Pluralistic: 07 Jan 2022

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A British five-pound note with the Queen's face replaced by a vintage engraving of a club-brandishing, cigar-chomping thug.

Jackpot watch (permalink)

In his 2014 novel The Peripheral, William Gibson plunges us into a far-future London, radically depopulated, quietly authoritarian, and under the iron thumb of "the Klept" – a fusion of the British chumocracy with post-Soviet Eurasian kleptoracy.

The origins of this society – its depopulation, its neo-aristocracy, its captivity to inscrutable AIs called "the Aunties" are lost to history. They all took place during a time called "The Jackpot," an interregnum where huge swathes of records simply vanished amid social breakdown, climate emergencies and cyberwar.

Gibson will be the first to tell you that he's not attempting prophecy with his work, but it can't be denied that he has an eerie ability to reflect back our latent, inchoate fears about the future in fiction, something he calls "predicting the present."

When I emigrated from the UK to the US in 2016, I explained my reasons in a post called "Why I'm Leaving London." The basic reason? The increasing obviousness of a city that existed primarily to launder vast, corrupt fortunes, and only incidentally be a place where Londoners could live and thrive.

Since then, the UK – and especially the City of London, home of the nation's finances – has doubled down on its role as enabler and concierges to the world's filthiest money, and the psychopaths who come with it. The UK and its overseas territories consistently top the Tax Justice Network's annual "Financial Secrecy Index."

Not all corrupt money comes from the former Soviet republics of Eurasia, but these countries – and Russia – embody a special kind of corruption: kleptocracy ("a political economy dominated by a small number of people/entities with close links to the state").

This form of corruption is closely related to the chumocracy that dominates British politics, and especially the ruling Conservative party. Thus it should come as no surprise that the UK, with its Thatcher- and Blair-era emphasis on finance, and its political compatibility with kleptocracy, is a linchpin in global kleptocratic money-laundering and corruption.

"The UK's kleptocracy problem," is Chatham House's deeply reported white paper on the connections between Eurasian kleptocrats and the UK political system, its finance sector, its charities, its libel laws, its property market, and its luxury goods sector.

The paper shows how the UK is a one-stop shop for corrupt, wealthy public officials from Eurasian kleptocracies. The UK's finance sector will launder your money. Its Home Office will sell you citizenship via a "golden visa." Its estate agents will convert the money to multimillion-pound mansions and "superflats." Its charities will launder your reputation and recast you as a philanthropist. Its billion-pound mega-law firms and "reputation mangers" will destroy your critics and terrorize their publishers, cleansing you of sin with expert use of Britain's notoriously bully-friendly libel laws. And while it's all going on, the country's luxury department stores will offer you white-glove service as you spend millions on gem-encrusted, bespoke trinkets.

The UK's role as concierge to the klept spills over beyond either the UK or Eurasia's borders. Not only do oligarchs buy influence with British governments and regulators, they also use their London-washed money to funnel bribes to politicians around the world. Think here of the Azerbaijani Laundromat, in which $2.9B was funneled through 4 UK shell companies and converted, in part, to bribes paid to EU politicians.

UK politicians (both Labour and Tory) have managed to divert interest from this influx of unsavory plutocrats and instead focus on hardworking, everyday people who come to the UK to do hard, everyday work. For forty years, British politics has been dominated by xenophobic terror of "economic migrants" (a major factor in Brexit), with complaints about foreigners competing for housing and resources. Meanwhile, the issue of ultrawealthy kleptocrats coming to Britain to buy its football teams, entire swathes of its major cities, its newspapers, and its politicians has largely gone unremarked-upon.

Neoliberal economists describe the UK as a post-industrial nation focused on "services" – not the "service sector" (plumbers, waiters, cab drivers), but high-ticket services like "wealth management," "legal strategy," "investment counsel," "reputation management," "property management" and so on.

These "service-providers" are more properly known as "enablers." The reputation management industry – which draws on all these services – describes its role in helping clients create "coherent narratives" about their identity and wealth, helps them steer clear of "out of place" investments, and identifies foundations and think tanks that they can support to be known as "philanthropists."

Enablers don't just help craft a public-facing narrative for oligarchs, though: they're just as skilled at creating an opaque bubble of secrecy around the parts of oligarchs' lives that are less savory. Britons are firehosed with information about kleptocrats' philanthropic activities and endorsements by members of the British elite, but we almost never hear about the klepts' private wealth, investment and assets.

Britain's borders are notoriously hostile to working people, but they are extremely porous when it comes to the klept. The "Tier 1 Investor visa" is a golden passport by another name – a way to spend a pittance for freedom of motion between the looted, authoritarian states of Eurasia and the UK. Don't let the "investor" fool you: there's no good evidence that the "investments" required under the scheme have a positive effect on the real economy.

The British political class will tell you that the UK has advanced anti-money laundering controls, with scrutiny of politically exposed persons and those holding passports from high-risk countries. These laws are deceptive though.

For example, a "high-risk" nation is one without good money laundering regulations – including countries like Jamaica, which are not particularly prominent the global corruption industry. Meanwhile, Eurasian countries with strong anti-laundering laws that are never enforced are considered low risk, because risk is calculated based on the existence of a law, not its enforcement.

Meanwhile, the rules that require estate agents, bankers, and luxury goods dealers to report transactions from "Politically Exposed Persons" (PEPs) are riddled with loopholes and primarily enforced through nonexistent self-regulation. For example, a politician's immediate family cease to be PEPs the day the politician leaves office – so a corrupt dictator's kids can buy a £60m Knightsbridge property the day their dad steps down, with no reporting requirement.

Even when solicitors, estate agents, and other covered professionals are caught ignoring the reporting rules, they face tiny fines and no lasting penalties. Many offer the defense that they didn't know they were working for PEPs – thus there's an incentive to simply not ask any questions when someone shows up looking to spend 8 or 9 figures through your firm.

Perversely, the finance sector goes overboard in the other direction, with an approach that is "risk-averse" and "also risk-insensitive." UK banks floor the financial regulator with "Suspicious Activity Reports" (SARs), filing these whenever a transaction has even a glancing contact with Eurasia. The regulator – grossly understaffed – ignores nearly all of these SARs, and the transactions proceed, with the banks' asses now covered by dint of having filed the SAR.

Another failing of UK anti-corruption law is its emphasis on identifying and blocking the proceeds of "crime," rather than "corruption." When an oligarch loots, it's only a crime if the state decides it is. The Kazakh oligarch Nurali Aliyev loaned himself $65m from the bank he chaired and used it to buy a Highgate mansion ("there is no evidence to suggest the loan was repaid"). Kazakh authorities did not class this as a theft, so UK anti-corruption law has little to say about it.

The flip side of this is that when oligarchs fall out of favor and go into self-exile in London, their adversaries back home can use the UK authorities to exact revenge at a distance, by selectively classifying their wealth as criminal assets and ratting them out to the British authorities.

(Of course, oligarch-on-oligarch warfare isn't limited to pitting rivals against UK tax authorities; there's also spectacular acts of violence, including assassination by nerve agent and radioactive poison).

A key enabler of the klept in the UK is the nation's great law firms, whose waves of mergers have produced chambers that generate more than £1b in annual billings. These firms offer full service – papering over the purchases of giant mansions, and suing the newspapers, publishers and reporters who write about them. Britain's libel laws – much-admired by Trump – are a great help here. I've been on the receiving end of these threats, personally, and was forced to delete a truthful account of a billionaire's financial stake in a firm that is implicated in human rights abuses around the world. The report cites a British journalist who estimates that "upwards of 50% of critical material about oligarchs ends up on the cutting-room floor" as newspaper lawyers force redactions of materials known to be true.

The British charitable sector is a favorite source of reputation laundering for keptocrats, especially charities associated with the British royal family, but also great universities and prominent think-tanks. Charities and universities have come to depend on private money more and more over the past 20 years, as austerity has starved them of public money. That makes them especially vulnerable to co-option by kleptocrats.

As interested as oligarchs are in being associated with the charitable sector, they're even more interested in funding the UK Conservative Party itself. The Tories' co-chairman Ben Elliot has formalized a "cash for access" arrangement where major donors are invited to private events and dinners with ministers and the PM. Elliot is a natural to court oligarchs for the Tories; his day job is running a "luxury concierge service" called Quintessentially, which provides "services" to the ultra wealthy. Elliot's spox says that this work is "entirely separate" from his work as co-chair of the Tories.

The Made-in-Britain enablers of the klept will tell you that the fortunes they facilitate are not criminal fortunes, and the Home Office will tell you that its focus is on Eurasian criminal gangs. But as the Pandora Papers – and other vast finance leaks – show us, the criminal wealth of the former Soviet Union is minute when compared to the oligarchs' fortunes.

The klept isn't criminal, because the klept writes the laws.

This is how the Jackpot starts.

This day in history (permalink)

#20yrsago Harpercollins orders Michael Moore to remove criticism of GWB from his new book

#15yrsago John McCain: lying extremist

#15yrsago Botnets will eat the Internet

#10yrsago Leaked memo: USA blackmailed Spain into passing brutal, censoring copyright law

#10yrsago Lamar Smith: if you oppose SOPA, you don’t matter

#5yrsago This NES Classic jailbreak is a perfect parable of our feudal future of disobedient dishwashers

#5yrsago Wayne County, NY man tries to corner market on local newspaper when it prints his DUI mugshot

#5yrsago Bible references make very weak passwords

#5yrsago Four Futures: using science fiction to challenge late stage capitalism and Thatcher’s “no alternative”

#5yrsago New Senator from California can’t explain why she didn’t prosecute Trump’s Treasury pick when she was AG

#1yrago Congress bans "little green men"

#1yrago Mass court: "I agree" means something

#1yrago Food and Climate Change Without the Hot Air

Colophon (permalink)

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