Financial Transparency Coalition

In case you were distracted by other world events on Tuesday night, I appeared on Radio 4’s File on 4to talk about the problem of dirty money and dodgy people finding their way into the UK.  If you missed it, you can listen here, and it’s playing again on Sunday at 5pm.

In the programme, reporter Allan Urry asked me whether we think Britain is doing enough to lead the fight against corruption.  We travelled to a Surrey mansion to investigate its links to Maxim Bakiyev, the son of a disgraced former Kyrgyz President, and an alleged money laundering scheme.  If you want details of this case and the story behind it, we have published on it here and here.

But really, the case concerning Maxim Bakiyev is just one in a long line of examples that call into question whether the UK is doing enough to stop foreign officials and their offspring from exploiting the current system governing property ownership and access to citizenship.  The problem is a big one, and it goes much deeper than most people realise.  At Global Witness, we’ve been looking into dodgy deals for nearly two decades, and in that time we have noticed a clear pattern of behaviour that shows why Bakiyev’s case is not unique, and why the UK government needs to act urgently to fix the problem.

The pattern we see usually goes something like this: an official in a far-off country is given responsibility for a state budget or is charged with negotiating an important contract – say a mining concession – that is worth a lot of money.  These powers usually are given to the official with the intention that he or she will use that money to provide important services to the population of his or her country (like providing schools, hospitals and roads).  But, unfortunately, what we see time and time again, is money going missing – disappearing into the international financial system via a collection of “anonymous” companies, which are incorporated in places like the British Virgin Islands – whose laws mean it is impossible for a member of the public to know the real person behind that company.  So essentially, the money disappears, and the promised schools, hospitals and roads never materialise.

But the story doesn’t end there – after a few months or years, we begin to see that same official (and his or her family) show up in places that we think of as “safe havens” – meaning places like London, New York, Vancouver and Sydney.  We think of them this way because they are all cities that are lovely (and safe) to live in.  They have booming property markets, great schools, culture, luxury shopping and a system of law that means that no one – even the corrupt – will be denied their rights to defend themselves, their property and their reputations.  We start to see a large amount of money being spent on luxury homes, cars and yachts, way beyond what an official salary could generally stretch to.

And eventually, we start to see that official and his or her family acquire visas, residency and passports to these safe haven countries.  This gives the official and his or her family physical security, which then allows them to enjoy their lives of luxury in peace, far from the recrimination of people back home.

All of the work we and others have done to date to bring these stories to light has set the scene for a new, exciting piece of legislation.  Just last month, the UK government introduced the Criminal Finances Bill, which will allow for the creation of unexplained wealth orders that could be used to require those suspected of corruption (like our fictitious official) to explain the sources of their wealth.  This means that if law enforcement has good reason to suspect that an official couldn’t afford to buy a mansion that costs around 100 times their official annual salary, they will be able to go to a UK court to ask it to order that official to explain how he or she afforded the purchase.  We’ll be following the passage of this Bill closely and would like to see the UK government use UWOs (if they enter into force) in cases like Maxim Bakiyev’s.  I will also be giving evidence in support of this Bill before Parliament on Tuesday, 15 November – follow my twitter feed for more updates.

All of this is potentially great news, and gives us at Global Witness real hope that the UK is taking important steps to end its role in the facilitation of corruption overseas.  The measures announced by the UK government so far have been brave and timely, and the UK’s Home Secretary conceded just yesterday that London has become safe haven for illicit money. What these recent developments have shown is that powerful change can happen – and can happen quickly – when civil society and government work together towards a common goal.  If the UK continues to listen to civil society and take responsibility for its own role in both facilitating and ending corruption overseas, we may see the creation of a fairer and better London and the UK.