Follow The Money: How London Became an Oligarchs Paradise

Protestors Demonstrating at an Oligarch Property

Since the 1990s, London has been a playground for the oligarchs of Russia. The city offered them the perfect place to hide, launder, and spend their money. The cycle of wealthy Russians coming to London and using the city to launder their wealth was a process that would never end. The Russia-Ukraine conflict and subsequent sanctions against Russia pushed this process to the forefront of British media. Sanctions were being skirted by the oligarchs in London. This left many asking - why London over any other European city? What made the city the perfect place for oligarchs to hide their money?

London's position as the most affluent and most populous city in the UK makes it ideal for oligarchs. London offers oligarchs plenty of avenues for investment, one of the most abused being the booming real estate markets. London's real estate sector is easily exploited, with oligarchs able to carry out a few tricks to maximize their financial activity. It is to be assumed that London's most famous neighborhoods, like Knightsbridge and Kensington, are to have some of the most expensive homes in the country. Oligarchs take real estate investment to the next level; instead of simply 'flipping homes' in the conventional sense, they use unique methods to maximize their investments and skirt regulations. For instance, oligarchs will purchase multi-million-pound homes and list them as a second address, even though they will only visit the property maybe once or twice a year. This phenomenon might sound quite innocent, but the mass of property that oligarchs and other foreign business people buy often leaves entire streets empty for ninety-nine percent of the year. Collectively, in London, nearly 22,000 empty homes go unused for most of the year. Another way in which oligarchs take advantage of London's real estate is through the creation of iceberg houses. These are homes that look like ordinary two or three-story houses but have vast basements that span thousands of feet. This means that on paper, you aren't getting a simple London townhouse, but a massive building with huge square footage, therefore boosting the price through the ceiling. The real estate market is also extremely attractive to oligarchs because of Britain's historic non-domicile tax status, which allows a person with their primary home outside of the UK to avoid paying taxes if they have subsequent homes within the UK.

An Architectural Drawing of an Iceberg Home

These methods allow oligarchs and other shady businesses to dump billions into London's real estate market. In fact, it is estimated that Russian oligarchs have pumped £1.5 billion into London's skyline. Once that dirty money has purchased a building, a mansion, a street, or even, sometimes, entire apartment blocks, it is protected diligently by London's regulations and laws. This is what makes London so attractive—it protects those who invest in the city. With this protection comes troves of agents who do their best to avoid regulation and protect dodgy investors, like the oligarchs of Russia. This backbone that supports oligarchs doesn't just pertain to shady businesses but also to legitimate, respected institutions. Oligarchs have access to more power and, therefore, use their connections to bolster their laundering and money-moving operations.

One such oligarch who brought his billions to the UK was Dmitry Firtash. Firtash made billions when he brokered oil and gas deals between Russia and Ukraine. Firtash didn't just spend massively in London, buying an entire block of houses in Brompton, but also found support in some of the most prestigious social circles in the country. Firtash attended multiple gatherings with serving MPs and even met with the Duke of Edinburgh, the Queen's husband. Firtash's most notable contribution was to the University of Cambridge, which established an entire course about Ukraine Studies in his honor. He was so deeply ingrained with British political institutions that the Department of Defense, the previous owners of the Brompton buildings, allowed Firtash to only pay a third of the amount upfront, giving him an initial discount of over £40 million. In other countries, this kind of attitude toward foreign billionaires is seen as corruption, something Firtash found out first-hand as he is now wanted by the US for that crime. In London, billionaires are treasured, looked after, and protected to the point where they can escape money laundering laws. England has 'Unexplained Wealth Laws' that allow for the origins of the wealth of a targeted person to be revealed if investigated; however, such a law is rarely used when it comes to shady foreign billionaires.

Not only do social and political institutions of London support oligarchs, but the economic and legal systems do too. Oligarchs simply receive better and superior treatment from numerous legal services, even before they begin embedding themselves in London. A popular example of this was the UK's Visa system. The UK's Tier 1 Visa used to offer permanent residency within the country to anyone who could afford it. No checks, no balances; it is a commodity to be purchased. This not only means that oligarchs can skip the necessary immigration checks ordinary people have to go through, but the Tier 1 privilege extended to businesses too. Unlike in Europe, where strict business and financial laws have to be upheld when looking at potential citizens, the UK's Tier 1 Visa meant that these checks were simply overlooked, allowing shady oligarchs to bring their dealings and money into the country. The strict legal system also protects oligarchs from getting accused of being serial money launderers. There have been multiple instances where oligarchs used Britain's libel laws to silence those who they see as trying to defame them. This was experienced firsthand by journalist Catherine Belton, who faced legal action from three Russian oligarchs who were named in her book, 'How the KGB Took Back Russia and Then Took on The West'. This book publicized the relationships between these oligarchs and their connections to Vladimir Putin.

London fosters an environment for the suspiciously wealthy. They can exploit systems to squeeze as much profit as possible, embed themselves in affluent social circles, buy their way into citizenship, and then sue anyone who speaks out against them.

The Support Systems that Aide Laundering

While they were briefly mentioned in the last sections, oligarchs' laundering could not be possible without the agencies that help them. These agencies do the legwork while the oligarchs just supply them with their masses of wealth, which are usually dubiously obtained from the Russian Government by stealing from public businesses, private businesses, and criminal enterprises (ranging from national to international crimes). The favorite methods of oligarchical money laundering aren't money laundering at all but instead money washing, also known as Conversion. Conversion is simple; oligarchs use their dirty money in a city with weak financial regulations and simply go on a spending spree. This is why London has gained so many monikers, like 'the Oligarchs' Playground' or 'Londongrad.' It is the perfect place for oligarchs to use their dirty money to buy high-end real estate, football clubs, cars, make donations to universities, or anything that involves throwing massive amounts of cash at something. The only problem is moving that money from Russia to London. British authorities might be lazy on money laundering checks, but the other national banks and international authorities are always on the lookout for suspicious activities. The burden of moving this money sits on the shoulders of the shell companies. This is easier said than done; even though there are London-based agencies to aid oligarchs in establishing these shell companies, having them registered in the UK is a problem. While oligarchs can skirt many regulations in London, the banking system wants its cut and could want to know where the money is coming from. Plus, taxes and fees in the UK can be large. It might be fun to spend in London, but to save and move money between accounts means massive administrative fees. So, the shell companies that will hold the ill-gotten gains will usually be registered in tax haven nations, like Cyprus or the British Virgin Islands. Not only does this allow the money not to be eaten into by legislative fees but also allows for the men behind the shell companies to enjoy a degree of anonymity. These wouldn't just be singular entities but tens, maybe hundreds of different shell companies all sending and moving money to each other, to muddy the trail if any financial investigators come sniffing around. It also stops any Russian authorities from being able to get their hands on the corrupt cash given to the oligarchs.

Now all of this money has been moved around and converted into a foreign currency. The next port of call is Enjoyment, yes, that is the actual name of the step. Usually, the enjoyment part comes at the end of the money laundering process, but for money washing, the enjoyment is an integral part of the method. Oligarchs usually have made a name for themselves and are well known for their business activities in Russia or Eastern Europe. If you're a Russian oligarch, with a net worth of upwards of billions, nobody is gonna bat an eyelid when you're seen courtside at the NBA or bankrolling an entire University Course, in the case of Firtash. Usually, oligarchs ease into their enjoyment spending. First, they will acquire stocks in successful businesses, allowing them to have some plausible deniability if anyone starts to investigate their income. However, once they have invested in a few businesses, oligarchs can live life to the fullest in London. They can purchase whatever they want, whenever they want. This is because these oligarchs are viewed as financial elites, so many turn the other way or don't think to check where the money was coming from. Money Washing, or Conversion, is simply a way of exploiting these weaker financial cities.

An Oligarch Yacht Docked in the UK

The final step is Elitism, whereby oligarchs further their social ventures. This is the meeting with politicians and becoming best friends with the University of Cambridge part of the process. This offers a layer of protective insulation around the whole process. Once you're rubbing shoulders with the Queen and Members of the Cabinet, then nobody is gonna suspect that you're living off criminal money acquired by the Russian Government. This is why oligarchs embedding themselves in these esteemed social circles is so effective. It doesn't just grant them power, but it also grants them the impression of power. If an ordinary person were to up and buy a mansion in Chelsea, there would be great concern because there would be so many questions, with the primary one being: Where did they get the money from? An oligarch's perceived power allows them to escape this alarm; it is simply just expected that powerful people splash their cash, and nobody really cares about where it comes from.

And Then It All Came Crashing Down

When financial sanctions were brought against Russia for their invasion of Ukraine, all eyes turned awkwardly to Britain. For decades, London had fostered the Russian oligarchs who were close with Putin. No longer could the UK shrug their shoulders and go back to enjoying the billions they brought into the city. Instead, they were forced to do something about it. At the end of 2022, all of Putin's closest oligarchs had all of their assets frozen. Overnight, over £2 billion worth of assets were frozen. Any bank or company account associated with the oligarchs was also locked. In the weeks before, there was talk of severing the oligarchs' spending power in London, as many feared they were sending money back to Putin to fund his war with Ukraine. The asset freeze stopped all of this and any hopes that oligarchs had of living their usual extravagant London lives. The oligarchal way of London was over. Due to poor record-keeping, all known assets were frozen, which prompted financial investigators to begin pursuing all hidden or obscured assets owned by the oligarchs, which were many and likely to add on a few billion to the known value of £2 billion. The freezing of these assets doesn't just mean they can be sold but that any investment into the asset was forbidden. Houses couldn't be renovated, football clubs couldn't accept transfers, gardeners couldn't even work on the hedges on any land owned. It was a sophisticated way of sticking the knife in the oligarchs and turning it. Their assets were frozen, and all they could do is depreciate in value. Not only that, but any rental agreements signed by oligarchs are still legally binding. They could be renting an office but are forbidden from using it or even putting lightbulbs in. Instead, the rent, and other fees, are taken from their frozen bank accounts.

As the oligarchs struggle and attempt to find loopholes, asset freezes are usually maintained for a long time. There are still buildings in London in disrepair from when there were financial sanctions against the Libyan Government and any businesses associated with them. For any financial purchase, from a carton of milk to buying a new sports car, they must go to the Office of Financial Sanctions Implementation (OFSI). Oligarchs have begun to sue OFSI because of the inconvenience of submitting paperwork every time they do a weekly shop. The cases are currently in court, but many don't expect sympathetic outcomes for the oligarchs. Further investigations have also uncovered more hidden assets owned by oligarchs, and the total value of Frozen Goods sits at just over £18 billion pounds.

Protesters Demonstrating on the Frozen Secondary Home of an Oligarch

London's disregard for and incentivization of foreign money drew in dubious oligarchs with deep pockets filled with ill-gotten cash. For decades, they were able to live lavish lifestyles and squeeze every ounce of value they could out of London's real estate. Now, they are paying for their crimes by watching their wealth slowly dwindle—Lamborghinis gather dust, land becomes overgrown, and buildings become vandalized.

The Yemen Civil War, Russian Oil and Corruption Within the US Government

This story may sound like something from a bad Hollywood blockbuster, involving corrupt lobbyists and international schemes, but it is real and happened just a few years ago. The men at the centre of this debacle are Barry Bennet and Douglas Watts. Between them, they possess decades of lobbying experience and have connections to numerous politicians and governmental organizations. Watts is a former Presidential consultant and the founder of his own PR company. Bennet oversees two lobbying firms in Washington D.C., Avenue Strategies and Avenue Strategies Global. Additionally, he was a key advisor to Donald Trump during his presidential campaigns. These two men played a crucial role in a plot to undermine a US alliance with other nations. When lobbyists and advisors take on work for foreign nations, they are required to register under FARA, the Foreign Agents Registration Act. This organization, established in the 1930s, aims to increase transparency in political decision-making, making it more difficult for foreign nations to influence US policy. However, Bennet and Watts did not make such disclosures.

Lobbyists cannot make a difference without a politician to influence, and in this case, it was Kansas Governor Jeff Coyler. With our American actors established, a key player is currently missing in this story: What foreign government is paying our Foreign Agent Lobbyists? It was Qatar, specifically the money came from the Qatari Embassy in the United States.

The corruption issue began in 2017 when Yemen was in crisis. The country was embroiled in a brutal civil war between the Yemeni government and the Houthi Movement. The Houthis are an anti-West terror organization seeking to sever Yemen's ties with the USA, Israel, and any other nation aligned with the West. The group was galvanized by US activities in the Middle East, specifically its invasion of Iraq in 2003. Since the 1990s, the Houthi Movement has been active in perpetrating attacks in Yemen. In the 2010s, these attacks escalated to the point where the Houthis had occupied a large section of Yemen.

While Western nations opposed the Houthis, in the Islamic realm, opinions were divided. Conservative nations like Iran and Syria, which had similar feelings toward the West and Israel, supported the Houthis. On the other hand, nations with allegiances to the West, such as the United Arab Emirates and Saudi Arabia, stood in staunch opposition to the Houthis. This divide turned the Yemen Civil War into a proxy war among Muslim states, with each side receiving financial support from sympathetic nations. Saudi Arabia led efforts to ensure the Yemeni national Government remained supported and internationally recognized. Qatar was one such nation in this council. However, relations between Qatar and Saudi Arabia were far from perfect, as they were political rivals. They had backed differing sides in the Second Libyan Civil War in 2014, and the Syrian Civil War, and had other disputes, including Qatari-owned media company Al Jazeera's criticism of Saudi Arabia. Al-Jazeera would be a useful asset for the Qatari Government, especially concerning the Houthi Movement. Qatar used its media resources to shift the perception of the Houthis from a terror group to that of a freedom fighter organization. Such portrayals, coupled with continued financial assistance by Qatar, angered Saudi Arabia and other council members. In June 2017, Saudi Arabia and all other council members cut diplomatic ties with Qatar, including restricting their air and sea space to Qatari vehicles.

Saudi Arabian media organizations began accusing Qatar of funding terror organizations and openly criticizing the United States. Such negative attention by its allies in the Middle East made the US focus on Qatar. Fearing repercussions for its expulsion from the anti-Houthi coalition, Qatar decided to pay US lobbyists to help them from within.

Between 2017 and 2018, Qatar paid Avenue Strategies, owned by Bennet, $3 million, along with plans to improve relations between the US and Qatar. Subsequent payments of $250,000 were also made to Bennet's companies by the Qataris. Funds from the initial payments were used by Bennet and Watts to establish an organization known as 'Yemen CrisisWatch.' The sole purpose of this organization was to undermine Saudi Arabia and the UAE by strengthening ties with the US. Around this time, then-Lieutenant Governor Colyer was briefing fellow congressmen on the security crisis in Yemen, displaying the logos and graphics of Yemen CrisisWatch. Colyer, preparing to run for the Governorship of Kansas in 2018 and accepting donations, received $4000 from Bennet's Avenue Strategies on December 18th, 2017, toward his campaign fund. The use of such logos in his presentation implies that he was in contact with Bennet and Watts long before those donations were made. It was clear that Yemen CrisisWatch's main purpose was to reach out to as many influential individuals as possible. Californian Televangelist Robert Schuller was also contacted by the organization, writing two op-ed pieces echoing the group's message.

He wrote:

"I was recently asked to become ambassador to Yemen CrisisWatch, a new organisation that seeks to raise awareness about the country. I agreed without hesitation. As a follower of Jesus, I have preached throughout my career- on television, on radio, and at churches- that we must help others who languish in fear and hopelessness".

This Has Happened Before

This would not be the only time Avenue Strategies, led by Bennet, would be linked to not registering as a foreign agent. This story had occurred before, but the men involved had managed to avoid prosecution. In 2017, Corey Lewandowski, another founder of Avenue Strategies and Trump's former campaign manager, lobbied for an American branch of a Venezuelan oil company called Citgo. Citgo paid Avenue Strategies $25,000 a month to establish connections with Trump's closest confidants and to dissuade Congress from imposing economic sanctions on Venezuela. At that time, Venezuela, a Russian ally, was in a fierce diplomatic dispute with the US. Additionally, Venezuela faced intense media scrutiny for its role in state-backed drug and human trafficking. Rumours circulated that Russia was in talks to purchase Citgo from its parent company in Venezuela. Citgo was desperate to cleanse its reputation among US government officials, and Avenue Strategies aimed to accomplish this. Once again, these connections weren't formally disclosed to the relevant authorities. Barry Bennet was also involved in this scandal when he stated that paperwork about the Citgo deal would be submitted on Wednesday, February 22nd.

When these documents weren't submitted, eyebrows were raised. Meanwhile, Trump promised to eliminate the influence of special interest groups in D.C., but his closest advisors were illegally lobbying. The situation brought nothing but embarrassment to Trump, Bennet, and Lewandowski. Soon, formal complaints were made to the Department of Justice by watchdog groups. Further investigation found that Bennet and Lewandowski used their Citgo lobbying money to establish another organization called Washington East West Political Strategies. Through this new organization, documents were discovered showing that they offered clients meetings with President Donald Trump and Vice President Mike Pence. These documents are believed to have been used when reaching out to potential clients in Eastern Europe. The situation worsened when it was found that Citgo had donated $500,000 to Donald Trump's inaugural committee, despite never making a political donation before. Bennet denied all these claims, stating that, although Avenue Strategies had stakes in Washington East West Political Strategies, they were not aware of these documents. He blamed the third owner of Washington East West, an Azerbaijani oil tycoon and businessman, who Bennet says created and distributed the documents without his knowledge. When pressed about Washington East West and these business dealings, Bennet announced that the company would be dissolved. The only issue was that other Avenue Strategy-affiliated lobbying companies operated in other areas such as the Middle East. Bennet did not comment on whether these would be shut down.

Concerning the business dealings with Citgo, further investigations found that the Russian government-owned oil company Rosneft was on the brink of taking over Citgo, causing concern among many Congress members. Citgo had three refineries in the US, as well as three major pipelines. Rosneft had given a loan to Citgo's parent company, the Venezuelan government-owned oil company PDVSA. As collateral, PDVSA had offered 49.9% of their company stock. Venezuela was experiencing one of its worst economic crises, and experts predicted they would not be able to pay it back in time. A bipartisan group of Senators wrote a letter to Trump's Secretary of the Treasury, Steve Mnuchin, expressing their fears about a Russian government-owned company having so much power over the US's energy production. The controversy reached a fevered pitch, and everyone was looking at Avenue Strategies, whose initial lack of paperwork filing had uncovered Citgo's potential buyout by Russia and the extremely close links between foreign agents and the President.

Bennet had previously stated that he would not lobby against US interests; clearly, he did not mean that. He stated that if Rosneft acquired Citgo, then Avenue Strategies would resign from the contract. He also doubled down, stating that Citgo was based in Texas and was an American company, despite being technically owned by a foreign government. Bennet shirked responsibility by stating that Avenue Strategies was subcontracted by VantageKnight, a Democrat-linked lobbying company. Documents revealed that VantageKnight had contracted Avenue Strategies for another lobbying job. In addition, VantageKnight was paid $270,000 to lobby for Citgo for the first three months of 2017, focusing on voiding possible sanctions and restrictions on US energy policy. So after all of this, where did it leave Bennet, Lewandowski, and Avenue Strategies? Well, the smoke kicked up by this whole controversy seemingly allowed them to avoid any punishment. Trump's presidency was already marred by talks of Russian collusion, and this foreign agent issue didn't help, but Avenue Strategies saw no major setback or punishment for their role in lobbying for other countries. In fact, Lewandowski received a major promotion to the advisory board of the Pentagon.

They got caught

The tactic of using lobbying money to establish a new organization to work through is clearly a favourite of Avenue Strategies. Yemen CrisisWatch and East West Washington Political Strategies are just two such organizations. This time, Avenue Strategies wasn't able to escape punishment for being undisclosed foreign agents. Soon after Yemen CrisisWatch began to ramp up its operations, the Department of Justice began to investigate. Promptly, the Yemen CrisisWatch Twitter and website were deleted. Bennet and Watts were brought in for deposition by the Department of Justice and FBI. Both men entered Deferred Prosecution Agreements. For Bennet, he consented to two charges of falsifying, concealing, and covering up material facts from the FARA Unit. In addition, he was charged with making false statements and material omissions in FARA filings. For this, Bennet will face a fine of $100,000. Watts consented to three counts of acting as an agent of a foreign principal without registering under FARA and making false statements to the FBI. He would be fined $25,000. The punishments for these men are measly. They openly accepted hundreds of thousands of dollars, sometimes millions, just to be fined nothing close to that. This will do nothing to discourage or prevent this in the future. The Department of Justice had failed once to punish these same men for doing this, and then when they did, they gave them punishments so weak that it likely wouldn't change anything.

Below is the Department of Justice's description of events. They kept the countries and companies involved anonymous. In this version, I will replace the pseudonyms with the actual names of the actors involved.

In 2017, Bennett signed a contract for Avenue Strategies to perform lobbying services for the embassy of Qatar. As part of his lobbying strategy on behalf of Qatar and for and in the interest of Qatar, Bennett covertly operated Yemen CrisisWatch, a Limited Liability Company (LLC) founded by Watts at Bennett’s direction. As directed by Bennett and managed by Watts, Yemen CrisisWatch ran a public relations campaign designed to cast one of Qatar’s rivals, Saudi Arabia, in a negative light for its conduct, and thereby to improve Qatar’s standing with the U.S. government relative to this rival.

 Qatar paid Bennett’s Avenue Strategies $2.1 million between September 2017 and December 2017 for lobbying services, and approximately 27% of those funds (i.e., approximately $773,000) financed the operations of Yemen CrisisWatch. In return, Yemen CrisisWatch conducted a social media campaign (the Yemen CrisisWatch Twitter), published opinion articles in major newspapers (The Televangelist Op-Ed), produced a documentary that was distributed through a national television network, sent direct mailings to American citizens, and lobbied Congress (Through Governor Colyer) and former President Trump.

Yemen CrisisWatch took credit for directing 3,000 phone calls to members of the U.S. House of Representatives encouraging them to discontinue U.S. involvement in a coalition of  Qatar’s rivals. The House eventually voted overwhelmingly to “deauthorize” U.S. involvement with the coalition.

            Neither Watts nor Yemen CrisisWatch was registered under FARA.