In Londongrad, not everything that’s rich is Russian
It’s well-known that London has cultivated a reputation for itself as a playground for the ultra-rich in recent years, with more billionaires per capita than anywhere else on the planet. But while much of that wealth has been associated with Russian oligarchs in the press and by politicians – earning the city the dubious nickname of ‘Londongrad’ – a new report has highlighted how London is a hot place for investments and residence of rich people from other countries as well, with Gulf nations pouring up to five times more than Russia into London overall, writes Colin Stevens.
The fact that all six of the Middle Eastern nations named in the report have had struggles with human rights abuses and internal scandals underlines how the UK government is keen to turn a blind eye and welcome the rich and powerful individuals from these countries if the price is right. Worse, many foreign affluent individuals claiming residency in the UK, have even helped themselves to government support intended to alleviate the economic effects of coronavirus.
Russian reputation belies Gulf ascendency
While the influx of Russian cash into the UK has been a particular cause for concern among British journalists and politicians – even prompting an eponymous report into Russia’s activities in the country – the stats show that they’re not the biggest investors by a long shot. The £25.5 billion spent by Russian businessmen is not an insignificant sums by any means, but it’s half the outlay expended by China and is positively dwarfed by the astronomical amounts poured into the country by oil-rich Gulf nations.
In the wake of these investments, an illustrious group of Gulf royals have set up shop across the UK, residing side-by-side with the notorious Russian oligarchs. Since the late 2000s, Arab sheiks have bought up prime real estate in London to have a residence in a country that not only offers them tax advantages but also serves as a get-away playground for doing business and enjoying entertainment not possible in their home countries. For example, Saudi prince Alwaleed bin Talal acquired a top-end hotel, the Savoy, while the Sultan of Brunei purchased the Dorchester Hotel. The list goes on, but illustrates how these real estate items are turned into trophy assets for those able to afford self-aggrandisement.
While the Conservatives will point to the massive injection of capital that those investments have brought to British shores, they are less eager to acknowledge the repressive regimes that often fund them. Indeed, the willingness to embrace overseas arrivals with shady histories if they open their chequebook is the over-arching theme in the story of how London became the place it is today. This is epitomised succinctly in the case of another non-Russian, Nerijus Numa, Lithuania’s richest man, who might also be in legal trouble back home.
The Lithuanian reportedly holds a portfolio of companies and properties worth around £1.2 billion, and assumed taxpayer status in the UK in 2015. Numa’s business interests, however, have been dogged by accusations of fraud and tax evasion. Holding company Vilniaus Prekyba – the owner of Lithuania’s largest retail chain and of which Numa is the single biggest shareholder – was probed by Lithuanian authorities shortly before his relocation to London, a move which has itself raised questions over the double taxation avoidance agreement between the two countries.
In the Netherlands, the Amsterdam Court of Appeals started a formal investigation concerning the activities of one of his companies, TAF Asset 11, focusing on a string of suspicious transactions to the tune of €26 million. According to the court, these funds were transferred from Numa's former companies to TAF Asset 11 in 2009, officially for "tax reasons", but they resulted in the acquisition of a Polish company called Emir 77. The fact that the acquisition happened without guarantees and under terms unfavourable to TAF Asset 11 caused the Amsterdam court to raise the question what the real interests behind the transactions were. For his part, Numa denies the charges, arguing that neither he nor companies connected to him are currently under investigation.
Foreign investment trickling upwards only
Again, proponents of the UK’s morally fluid stance on FDI will highlight how Numa has not yet been found guilty of any wrongdoing in much the same way they have attempted to wash their hands of the oppression linked with their Middle Eastern benefactors. However, it’s clear that even a purely economic argument doesn’t hold up under much scrutiny from the perspective of everyday citizens.
Indeed, the only ones who appear to be profiting from overseas investment are those already with one foot in the mega-rich club, while over 200,000 Londoners lose their homes as entire estates are demolished to make way for fancy new developments. The opulent hotels which are owned by sheikhs, sultans and other affluent Arabs, often serve as the backdrop to their lucrative commercial transactions, are staffed by minimum-wage attendants, only leading to a widening dichotomy between the rich and poor.
To add insult to injury, it appears that wealthy foreign nationals and even British-born tax exiles are making full use of the UK government’s furlough scheme to further line their pockets. Analysis of claimant data released last month has revealed that 750,000 companies will have claimed a grand total of £66 billion by the time the initiative reaches its conclusion in September this year, with many of them non-native and categorically not in need of such a bailout.
As such, the rich – be they Gulf-based, Russian, Lithuanian or anything else – are not just hoovering up all of Britain’s best property and driving up house prices in the process, but actively taking taxpayers’ money from their pockets. In that context, it begs the question: is such a relationship really worth it, for London, her citizens or the wider British public?