What do a couple of Hampstead houses, Russia’s railways and fridge full of fur coats have in common? India Block hops on the Kleptocracy Tour bus to find out
A gaggle of journalists stands blinking in the surprising spring sunshine in Whitehall, clutching cups of coffee and exchanging Twitter handles. We’re all here at the invitation of Roman Borisovich for a ‘Kleptocracy Tour’ of London, a twist on the traditional tourist trail he promises will take in an array of beautiful homes with dirty secrets.
Clamp K is collaborating with organisations such as Global Witness and Transparency International to draw attention to the issue of overseas ‘kleptocrats’, government officials who Borisovitch says, “use corruption to extend their personal wealth and political power.”
In a three-hour tour of London’s top addresses, with expert speakers acting as guides, Borisovich hopes to bring to light how these kleptocrats have found a safe haven for their ill-gotten gains in London, investing in prime property through a complex network of offshore shell companies.
Corruption countdown
The London 2016 Anti-Corruption Summit will be held in the capital in May and Borisovich says the tours are a symbolic countdown. David Cameron is due to host the event, where he will call on world leaders to join him in exposing and driving out corruption.
The Panama Papers data leak in the preceding days lends a certain frisson to the atmosphere. With the Prime Minister himself forced to admit he has benefitted from an offshore trust in the past, the discussion of issues surrounding corruption and transparency has never been more pertinent.
“The time has come to stem this flow of dirty money,” Borisovich tells us over the bus intercom. “London is not a place to stash your dodgy cash.”
We roll through Knightsbridge, ogling the disused Brompton Road underground station snapped up by wealthy Ukranian oligarch Dmytro Firtash. We pass the house on Wilton Place where ousted Egyptian President Hosni Mubarak’s daughter’s birth certificate is registered. The house was bought through an offshore company, of course, and can’t be traced back to the family. After a minor detour around Ladbroke Square, where the suspected fixer for the £1 billion dollar Malaysian 1MDB scam Patrick Mahoney owns a house, we’re headed up to north London to Hampstead, where Andrey Yakunin makes his home.
As part of their investigation into the Land Registry’s list of offshore companies that own property in England, The Sunday Times linked the 2013 acquisition of a £23 million property on Acacia Road, St John’s Wood to Andrey Yakunin, son of former Russian official Vladimir Yakunin, via a British Virgin Islands-based company Terphos Financial. The eight-bedroom mansion complete with two basements and a pool is thought to have been bought as an investment property.
Andrey Yakunin is registered as living at another property nearby, a £10 million house on Hampstead Lane. The Hampstead house is owned by Diamondrock, another offshore company based in Panama.
Investigators have been unable to discern who the ultimate owner is, but it’s not hard to speculate a connection to the Yakunin family.
From Russia with love
The obfuscated ownership of these north London homes is all entirely legitimate; the way in which the fortunes required to purchase these properties was amassed, less so.
Oliver Bullough, journalist and author of The Last Man in Russia, is our tour guide for north London. Taking the microphone as we careen up through Marylebone, he takes us on a journey through the murky origins of the Yakunin estate.
“Few people demonstrate better than the Yakunins how one of the best possible career choices anyone in the world could have made in the past two decades was to make friends with Vladimir Putin,” says Bullough.
Until last year, Vladimir Yakunin was the head of the state-owned Russian Railways. With annual sales of $42 billion, Russia’s railway is big business. A 2014 Reuters investigation, dubbed ‘Comrade Capitalism’, exposed how $340 million worth of state contracts pertaining to the railway were awarded to friends of Putin’s regime, with companies registered to the same people outbidding each other in a charade of competition.
“It doesn’t take too much of a leap of logic to speculate there is something crooked going on here,” says Bullough. “However, no-one has been able to directly connect this misbehaviour to Mr Yakunin, and he denies any wrongdoing.”
Vladimir Yakunin, who is meant to subsist on his government salary alone, is rumoured to own a luxury compound outside Moscow, complete with a 15-car garage, a 50 m pool and a specially designed refrigerated room for storing fur coats. Naturally.
Like father, like son
Andrey Yakunin has spent 10 years at the helm of private equity firm Venture Investments and Yield Managements LLP, which is registered to an office in Marble Arch. Father and son deny any overlap in their business interests, but Bullough points to two significant clues.
Firstly, Venture Investments and Yield Managements, or VIY Managements, is an acronym for Vladimir Ivanovich Yakunin. As Bullough says, this is “something that is unlikely to be a coincidence.”
Secondly, despite a complex arrangement of tax avoidance structures in Cyprus and Liechtenstein that conceal the origin of VIY Management’s assets, the company specialises in acquiring Russian hotels – in particular those abutting railway stations.
“Both Yakunins deny any connection between VIY management and Russian Railways or indeed any suggestion of insider trading. But since 2000 Vladimir Yakunin has only worked for the government, so it’s hard to imagine how he has amassed his vast fortune any other way,” says Bullough.
“[It’s] is a perfect example of how Britain welcomes anyone, no matter how noxious their money, provided they’ve got enough of it.”
Money mysteries
Whilst the story of the Yakunins has enough mystery and skulduggery to make it sound more like a work of fiction than an investigation of fact, it’s a sobering reminder of how a house on an innocuous street in north London can serve as one of many symbols of international corruption. Money syphoned off from state coffers is being hidden in plain sight, on leafy streets.
An investigation last year by Transparency International UK revealed that there are 2,084 properties in Camden owned by secretive offshore companies, the third highest concentration of such properties in London after Westminster and Kensington & Chelsea.
The effects of this corruption aren’t limited to the countries where the looted money originates from. The influx of money from kleptocrats looking to safely and remotely hide their money through investment in property has contributed to the rise of London property prices. According to property portal Zoopla, house prices on Acacia Road have risen more than 35 per cent in the past five years. The Yakunins’ investment has paid off.
Whilst many foreign investors have come by their funds legitimately, the presence of a money laundering system reflects poorly on London’s property market, the banks, the lawyers, estate agents and the government. Meanwhile a property owned by an offshore company avoids paying taxes such as capital gains tax and stamp duty, depriving the UK government of essential funds.
Seeing through it
As we head back towards the river a surprise guest speaker comes aboard. Margaret Hodge, MP for Barking & Dagenham and former head of the public accounts committee says: “It is outrageous that we don’t know who owns one in 10 properties in Westminster and we’re supposed to be an open, advanced, strong democracy.
“London is full of the professionals you need to be able to undertake the corrupt acquisition of property here and the laundering of money into the UK.”
“If we’re going to preach, as the Prime Minister is in the coming month, about anti-corruption to other countries, we have to stamp it out here in Britain today.”
Hodge spent her years on the committee combatting tax evasion and avoidance, and is now calling for measures such as an improved property tax system and the publication of registers of beneficial ownership to combat corrupt practices.
“The answer to all of this is transparency,” she says.
“You really need to know who owns what. Once you uncover that, everything else flows from it.”
Comments: Our rules
We want our comments to be a lively and valuable part of our community - a place where readers can debate and engage with the most important local issues. The ability to comment on our stories is a privilege, not a right, however, and that privilege may be withdrawn if it is abused or misused.
Please report any comments that break our rules.
Read the rules here