Less than two weeks after Russian President Vladimir Putin’s forces invaded Ukraine, the British House of Commons on Monday passed a law to make it harder for Russia’s multibillionaire oligarchs to launder their dirty money through what has become known as “Londongrad.”
For decades, a small coterie of friends of Russian presidents—first Boris Yeltsin and then Putin—have used state resources to fund unimaginably lavish lifestyles in return for propping up the corrupt regimes that made them rich.
Spending on property, superyachts, private jets, made-to-order cars, soccer clubs, high fashion, jewelry, art, and fine wine and dining has also helped fund enormous wealth in London’s service sector. Throw in divorces, lawsuits against journalists who try to uncover the source of this uber-wealth, court cases to settle oligarch-on-oligarch feuds, and public relations to whitewash reputations, and the scale of the theft becomes clear: Tens, possibly hundreds of billions of dollars stolen from the Russian people.
Now, with the Economic Crime Bill passing through Parliament, all that could change. The bill would, according to the government’s website, “set up a register of overseas entities and their beneficial owners and require overseas entities who own land to register in certain circumstances; to make provision about unexplained wealth orders; and to make provision about sanctions.”
After letting the bill, first introduced in 2016, languish so long it was close to being abandoned, the British establishment was finally jolted into action by the unity of the European Union and United States in sanctioning Putin’s Russia as punishment for its invasion of Ukraine.
The law also represents another legacy of the murder of Sergei Magnitsky, a Russian tax lawyer who uncovered a massive and complex conspiracy by Russian officials who targeted American British financier Bill Browder, whose fund was once Russia’s biggest foreign investor. As detailed in Browder’s book Red Notice, the officials allegedly planned to take ownership of companies owned by Browder and then use those companies to reclaim hundreds of millions of dollars in taxes that had been paid to the Russian state.
After blowing the whistle, Magnitsky was detained, tortured, denied legal rights and medical care, and then beaten to death by Russian prison guards in 2009. He was 37 years old. Browder has been avenging his death ever since, working with lawmakers in the United States and the United Kingdom to introduce legislation to punish officials worldwide for human rights violations and corruption by freezing their assets, for instance, and canceling their visas.
The U.K.’s Economic Crime Bill follows the U.S. Magnitsky Act, passed by Congress and signed into law by then U.S.-President Barack Obama in 2012. The law was intended to punish the Russian officials behind Magnitsky’s death; in 2016, Congress built on it, authorizing the U.S. government to target officials responsible for corruption and human rights abuses globally.
Browder spoke with Foreign Policy about London’s addiction to dirty Russian money, and the “righteous” life that can be lived without it. He also talked about the genesis of Russia’s oligarchs, and the nature of the man who tried to destroy him—and who he now believes has brought the world to the precipice of nuclear annihilation, while guaranteeing his own destruction.
This conversation has been edited for length and clarity.
Foreign Policy: Who are these oligarchs who seem so integral to Putin’s power and longevity? And why is London so attractive to them?
Bill Browder: “Oligarch” is a very broad term, and in Russia it has evolved. Originally, there were 22 individuals who were friendly to Yeltsin. And those 22 individuals stole 40 percent of the country from the Russian people in exchange for using their resources to help Yeltsin get reelected in 1996.
When Putin came to power, he basically said to the oligarchs, I want 50 percent of your assets, and I want you to stop throwing your weight around. A couple of them refused: Mikhail Khodorkovsky went to jail for 10 years. Boris Berezovsky fled to the U.K. and eventually either hung himself or was hanged. And the third was Vladimir Gusinsky, who also [left] the country. The rest of the oligarchs went with the program.
The original oligarchs were the Yeltsin oligarchs, and when Putin came to power, he created a new set of oligarchs who were his friends. These were people who owned vacation houses around his, near St. Petersburg—people like Gennady Timchenko, Arkady Rotenberg and his brother Boris, and a bunch of others.
Then you have what I call the state-owned company oligarchs: the CEOs of Rosneft, Gazprom, the major diamond company, and so forth. And there’s a last set of oligarchs who are the heads of agencies who have the power to arrest people: the interior ministry, the prosecutor’s office, the FSB [Federal Security Service], military intelligence. They don’t keep money in their own name, they keep it in the name of their sons, daughters, wives.
There’s a long list. Last I counted, there are about 115 people I would characterize as oligarchs.
FP: As the Chinese say, Putin killed the chicken to scare the monkeys?
BB: Exactly. That’s Putin’s big thing, to rule by symbolism. Fix the top person in any given class that he wants to attack, make an example of them, and everyone else then behaves. He did that even in my case. I was the largest foreign investor in the country, and I was complaining about corruption in Russian state-owned companies that I was investing in. So he expelled me from the country and did all sorts of other terrible things so that nobody else ever complained about corporate corruption.
FP: We’ve talked about the money coming from the thievery of state assets. Where did it go?
BB: Here. Here in London. I should say it went all over the world, but this is the most attractive place for Russian oligarchs. London is to Russia like Hong Kong is to China. They love it because as easy as the money was to steal in Russia, once it’s here, there are extremely robust laws and property rights, so it can’t be stolen from them.
On top of that is the huge added benefit that in addition to all those laws and property rights there’s an almost absent law enforcement system, so there’s nearly a 100 percent certainty that no one is going to investigate you or prosecute you for spending your ill-gotten gains here.
The laws exist, and I was very close to the lawmaking process; I was working with members of Parliament. The problem in this country is that the legal system, as it looks on paper, is quite impressive. But it’s totally dysfunctional, because it’s never been properly implemented by law enforcement.
You have a totally different law enforcement culture here than you do in the United States. In the U.S., the Department of Justice has enormous resources. And there’s a very important structural part of the legal system which says that if the government brings a case against you and they lose, they don’t have to pay your legal fees. Whereas here you do.
Here you have government departments which are extremely poorly funded and there’s a possibility that they have to pay the other side’s huge lawyer bills if they don’t succeed in the case.
FP: And the other side, the oligarchs, are using the legal equivalent of the Masters of the Universe…
BB: The best and most expensive lawyers in the world. So it creates this paralysis, because nobody in law enforcement wants to bring any case unless there’s a 100 percent certainty that they are going to win, and they certainly don’t want to bring any case against anybody who knows how to find the best [lawyers] and solicitors in this country, because they know they are just going to get tied in knots and that’s going to be that. There’s a total inequality of arms, even if you didn’t have this loser-pays-fine at the end of a case.
FP: How has the British economy benefited from the enormous amounts of money that the oligarchs have pumped in?
BB: The British economy is a very big economy. And I would imagine that it hasn’t benefited the whole British economy dramatically. If you wanted to look at the economy of estate agents in certain parts of London, of certain lawyers that do property work, divorce, other types of business conflicts, diamond dealers, all of them have benefited very dramatically. It is a part of the whole London economy.
FP: Will the new Economic Crime Bill make a difference? The drug traffickers always have the fastest boats. Is this just putting lipstick on a pig?
BB: Unless they properly resource law enforcement, create a priority to enforce these laws and to restructure the laws so the incentive is there to execute these laws, it will just be more of the same.
FP: And further enable Putin?
BB: Putin, at this point, I think, is out of business. But for every Bill Browder who has been screaming about Russia, there are Hong Kong activists screaming about China, there are Venezuelan activists screaming about Venezuela. All those people [corrupt officials, human rights violators] continue to come here. But nobody is ever going to forget the images they are seeing on the TV [from Ukraine], ever.
FP: What happens next?
BB: Putin totally miscalculated. He thought he was going to win this war very quickly, and he thought there would be no serious coordinated sanctions response, and both those calculations proved to be incorrect. The reports that I read coming from the ground in Ukraine suggest that they know how to fight, and they know their country, and they have created some impossible situations for the Russians. If we can provide either the aircraft or some type of air support so they don’t get flattened by Russian bombers, then they actually have a chance of freezing this conflict.
If the Ukrainians can freeze the conflict, then Putin will eventually run out of money. And that has to be a major priority right now. Because if he succeeds in Ukraine, he will come for NATO. And he will point his missiles and his nuclear weapons at us and say, “You want a nuclear war with me?” And then we’re in a Cuban missile crisis situation.
We are right on that precipice of that right now. And the best way to stay away from that precipice is to do everything we can possibly do for the brave Ukrainians who are holding Russia at bay. For us to in any way tie our hands behind our backs as far as the Ukrainians are concerned—whether it’s sanctions, whether it’s oil, whether it’s weapons—we have to just untie them and give them every possible support. Because they are the buffer between Russia and us.
FP: Former Soviet Premier Nikita Khrushchev was a much more statesmanlike leader—and he blinked.
BB: Putin may be willing to blink, too. He is a desperate man. He didn’t go into Ukraine for any other reason than he was worried about his own longevity. And he is also a person who cannot admit mistakes or show weakness. But if he runs out of money and he has no capacity to fight, if half his entire army is literally stuck in the mud and being massacred, he may not have any choice.
FP: Can the West live without filthy money? A lot of people in the United Kingdom don’t want to pay an extra 1,000 pounds a year on top of their already high fuel bills, for instance.
BB: Of course, the West can absolutely live without filthy money. And not even with that much pain. And we can live much more righteous and pure lives going forward. People may even be able to get Central London property cheaper because the oligarchs aren’t bidding it up.