“Londongrad”: how London became the main destination of the millions of Russian oligarchs

With its elegant five-story mansions and immaculate private gardens complete with tennis courts, Eaton Square is nothing like the famous square in Moscow.

What they do have in common is the large number of russians that make life in both places.

For more than a decade, the Russian elite have snapped up million-dollar properties in Eaton Square and many other prime addresses in the British capital.

Considered as one of the most exclusive neighborhoods in the worldBelgravia became the center of protests in London against Russian money in the UK in mid-March, after a group of protesters occupied a mansion at 5 Belgrave Square.

Valued at tens of millions of dollars, the property is linked to Oleg Deripaska, an oligarch allied with Vladimir Putin and sanctioned by the British government after the Russian invasion of Ukraine.

From the balcony of the opulent mansion, one of the protesters told reporters that they wanted to use the building for give shelter to ukrainians who have been forced to leave their country because of the war.

“We demand that this property belongs to Ukrainian refugees. His houses have been destroyed and this guy (Deripaska) has supported the war,” the young man exclaimed.

The group described the mansion as “disgustingly luxurious”, detailing that it had some 200 rooms with “so many things that a normal human being would never need”, including a cinema and various works of art.

“The British legal system was the main motivation”

The anti-corruption organization Transparency International has identified at least £1.5bn (US$2,000 million) in properties in the UK belonging to Russians with unexplained fortunes or links to the Kremlin.

But Russian millionaires have not only bought mansions across London, but also Premier League football clubs such as Chelsea FC, large estates in Scotland and even media outlets such as the London Evening Standard.

Mark Hollingsworth, author of “Londongrad: From Russia with Cash; The Inside Story of the Oligarchs” (From Russia with Cash; The Inside Story of the Oligarchs), states that it all started to late 1990s.

“After making a lot of money with privatizations, some oligarchs like Mikhail Khodorkovsky wanted to get their money out of Russia because they were worried about being persecuted or having their fortunes confiscated,” he tells BBC Mundo.

“Then they transferred it to companies offshoretrusts offshore, among other jurisdictions. In the end ended up in londonwith the purchase of properties, investments and in bank accounts”.

“I am very open about the fact that for too long London has been the place where people have come to launder dirty money,” UK Home Secretary Priti Patel recently agreed.

According to experts, the Russian oligarchs emerged in two waves.

The first was from 1990, when during the government of Boris Yeltsin large state-owned companies were sold at a low price to a select group of tycoons in exchange for benefits, while the second wave was promoted by Vladimir Putin through contracts with the state.

In the early 2000s, many oligarchs they feared being persecuted by Putinas would happen with Khodorkovsky, who was the wealthiest man in Russia and one of the richest in the world, according to Forbes magazine.

But much of his economic power evaporated overnight after being accused by the government of tax evasion during the 1990s and fraud.

Khodorkovsky, now in exile after spending nearly a decade in prison, says he was victim of a group of corrupt officials under Putin’s leadership who were afraid of his political ambitions and wanted to carve up his business empire.

Mark Hollingsworth explains that, to avoid political persecution, the oligarchs looked to London as the best place to keep their money and keep it safe: if the Russian authorities requested the extradition of any of them, their lawyers knew that the United Kingdom would not send them back. return to Russia due to the lack of rule of law in that country, because they would not have a fair trial.

“I think the British legal system was the main motivation so that many put their money in this country”, adds the also investigative journalist.

For those years, in London there were already many lawyers, real estate agents, bankers, advisers and accountants who offered help to oligarchs to move and hide their money in the British capital.

The purchase of Chelsea FC by Roman Abramovich in 2003 attracted the attention of many in the UK. People began to wonder who the oligarchs were and where their money came from.

an imperial legacy

Kojo Koram, Professor of Law at the University of London, argues that foreign “dirty money” in the British capital dates back much further.

In January this year, Koram published his book “Uncommon Wealth: Britain and the Aftermath of Empire” (Uncommon Wealth: Britain and the Aftermath of Empire), in which he explains how Britain’s imperial legacy has influenced their legal and financial systems.

“London has opened the doors not only to the wealth of Russian oligarchs, but also to Saudi Arabia, Nigeria, Chinese billionaires. Everyone uses London as the gateway to the world offshore, due to the way in which the city was repositioned after the fall of the British Empire”, he tells BBC Mundo.

“This can also be seen in the role of the British Overseas Territories, the Cayman Islands, the British Virgin Islands and Bermuda, which are currently three of the main tax havens in the world,” he adds.

The controversial scheme of “golden visas”

Many Russian oligarchs came to the UK more recently, thanks to a system of “golden visas” that the British government suspended in February this year after much domestic and international pressure on economic ties between London and the Russian oligarchy.

It was in 2008 when the British government officially opened the doors of the country to thousands of billionaires from around the world, creating the Tier 1 visa scheme that was granted to entrepreneurs who invested £1 million ($1.4 million). In 2014, this amount was raised to 2 million pounds sterling.

The program allowed holders of these visas to apply for permanent residence in the United Kingdom, together with their families. And how quickly they could access it depended on the amount of money they invested.

2 years for those who invested £10 million ($13.6 million), three years for those who spent £5 million ($6.8 million) and 5 years for those who invested £2 million.

Other European countries such as Spain, Portugal and Greece offer similar schemes, with less investment. Spain just asks to disburse 500,000 euros (US$552,000) for the acquisition of one or more properties on Spanish soil, in exchange for a golden visa.

But in the wake of the Russian invasion of Ukraine, both Spain, Portugal and Greece have stopped issuing golden visas to Russians.

According to data from the UK Home Office, 2,581 investor visas for Russian citizens since the program was introduced.

“The golden visa scheme made everything so much easier. All the oligarchs had to do was buy a property for a couple of million in London or Surrey,” explains Mark Hollingsworth.

“In effect, they were given the opportunity to buy your ticket to the UK and for most of the oligarchs 5 million pounds is not much”, he continues.

Received “with open arms”

After investigating Russian interference in the country for two years, the intelligence committee of the British Parliament published a report in 2020 in which it assured that Russian influence in the United Kingdom is the “new normal”.

“Successive governments have welcomed the Russian oligarchs and their money with open arms and there are many Russians with very close ties to Putin who are well integrated into the business, political and social scene, particularly in ‘Londongrad’.”

The report adds that few questions were asked about the origin of the considerable fortunes.

Another report published two years earlier by Parliament’s Foreign Affairs Committee found that Britain had simply “turned a blind eye” to the dirty money laundering Russian through London.

Hollingsworth agrees that the UK government chose to ignore the problem and simply decided to be “accommodating”.

“It has taken a war for the British government to deal with the oligarchs and Londongrad,” he laments.

Koram, from the University of London, believes the government ignored it for too long because it was seen as something from which the UK profited financially.

“They thought that the United Kingdom being a great financial and legal center, it allowed them to spend huge amounts of money across the country and its overseas territories”, he points out.

“But it’s not like that for ordinary Britons. One of the consequences of the United Kingdom positioning itself as this type of center offshore has been the increase in housing prices in the country, especially in the capital”.

The end of Londongrad?

After London sanctioned more than 1,000 Russian individuals and entities, including more than 50 oligarchs and their familieswith a combined net worth of £100bn, many think this could be the end of Londongrado.

Among those sanctioned are the owner of Chelsea FB, Roman Abramovich, as well as the oligarch Oleg Deripaska and the president of the Russian bank VTB Andrey Kostin. They have all had their assets frozen in the UK.

The British government describes them as individuals “whose business empires, wealth and connections are closely associated with the Kremlin”, a link that Abramovich has denied.

“Most of the oligarchs never physically lived in London, but they had their assets and money here. They spent time here, they educated their children here… but these sanctions mark the end of Londongrado”, estimates Hollingsworth.

“With so much hostility against them and against the Russian businessmen who have supported Putin, now they know they have to move and hide your money somewhere else.”

Kojo Koram thinks the government has to go further.

“There must be real change. Not only legal changes, but also in terms of the political attitude that invites foreign money, as well as changes in the UK’s approach to its overseas territories, ”she says.

It may be that, as Koram says, London continues to receive fortunes of dubious origin from all over the world.

But for the Russian oligarchs who used to frequent the most luxurious restaurants in Mayfair and stroll through the private gardens of Belgravia, the “British dream” of Londongrado or of Moscow-on-Thames (the Moscow of the Thames), as others call it, seems to have come to an end with the so-called “Putin war”.