Hello, and welcome to Oligarchy. We are tracking how Covid-19 and the world’s response to it is affecting the super-rich — and what that means for power and politics.
THERE ARE THE HAVES, AND THE HAVE YACHTS…
I’m back from holiday, and dreaming of the next one. Perhaps I could rent one of the behemoths that will be on show next month at Damen Yachting’s first ever superyacht private view at their yard in The Netherlands, like the show’s headliner: the truly bonkers La Datcha.
She’s bronze-colored, 77 meters long (252 feet), and boasts what the advertisements describe — I’m not making this up — as an “excellent toy collection”: two helicopters, a three-person submarine, a dive center, various snowmobiles, small boats and jetskis, plus 25 servants to keep your daiquiri topped up. Of course there’s also a jacuzzi, a gym, and the usual luxuries, and she’s apparently capable of ploughing through 16 inches of ice, should the captain decide to go somewhere cold.
Sadly, the yacht’s owner, Oleg Tinkov (who occasionally, and slightly foppishly, spells his name Tinkoff, as if he were a pre-revolutionary Russian aristocrat) will not be sailing in her.
Shortly before lockdown in the U.K., and shortly after he took his private jet to Germany for the day to mark his son Roman’s 17th birthday, British police arrested him on a U.S. warrant. He is now forbidden from leaving London, and has had to surrender his passports.
The billionaire rose to prominence in early-Putin-era Russia by producing beer that was unusually drinkable by the standards of the time, with notably controversial television commercials, before moving into banking. His online bank now has more than 10 million customers in Russia.
A week after La Datcha will go on show, Tinkov’s lawyers will be representing him in a London magistrates’ court, as he seeks to avoid extradition to the United States. American prosecutors argue that when renouncing his U.S. citizenship in 2013 he fraudulently claimed to be worth just $300,000. They say he was actually worth more than a billion dollars, thanks to his ownership of Tinkoff Bank, which he held via a British Virgin Islands company, which owned two other British Virgin Islands companies, which owned a Cypriot company. There were also Isle of Man companies involved.
All the same, La Datcha is quite a boat. See for yourself. She costs $876,700 to rent for a week, proudly flies a Cayman Islands flag, and I’m up for it if you are. All we need is 10 other guests, at least one of whom is going to have to be extremely rich.
HNWI, IT’S A FOUR-LETTER WORD
We may be out of luck, however. Apparently, according to WealthX’s annual investigation of the global luxury market, the mega-wealthy have responded to the pandemic by staying at home more, which may mean they’re no longer as interested in scuba diving among the penguins as they once were.
- “With their homes worth in the millions and designed exactly the way they want them, the wealthy haven’t had the same sense of urgency to leave them,” said Jaclyn Sienna India, who runs a travel firm for “V-V-V.I.P.s.” Her clients routinely drop half a million dollars on an average trip. Although, presumably, they’re not doing that so much at the moment.
- “The challenges and disruption (and indeed loss) caused by the pandemic have prompted many people to reappraise what is important to them. Among the wealthy, there has been an increase in demand for intangible assets, namely additional passports and citizenships or on demand healthcare,” Wealth-X concludes.
Still, La Datcha does have an onboard hospital, and perhaps that will count as on demand healthcare.
WHERE THERE’S MUCK, THERE ARE GOLDEN PASSPORTS
As Wealth-X noted, one of the most attractive purchases right now is an extra passport, for insurance against getting stuck somewhere with a bad healthcare system. Vanuatu says it has been doing particularly well.
On the other side of the world, Cyprus has been doing well too, and hats off to Al-Jazeera, for its investigation into who’s been buying passports from the Mediterranean Island, which is one of a half-dozen or so countries which has a directly transactional approach to citizenship. According to its findings, among the recipients of a Cypriot passport were:
- the speaker of Afghanistan’s lower house of parliament, who got rich from selling fuel to the U.S. military.
- A member of the Vietnamese congress.
- A former deputy minister for economic development in the Russian government.
- Various oligarchs, and business people from Saudi Arabia, Ukraine, Lebanon, China and other leading kleptocracies. Have a look for yourself.
Campaigners and officials have long argued that golden passport schemes such as those run by Cyprus and Malta provide a backdoor into the European Union for those of questionable fortunes. Once an individual has citizenship for one EU member state, they have the right to live, work and travel in all other members of the union.
- “Investor citizenship and residence schemes pose risks for the Member States and the Union as a whole, including in terms of security, money laundering, corruption, circumvention of EU rules and tax evasion,” noted a report from the European Commission published last year.
- “The Commission has concerns about the risks inherent in investor citizenship and residence schemes and about the fact that the risks are not always sufficiently mitigated by the measures taken by Member States.”
All such schemes tend to claim that their due diligence standards are excellent, but the incentive is to bring in as much money as possible, which inevitably leads to scandals almost everywhere they have been tried. Al-Jazeera will be producing more articles on the topic all week, so look out for them.
LIFE IMITATES METAPHOR
If a thriller writer used a metaphor for gentrification as crude as a rotting corpse being found in the basement of a house, shortly after an investment banker bought it for 35 million euros, his editor would calmly ask him to replace it with something more believable. Fortunately, however, real life has no editor, so here it is.
WHAT I’M READING
Kleptocracy is basically colonialism in reverse: instead of Westerners going to poor countries to loot them then bring the cash home, those countries’ own politicians do the looting then send the proceeds to the West. The interesting historical moment happened when one process became the other, when Western powers went from being Mafiosi, to being mob bankers. As such, I was very interested to read Vanessa Ogle’s fascinating paper on “Funk Money,” and how returning colonists created the financial links to tax havens that were later used by kleptocrats and oligarchs.
- “While European countries and the United States could certainly have collected more taxes if Europeans had mostly repatriated funds from the colonial world and subsequently retained money in the metropole, the main burden of the late colonial withdrawal of assets fell not on Europe but on newly independent countries. It did not take long for elites in former colonies to discover the advantages of a Swiss bank account,” Ogle notes.
See you next Wednesday,
Oliver