 9:30 p.m., you will be hard pushed to find a single house with any lights on, because people invest money in these properties knowing that they're going to put 10 per cent on and they're going to be safe investments, but they never come and live there.

It's sort of knocked the stuffing out of the heart of the city. So sometimes you notice them by their absence.

And why London? Why not Frankfurt, or Singapore, or Tokyo, or New York?

Well, not that I've got anything against Frankfurt, I quite like it, but it's pretty boring. Let's face it. 

If you're in London, you're four hours away from Moscow, five hours away from New York. You're two hours from the south of France, two hours from the south of Spain, where a lot of Russians have their holiday homes. And you're a two-hour flight away from the slopes of Switzerland and Austria, where they like to go skiing.

In addition to that, you have a very low regulatory financial system, so you can bring money in and out and nobody really needs to know about it. So what's not to like about London?

I had a long conversation with a senior officer from the now disbanded Serious Organized Crime Agency and he told me specifically that they are had instructions from higher up ... not to push too heavily against the Russians.- Misha Glenny

If you were involved in criminal activities like the characters in McMafia, is there something about the way the British government has decided to treat a suspected Russian criminals that makes it more attractive for them to be in London?

After I'd finished researching McMafia, I had a long conversation with a senior officer from the now-disbanded Serious Organized Crime Agency and he told me specifically that they had instructions from higher up, from the Home Secretary, not to push too heavily against the Russians.

There were so many Russians coming in and bringing a lot of money, and setting up IPOs on the London Stock Exchange, as opposed to on Wall Street, that it was simply too much of a boom for London.

And apart from the occasional unexplained murder, they didn't create that many problems.

And so yes, successive governments did not want to discourage rich foreigners, including Russians, from from coming here. They're none discriminatory in that sense — they'll invite anyone in.

But now we have the Skripal case, and there's talk this week in the British press about the possibility of a Magnitsky Act for the U.K. This would be a law targeting specific Russian oligarchs suspected of human rights abuses, with the aim of separating them from their financial holdings. Do you think there is an appetite for this kind of law?

I think there is, but the jury is still out on it.

Skripal is different. It's a direct attack on somebody who's under the protection of the British state. 

Theresa May has to do something in this situation.

She could come up with a Magnitsky Act. She could go even further, in my opinion, and insist on the transparency of anonymous companies. And that would impact not just the Russians, but everyone else.

Now, she's reluctant to do that because, of course, Britain is now in the process of leaving the European Union and our economy is looking extremely shaky.

One of the few things we've got to attract outside capital is the fact that few questions are asked when [foreigners] invest in the city.


This interview has been edited for length and clarity. To hear our full interview with Misha Glenny, download our podcast or click 'Listen' above.