How London could be the key to getting Putin to back down

On Tuesday, the British government announced that three Russian oligarchs would be targeted with sanctions from the U.K. in response to the crisis in Ukraine. The announcement was made less than 24 hours after President Vladimir Putin of Russia announced the recognition of two breakaway regions in Ukraine as independent and deployed “peacekeeping” forces there, a move the U.S. government called an “invasion” on Tuesday.

Boris Rotenberg and his nephew Igor Rotenberg, both billionaires, along with Gennady Timchenko, all three of whom are close friends of Putin, will have their U.K. assets frozen. They will also be banned from traveling to Britain, Prime Minister Boris Johnson announced. The move follows immediate sanctions that were deployed against the Russian banks IS Bank, Rossiya, General Bank, Promsvyazbank and the Black Sea Bank. “This the first tranche, the first barrage, of what we are prepared to do, and we hold further sanctions at readiness to be deployed,” Johnson told politicians in the House of Commons on Tuesday.

However, Scotland’s First Minister Nicola Sturgeon said the prime minister’s announcement “did not, in my view, go nearly far enough.” She went on to say that Johnson “described the limited sanctions announced today as a first tranche, but I think it is essential that we see further tranches very soon, with further sanctions imposed upon Putin and interests in Russia.”

In Parliament, Johnson said that the U.K. would continue to work toward a diplomatic solution, but that the latest sanctions were justified, because, he said, Putin “is implacably determined to go further in subjugating and tormenting Ukraine.” Tackling Russia’s mega-rich in London could be Johnson’s solution to the crisis. For years, Putin and other Russian multimillionaires and billionaires used London as their playground and bought up properties in wealthy areas in central London, earning the city the nickname “Londongrad.”

Last week, the chairman of the House of Commons' Foreign Affairs Committee, Tom Tugendhat, accused the Russian president of running a “Mafia-like organization” and urged the British government to stop turning a “blind eye” to money flowing into the country from Russia. “For decades, Russian companies have used our markets to raise money, equities and debt, to finance the Kremlin,” Tugendhat said. “We’ve done nothing to stop it.”

In 2018, the Foreign Affairs Committee published its Moscow Gold report. It found that despite public outrage over the poisoning of Sergei Skripal, a former Russian military officer, and his daughter, Yulia, in Salisbury, England, Putin and his cronies were continuing to use London as their base for “corrupt assets.” New sanctions on the mega-rich in the capital could hit Putin hard. A government report from the Home Office stated that the U.K. had seen a “significant volume of Russian or Russian-linked illicit finance” spent on luxury items such as properties, cars and private-school fees, which helped individuals “launder their reputation.”

Johnson announced last week that he would strengthen measures against “ill-gotten Russian money” in Britain in the wake of the crisis.

Transparency International, an NGO that aims to combat global corruption, identified more than £5 billion worth of property bought in the U.K. by what it claims is “suspicious wealth,” an astonishing one-fifth of which came from Russia.

After a meeting of COBRA (a government organization, also known as the Civil Contingencies Committee, that deals with national emergencies or major disruptions) about tensions between Russia and Ukraine last Tuesday, Johnson was questioned about whether his government had done enough to stop the flow of “dirty money” into the country. “I don’t think that it’s fair to say the U.K. hasn’t done a huge amount on ‘dirty money,’ whether it’s from Russia or anywhere else,” Johnson told reporters. “What we want to do is strengthen the package that we have, strengthen the measures we have against potential ill-gotten Russian money, whether here or anywhere for … which we have responsibility, with new measures that will hit the companies and concerns that I’ve talked about.” The package Johnson was referring to was the Economic Crime Bill, which is due to be brought to Parliament for a vote this year. The bill’s reported aim is “to tackle economic crime, which [the government] says causes ‘much harm to individuals and communities, and damage to legitimate business and the UK’s reputation.’”

Johnson went on to tell reporters that he would “open up the matryoshka doll” to find out which companies might be laundering Kremlin-linked money through the U.K.

But what about the donations to the prime minister’s party that have been paid by members of the Russian elite? One of the biggest female donors in recent British political history, Lubov Chernukhin, happens to have a strong connection to the Kremlin, since she is the wife of Putin’s former deputy finance minister, Vladimir Chernukhin. According to a report by the U.K.-based Chatham House, Lubov donated more than £2.1 million to the Conservative Party after becoming a British citizen in 2012.

In an interview with Yahoo News, Casey Michel, an investigative journalist who was one of the authors of the Chatham House report, said of Lubov Chernukhin: “She is a canary in the coal mine about this phenomenon of suspect wealth coming out of Russia and again, not only infiltrating British markets, but using anonymous British financial secrecy vehicles and turning to things like British lawyers and British barristers and accountants to manage that money. ... And then using that wealth to bankroll the Conservative Party and the highest members of the Conservative Party, potentially tilting policies." He added that although Chernukhin was a prominent case study in the research paper, "she is hardly the only one.”

The Pandora Papers investigation in October 2021 revealed that Lubov Chernukhin’s wealth flowed through her husband’s secretive offshore accounts, which raised questions over whether it was Vladimir Chernukhin, not Lubov, “who may be the ultimate source of some of the cash flowing into the Conservative Party,” as the Guardian put it. The Sunday Times revealed over the weekend that Lubov, along with a dozen or so of the most generous Conservative Party donors, was invited to “regular meetings with Boris Johnson’s top team as part of the party’s elite ‘advisory board’” during the pandemic.

As luck would have it, all the proceedings in these board meetings are kept private, due to the fact that the board is a Conservative Party organization, not a government organization, and as such, its activities fall outside the U.K.’s transparency laws. “They have been granted the contact details of ministers and advisers, and some have used them to lobby the government directly on Covid-19 strategy and procurement,” the Sunday Times reported. “In some cases they have also received help and advice applying for public appointments. Some have received lucrative public contracts approved by ministers and honors signed off by Johnson ... while they were members of the board.”

The Chernukhins are believed to be worth £336 million, and their wealth is believed to be held mostly offshore. Lubov is said to have lobbied against higher taxes for the ultrarich, the Sunday Times reported. Michel told Yahoo News that there has been an increasing concern in Britain over the past number of years as to what “suspect wealth” has done to British politics. “There is a concern specifically with donations to members of the Conservative Party that seem to have had an effect on slow-walking some reforms that should have been implemented years and years ago,” he said.

Members of Parliament agree. Bob Seely, MP for the Isle of Wight and a member of the Foreign Affairs Committee, said the U.K. is “a decade behind the times” on the threat posed by the financial influence of Russia. He added: “On Russia, we have known about this problem for years. The problem is that the frontline with Ukraine is the border, the frontline with Germany is the gas pipeline — and the frontline with the U.K. is the City of London. We need to be wiser about how the Putin regime acts and the potential threat to our institutions and values, and how we can protect them against a potential tsunami of questionable money.”

Last week, Labour Party leader Keir Starmer insisted that any donation to the Conservative Party that has a link to Putin should be looked at “very, very carefully.” He added: “That means returning the millions of pounds of Russian-linked cash that has been donated to the Tories and their MPs since [Johnson] became prime minister and reversing his plans to allow unlimited donations from abroad.”

But what about Johnson’s promise to tackle specifically “dirty” money? Do donations from Kremlin-linked Russians count as “dirty”? “I don’t think what Boris said is different from what any other politician across the spectrum is going to say,” Michel told Yahoo News. “I don’t think there are those who are coming out and incentivizing the influence of dirty money. But when you get beyond that comment, you get beyond that flowery language about ‘finally going after dirty Russian money,’ what does that actually mean?”

Michel went on to say: “I’d fully support Boris addressing this on the highest level, but it is years late, and right now it is rhetoric. We have to see what actually happens if any of these policies are actually implemented.”

A senior Labour MP, Chris Bryant, said last Wednesday that sanctions should have been “in place before this whole saga, not after.” He said that warnings about Russian money had come to the Foreign Affairs Committee in 2018 and in 2020 from the Intelligence and Security Committee report on Russian influence in Britain’s democracy. He added: “It is like the prime minister has finally woken up to contraception the day after conception.”