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Old 5th June 2014, 19:00
Hannia Hannia is offline
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Londongrad Calling - The United Kingdom's Dangerous Dependence on Russian Money
By Jonathan Hopkin and Mark Blyth April 21, 2014 Foreign Affairs
Having sold London as a place where oligarchs can invest and spend their money without too many questions being asked, the British government is now too afraid to challenge these privileges for fear of any reversal of the flow of capital.

The Big Bang of 1986, in which Prime Minister Margaret Thatcher’s government liberalized the London exchanges and removed barriers to entry for foreign financial institutions, cemented the financial sector as the main driver of the British economy and established London as the place to be for footloose international capital. Major international financial institutions flooded into the British market, wiping out many of the United Kingdom’s established merchant banks. The City, which had long enjoyed its own separate administrative status -- its governing body, the Corporation of London, sits apart from the rest of London’s boroughs, with financial companies, rather than residents, constituting its electorate -- only drifted further from the rest of the United Kingdom. Its internationalization, dominated by American, Japanese, and German banks, isolated it from the political drama -- and humors -- of British society.

As London became a magnet for international capital, it also became home to international capitalists and their families. Visa rules that facilitated entry for the super-wealthy, a light tax regime for non-domiciled residents (who claim a residency or income from abroad), low property taxes, prestigious schools, and proximity to the institutions investing their money have made London an attractive haven for billionaires. Several come from Russia, although the high profile of some Soviet-origin billionaires overstates the true Russian presence: the 2011 census recorded just 26,603 Russian speakers in London, compared with 70,602 Arabic speakers. But Russian capital is more significant. One estimate put Russian purchases of high-end real estate in London (properties worth more than a million pounds) at seven percent of the total, a sizeable amount that appears likely to grow, thanks to the instability in Ukraine. Many of these purchases are investments unconnected to residency, so scores of homes in London’s most exclusive neighborhoods sit empty but for patrolling security guards.

The reason British policymakers have been so relaxed about London’s status as a kind of offshore financial center is, in part, cyclical. The Conservative-Liberal Democrat coalition elected in 2010 reversed the stimulus measures that Gordon Brown’s Labour government had adopted after the credit crunch. They hoped to eliminate the United Kingdom’s budget deficit by the end of the legislature, in 2015. But amid a global recession and attempts to deleverage the domestic household sector, these policies predictably stopped recovery in its tracks, leading to three years of stagnation. So the Cameron government relaxed fiscal adjustment a little and encouraged growth in real estate prices by underwriting bank lending to highly leveraged buyers. This backdoor stimulus brought a wave of capital from international investors seeking a safe haven for their assets and helped improve the outlook for a government that had been trailing in the polls for the past three years. Jonathan Hopkin and Mark Blyth | The United Kingdom's Dangerous Dependence on Foreign Money | Foreign Affairs

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  #23 (permalink)  
Old 10th June 2014, 12:10
consultivate consultivate is offline
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British government should be held to account for protecting wealthy criminals.
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Old 11th June 2014, 08:59
Gotno Gizmo Gotno Gizmo is offline
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In a previous post it was written that "Prime Minister Margaret Thatcher’s government liberalized the London exchanges and removed barriers to entry for foreign financial institutions, cemented the financial sector as the main driver of the British economy and established London as the place to be for footloose international capital".

This, I believe was the beginning of a very slippery slope that facilitated the expansion of the multi-national corporations and banksters to run amok. Britain has now sold virtually all of its citizens possessions. Utility services (water, gas electricity, transport, postal services) are all in global oligarchic hands. The current UK government are trying to privatise the last remaining bastion of state ownership, the National Health Service and if they succeed Britain will end up with a dysfunctional and expensive health care system rather like the USA.

Strangely Brits don't seem to know or care that their remaining successful automotive and much other manufacture is exclusively in foreign ownership and whilst the exports from these products bring jobs to Brit workers the bulk of the profits go abroad.

The Banksters launder money and mis sell dubious financial products whilst paying themselves huge salaries and bonuses. When they get into trouble the taxpayer is called upon to bail them out so that they can continue their malfeasant practices.

Britain's law's seem unable to deal with serious fraud and consumer protection is poor. People buying a new house that starts to lean and crack have to raise a lot of money to take a large housing developer to court to win his case. Rogue traders can rip people off big time, go bankrupt and set up the virtual same business the next day using a relatives name as the director. Being a housing tenant to an unscrupulous landlord means misery because law costs money and the landlord has more of it. I could go on, but it would become boring. I can well understand why many Scots are considering leaving the Union of the United Kingdom of Great Britain for an independent Scotland. It pains me that a once superior nation, developed from a nation of strength, is struggling to maintain the standards that it could once boast.
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Old 11th December 2014, 00:42
Hannia Hannia is offline
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Bloomberg: Wealthy Chinese are wooed in London as Russians pack up and go home
Dec. 10, 2014, 10:50 p.m. | Business — by Bloomberg

London’s Jack Barclay Bentley dealership has hosted British aristocrats, Russian industrialists and Arab sheiks in its 87-year history. Until this year, it had never held a Chinese New Year celebration.

In February, the dealership invited more than 200 wealthy Chinese expatriates from fields like finance and real estate to a Year of the Horse-themed event under the slogan “take the reins for a prosperous journey.” And, of course, Chinese-speaking staff were on hand, ready to rhapsodize about the pleasures of a car favored by the royal family and rap stars alike.

“A quintessentially English dealership could be quite intimidating” for Chinese buyers, said Chris Harris, marketing director for luxury automotive group HR Owen, which owns Jack Barclay. “We wanted to de-mystify the experience.”

From luxury retailers to law firms to banks, Londoners are jockeying to take advantage of a wave of Chinese investment and tourism. With Russia, India and the Middle East struggling with weak commodity prices, businesses that cater to wealthy foreigners are betting Chinese money can make up the difference.

The property sector is seeing some of the most dramatic increase, with real-estate investment in the British capital from China tripling from 2012 to 2013 to about $2.8 billion, a figure that will probably be matched this year, according to broker Knight Frank.

$20 Million Yachts

Chinese-financed projects include One Nine Elms, a 56-story apartment tower on the south bank of the Thames backed by developer Dalian Wanda. And Shanghai-based Greenland Holding Group Co. this year said it would invest 1.2 billion pounds redeveloping a brewery in the city’s leafy south-west and building a residential tower near Canary Wharf.

Chinese buyers are also taking their first steps into corporate dealmaking in Britain. In July private equity firm Hony Capital Ltd. said it would buy U.K. restaurant chain Pizza Express for about $1.4 billion -- the largest-ever corporate takeover in Britain by a mainland Chinese company. The previous summer, Dalian Wanda (1068366D) agreed to pay $451 million for Sunseeker International Ltd., a London manufacturer of yachts that sell for as much as $20 million.

The increased presence is partly a function of China’s diversifying economy, said Nicola Mayo, a partner at law firm Linklaters who just returned to London after four years in Shanghai. “China Inc. is looking strategically at more sectors beyond natural resources.”

Some companies are using British deals to strengthen their position back home. Investment firm Sanpower Group this year took control of House of Fraser in a transaction valuing the Oxford Street department store at 450 million pounds; It’s now planning dozens of branches in China. Pizza Express expects to build new restaurants in the Mainland as interest in Italian-style fare picks up there.

Haibo Wang, a 38-year-old accountant from the coastal city of Dalian who moved to London a decade ago, can taste the change. A few years back, “the only food you could get was from Hong Kong,” he said. “Now, you can find every type of authentic Chinese food, from all the regions.”

Prime Minister David Cameron has made a concerted effort to strengthen ties with China amid criticism from business leaders that Britain has slipped behind the U.S., Canada and Australia in courting Beijing. Chinese Prime Minister Li Keqiang joined Queen Elizabeth for tea when he visited London in June, and Chancellor of the Exchequer George Osborne is promoting a plan to make London a hub for trading China’s yuan, for which the London Stock Exchange (LSE) in June inked a “strategic partnership” with Bank of China Ltd.
Orange Diamond

Two years ago, Boodles, a jeweler with five London stores, had no Chinese speakers on staff. Today it has two and is looking for a third as more than five percent of its business now comes from Chinese shoppers, up from one percent five years ago, says managing director Michael Wainwright. One Chinese customer who “we made a huge sale to last year wants an orange diamond,” Wainwright said. “You’re looking at a million pounds-plus. We know this person can spend this kind of money.”

Chinese shoppers have accounted for a quarter of retail purchases by overseas visitors in London this year, according to duty-free shopping provider Global Blue -- up from 14 percent in 2012.

The Chinese wave is arriving as London weans itself from a dependence on wealthy Russians, who provided steady work both to professional-services firms and the luxury sector. Amid European Union sanctions over Ukraine, President Vladimir Putin’s government has urged Russian companies to de-list from foreign stock exchanges and told billionaires to repatriate assets.
Passport-Free Travel

For instance, VTB Group -- a state-controlled bank that is a sanctions target -- cut more than a third of its European staff in the last quarter, with London bearing the brunt of the layoffs. The bank is also considering ditching its U.K. market listing.

Obstacles remain to a whole-hearted embrace of China in London. The U.K. government recently criticized China’s decision to block a delegation of British lawmakers from visiting Hong Kong as part of an inquiry into conditions in the former colony, which has been rocked by pro-democracy protests. And China’s breakneck economic growth is slowing to below 7 percent as a housing boom slows, which could curtail foreign investment and tourism in the U.K. and elsewhere.

More prosaically, Heathrow airport has trailed Frankfurt and Paris in developing new routes to China because of runway capacity limits. Britain has captured just 14 percent of the growth in flights from China to Europe over the last 20 years, with 34 percent going to Germany and 22 percent in France, figures from the Confederation of British Industry show.

And despite recent tweaks, Cameron’s government is facing calls from business leaders to loosen visa requirements for Chinese visitors. The U.K. isn’t a member of the passport-free Schengen area that includes most of western Europe, so Chinese travelers need separate visas for the British Isles and France or Italy. They often opt to avoid the hassle by only getting one for the continental countries.

“We think there should be more connectivity,” said Peter Bishop, deputy chief executive officer of the London Chamber of Commerce and Industry. The visa system, he said, “is weighted against people who want to do business in the U.K.” Wealthy Chinese Are Wooed in London as Russians Pack Up and Go Home - Bloomberg

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Old 21st December 2014, 20:21
Hannia Hannia is offline
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International Business Times: Russia's super-rich oligarchs fleeing ruble crisis for the United Kingdom - Wealthy Russians can also be put on fast-track to settle permanently
Dec. 21, 2014, 4:15 p.m. Tom Porter — International Business Times

The has been a surge in the number of wealthy Russians buying their way into the UK with special fast-track visas.

The number of Russians given "tier 1 investment visas", which are granted to those who invest at least £2m in the UK, is 69% higher in 2014 than over a comparable period in 2013.

A total of 169 of the visas were granted between January and September, with a steep increase occurring after after the West imposed sanctions on Russia following its annexation of Ukraine, reports the Sunday Times.

During the same period in 2013, 96 were granted, reveal Home Office figures.

Under the scheme, those granted the visa can apply for permanent residency after three years, if they invest £5m or more, or after two years with a £10m investment.

Under normal rules, those granted a visa must wait five years before they can apply for permanent residency, and a further year to apply for citizenship.

According to the Home Office website, Tier 1 visas usually take up to 30 days to be granted. However, applicants already in the UK can pay extra to get the visa processed within 24 hours.

With the ruble having crashed last week in response to dropping oil prices and western sanctions, lawyer Kamal Rahman, who handles applications at Mishcon De Reya told the newspaper that the number of applications is expected to rise.

"The thing our Russian clients are interested in is citizenship," she told the newspaper. "Investing the higher amount reduces the time from six years to five."

Last week, it was reported that increasing numbers of mansions and expensive properties were being bought up by Russians, with Knight Frank reporting that the number of super-prime London properties sold to Russians had risen by 13% in the six months leading to October.

Some of Russia's wealthiest oligarchs have lost millions in the ruble crash, with Roman Abramovich and Alisher Usmanov losing £400m between them in a 48-hour period. Russia's super-rich oligarchs fleeing ruble crisis for the UK

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Old 2nd March 2015, 16:22
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How Billionaires in London Use Secret Luxury Homes to Hide Assets
Neil Callanan & Suzi Ring March 2, 2015 BLOOMBERG BUSINESS

On London’s Billionaires Row in Hampstead, the seven-bedroom Carlton House with its 50-foot ballroom, underground swimming pool and 10-person Turkish bath is for sale for 14 million pounds ($21.5 million).

It’s being sold to repay BTA Bank after British courts seized assets from the Kazakh lender’s one-time chairman, billionaire Mukhtar Ablyazov. The lender accused him of embezzling about $6 billion from the bank, claims he says are false and politically motivated.

It took the U.K. High Court to establish that the home, with its marble bathrooms, crystal chandeliers and cherry-wood elevator, belongs to the 51-year-old, because the property was bought through a network of offshore companies that hid his identity. He argued it was his brother-in-law’s and he just rented it after his family moved to England in 2009.

Buying upscale homes in the U.K. through trust funds and overseas-based companies is popular among the rich as a way to minimize taxes and protect privacy. The practice also makes it difficult for law enforcement and the courts to establish whether their owners bought them legitimately. Hundreds of billions of pounds classified as the proceeds of crime are laundered here every year and London’s surging property market is one of the more attractive ways to do it, according to the U.K. National Crime Agency.

Real estate’s role in laundering money is “not one we understand well enough by any stretch of the imagination,” said Donald Toon, director of the NCA’s economic crime unit. “We’re not saying that money laundering is endemic in the property market, but we are saying it looks like there’s a problem here.”

Luxury Tax

A new tax on luxury homes owned by corporations yielded 100 million pounds last year, almost five times more than expected, according to Her Majesty’s Revenue and Customs. As part of the levy, companies have to pay as much as 143,750 pounds a year to keep their owners’ names private if they own residential property worth more than 1 million pounds and don’t lease it.


Eighty percent of the tax revenue came from owners in Westminster and Kensington & Chelsea, London’s most expensive boroughs for housing. More than a quarter of the homes sold for more than 1 million pounds in prime central London in the year through June 2013 were bought by people who aren’t based in the U.K., according to Knight Frank LLP, a real estate broker.

The surprise windfall for HMRC prompted the NCA to start examining whether some of the houses were bought to launder money. The figures highlight both how attractive U.K. real estate is for wealthy investors globally, and why it’s vulnerable to crime.
Good Investment

“A money launderer or somebody with significant illicit assets is attracted to a good investment in the same way as somebody who has legitimate assets is attracted to a good investment,” Toon said in an interview last month.

The U.K. government plans to publish its first national risk assessment of money laundering and terrorist financing this month, according to a Treasury spokesman. The report, which will include real estate, will look at the role of estate agents in fighting money laundering. Legislation is also being drawn up requiring the ultimate owner of U.K. companies to be listed on a registry.

The government should go even further and require all property-owning companies to disclose who really owns them, said Nick Maxwell, head of research at Transparency International. The advocacy group will publish a report on how British real estate is used by money launderers this week.
Secrecy Preference

The amount raised from the levy on luxury homes shows there’s a “big preference for secrecy,” he said. “It’s part of the problem of offshore ownership in the U.K.”

Buyers of luxury real estate often purchase the holding company rather than the property directly to avoid paying stamp duty, a tax owed when a sale goes through. This means the name of the owner on paper doesn’t change, while the real proprietor does, according to the Serious Fraud Office’s proceeds of crime unit.

More than 12,500 London properties worth over 48.5 billion pounds were sold by offshore companies from 2012 through 2014, Land Registry data compiled for Bloomberg News show. The registry only has information on sales, not purchases.

More than a third of the sellers were out of the British Virgin Islands, where Mount Properties Ltd., which bought Carlton House, is based. Mount Properties is owned by Mega Property Ltd., a company based in the Marshall Islands, according to the High Court ruling on seizing Ablyazov’s assets including the home. Neither jurisdiction requires disclosure of beneficial owners of companies.
Marble Hallway

The home on The Bishops Avenue, one of two London streets known as Billionaires Row because of the large number of wealthy residents, has a manned security hut and security cameras out front. Inside, a marble hallway with a wrought-iron staircase welcomes visitors, according to broker Glentree Estates, which is acting on behalf of receiver KPMG LLP.

The High Court found Ablyazov in contempt for lying about owning the home and other assets. After he didn’t show up for his sentencing hearing -- he got 22 months in prison -- it was discovered that he’d fled the U.K. He’s now in jail in France, awaiting a verdict on his appeal against extradition to face criminal charges in Russia or the Ukraine in the embezzlement case. BTA, once Kazakhstan’s biggest bank, was bought last year by Kazkommertsbank and a local businessman after defaulting twice.
Fraud Victim

Ablyazov “is the victim of a massive fraud committed against him by a dictatorial regime,” according to a statement from his lawyer, Peter Sahas.

One of the biggest obstacles in tracing proceeds of crime is that law enforcement receive few reports of suspicious customer activities that are related to real estate, and those they get aren’t always useful, according to Transparency International. Just 179 of the 354,186 reports filed in the year ending in September came from property brokers.

“For an individual estate agency, regular business with any high-net-worth individual can be very lucrative for the company and, therefore, there can be a lack of incentive to report of suspicions,” Maxwell said. “A similar risk arises in small practices in the legal and accountancy sector.”

Her Majesty’s Revenue and Customs, which regulates property brokers, has started making unannounced supervisory visits to property brokers to ensure they are carrying out proper due diligence including identifying the true owners, the tax agency said by e-mail.
‘Back-Covering Exercise’

A big part of the problem is that the filings aren’t driven by a desire to genuinely police against money laundering, according to Dick Gould, joint deputy head of the proceeds of crime unit at the SFO.

Suspicious activity reports “are supposed to identify what is being laundered, and at the moment you get a lot of institutions, predominantly banks but not only banks, using it as a back-covering exercise,” Gould said.

Gould also said that while anonymity around property ownership draws suspicion, there are many high-net-worth individuals who own houses through trust funds and corporate structures for legitimate reasons. That can make it harder for law enforcement and the property industry to police.

“It’s really important we have effective collaboration and exchange of information between national financial intelligence units,” Toon said. “If we are seen to be a major money- laundering problem, then that undermines confidence in the U.K. as a place to do business.” Kazakh Billionaire’s London Home Sale Reveals Underside of Real Estate Secrecy - Bloomberg Business

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