The Oligarch Syndrome – Has The Fog Of War Brought Clarity On Corruption?

If every cloud has a silver lining, the appalling attack on Ukraine has made it impossible for the British government to continue to ignore the presence and servicing by the British finance industry and professional classes of foreign kleptocrats. Roman Abramovich for one is seeing his come-uppance.

However, increasingly there is concern that those oligarchs who have become most entrenched with the governing elite, providing regular donations to political parties, lavishing Oxford colleges and receiving knighthoods in return, have to a large extent escaped the sanctions so far.

One glaring example has been the newspaper owner, Evgeny Lebedev, whose father is an ex-KGB man who spied, collected ‘kompromat’ and spread misinformation in London back in the day, before transforming himself into a billionaire in Putin’s Russia.

As observers have been pointing out, Lebedev has continued to push pro-Putin propaganda in recent years and is known to indulge in a dangerously raucous lifestyle focused particularly around his medieval castle hideaway in Italy, where as Foreign Secretary and Prime Minister the clearly party-loving Boris Johnson has been a regular guest.

On a recent occasion Johnson was seated next to Katie Price at a dinner where she flaunted her bare breasts to fellow guests. One dare not speculate on what other unreported antics there might have been over these several visits, for which all the PM’s travel expenses were paid for by Lebedev.

Several of Johnson’s projects as mayor and in government have also been supported by Lebedev and upon becoming prime minister the Russian newsman (whose Evening Standard had loyally promoted Johnson as the best, most deserving and appropriate candidate to be leading Britain) was Johnson’s top crony candidate for ennoblement.

Britain’s secret services tried to veto the son of the former spy, who is known to have himself attended so many of the gatherings involving Johnson and fellow Tories (it was at a dinner with Lebedev junior that the key Boris backer Michael Gove was finally persuaded to  support Brexit, a top target during Putin’s campaign to de-stabilise Western Europe).

However, Boris Johnson over-ruled the advice from the head of M16 and Lebedev is now a Lord, although rarely seen in Parliament.

It is therefore perhaps of little surprise that, so far, Lebedev has evaded the list of sanctions issued by Johnson who is purportedly on record as celebrating Britain’s record on ‘libel tourism’ and ‘reputation laundering’ while encouraging oligarchs to use London lawyers to silence critics of corruption. “If you want to take him to the cleaners take him to the cleaners in London. Because London cleaners will be grateful for your business”, he is quoted saying by The Sunday Times.

Who Is Britain’s Richest Man?

There is another barely mentioned oligarch who has so far also escaped the conversation on sanctions, and who is equally if not more entrenched in Britain’s present establishment. He is none other than Britain’s richest man, Leonid (Lev) Blavatnik (see main picture with Oxford Chancellor Chris Patten).

Blavatnik is considered as being less of a rough diamond than many who made their billions out of Russia’s disastrous privatisations of state-owned aluminium and oil companies during the turn of the century.  His family left Russia early on, enabling him to be educated in the west including at Harvard university. He is considered most at ease in fine company and is said to recoil from being directly sucked into the rough and tumble of the Russian operations he is associated with. Perhaps more importantly, he has poured eye-popping sums of money into elite institutions and the ruling parties in the US and UK over recent years.

Yet, Blavatnik’s closest business colleagues have notorious reputations, in particular Viktor Vekselberg who has already been hit with sanctions over the past few days and a reputed ‘bruiser’ German Khan, who was included in the latest list of sanctions issued on Tuesday by the British government, but still no Blavatnik.

Given Blavatnik and Vekselberg have been in the closest possible partnership over the activities that made them filthy rich in Russia during the past three decades, one wonders why the US statement on Friday that Vekselberg has close links with Russian President Vladimir Putin and “has taken part in Russian diplomatic and soft power activities on behalf of the Kremlin,” was applied only to him?

Blavatnik’s other two close partners in the Rosneft deal that turned them all into multi-billionaires in 2013, Khan and Mikhail Fridman, have now also been included in the widespread sanctions. Their yachts and properties are being confiscated.

Blavatnik on the other had has poured $100 million into Oxford University, ironically sponsoring the so-called Blavatnik School of Government to teach the next generation how countries should be run. He has also heavily funded the present Conservative party, the last recorded official donation being £50,000. Likewise he came under scrutiny during the Mueller enquiry, having not only pushed significant funding into his alma mater Harvard but also having paid a cool million dollars into the Trump campaign.

Access Capitalism

The fundraising structure adopted by the Conservative party and honed further under Boris Johnson’s new Party Chairman, the ‘concierge’ company boss Ben Elliot has been criticised as blatant access peddling.  Elliot’s outfit, Quintessentially, operates as a membership club for foreign ultra rich individuals seeking to be invited to the right parties and events, which appears to have extended to the party.

Super-donors have been granted membership to an informal inner circle of businessmen given an astonishing level of lobbying access to ministers at the top of government in return for having donated at least £250,000 to the party. The so-called 250 Club is itself a refinement of the party’s Advisory Board and Leaders Group (for those who donate at least £50k a year).

Those who have attended events of this elite circle explain that the access includes fortnightly gatherings hosted at the very homes of these wealthy patrons, where senior ministers take turns to be given hospitality and to lay out their policies and priorities for government during a speech followed by questions and answers. In short, it presents the perfect lobbying opportunity for highly valued donors to the governing party to influence its decisions.

Whilst absent from this circle Len Blavatnik has been a major donor not just to the Conservatives but also to key cultural institutions. As with Oxford he has donated spectacularly to the Tate Modern, which has also named a building after him. Naturally, he received a title and is now Sir Len Blavatnik.

However, in the eagerness to accept such cash it is plain that the British establishment has been ready to turn a blind eye as to whom the money actually belongs and to the more than strong evidence that it was illegally acquired to a very large degree. Blavatnik did not start out a wealthy man, but like so many Russian oligarchs he made vast sums extremely quickly from a handful of deals after engaging in the rush to privatisation of state assets under Putin’s watch.

According to an extensive profile in the New Yorker, as a young man he borrowed investment capital from his circle of Russian emigres in New York and (prompted by none other than his old schoolfriend Viktor Vekselberg) went out to Russia where he “stood outside the Vladimir Tractor Works, buying stock vouchers that had been distributed to employees, and eventually got control of the company”.

From there the pair teamed up with another business partner and present UK resident, Mikhael Fridman, to form the AAR group targeting major oil assets. Fridman was made  subject to sanctions by the EU shortly following the outbreak of the war and now has his assets frozen in his Luxembourg based Letter One group – a clear indication that the origin of his wealth was well known to be questionable, although for years that has been ignored.

It is well-documented how these gentlemen together obtained a large chunk of their instant fortunes as they joined the network of opportunists floating around the government divestments of post-Soviet Russia. However, at this point Sarawak Report flags up the restraints and pitfalls of commenting upon the matter, given that all these oligarchs are magnificently represented by London’s legal and PR community, who have been most effective in rushing to their defence against the press in recent years.

Note this coverage of just two retractions published after articles relating to Blavatnik met with his disapproval, as reported by the Spanish news organisation El Pais this weekend:

The Guardian published the following apology in September 2017: “On 4 September 2017 we published an online article that in its headline referred to Sir Leonard Blavatnik as a ‘Putin pal.’ Readers may have understood this to suggest that he was a close friend and confidant of President Putin. Sir Leonard Blavatnik’s lawyers have informed us that their client has had no personal contact with President Putin since 2000 and that he has never been a close friend or confidant of President Putin. We apologise to Sir Leonard Blavatnik for the use of this term and have removed it from the headline.”

The Times did something similar on April 1, 2018: “Last week (…) we described Sir Leonard Blavatnik as a Russian oligarch and Vladimir Putin associate. He says he is neither. We are happy to make it clear that he is a US and UK citizen and has had no personal contact with Putin since 2000.”

Mr Blavatnik’s business partners on the other hand are now confirmed to have been  extremely close and there are certain observations that one can justly make about the environment in which they all made their money. The first is that oligarchs who have made enormous profits out of Russia but then fallen out with Putin have an extremely dangerous record of ending up deceased.

The list of unfortunates includes Boris Berezovsky, who first lost out on billions after a London court case against his rival Putin pal (as it is now officially permitted to describe him) Roman Abromavich. Berzoivsky then mysteriously hung himself under suspicious circumstances (the door to the scene is said to have been locked from the outside).

Likewise, whistleblower Aleksandr Perepilichny and Aeroflot whistleblower Nikolai Glushkov suffered unexpected and unexplained deaths, whilst the UK businessman Scott Young allegedly threw himself out of a 4th floor window after falling out with Russian colleagues.

This is all quite apart from the trail of ex-spies and servicemen who were outlandishly poisoned after being seen to betray the Putin regime. Just this month there was another case of an ‘unexplained suicide’ of an oligarch, who had changed his name to Mikhail ‘Watford’ and had allegedly informed friends he thought Putin was plotting to kill him.

The record leaves a valid question mark as to whether anyone who is known to have made several billions out of looting the Russian state could have hoped to have remained both rich and alive over the past decade, unless they ultimately enjoyed the patronage of Mr Putin?  Should one be sued for finding that hard to necessarily believe without having solid proof?

It would seem that in the past few hours Roman Abramovich has rather proved the point, in that having been globally sanctioned after years of pretending to have become distanced from Putin (and indeed recently sued the journalist who had described him as a business proxy in the book Putin’s People in the London courts) he has scarpered back to Russia in the middle of the Ukrainian war, which he implied he disapproved of just days ago.

So, if Blavatnik and his associates are now distanced from Putin, as they have sought to imply, how have they remained pouring Russian made billions into the British establishment and the Republican Party in the United States and stayed ship shape/alive? At the very least, one would suggest that more scrupulous recipients of donations ought to have given pause and political parties to have supped with a longer spoon?

The Jho Low Kleptocracy Model

As coverage of Blavatnik’s business makes clear, he and his bruiser business partners on the ground exploited favoured status and corruption in order to acquire lucrative oil fields at bargain basement prices, largely at the expense of the UK’s own investments in the Russian oil business.

BP, originally under its flamboyant CEO John Browne, soon found profitable aspects of its mammoth investments being hijacked and hived off by the consortium AAR run by Blavatnik, Fridman and Vekselberg together with local hard man German Khan. They appeared to have key authorities making decisions in their favour.

For very many months the battle raged against BP executives in Russia, at the height of which the UK company’s Russia chief executive was poisoned and forced to flee the country to escape warnings of an imminent arrest.

Eventually, the warring parties reached an accommodation (Lord Browne was recently appointed Chairman of the Blavatnik School of Government) as the state owned Rosneft came into the picture in 2013 to purchase back assets which had been sold to the businessmen in the first place, for a relative song, a few years previously.

This time Rosneft, on the orders of the all-powerful Putin inevitably, showed willing to pay a staggering $28 billion to buy out the AAR owned TNK oil giant from its now BP partnership, leaving the four oligarchs with a clean $6 billion each. BP continued with its now deeply strained relationship with Rosneft.

Many have pointed out this payout was at the expense of the Russian taxpayer in that the price paid was way in excess of the market value of the asset. As one critic has termed the situation:

This deal saw [an] unexplained excessive payment by Rosneft. The market price of AAR’s stake was around $20bn but oligarchs got around $10bn in excess over that price. Why? No one can explain and even Putin himself criticized this deal in his speech to the Federation Council at the end of 2013 for being carried through offshore accounts to the detriment of the Russian budget (even though he personally micro-managed it eight months before then). [Ilya Zaslavskiy, Why comrade Sir Leonid (Len) Blavatnik is a Putin oligarch, 2019]

Such a template will be only too familiar to the Malaysian people as the typical method by which kleptocrats achieve instant and staggering wealth by ripping off the public through the sorts of jaw-dropping over-expenditures to the tune of vast sums that only major state actors could get away with, and only in countries where a total lack of accountability exists. Such places include Malaysia under UMNO/BN and Russia under Putin.

Again, a question deserves to be posed. Does anyone think these Jho Low style businessmen could have got away with walking off with $10 billion of Russian state money flowing into their off-shore bank accounts had Putin not been as totally complicit as Najib Razak in the deal?  Likewise, ought commentators be forced to keep quiet about their scepticism on pain of being sued for not being able to absolutely prove it?

Just as Najib failed to make the slightest move to hold Jho Low to account for the entire period that the truth of the 1MDB theft unravelled whilst he was in control in Malaysia, so Putin has allowed these oligarchs to remain effectively unchallenged and alive for all this time.

Far from going after these super wealthy, yacht-owning oligarchs the former KGB spy (whose prime objective has been the destruction of the western democracies along with NATO in order to carry out his lifetime objective of reviving the Russian empire) has allowed the likes of Blavatnik, Fridman, Arven and others to employ their billions in an extraordinary schmoozing campaign that has had the likes of Boris Johnson and his conservative colleagues (along with several Labour grandees) eating from their hands and including them in their inner circles.

It is not just the British who have been thus entranced and buttered up, Blavatnik for one has likewise poured money into Harvard University and US politics. The engagement with the US included small payments to the Democrats and increasingly huge payments to the Republicans, including a staggering $1 million donation to Donald Trump’s inauguration committee.

This was money that in fact belonged to the low income Russian taxpaying public who were forced to overpay for assets sold earlier for far less, but has ended up supporting Boris Johnson and other politicians in Britain and paying the financial establishment, academics, lawyers and PR people to shut up critics. Sir Len has bought his cultural and social respectability in the UK at the expense of the schooling, infrastructure, hospitals and general wellbeing of millions of Russians.

Plenty of establishment figures in beneficiary locations are swift to argue if money that might not have been properly come by can nonetheless be seen to have ‘done good’ (particularly for themselves) then forgiveness ought to be extended and accolades distributed to such kleptocratic crooks. Malaysians and doubtless Russians have a very different perspective as the injured parties.

Major Spy Operation?

There is a further reason, quite apart from natural justice and the rule of law, why Britain and America ought to have been more scrupulous and diligent in the receipt of plainly illegitimate oligarch cash.

In the same way that Jho Low offered a hundred million dollars to the now convicted chairman of the National Republican Committee as a bribe to get himself and Najib off the hook with the DOJ, there is every sign that the Russian oligarchs have pursued an agenda on behalf of Putin – as do Gulf royals who likewise pour money into the British establishment and professional classes.

As the boss of two British newspapers Lebedev championed Putin’s invasion of Crimea and encouraged Brexit amongst wavering Tories, including Boris Johnson, whilst the Cameron government was opposing it. A Russian connected businessman Aaron Banks likewise stated he considered it a ‘worthwhile investment’ to plough £8 million putatively from his personal fortune (which is relatively modest) into boosting Nigel Farage and the Brexit campaign.

All this at a time that Putin’s clear objective was to achieve the removal of the British financial powerhouse from the EU. A recent article examining the entire operation in the Byline Times quotes the departing Russian Ambassador of the time (who was honoured personally by Putin on arrival back in Moscow) as having boasted of the Brexit operation: “We have crushed the British to the ground. They are on their knees, and they will not rise for a very long time.” [from Luke Harding’s book Shadow State: Murder, Mayhem, and Russia’s Remaking of the West] .

It is fair enough to say that through the patronage of his oligarchs, most of whom claimed to have distanced themselves from Putin and to deplore his tactics, the Russian leader had in fact developed a potential network of infiltration at the highest level to influence and report back on British policies and decision making.

Meanwhile, at the same time these rich and powerful oligarchs were in a position to act as global proxies for his wealth in the very same way that Jho Low acted for the now doubly convicted Najib Razak. Some times the best concealment is to operate in plain sight.

Likewise, for those who loudly justify ‘doing business’ with such people on the grounds they see the world as we do and pander to our prejudices, is this not just an argument to serve their own interests?

Oligarchs like Sir Len Blavatnik and Mikhail Fridman are entitled to argue the rather more unlikely scenario that they were never assisted nor protected by the all powerful Putin as they walked away with huge excess sums paid for their assets by the Russian state. They are also entitled to claim that despite this Putin did not resent their massive takings or demand a quid pro quo.

They are entitled to imply that they have completely gone off Russia now they have made their billions and are driven merely by a new found liberalism and gratitude to cosy up to western host countries, funnelling cash to ruling parties and networking in the process.

After all, that is what they have implied for years and plenty have been willing to accept that and take the cash.

However, the ultimate reality check has come in the form of a war that was always going to develop from this steady willingness to tolerate the unimaginable levels of kleptocracy in Russia and autocratic thuggery that went with it. For the UK to now selectively tip toe round its oligarchs can no longer be accepted. Sanctioning some but not the big party donors such as the Reuben brothers, Fridman and Blavatnik.

All these characters should be cut off, questioned and seen for the criminals they obviously have to have been to have made their billions out of Russia.

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