Intelligence and Security Committee Russia report/Russian Expatriates
49. Whilst the Russian elite have developed ties with a number of countries in recent years, it would appear that the UK has been viewed as a particularly favourable destination for Russian oligarchs and their money. It is widely recognised that the key to London's appeal was the exploitation of the UK's investor visa scheme, introduced in 1994, followed by the promotion of a light and limited touch to regulation, with London's strong capital and housing markets offering sound investment opportunities. The UK's rule of law and judicial system were also seen as a draw. The UK welcomed Russian money, and few questions – if any – were asked about the provenance of this considerable wealth. It appears that the UK Government at the time held the belief (more perhaps in hope than expectation) that developing links with major Russian companies would promote good governance by encouraging ethical and transparent practices, and the adoption of a law-based commercial environment.
50. What is now clear is that it was in fact counter-productive, in that it offered ideal mechanisms by which illicit finance could be recycled through what has been referred to as the London 'laundromat'. The money was also invested in extending patronage and building influence across a wide sphere of the British establishment – PR firms, charities, political interests, academia and cultural institutions were all willing beneficiaries of Russian money, contributing to a 'reputation laundering' process. In brief, Russian influence in the UK is 'the new normal', and there are a lot of Russians with very close links to Putin who are well integrated into the UK business and social scene, and accepted because of their wealth. This level of integration – in 'Londongrad' in particular – means that any measures now being taken by the Government are not preventative but rather constitute damage limitation.
51. It is not just the oligarchs either: the arrival of Russian money resulted in a growth industry of enablers – individuals and organisations who manage and lobby for the Russian elite in the UK. Lawyers, accountants, estate agents and PR professionals have played a role, wittingly or unwittingly, in the extension of Russian influence which is often linked to promoting the nefarious interests of the Russian state. A large private security industry has developed in the UK to service the needs of the Russian elite, in which British companies protect the oligarchs and their families, seek kompromat[1] on competitors, and on occasion help launder money through offshore shell companies and fabricate 'due diligence' reports, while lawyers provide litigation support. William Browder told the Committee that:
Russian state interests, working in conjunction with and through criminal private interests, set up a 'buffer' of Westerners who become de facto Russian state agents, many unwittingly, but others with a reason to know exactly what they are doing and for whom. As a result, UK actors have to deal with Russian criminal interests masked as state interests, and Russian state interests masked by their Western agents.[2]
52. The links of the Russian elite to the UK – especially where this involves business and investment – provide access to UK companies and political figures, and thereby a means for broad Russian influence in the UK. To a certain extent, this cannot be untangled and the priority now must be to mitigate the risk and ensure that, where hostile activity is uncovered, the tools exist to tackle it at source.
53. The extent to which Russian expatriates are using their access to UK businesses and politicians to exert influence in the UK is ***: it is widely recognised that Russian intelligence and business are completely intertwined. The Government must ***, take the necessary measures to counter the threat and challenge the impunity of Putin-linked elites. Legislation is a key step, and is addressed later in this Report.
54. Several members of the Russian elite who are closely linked to Putin are identified as being involved with charitable and/or political organisations in the UK, having donated to political parties, with a public profile which positions them to assist Russian influence operations. It is notable that a number of Members of the House of Lords have business interests linked to Russia, or work directly for major Russian companies linked to the Russian state – these relationships should be carefully scrutinised, given the potential for the Russian state to exploit them. It is important that the Code of Conduct for Members of the House of Lords, and the Register of Lords' interests, including financial interests, provide the necessary transparency and are enforced. In this respect, we note that the Code of Conduct for Members of Parliament requires that MPs register individual payments of more than £100 which they receive for any employment outside the House – this does not apply to the House of Lords, and consideration should be given to introducing such a requirement. A 'Foreign Agents Registration Act' (an issue which is addressed in the section on Legislation) would also be helpful in this respect.
55. The Government effort on the disruption of Russian illicit financial activity in the UK is led and co-ordinated by the National Crime Agency (NCA).[3] Its work also encompasses the investigation of UK-based professional enablers in the financial and property sectors, with the aim of hardening the UK financial and property markets from the proceeds of crime, and challenging any perception that the UK is a safe haven for illicit funds. The extent to which this money has now been invested, and reinvested, calls into question the efficacy of the recently introduced Unexplained Wealth Orders when applied to the investigation of individuals with such long-established – and to all intents and purposes now apparently legitimate – financial interests in the UK. Whilst the Orders appear to provide the NCA with more clout and greater powers, the reality is that it is highly probable that the oligarchy will have the financial means to ensure their lawyers – a key group of professional enablers – find ways to circumvent this legislation (we return to this issue later in the Report). By contrast, the NCA lacks the resources required in terms of financial investigators, technical experts and legal expertise – this must be rectified.[4]
56. The inherent tension between the Government's prosperity agenda and the need to protect national security that has led to the current situation has been played out across Whitehall departments. However, the formation of the new Serious and Organised Crime (SOC) Group within the Home Office at the end of 2018 was a tangible acknowledgement of economic crime as a national security issue. The SOC Group has a wide-ranging remit – it is hoped that it will be provided with the necessary resources and will give sufficient priority to disrupting the threat posed by illicit Russian financial activity. One key measure would be an overhaul of the Tier 1 (Investor) visa programme[5] – there needs to be a more robust approach to the approval process for these visas.
57. Whilst the oligarchs and their money have been the most obviously visible part of the Russian diaspora, recent events have highlighted the number of Russians in the UK who are on the opposing side. Since Putin came to power in 1999, a number of critics of Putin and the Russian government have sought sanctuary in the UK, fearing politically motivated criminal charges and harassment.[6] They are of interest to the Russian Intelligence Services (RIS), which may seek to target them in a number of ways:
- it is possible the RIS will seek to monitor some of these individuals using human sources (i.e. agents) and by technical means, for example by intercepting phone calls and hacking into their personal electronic devices;
- RIS collection of intelligence could also be used in support of 'influence operations', with the objective of degrading an individual’s ability to encourage international or domestic Russian political opposition to Putin and his government; or
- the RIS may seek to identify or engineer opportunities to arrange an individual's arrest and transfer to Russia to stand trial, or indeed meet a worse fate.
58. On 15 June 2017, BuzzFeed News published the results of its investigation into 14 deaths in the UK of Russian business figures and British individuals linked to them.[7] The attempted assassination of Sergei and Yulia Skripal in March 2018 prompted calls for the Government to investigate the allegations that had been made in the BuzzFeed report and, on 6 March 2018, the Chair of the Home Affairs Select Committee wrote to the Home Secretary calling for a review of the 14 deaths, given the "considerable concerning evidence" from BuzzFeed which raised "questions over the robustness of the police investigations".[8]
59. The Committee has taken evidence on these matters. We have been told that ***. ***.[9]
60. We questioned whether the need to protect those at risk in the UK has been given sufficient priority. We were assured that all figures at risk – Russian or otherwise – receive protection according to the level of risk, through a police-led process ***.[10]
61. We welcomed this process, but questioned whether the Intelligence Community has a clear picture of how many Russians there are in the UK who are at risk – for example, would MI5 or any other relevant agency ***? This would appear to be an immediate and obvious way in to the issue, and the ***, so it would appear manageable. In response we were told that ***.
62. The events of 4 March 2018 showed that it is not only individuals who are openly critical of Putin who are at risk here in the UK. The Salisbury attack has highlighted the vulnerability of former Russian intelligence officers who have settled in the UK. This issue was investigated by the Committee as part of its Inquiry, and is addressed in the classified Annex to this Report.
- ↑ Kompromat – compromising information collected for use in blackmailing, discrediting or manipulating someone, typically for political purposes.
- ↑ Written evidence – William Browder, 14 September 2018.
- ↑ The Committee is grateful to the NCA for providing evidence for this Inquiry. The Committee does not oversee the NCA; its work and operations usually fall outside the remit of the ISC.
- ↑ The Serious and Organised Crime Strategy, published on 1 November 2018, announced the establishment of a multi-agency National Assessment Centre (NAC) and the National Economic Crime Centre within the NCA.
- ↑ A Tier 1 (Investor) visa allows the recipient to stay in the UK for three years and four months in exchange for a £2m investment in the UK.
- ↑ These include such high-profile figures as ***.
- ↑ 'From Russia with Blood', BuzzFeed News, 15 June 2017.
- ↑ Letter from the Chair of the Home Affairs Select Committee to the Home Secretary, 6 March 2018.
- ↑ ***
- ↑ Oral evidence – *** February 2019.