How Global Britain props up Putin’s gangster state


As the financial crash of 2008 took hold, the public learned a new vocabulary of acronyms and neologisms: CDOs (collateralised debt obligations), Pigs (the teetering EU economies of Portugal, Italy, Greece and Spain), credit crunch, Grexit, QE (quantitative easing). These once-esoteric terms described how the global economy, which on the surface seemed a work of sophisticated architecture, was built on lumps of rotten debt – structured, stuffed, spray-painted and concealed, until they burst, and the whole artifice slumped into their stinking remains. 

Russia’s invasion of Ukraine has exposed how decades of deregulated finance have once more contributed to a geopolitical and financial crisis, this time one in which the Russian army shells nuclear power stations and maternity hospitals. We have long known what oligarchy and kleptocracy meant in theory, but Russia’s savagery against the civilians of Ukraine is forcing the UK into a national moment of recognition that the wheels of Vladimir Putin’s gangster state have for many years been greased by British business. 

There is new jargon that describes how this was done. It includes Slapps (“strategic lawsuits against public participation”), the intimidatory actions brought against journalists such as Catherine Belton and Tom Burgis for reporting on the business dealings of Russian oligarchs such as Roman Abramovich and their associated entities, and UWOs (unexplained wealth orders), the all-but-unused mechanism for confiscating the assets of foreign kleptocrats. 

Oliver Bullough’s Butler to the World is a rich source of these terms, and a tour of the long project to create a new “Global Britain” from the ashes of empire. This is something the country achieved – long before Brexit took us to today’s sunlit economic uplands – by deregulating itself, again and again, until it was cheaper to do business here than abroad, usually because the cost and consequences were foisted onto another (generally poorer) country.  

Some of the instruments used to do this existed when the British empire was in its pomp: the Scottish partnership, created in 1890, and the Scottish limited partnership (SLP), created in 1907, were means to create “a legal person distinct from the partners of whom it is composed”. The SLP went unused and unnoticed by everyone except a handful of agricultural landlords for more than a century until, in the 1980s, private equity funds realised that this legal person was, for purposes of taxation and regulation, just the man to take delivery of their profits.  

Years later, criminals from around the world (and particularly eastern Europe) realised that this legal person was also just the man to take delivery of the bag of money they’d recently made from organised crime or appropriated from their government. When this practice became widespread, the SLP was brought to public attention by the Glaswegian investigative journalist David Leask, who described it to MPs as “a do-it-yourself kit for tax avoidance at best and money laundering at worst”. But as Bullough finds, this didn’t mean anyone was prepared to do anything about it. What mattered above all else was that the competitiveness of UK plc was preserved. In 2017 the Treasury intervened to create a newer, still less regulated form of partnership specifically for the private equity industry.

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Naturally, there was an acronym ready to make this happen, in this case the LRO, or legislative reform order, a quirk of the British legal system that ensures legislation only travels in one direction. To add new regulation to an industry, a British lawmaker has to introduce primary legislation, which requires debate in both parliamentary chambers, review by committee and royal assent; this often takes a year or more. Removing regulation, meanwhile, can be done by LRO, with a single vote in a select committee. “An LRO is like a built-in ratchet,” Bullough writes, “designed to make it easy to remove regulations.”  

In 2018, a year after Britain deregulated its partnerships law still further, whistle-blowers revealed that over the course of nine years, more than €200bn from the former USSR had been laundered through the Estonian branch of Denmark’s Danske Bank. Much of the money ended up in UK limited partnerships, which allowed their true owners to remain anonymous, but in 2013 it had been revealed that some of the funds the bank had received had come from the family and associates of Vladimir Putin. 

As Bullough points out, however, Britain’s professional and political elite has given much more direct assistance to Putin’s regime. From 2007 onwards, British businesses and parliamentarians helped improve the image of a Ukrainian billionaire called Dmitry Firtash, who was, along with Gazprom (Russia’s state-owned gas company), the joint owner of RUE, which sold Russian gas through Ukraine into Europe.  

Putin was already alleged to have interfered in Ukraine’s 2004 election, by rigging the vote and poisoning the rival of his chosen candidate Viktor Yanukovych. When the subsequent popular uprising (the Orange Revolution of 2004-2005) deprived him of victory, Putin simply cut off the country’s gas and forced Ukraine’s democratically elected government into a new deal with RUE – and, by extension, the Kremlin. Dmitry Firtash (perhaps sensing that he was no longer welcome in Ukraine, having helped leave his countrymen without heating in a -30C winter while acting on behalf of a foreign aggressor) did what comes naturally to the kleptocracy, and moved to Kensington.  

There, he and his billions were warmly received: he was advised by a Conservative MP and a property developer who was a substantial Tory donor, honoured by Cambridge University, introduced to the Duke of Edinburgh and invited to open trading on the London Stock Exchange. When Russia invaded Crimea in 2014, Firtash was called into the Foreign Office, where (he later told a Russian news agency) he “tried to persuade them that imposing sanctions against Russia was a bad idea”. After the invasion, a government document used in a meeting of the UK’s National Security Council recommended that the UK should “not support, for now, trade sanctions… or close London’s financial centre to Russians”. 

Bullough’s work is part of a growing literature on what he called, in his previous book, “moneyland” – the multi-trillion-dollar offshore economy that has an increasingly tangible effect on the lives of everyone. Reading his books, it’s tempting to wonder if there isn’t some organising principle behind all this: a “deep state”, as Donald Trump and Jeremy Corbyn used to call it (and probably still do).  

In an episode of David Simon’s crime drama The Wire, detective Jimmy McNulty loses his temper with a district attorney who defends a fellow lawyer. Justice is never found, he rails, because “everybody stays friends, everybody gets paid, and everybody’s got a f***ing future”: white-collar people with student loans and mortgages to pay off are never going to rock the boat.  

If there’s an organising principle, then, perhaps it’s not the deep state but the McNulty State in which for many workers good professional conduct and corruption eventually amount to the same thing. It could be argued that this derives from another national delusion: the idea that the UK’s ever-inflating knowledge economy, which produces hundreds of thousands of new lawyers, accountants and other professional services workers per year, is acting in all our interests. In the 2020-21 academic year more than 138,000 people enrolled to study law and more than 40,000 to study accounting in the UK. What else are they all going to do but seek out legal loopholes and “financial innovation”?  

Bullough, a historian by training, sees this as part of our national character. For him, our country’s secret mechanisms comprise the Chap State, an old boys’ network of estate agents, PR professionals, accountants, bankers, lawyers, newspaper owners, architects, wealth managers, private-school headmasters, civil servants and politicians, cemented into their class positions and trained from an early age to understand that “chaps don’t tell other chaps how to behave, and as a rule most chaps don’t need telling”.  

The stateless capital that these people serve has no such illusions about status, of course. Liquid assets flow towards the place that will do the least to impede them, the place with the lowest standards – Britain, the Cheap State. 

Butler to the World: How Britain Became the Servant of Tycoons, Tax Dodgers, Kleptocrats and Criminals
Oliver Bullough
Profile Books, 288pp, £20




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