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Posted March 05, 2022

Sean Ring

By Sean Ring

Londongrad in the Crosshairs

  • There are mountains of Russian oligarch money in London.
  • Not only did the oligarchs get passports, but they also got tax deductions.
  • The country that invented money laundering writ large has a crisis of conscience.

Happy Thursday!

Youll need to sit down for this one.

The staggering hypocrisy will floor you if you dont.

Now lets get one thing straight: I love the country of my second childhood.

But lets face it: no one goes there for the weather the food the taxes or the lectures on morality.

What makes the UK so great in general, and London in particular, is that the entire world heads there to make money.

Ive been drunk with more people from more lands in London pubs than I can count.

I weep for those days.

Yes, rent was incredibly high. And the taxes were asinine.

But It was a joyful time in my life.

Now that doesnt mean Im unaware of its, well, dubious financial dealings.

You see, the most brazenly capitalistic place in the western world isnt New York.

No, siree.

That distinction goes to the little square mile known as the City of London.

A place in Greater London, England, and the UK with a different set of laws than everyone else. Literally.

But before I get into the City itself, lets head back to another great place, founded in the nineteenth century.

Hong Kong, circa the 1840s

What the boat people used to call the fragrant harbor was nothing more than a fishing village of a few families off the south coast of China.

But Hong Kong was destined for greater things once the British got their hands on it.

How so?

Ill spare you the details, but lets imagine a conversation between British merchants, trying to procure some tea - which at the time only grew in China.

Their problem was that the Chinese emperor didnt want any British export crap; he would only take silver.

Lets join our friends, who are brainstorming over a pint of IPA - India Pale Ale - which didnt need to be refrigerated and, hence, could be shipped from the homeland.

What are we going to do? The damn emperor wont trade anything for the tea!

But those Chinese like to chase the dragon, dont they?


You know smoke the opium pipe


Ive got an idea How about we sell them the opium for silver

And then use the silver they give us to buy their tea!

Thats it!

Matey, youre a genius!

And that, my friend, is how the Opium Wars started and how the British Empire became the greatest narcostate in human history.

But they needed a bank to finance the whole thing.

Step forward, Thomas Sutherland, director of the P&O ferry company and founder of the Hong Kong and Whampoa Dock company.

Sutherland founded the Hongkong and Shanghai Banking Corporation - now you know them as HSBC.

To spell it out for you: HSBC was founded to launder drug money.

Yes, I just wrote that.

Sure, they financed loads of other things and still do a great job.

Heck, theyre my bank in Hong Kong.

Nevertheless, the Hongkong and Shanghai Banking Corporation was formed to finance the opium trade.

I tell you this, so you know the British have pedigree in this game.

Read this excellent article later for more fun history.

The City of London - Present Day

Why build banks around the world when you can launder money at home?

Enter: Londongrad!

When the Soviet Union broke up, and the oligarchs raped the joint with the help of the Harvard Boys, they needed a place to stash the cash.

And you thought Switzerland had all the fun!

From Reuters:

Russian business has grown tentacles deep in Britain's financial system in the thirty years since the Soviet Union's collapse, prompting the British parliament's security and intelligence committee to warn in 2020 that its influence was so deeply embedded that by now it "cannot be untangled.

While Russian billionaires are best known for their high-end mansions in Belgravia and Knightsbridge, the protection provided by the English legal system, along with light-touch regulation, has also made London a haven for much of their private wealth.

Russians have more than 27 billion pounds invested in Britain where they come to bank, shop, educate their children and make use of the courts, government data shows.

What Russia does in London is similar to what the Chinese do in Hongcouver - sorry, Vancouver - Auckland, Sydney, and Melbourne.

You can see where Im going with this.

After decades of allowing Russian and Chinese businessmen, politicians, and assorted criminals to launder their money into their financial and real estate markets, the western world is suddenly trying to disentangle itself.

When people tell me its the free market that makes a woodshed in London worth a million pounds, I laugh heartily.

Those cities got so expensive because foreigners of both spotless records and dubious distinction change their gains into the home currency and buy stuff with it.

And its a whole lot of cash.

Its not just the cash in the Anglosphere, though. Its the influence on the Continent, as well.

Former French Prime Minister Francois Fillon joined the board of the Russian state oil company Zarubezhneft.

Austria's former Foreign Minister Karin Kneissl was appointed to the board of powerful state oil company Rosneft, chaired by former German Chancellor Gerhard Schroeder.

Former Austrian Chancellor Christian Kern is on the supervisory board of Russian Railways.

Fillon and Kern resigned their posts.

Kneissl and Schroeder have not upon my writing.

The Purported Clean-Up

Straight up, it isnt happening.

Heres why - and this is my opinion, I hasten to add.

Switzerland just ended its neutrality policy by mimicking EU sanctions on Russian money held there.

As someone who worked for a Swiss bank for almost a dozen years, I cant accurately convey to you what I think of this shortsightedness.

Nevertheless, its done.

Next, other world financial centers will watch what happens to capital flows in Switzerland.

Does money come flooding out?

Do places like Dubai and Hong Kong see massive inflows? (Id include Singapore, but theyve also backed the sanctions.)

If money floods out of Switzerland, you can bet places like London will think twice about being heavy-handed.

While that may seem morally unpalatable, money talks and realpolitik will assert themselves.

As an old friend once said to me, You can ignore the laws of economics, but the laws of economics wont ignore you.

Wrap Up

In my estimation, reports of the closing of Londongrad Laundromat, known the world over to clean your currency with a wink and a smile, are wholly exaggerated.

If the money is going anywhere, itll be because those asset owners will move it themselves, if they havent already.

And that wealth will head to more accommodating climes, as it always has.

But probably not to Switzerland, Canada, or the United States.

Maybe thats not such a bad thing after all.

Until tomorrow.

All the best,


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