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Why do Russian oligarchs hide their money in London?
Why do Russian oligarchs hide their money in London?
Oct 2, 2024 12:18 AM

Former Russian intelligence agent Sergei Skripal and his daughter Yulia are clinging to life after being attacked with nerve gas in Salisbury. British Prime Minister Theresa May and Foreign Secretary Boris Johnson plan to target the finances of Russian oligarchs in retaliation.

Russian elites have spirited their cash to the UK via a dizzying array of British banks, businesses, and luxury properties:

British banks reportedly processed $738 million in funds from an elaborate Russian money-laundering scheme known as “The Laundromat”;Transparency International found at least £4.2 billion ($5.9 billion) worth of property in Londonwas “bought by individuals with suspicious wealth”;Russian funds (not all of it from oligarchs) may account for as much as “10 percent of all land and property worth more than a million pounds in London,” or $1.4 million, according to NPR; andOne-fifth of the sales of“super-prime” homes, worth £10 million or more, go to Russian nationals.

If the oligarchs enjoy Vladimir Putin’s favor, why would they store their wealth on the other side of the continent?

First, mand economy sows the seeds of its own destruction. “The whole Russian economy is dying,” a banker, who (understandably) wished to remain anonymous, told the Guardian. “Bribes are the biggest part of it.” Russia ranked 138 globally in Transparency International’s annual report on corruption perception; the UK came in eighth.

Bribery must lubricate the wheels of any economy which turn only at a politician’s will. Vladimir Putin has nationalized an increasing share of the nation’s GDP, from 50 percent under Boris Yeltsin to an estimated 70 percent of the economy today.

Second, one’s wealth – and, as the Skripal attack demonstrates, one’s existence – depends on the good and often fickle will of the ruler. “Billionaires such asMikhail Khodorkovskyor Vladimir Yevtushenkov saw their fortunes vanish after they fell out of favor with the government of President Vladimir Putin,” CNN reported.

Cronyism makes an attractive livelihood until the recipient no longer wishes to be a crony.

Jittery elites must always protect themselves against a mercurial strongman or his vengeful successor. It is precisely the facets of the crony economy that made the oligarchs wealthy in the first place that also make their nations unreliable and undesirable for storing wealth.

They choose to offshore their funds in London (and elsewhere) for the same reason Latin American jefes bank in Miami: private property rights and the rule of law.

William F. Buckley Jr. called economic liberty “the most precious temporal freedom,” because “it alone gives to each one of us, in ings and goings in plex society, sovereignty.” Economic freedom provides the individual with the resources needed to resist tyrants, or mitigate their fury.

The rule of law creates social equality, stability, and permanence that allow citizens to plan their lives. Societies based on lex rex empower citizens to give their all, knowing they will enjoy the fruits of their own labor. Such nations do not bleed streams of revenue that its most productive citizens have squirreled away overseas out of fear or uncertainty.

In the English liberal tradition, the rule of law is the defining mark of a civilized government. “Between a tyrant and a prince there is this single or chief difference, that the latter obeys the law and rules the people by its dictates, accounting himself as but their servant,” wrote John of Salisbury in his Policraticus a half-century before the Magna Carta.

Imperious and capricious power also violates one of the principles of St. John Chrysostom, perhaps the most revered saint of the Eastern Orthodox Church. He wrote that a ruler must conform himself to Christian standards of temperament and behavior, which preclude partiality and vengeance. “A true king,” the saint wrote, “is he who conquers anger and jealousy and voluptuousness, and subjects everything to the laws of God.”

“He who appears mand people but in fact modates himself to wrath and ambition and pleasure … will not know how to dispose of the power” of the state, he wrote.

That statement is quoted in the “Bases of the Social Concept of the Russian Orthodox Church,” adopted by the Russian Orthodox Church in 2000, near the end of Putin’s first stint as prime minister.

photo has been cropped. CC BY-SA 4.0.)

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