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Five years ago this month “little green men” popped up on Ukraine’s Crimea peninsula and quickly took control. A month later, the Russian Duma voted to annex the peninsula, in what is a blatant violation of international law and the first time borders in Europe were changed using military force since the Second World War.
The West was slow to react in the early days of the crisis, but has since tried making up for lost time by helping Ukraine reform its economy, train and equip its military, and putting increased diplomatic, economic, and political pressure on Russia.
As part of this strategy to confront Russia’s aggressive behaviour, the United States and Europe have focused on targeted sanctions aimed at the heart of President Vladimir Putin’s inner circle: Russian oligarchs.
However, as the years have gone by resolve seems to be weakening. The Trump Administration, which started out very strongly placing more than 200 Russian oligarchs and political leaders under economic sanctions, has recently shown an indication that it might be softening its approach.
The situation is not much different in the UK. Even five years after the invasion of Crimea, and almost one year since the Skripal incident in Salisbury, the UK still comes up short when it comes to cracking down on questionable Russian money in London.
Perhaps there is no better example of this than the case of the Russian oligarch, Oleg Deripaska.
Deripaska was once the richest man in Russia and the ninth richest in the world. A billionaire several times over, he enjoys powerful connections and is closely connected to Putin.
He is no stranger to controversy on both sides of the Atlantic going back years.
He has had long history of confrontation with American authorities. In the past he was denied a business visa for the United States because of alleged links to organised crime in Russia.
More recently, Deripaska has been identified as a person of interest in the investigation into Russian election hacking. It is is claimed he had business ties with former Trump campaign manager Paul Manafort, who was recently convicted of tax and bank fraud as a result of that ongoing investigation.
Last year, the US put Deripaska on its sanctions list alongside two of his companies, aluminium giant Rusal and its parent company EN+.
Sadly, the sanctions on his companies were short-lived. A team of lawyers and lobbyists were hired by Deripaska and his companies to successfully convince the U.S. Treasury Department to lift the sanctions—, which it did last month.
In the UK Deripaska is equally controversial.
In 2008, he infamously hosted Lord Mandelson and George Osborne on his private yacht. A meeting which Osborne later admitted was a “mistake”. Last week a court in London ruled against Deripaska in a hotly contested property dispute against Vladimir Chernukhin, a London-based former minister for President Putin, putting him back in the news again.
But the real concern about Deripaska is not hobnobbing with political elites on private yachts or conducting questionable real estate deals. It is about Deripaska’s ability to use London to advance his wealth at a time when the UK has identified Russia as a significant geo-political adversary.
In November 2017 Deripaska’s En+ Group was listed on the London Stock Exchange even though there were serious concerns at the time about his close ties to Putin and the Kremlin. During this listing, almost £1 billion was raised and most of the money funds was used to pay debt owed to VTB Bank – a bank under US economic sanctions.
Clearly the listing of Deripaska’s En+ on the LSE at a time of heighten tension with Moscow exemplifies a colossal failure of oversight by the UK authorities.
Now is not the time to go soft on Putin’s inner circle of oligarchs.
As Tom Tugendhat MP, the Chairman of the House of Commons Foreign Affairs Committee stated: “Surely addressing this regime through the financial interests of its kleptocratic presidency and those who are suckling at the teat of the Putin regime is exactly what we should be doing to close off this threat.”
Other oligarchs, not Deripaska, have used London’s lax regulations to clean money and become rich to get around economic sanctions from other jurisdictions.
The recent reversal in US sanctions on Deripaska’s companies combined with the lack of political will in the UK to do anything meaningful to crackdown on Russian oligarchs in London is a grave concern. Russian activity is a national security threat for the UK, the US and their allies.
It is time to wake up to this threat.
Luke Coffey is Director of the Foreign Policy Center at the Heritage Foundation in Washington DC