Economy

Why 'Londongrad' Weighs On Britain's Russia Policy

Extraordinary Russian wealth has accumulated in London, much of it of questionable origins.  Inevitably, it will be factored into British decisions in the showdown with Vladimir Putin.

Driving past London's One Hyde Park in a Ferrari
Driving past London's One Hyde Park in a Ferrari
Eric Albert

LONDON — They are the most expensive and luxurious flats in the whole of London. Their ultramodern bay windows offer an unobstructed view onto Hyde Park. An underground corridor connects them to the Mandarin Oriental, the palace where Michelin-starred chef Heston Blumenthal has one of his prized restaurants.

In total, the 76 apartments in One Hyde Park, a building designed by legendary architect Richard Rogers, were sold for $2.4 billion, an average of $30 million dollars each, according to an investigation conducted by Nicholas Shaxson, author of a book on tax havens.

This is also the location that pro-European Ukrainians chose to demonstrate several times over the last few months. Among the owners of this luxury temple are Rinat Akhmetov — Ukraine's richest man with significant political influence, who Forbes estimates has accumulated a personal fortune of $12.5 billion.

Akhmetov is not the only representative of the Russian sphere of influence to have invested in One Hyde Park. Irina Viktorovna Kharitonina and Viktor Kharitonin, the co-owners of a large Russian pharmaceutical company, have two flats there. Construction magnate Vladislav Doronin is one of their neighbors. As for Alastair Tulloch, a British lawyer close to Russian circles, his name is listed as the owner of four apartments, whose real owners' names are hidden behind a shadowy organization.

The British capital is the major financial center for oligarchs from Russia and all former Soviet states, and is now sometimes referred to as "Londongrad." According to estate agency Knight Frank, Russian buyers represent 10% of luxury residences, while some 60% of the new files opened by the London Chamber of Commerce & Industry come from Russia or Eastern Europe.

The extraordinary court case between Roman Abramovich, the owner of London's soccer club Chelsea FC, and Boris Berezovsky, a famous opponent to Putin who died last year, also took place in London.

"A lot of oligarchs bring to London vast quantities of money and use this city as their headquarters to manage their personal wealth," says John Christensen from the association Tax Justice Network, who suspects that much of the wealth flow winds up circulating through money laundering.

A merchant banker, specialized in Russian business, confirms this implicitly. "A lot of Russian activities are legal and the laundering doesn't necessarily take place in London because it's too visible, but it's indeed here that the lawyers, the legal experts and counsellors are."

Russian oligarch and Chelsea FC owner Roman Abramovich — Photo: Marina Lystseva/GNUFDL

Since it concerns illegal money, it is impossible to accurately say how much this represents. However, even Russia's Central Bank has estimated that two-thirds of the capital that leaves the country come from illegal activities. According to Tax Justice Network, capital flight in Russia over the last 30 years is as high as $798 billion.

School connections

Another clue for this is that most foreign investments made in Russia come from Cyprus, the British Virgin Islands, Bermuda and the Netherlands (via the Dutch Antilles). In other words, tax havens, most of them directly under London's jurisdiction. "For the most part, it's laundered money that comes back to Russia," accuses Ben Judah, author of the book Fragile Empire: How Russia Fell In And Out of Love With Vladimir Putin.

Worse still, even oligarchs accuse each other. Alexander Lebedev, who earned his fortune in finance and owns the British dailies London Evening Standard and The Independent, wrote in a Feb. 26 op-ed in The New York Times that Andrei Borodin, a former chief executive of Bank of Moscow who now lives in Britain, is someone who "can continue to live off the proceeds of their crimes." Borodin rejects all accusations of corruption.

According to Judah, Russian money now influences British authorities. He underlines the fact that oligarchs are well integrated in the upper echelons of British society, partly because they send their children to the most expensive private schools. There are 2,150 Russian children in the biggest boarding houses, representing tuition fees of about $97 million per year. "The British elite have a hedge-fund mentality. They don't produce anything but live off annuities they take on foreign money, including from Russia," he claims.

In these conditions, imposing sanctions that would weaken The City is out of the question. On March 3, Hugh Powell, deputy national security adviser, revealed this by accident, as he was on his way to meet Prime Minister David Cameron at 10 Downing Street. The memo he was holding was photographed, and amongst other things, it said that London's financial center should not be closed to Russians.

The discovery left Ben Judah infuriated. "As long as the United Kingdom continues to launder money, it will remain a partner to Russia."

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Green

Ecological Angst In India, A Mining Dumpsite As Neighbor

Local villagers in western India have been forced to live with a mining waste site on the edge of town. What happens when you wake up one day and the giant mound of industrial waste has imploded?

The mining dumpsite is situated just outside of the Badi village in the coastal state of Gujarat

Sukanya Shantha

BADI — Last week, when the men and women from the Bharwad community in this small village in western India stepped out for their daily work to herd livestock, they were greeted with a strange sight.

The 20-meter-high small hill that had formed at the open-cast mining dumpsite had suddenly sunk. Unsure of the reason behind the sudden caving-in, they immediately informed other villagers. In no time, word had traveled far, even drawing the attention of environment specialists and activists from outside town.

This mining dumpsite situated less than 500 meters outside of the Badi village in the coastal state of Gujarat has been a matter of serious concern ever since the Gujarat Power Corporation Limited began lignite mining work here in early 2017. The power plant is run by the Power Gujarat State Electricity Corporation Limited, which was previously known as the Bhavnagar Energy Company Ltd.

Vasudev Gohil, a 43-year-old resident of Badi village says that though the dumping site is technically situated outside the village, locals must pass the area on a daily basis.


"We are constantly on tenterhooks and looking for danger signs," he says. Indeed, their state of alert is how the sudden change in the shape of the dumpsite was noticed in the first place.

Can you trust environmental officials?

For someone visiting the place for the first time, the changes may not stand out. "But we have lived all our lives here, we know every little detail of this village. And when a 150-meter-long stretch cave-in by over 25-30 feet, the change can't be overlooked," Gohil adds.

This is not the first time that the dumpsite has worried local residents. Last November, a large part of the flattened part of the dumpsite had developed deep cracks and several flat areas had suddenly got elevated. While the officials had attributed this significant elevation to the high pressure of water in the upper strata of soil in the region, environment experts had pointed to seismic activities. The change is evident even today, nearly a year since it happened.

It could have sunk because of the rain.

After the recent incident, when the villagers raised an alarm and sent a written complaint to the regional Gujarat Pollution Control Board, an official visit to the site was arranged, along with the district administration and the mining department.

The regional pollution board officer Bhavnagar, A.G. Oza, insists the changes "aren't worrisome" and attributes it to the weather.

"The area received heavy rain this time. It is possible that the soil could have sunk in because of the rain," he tells The Wire. The Board, he says, along with the mining department, is now trying to assess if the caving-in had any impact on the ground surface.

"We visited the site as soon as a complaint was made. Samples have already been sent to the laboratory and we will have a clear idea only once the reports are made available," Oza adds.

Women from the Surkha village have to travel several kilometers to find potable water

Sukanya Shantha/The Wire

A questionable claim

That the dumpsite had sunk in was noticeable for at least three days between October 1 and 3, but Rohit Prajapati of an environmental watchdog group Paryavaran Suraksha Samiti, noted that it was not the first time.

"This is the third time in four years that something so strange is happening. It is a disaster in the making and the authorities ought to examine the root cause of the problem," Prajapati says, adding that the department has repeatedly failed to properly address the issue.

He also contests the GPCB's claim that excess rain could lead to something so drastic. "Then why was similar impact not seen on other dumping sites in the region? One cannot arrive at conclusions for geological changes without a deeper study of them," he says. "It can have deadly implications."

Living in pollution

The villagers have also accused the GPCB of overlooking their complaint of water pollution which has rendered a large part of the land, most importantly, the gauchar or grazing land, useless.

"In the absence of a wall or a barrier, the pollutant has freely mixed with the water bodies here and has slowly started polluting both our soil and water," complains 23- year-old Nikul Kantharia.

He says ever since the mining project took off in the region, he, like most other villagers has been forced to take his livestock farther away to graze. "Nothing grows on the grazing land anymore and the grass closer to the dumpsite makes our cattle ill," Kantharia claims.

The mining work should have been stopped long ago

Prajapati and Bharat Jambucha, a well-known environmental activist and proponent of organic farming from the region, both point to blatant violations of environmental laws in the execution of mining work, with at least 12 violations cited by local officials. "But nothing happened after that. Mining work has continued without any hassles," Jambucha says. Among some glaring violations include the absence of a boundary wall around the dumping site and proper disposal of mining effluents.

The mining work has also continued without a most basic requirement – effluent treatment plant and sewage treatment plant at the mining site, Prajapati points out. "The mining work should have been stopped long ago. And the company should have been levied a heavy fine. But no such thing happened," he adds.

In some villages, the groundwater level has depleted over the past few years and villagers attribute it to the mining project. Women from Surkha village travel several kilometers outside for potable water. "This is new. Until five years ago, we had some water in the village and did not have to lug water every day," says Shilaben Kantharia.

The mine has affected the landscape around the villages

Sukanya Shantha/The Wire

Resisting lignite mining

The lignite mining project has a long history of resistance. Agricultural land, along with grazing land were acquired from the cluster of 12 adjoining villages in the coastal Ghogha taluka between 1994 and 1997. The locals estimate that villagers here lost anything between 40-100% of their land to the project. "We were paid a standard Rs 40,000 per bigha," Narendra, a local photographer, says.

The money, Narendra says, felt decent in 1994 but for those who had been dependent on this land, the years to come proved very challenging. "Several villagers have now taken a small patch of land in the neighboring villages on lease and are cultivating cotton and groundnut there," Narendra says.

They were dependent on others' land for work.

Bharat Jambucha says things get further complicated for the communities which were historically landless. "Most families belonging to the Dalit or other marginalized populations in the region never owned any land. They were dependent on others' land for work. Once villagers lost their land to the project, the landless were pushed out of the village," he adds. His organization, Prakrutik Kheti Juth, has been at the forefront, fighting for the rights of the villages affected in the lignite mining project.

In 2017, when the mining project finally took off, villagers from across 12 villages protested. The demonstration was disrupted after police used force and beat many protesters. More than 350 of them were booked for rioting.

The villagers, however, did not give up. Protests and hunger strikes have continued from time to time. A few villagers even sent a letter to the President of India threatening that they would commit suicide if the government did not return their land.

"We let them have our land for over 20 years," says Gohil.

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