That the rise of a powerful coterie of Russian billionaires overlapped with Britain’s transformation into an offshore tax-haven is unlikely to escape the notice of both countries’ future historians. Indeed it is entirely plausible that had successive British governments in the 1990s been less amenable to foreign wealth, this book would have been entitled Genevagrad rather than Londongrad.
Mark Hollingsworth and Stewart Lansley raise interesting questions about how the rocketing price of property, contemporary art and even private school fees of early Noughties Britain, fuelled by a steady supply of roubles, contributed to the bubble preceding the bust. While there are several excellent studies of the impact of the oligarchs on post-Soviet Russia, few have examined in detail how their arrival on our shores has shaped the UK.
Identifying a turning-point in 1996 with John Major’s government introducing an ‘investor’s visa’, allowing permanent UK residence after five years to those able to invest £750,000 in government bonds or UK companies, the book notes that by 2007 the IMF ranked London as an ‘offshore financial centre’ alongside the Cayman Islands and Bermuda.
Thus London became the location of choice for Russia’s best-known oligarchs — Mikhail Khordorkovsky, before he was imprisoned in Siberia, Chelsea football club owner, Roman Abramovich, the anti-Putin exile, Boris Berezovsky, and the aluminium magnate, Oleg Deripaska, now famous for entertaining Peter Mandelson and George Osborne on his yacht in Corfu.
Such was the competition among the new oligarch community for the trophy assets of ‘super prime’ houses that London overtook New York in 2007 as the most expensive residential property market in the world. As non-domiciled UK residents, Russia’s super-rich could use offshore vehicles to avoid capital gains tax and stamp duty payments, making the squares of west London an attractive way of storing their wealth. Boris Berezovsky, once Russia’s richest man and Abramovich’s business mentor, now exiled and waging a PR war against the Kremlin from London, poured millions into swathes of the highest end properties — sometimes, the book claims, without even bothering to look at them.
One of Londongrad’s more bizarre tales is of Abramovich harbouring such a craving for sushi while on a business trip in Azerbaijan that he ordered one of his aides to send over £1,200-worth from a Canary Wharf restaurant via his Gulfstream private jet. At a total cost of £40,000 pounds, the authors estimate it ranks as the most expensive takeaway in history.
But while these accounts of where and how the oligarchs spend their wealth in London are entertaining, the book occasionally crosses the line between an exercise in journalistic thoroughness and the vapidity of a Hello! magazine photoshoot. For instance, few drawn to this book will care about the precise specifications of Abramovich’s yachts.
Londongrad’s claim to be the ‘inside account’ of London’s oligarch community is also difficult to justify, since the authors are overly reliant on newspaper clippings for key details. Of their (mostly anonymous) primary sources, few appear to have remained in personal contact with their subjects, while the bibliography is skimpy. However, the sections on the death of Stephen Curtis, Khordorkovsky’s lawyer, and the public polonium poisoning of Alexander Litvinenko are stronger. Indeed, if Abramovich’s purchase of Chelsea marked the acceptance of Russia’s nouveau riche into the heart of British popular culture, the arrival of post-Soviet Russia’s power struggles and political assassinations on the streets of London served as a stark reminder of the bitterly contested provenance of that wealth.
The credit crisis has torn through Russia’s rich lists. According to Forbes magazine, in 2008 Moscow boasted the highest number of dollar billionaires of any city in the world. By 2009 the number of billionaires in Russia had dropped by almost a third, caught between tumbling commodity and share prices and the near-collapse of the rouble.
Londongrad reminds readers of the brutal cyclical fate of Russia’s elites over the last century and more. Britain has a tradition of attracting political exiles from eastern Europe, going back to the Russian anarchists of 19th century. The oligarchs being pummelled by Putin, and then by turmoil in the global capital markets, is merely part of the long arc of this history. Wealth may come and go, but it seems that London’s attraction for dissidents remains as strong as ever.
Miles Johnson is a Financial Times journalist.
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