The labyrinth that is British complicity in kleptocracy

Oliver Bullough


On Monday, I sat on a stage at London’s Frontline Club and asked a real person questions in front of an audience (as well as people on a screen). I used to do this kind of thing so often, that I was rather blasé about it, but it’s been two years since I did anything like it. And it felt great. We were talking about whistleblowing, and were joined (by video, from an undisclosed location, for obvious reasons) by the great Howard Wilkinson, who exposed on the largest money laundering scheme in history while at Danske Bank.

If you’re likely to be in London, please keep an eye on the Frontline Club web site because – now that Covid-19 is hopefully waning once more – I’m planning to get back to doing kleptoscope events every month. If you’re not able to come in person, the club streams them live. The next one will be on February 21, when I’ll be talking to Catherine Belton, her lawyer, and her publisher about defamation. If you do come, say hello!


It is fair to say that the British government decision to break its promise to the White House and not impose transparency on offshore-owned property or clean up the country’s hot mess of a corporate registry (which I wrote about last week) did not go down well. The government’s own anti-corruption champion said the move was “about as popular as a bucket of cold sick”, and others were less polite.

The timing was hilarious – in a not-actually-funny-at-all kind of way – in that Vladimir Putin is currently giving his best demonstration of how unrestrained kleptocracy threatens the world. So it was genuinely awful to see the government that oversees the world’s biggest laundromat decide it couldn’t be bothered to do even the most basic of checks on the provenance of the cash that it’s washing.

It also clashed with the British government’s current attempt to position itself as a guardian of the international order, so I’m pleased to say there has been a U-turn of sorts. This week Foreign Secretary Liz Truss (who’s currently positioning herself as a second coming of Margaret Thatcher just in case a new prime minister is needed at any point) announced new sanctions to punish Russia for its wrong-doing.

Sanctions have become the go-to tool for Western countries keen to influence foreigners without getting their hands dirty, and this was a bit welcome, but only in the sense that someone lending you a trowel is welcome when what you really need is a lot of heavy earth moving machinery, and opposition politician David Lammy’s response was spot on.

  • “Where is the economic crime Bill that the Government have just pulled? Where is the comprehensive reform of Companies House? Where is the register of overseas entities Bill? Where is the foreign agent registration law? Where are the new counter-espionage laws? Where are the new rules on political donations? Where is the reform of tier 1 golden visas? Where is the replacement of the outdated Computer Misuse Act 1990? Where is the reform of the Electoral Commission, and why does the Government’s Elections Bill make these problems worse by enabling political donations from donors based overseas?”

That is a lot of questions and expecting Boris Johnson’s government to answer them is far-fetched. He was after all the prime minister who suppressed a report into Russian interference in the U.K. (a sort of low-budget British remake of the Mueller report), until after 2019’s general election so voters wouldn’t get a chance to read it, then rejected its important and sober conclusions as an attempt to delegitimize Brexit.

But, put on the spot, in the House of Commons, Liz Truss did kind of commit to keeping that promise her boss made to Joe Biden after all, which is better than nothing. She said a new economic crime bill would be passed, though it’s notable she didn’t put any kind of timing on that or say what it would contain. When Lord Agnew resigned as a minister last week, in protest at the government’s failure to do anything about financial crime, he said his position in the government was intolerable, but that his departure would be worthwhile if it moved “the machine into action”, which it appears to have done. He put the cause he believed in before his career, which I think is what we used to call integrity. I could get used to it.

There is of course a far deeper problem in that London has become so accustomed to moving questionable money that the whole regulatory machinery would have to be redesigned to make any significant difference, and there is zero sign of any politician appreciating what a vast job that will be. On that note (while researching an entirely different subject for an article I’m working on), I last week came across the Deregulation Act of 2015 and the “growth duty” it imposes on regulators. Here’s paragraph 1.1.

  • “Any person exercising a regulatory function must have regard to the desirability of promoting economic growth (the “growth duty”). In performing this duty, they must, in particular, consider the importance for the promotion of economic growth of exercising the regulatory function,” the guidance for regulators stated.

I had previously believed that regulators’ primary job was, well, to regulate. So this came as a bit of a shock once I’d thought through its implications. Money laundering promotes economic growth; pollution promotes economic growth; selling toxic financial products promotes economic growth. So presumably regulators must nod them through. Just when you think you’ve reached the end of the labyrinth that is British complicity in kleptocracy you open a door and find a new labyrinth. It is, as they say, turtles all the way down.


Normally I put this bit at the end of the newsletter, but I was so impressed by Christopher Leonard’s Lords of Easy Money, how the Federal Reserve broke the American economy, that I’m bumping it up a bit. It is one of those books that crystallized lots of things I’ve wondered about, but never had time to actually do any research into. True story: I was reading it on my kindle at the same time as a detective novel that my wife had recommended and every time she asked if I was enjoying it, I’d have to admit I was instead reading about the detrimental effects of quantitative easing. Click Bait!

The basic argument is a bit of a dispiriting one, which is that the 2007-8 financial crisis has basically never ended. For the last decade and a bit, the world economy has been sustained solely by the bottomless well of the Fed’s money creation machine. The numbers are vast.

  • “Between 2007 and 2017, the Fed’s balance sheet nearly quintupled, meaning it printed as many dollars during that period as it printed in the first hundred years of its existence.”
  • “In roughly ninety days, the Fed would create $3 trillion. That was as much money as the Fed would have printed in roughly three hundred years at its normal pace, before the 2008 financial crisis.”

Throughout this process, the Fed maintained the pretense that what it was doing was apolitical, that it was just taking technocratic steps to keep the world going.

  • “He’s a pragmatist who will pursue an economic good and turn a deaf ear to politics,” said one investment manager of the Fed’s Jerome Powell.

That reminded me strongly of a comment once made by Lord Cromer, the Bank of England governor who oversaw the massive expansion of the City of London’s offshore business in the 1960s, to a Labour politician.

  • “I told him, which was perfectly true, that I wasn’t going to play politics, nor did I.”

Behind the jargon, the actions of the Bank of England back then, and the Fed right now, were profoundly political. They benefited one particular group of people – the owners of assets, who saw their prices float endlessly upwards on the torrents of money being pumped into the markets – at the expense of everyone else. Politics is about choosing, and the central bankers chose to enrich the already wealthy, and to keep doing it even once it had become abundantly obvious that the money was not trickling down into other people’s pockets as much as they hoped it would.

And, once the financial markets came to expect the Fed to intervene to prop up asset prices, speculators could make essentially risk-free bets, secure in the knowledge that any downturn would be backstopped by Easy Money. This activism infantilized democratic politics, by smothering financial turbulence, which – it seems to me – is a significant reason why political debate has become so consumed by culture war at the expense of the substantive issues that, as this book makes clear, were once so central to political debate.

I can’t tell you how much I liked this book, it is fascinating (with funny little flashes of leftfield humor too), and I would highly recommend you read it. It is entirely US-focused but since the Fed has become ever-more the world’s central bank, it has relevance to everyone who’s interested in money. If you do read it, please let me know what you think.


Quite a lot of the last couple of days has been taken up with people calling me up to ask which Russian oligarchs own property in London, and I’m delighted people are taking an interest in the dirty money problem. If you’ve not seen them, I thought this piece in the London Times, and this piece in the Washington Post were very good. What I’m really looking forward to though is seeing the documentary about Alexei Navalny, the imprisoned Russian anti-corruption activist and opposition politician, for which the trailer is here.

  • “That he was nearly killed made him a semi-martyr, but at the risk of sounding facile about it, that he survived the attack on his life elevated him to something like a superhero of freedom,” says this extremely excitable review in Variety.

The Kremlin’s review was pithier. It has added Navalny to its list of “terrorists and extremists.” He’s number 7,513, and he and his allies are now locked out of the Russian banking system, which is a grimly ironic counterpart to the debate ongoing in the West about whether Putin should be personally sanctioned or not if he invades Ukraine (not that he’s ever actually stopped invading Ukraine since last time).


Another year, another iteration of Transparency International’s multi-colored map, showing how countries in Asia, Africa, and South America are more corrupt than rich places. Long-time readers of this newsletter may have previously read my thoughts on the Corruption Perceptions Index, which defines corruption along the lines of what happens in poor countries rather than rich countries, and then sensationally reveals that there is more of it in poor countries than in rich countries. It’s a little like studying the drug trade only by looking at where drugs are produced, rather than where they’re consumed.

Transparency International did let me write a blog on their website in 2019 explaining why I hate the CPI, but they appear to have deleted it, which is a shame because now I need to try to remember the points I made. Basically, you can’t rate countries by how corrupt they are, as if it’s a competition, because corruption is transnational, the money and its owners cross borders. Blaming Nigeria for being corrupt, while ignoring Britain’s role in laundering Nigerian politicians’ money, is not just unfair; it’s inaccurate. Scandinavian countries remain at the top of the index for another year, yet there isn’t a country in the region that hasn’t seen its corporations implicated in corruption in Eastern Europe.

The CPI is extremely influential, but it is also wildly wrong, which is troubling because it is the one thing people who don’t know about corruption always call on when looking to see what’s going on. Pretty much everyone I’ve ever spoken to at Transparency International recognizes that it’s flawed at best, which raise the uncomfortable thought that the organization only keeps producing it because it’s such a good marketing tool.