Politicians and criminals in Central Asia are using the UK’s financial and corporate systems to “loot” money from their own citizens a select committee has heard.
The Foreign Affairs Committee heard how Britain was “enabling” corruption in Kazakstan and four other Eurasia republics by allowing dirty foreign money to be cleaned through UK property, bank accounts, and businesses.
The damning evidence, given by a range of experts at Tuesday’s Commons committee hearing, also heard how London was now considered a “world financial crime centre” being used to shield wealth by those with close links with both Russia and China.
Speaking to the panel of MPs, journalist Oliver Bullough said the misuse of the UK’s financial, corporate, and business structures has had a direct and chilling impact on impoverished communities overseas.
“We have turned a blind eye to the misuse of our corporate structures, the misuse of our financial system, the misuse of our professional services companies, by the elites of the five republics of Central Asia for far too long,” he said.
“And that has meant that we have helped them loot their home countries.
“We have made life worse for ordinary people from those countries as a result, and I firmly believe that the best thing we could do to assist the Central Asians in building a more prosperous and democratic future would be just to stop.”
Bullough’s evidence is part of a public inquiry into the UK’s influence in Central Asia, launched by the committee in February.
‘Centre of Criminality’
Discussing the use of the UK and its dependent territories for the laundering and storing of illicit finance, Bullough said there were “no rivals to London as a centre of criminality.”He told MPs: “When we talk about the UK we’re talking about the greater British archipelago, but there are many other places that were also part of the problem but part of the issue is that so much of the enabling has done out of this city—it’s not our offshore territories.
“The enabling is arranged from here, and the core problem is a failure to invest in our law enforcement capabilities in this country.”
Quoting figures from anti-corruption charity Spotlight on Corruption, he said that an estimated 0.04 percent was spent by the UK on tackling economic crime.
“We are one of the world’s great financial centres,” he said. “We need to be doing a lot better than that.”
The journalist gave previous examples of how the UK’s financial and corporate weaknesses have been abused by foreign state actors in the past, including the recent case of Gulnara Karimova, daughter of former Uzbekistan president Islam Karimov.
Karimova, who moonlighted as a pop star and diplomat, spent $240 million (£200 million) on properties from London to Hong Kong using UK companies.
Accounting firms in London and the British Virgin Islands acted for the UK companies involved in the deals.
The report said the ease the dictator’s daughter obtained UK property was “concerning.”
It also stated that there was no suggestion that those acting for the companies linked to her were aware of any connection to her or that the source of cash could have been suspicious.
Bullough said similar activity couldn’t be immediately stopped with legislation or regulatory change.
“It requires years of work and hundreds of millions of pounds of investment,” he told the committee.
“But I do think if you look at what happened in Ukraine, the damage to Ukraine, the ability that Russia and Putin to undermine Ukraine, you know, we have the opportunity to prevent that happening to other countries.
Brothers Circle
Professor Kristian Lasslett, head of the School of Applied Social and Policy Sciences at the University of Ulster, also gave evidence.He told politicians how it was discovered in a recent investigation examining the capture of Uzbekistan’s gas resources by Russian actors had a link to Britain.
“The entire head of the operation was in Jersey—incredible that this is taking place right from a UK jurisdiction.
“Right now, there are people who are working as money launderers, you only have to look on Google to find out that they’re linked to the Brothers Circle in Russia.
“They have been involved in money laundering, they’re connected to the Security Service and British companies.
“They have properties in Britain, limited liability companies. Everything they use—there’s nothing they don’t use.”
Lasslett also spoke about legal threats from Central Asian actors over his work, as well as threats to activists and journalists exposing financial crime.
MPs—who are due to visit Central Asia next week—asked what measures could be used to tackle illicit money crime in the UK.
Bullough said: “What we need is a regulatory and audit system that is up to the task which we can then use sanctions to augment if there is a moment of crisis as it’s happened in Ukraine.
“The system in Central Asia is not in a crisis, it is the chronic system and needs to be managed in a careful, long term way.”
The journalist and author also identified issues with Companies House, which he said was resourced enough to deal with sinister actors using UK companies to help in their criminality.
He also said current laws aimed at tackling similar crime needed to be enforced more readily.
