‘Unhealthy for democracy’: Peer slams political donors amid bid to clean up Oligarch haven ‘Londongrad’

A Labour peer has criticised political donations from private financiers as “unhealthy for democracy” amid a government bid to clean up Russian dirty money in London.

The capital has become known as “Londongrad” due to the amount of wealth Oligarchs have stashed here, in both homes dotted around Mayfair and Kensington and finance through the City.

Transparency campaigners have called on the government to ensure loopholes in legislation brought forward to boost Britain’s defences against illicit wealth are closed.

And financial expert Professor Prem Sikka has said the UK’s financial regulatory laws are “incredibly poor” and claimed banking institutions are “virtually immune from bankruptcy”.

Freshly drafted laws to root out corruption in the UK were revealed in parliament yesterday, as the prime minister vowed to crack down on “ill-gotten gains”.

The Economic Crime Bill has been sped up after Russia’s invasion of Ukraine, and is meant to help law enforcement prevent money laundering and eliminate corrupt wealth in the UK.

Changes include a register of foreign UK property owners’ real identities, and toughening up unexplained wealth orders, which force targets to reveal where their money came from.

But anti-corruption campaigners said they had been concerned about questionable global funds being invested in UK property since 2016.

Transparency International UK claims £1.1bn worth of property in Greater London is owned by Russians “accused of corruption or links to the Kremlin”, compared to £6.7bn UK-wide.

While Land Registry data reveals just four properties in London - in Westminster, Camden and Kensington and Chelsea - are officially owned by Russian-registered companies.

The firms are Sova Real Estate LLC, The Russian Federation, Antey Private Security Firm LLC, and a federal agency under the jurisdiction of the Russian Ministry of Foreign Affairs.

Professor Sikka, emeritus accounting professor at the Universities of Essex and Sheffield, told LondonWorld he was sceptical about the plans in the accelerated legislation.

He said: “We haven’t really tackled white collar crime in the UK. Laws are passed but enforcement is poor.

“The banks are virtually immune from bankruptcy because we bail them out all the time.

“The fines are puny. You need some fundamental reforms to Companies House.

“Where are the incentives for these people to behave?”

Dirty money is a “broad term”, Lord Sikka said, and could refer to profits of criminal activity - including drug or human trafficking, terrorism or theft - tax evasion or undeclared funds.

“People may be betting illegally or making money from illegal activities,” he said.

“Or from legal activities but not declaring it for tax purposes, making it dirty.”

Cash which is not declared to any regulator in any country is also considered illicit wealth.

And the professor said he also felt that political donations - across both major parties - from undeclared sources, were “undesirable” and a major issue.

“Our laws are incredibly poor,” he said.

“A rich billionaire holed up in a tax haven can form a company in the UK… so a company registered in the UK that has not traded or made profit here, can make political donations.

“As long as private money goes into political parties that really is unhealthy for a democracy.

“Whether they are trade unions or companies or rich oligarchs, they are not donating - they are investing and they want something in return.

“What they are getting in return is toothless regulators, poor enforcement, prosecution and public accountability, and that is their payoff.

“The idea that legislators and the political system are in the pocket of rich people, whether they are from the left or the right, is unhealthy.”

While Rachel Davies, from Transparency International UK, said: “We welcome this ground-breaking legislation that we have been campaigning for since 2015.

“Transparency over who really owns property here is vital to addressing Britain’s role as a global hub for dirty money from Russia and elsewhere.

“To ensure these new measures are as effective as they can be, we urge the government to close the loopholes that would provide those with money to hide ways to continue to conceal their ownership of UK property.”

Speaking in the House of Commons today as he introduced the legislation, the cabinet office minister Michael Ellis said: “Acting in concert with our allies our measures will deliver a devastating blow to Russia’s economy and military for years to come.

“Coordinating with our partners our sanctions will reverberate throughout Putin’s regime. We must remain absolutely firm in our response.

“We must rise to this moment and we must stand with the people of Ukraine.”

Home secretary Priti Patel said the plans made court action easier, while business secretary Kwasi Kwarteng said the register would “flush out oligarchs, criminals and kleptocrats”.

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