A week ago, the British House of Commons Select Committee on Foreign Affairs issued a report entitled ‘Moscow’s Gold: Russian Corruption in the UK.’ Given the title, one might imagine that this was all about corruption and the role played by Russian ‘dirty money’ in the British economy.
In reality, the report conflates legal and illegal activity, and contains one statement which, in my opinion, verges on the libellous and constitutes an attempt to intimidate British companies from engaging in legitimate business. In this way, it goes beyond the usual criticism of Russia and into altogether more dangerous territory.
The fact that Russians have invested billions of pounds in the British economy is well known. The probability that some of this money comes from corrupt activities within the Russian Federation is also widely accepted. To the extent that the latter is true, this is a matter of proper concern to the British authorities, and it is right that something be done to clamp down on money laundering.
The report ‘Moscow’s Gold’ makes much broader claims, however. It says that ‘There is a direct relationship between the oligarchs’ wealth and the ability of President Putin to executive his aggressive foreign policy.’ Supposedly, the ‘dirty’ money invested by ‘oligarchs’ with ties to the Kremlin can be used to undermine British democracy and for other aggressive activities. The report claims that ‘These assets, on which the Kremlin can call at any time, both directly and indirectly support President Putin’s campaign to subvert the international rules-based system.’
The committee fails to support this claim with firm evidence. The best that it can come up with is a statement by Mark Galeotti about what Galeotti calls ‘small-scale stuff’ in the Balkans, such as funding for websites. No evidence of any ‘large-scale stuff’ is produced, and absolutely no evidence to suggest that the Kremlin is in fact using dirty money invested in the UK for the ends claimed by the report. In any case, even if Russian oligarchs are indeed using their money to such ends, no evidence is provided to show that it is actually dirty money rather than legally invested money. In other words, the issue of corruption is conflated with something entire distinct.
The report likewise conflates corruption with perfectly legal business and financial deals, such as the flotation of Russian companies on the London stock exchange (in particular the Russian company EN+ in 2017) and the selling of Russian sovereign bonds in the British financial market. It may be the case, as the report says, that it makes no sense for the UK to permit such actions at a time when it is simultaneously imposing sanctions on Russia, but that is an entirely separate matter from that of corruption and money laundering.
And that leads me onto the thing which really struck me about this document. This was a statement about the British law firm Linklaters, which managed the flotation of EN+. Shortly before this, the report says ‘Both the EN+ IPO [Initial Public Offering] and the sale of Russian debt in London appear to have been carried out in accordance with the relevant rules and regulatory systems, and there is no obvious evidence of impropriety in a legal sense.’ Yet, it then goes on to say the following:
We asked Linklaters to appear before the committee to explain their involvement in the flotation of EN+ … They refused. We regret their unwillingness to engage with our inquiry and must leave others to judge whether their work at ‘the forefront of financial, corporate and commercial developments in Russia’ has left them so entwined in the corruption of the Kremlin and its supporters that they are no longer able to meet the standards expected of a UK-regulated law firm.
This is quite outrageous, and also cowardly. The committee in effect accuses Linklaters of corruption, while avoiding complaints of libel by use of the weasel words ‘we leave to others to judge’ – a way of making an accusation while claiming that one hasn’t. What’s so outrageous about the statement is that comes straight after a confession that the EN+ flotation was completely above board. Linklaters didn’t do anything wrong, and the House of Commons committee knows it. Nevertheless, it sees fit to suggest that the company is ‘no longer able to meet the standards expected of a UK-regulated law firm.’
The implication here is that any company which has extensive dealings with Russian enterprises is ‘entwined in the corruption of the Kremlin’ and so unfit to do business. I cannot interpret this as anything other than an attempt by the committee to threaten British companies and intimidate them into dropping their lawful activities. I consider this disgraceful.
The committee’s attitude can be seen again towards the end of the report, when it writes that ‘instead of participating in the rules-based system, President Putin’s regime uses asymmetric methods to achieve its goals, and others – so-called useful idiots – magnify that effect by supporting its propaganda. So, there you have it. People who do with business with Russia are to be publicly shamed as unworthy of the standards expected of the British people, while those who would dare to point this sort of thing out are to be denounced as ‘useful idiots’. Having any dealings with Russia makes one a Kremlin stooge.
What the British House of Commons ignores is that lots of British citizens have perfectly legitimate reasons to do business with Russia, and do so in an entire legal and proper way. And others also have very good reasons to question public policy regarding Russia. None of them deserved to be insulted in this way by their elected representatives. The authors of this report should be ashamed of themselves.