After securing residency and acquiring wealth in the UK, kleptocrats and/or their family members often try to gain traction in British society by managing their reputation through PR agents, forging ties with political, business and other leaders and stifling any reporting of alleged wrongdoing.
Kleptocracy is the extension of political and economic power into all realms of life. A sign of its strength is its transnational reach. Kleptocracy thrives when it can extend the corruption of institutions beyond national boundaries, overcome law and regulation, and weaken support for human rights and constitutional democracy. As these are self-evidently damaging outcomes, the success of kleptocracy requires that the perpetrators are hidden in plain sight.
When perpetrators acquire a new ‘clean’ image, their money-laundering practices become invisible, but the individuals themselves become influential voices in Western democracies.
This penultimate chapter explores how such image management and influencing occurs in three key respects. First, it considers reputation laundering via philanthropy. Second, it explores libel actions against and threats to journalists and researchers before outlining supply-side factors in the reputation management industry. Finally, it discusses how post-Soviet elites have made political friends and entered high-society networks through the funding of political parties.
Before we begin, a caveat is necessary. In this chapter, more than in any of those preceding it, we are working with limited data, as public examples of reputation laundering are rare, and the philanthropic and associated sectors suffer from major absences of transparency. Indeed, it is in the very nature of reputation laundering that it would not exist if it were entirely visible.
Becoming a philanthropist
Philanthropy, while deemed an act of generosity, can also be self-interested. Donors can give to causes they support and withdraw such support from institutions that displease them. Philanthropy can also serve instrumental purposes, including the status and moral standing gained by association with a ‘worthy’ institution. Once acquired, such philanthropic work can be cited in defence of a donor’s reputation.
Donations to universities can also be used to gain status in the UK. The Ukrainian businessman Dmytro Firtash (Annex, numbers 88–90) – later charged in the US with involvement in a scheme to bribe officials in India (charges he denies) – made a substantial donation to the University of Cambridge, endowing a research centre on Ukrainian studies and establishing two permanent academic posts. Facing significant corruption accusations in Ukrainian media, Firtash brought a libel case against the Kyiv Post in the UK. His line of argument rested on him being presented as a respectable businessman and a philanthropist, with ‘substantial and important connections’ in the UK, including his donation to the University of Cambridge. While this specific lawsuit was dismissed, it is emblematic of the explicit use of donations to prestigious universities to establish good standing – even in court.
In the UK, universities and think-tanks increasingly compete in an unregulated global market for donations. Unlike in the US, they are not required to make donors, amounts or any conditions public. For this reason, we know little about the role in UK universities of donations from abroad, except in the rare cases when they become public knowledge. In the US, when a 1980s amendment to the Higher Education Act of 1965 was enforced fully for the first time in 2019, $6.5 billion in previously unknown donations – many of them originating in autocracies – was reported with more than 60 institutions reporting donations for the very first time.
While certain safeguards have been put in place following previous scandals – such as when the London School of Economics and Political Science accepted funds from the son of Libyan leader Muammar Gaddafi – the concerns by university managers still largely centre on the reputational risk presented to the institution. This is one of the conclusions of research carried out by some of the authors of this paper for the National Endowment for Democracy. From our survey of the measures put in place for philanthropic gifts at Russell Group universities, we know that only seven out of 24 institutions have established both public ethical guidelines and a dedicated and independent gifts committee. Even where they do, credible cases of reputation laundering have arisen. What matters, most of all, is to prevent negative media coverage.
What is essentially an ‘outside-in’ dynamic pertaining to funds coming from abroad is complemented and made possible by a distinct internal vulnerability. Over the past decade, the amount of private donations to universitites in the UK and Ireland has nearly tripled. In the same period, public funding of higher education has been inconsistent and latterly has been disrupted by the uncertainty caused by Brexit and cuts to overseas development aid, which supports a great deal of research by British universities. The focus on universities as ‘businesses’ has brought reliance on private donations to unprecedented levels. All this, in the words of one of our respondents, ‘is lowering the bar of what is considered acceptable’ by universities.
Pressuring journalists and researchers
London’s transformation into a centre of so-called ‘libel tourism’ – such as in cases like that of Firtash – has been detailed elsewhere. The English court, despite libel-law reforms in 2013, remains a jurisdiction of choice for those wishing to aggressively manage their reputation.
In February 2021, for example, Anglo-Kazakh mining group ENRC issued libel proceedings in the UK High Court against author and investigative journalist Tom Burgis and the publisher of his book Kleptopia, HarperCollins. A month later, Russian oligarch Roman Abramovich also launched proceedings against HarperCollins, this time targeting journalist Catherine Belton and her book Putin’s People.,
The standard professional defence that lawyers must take on and represent such clients is belied by increasing awareness that cases such as these are what are referred to in the US as Strategic Lawsuits Against Public Participation (SLAPPs) – cases taken not for their legal merit, but for the effect of silencing a critic by locking them into a long legal struggle.
On 24 November 2021, 19 free-speech organizations issued a statement that Abramovich’s lawsuits against Catherine Belton and HarperCollins are SLAPPs. The Abramovich case centres on the claim in Putin’s People that he purchased Chelsea FC at the behest of Russian president Vladimir Putin. A statement from the firm Harbottle & Lewis, representing Abramovich, claimed that Belton’s book ‘falsely alleges that [Abramovich] acted corruptly’. Abramovich added that the ‘false allegations in this book are having a damaging effect… on my personal reputation’. But the chilling effect under English law is the time and expense of litigation for the UK defendants in a case brought by a person who is no longer resident in the UK.
There is an increasing awareness that cases such as these are Strategic Lawsuits Against Public Participation (SLAPPs) – cases taken not for their legal merit, but for the effect of silencing a critic by locking them into a long legal struggle.
A further three Russian billionaires and the Russian state oil company Rosneft followed Abramovich in filing civil claims against HarperCollins. Two of these billionaires, Mikhail Fridman and Petr Aven (who settled their claims), were represented by Geraldine Proudler, one of the UK’s leading reputation-management lawyers. Proudler also sits on the board of the Guardian Foundation (an independent charity which, among other activities, supports media under threat), is a former lawyer for the Guardian newspaper and is a former trustee of English PEN, one of the UK’s leading free-speech organizations.
This chilling effect is most visible in the threat of action rather than action itself. Karen Dawisha, the author of the 2014 book Putin’s Kleptocracy, was forced to change publishers due to legal concerns in the UK. As her initial publisher, Cambridge University Press, stated after announcing it was dropping Dawisha’s book: ‘We believe the risk is high that those implicated in the premise of the book… would be motivated to sue and could afford to do so. Even if [Cambridge University] Press was ultimately successful in defending such a lawsuit, the disruption and expense would be more than we could afford, given our charitable and academic mission.’ Dawisha’s book was eventually published by the US publisher Simon & Schuster.
Legal enablers of reputation laundering also innovate to protect the privacy and public image of their clients. A recent trend to emerge after UK libel laws were made less punitive for defendants in 2013 has been for high-net-worth individuals to use data protection and privacy laws to bring ‘quasi-defamation’ cases. Mikhail Fridman and Petr Aven’s claim against HarperCollins (which led to the above-mentioned settlement) was in regard to data protection.
The market in ‘reputation management’ is booming and lucrative for legal firms and other companies that compete to offer services to clients. Firms specializing in reputation management offer not only defensive but offensive services to their clients. These include the removal of critical coverage of the sources and uses of wealth accrued in kleptocracies.
Former Russian official Vladimir Yakunin – an ex-head of the Russian state railway company, who has been specifically sanctioned by Canada, the US and others for his ties to the Kremlin – has turned to British entities on multiple occasions to help bolster his image, while simultaneously preventing the publication of critical information regarding his background. In his efforts to deter reportage into significant corruption allegations, Yakunin turned to the British firm GPW + Co to ‘provide the Yakunins with information they needed to keep assets hidden from anti-corruption investigators’. According to one report, the firm further ‘provide[d] the home address of a British journalist who had written a negative story about the family’, something the firm would neither confirm nor deny.
Certain firms are very prominent players in this market. The Yakunins (Annex, numbers 70–71) also employed the law firm Mishcon de Reya (whose slogan is ‘It’s business. But it’s personal’). After a range of media outlets covered the ‘kleptocracy tours’ that took members of the public to a series of London properties tied to assorted oligarchs and non-UK political figures, including the Yakunins, Mishcon de Reya forced the removal of at least one article, with the publisher both issuing a public apology and covering assorted legal costs. Mishcon de Reya also represented Maxim Bakiyev, threatening Global Witness with legal action before it published a report on a money-laundering scandal in Kyrgyzstan. In 2021, the same company acted for Dariga Nazarbayeva to issue a legal threat against a London-based magazine to prevent an article about the death of her son, Aisultan, from natural causes related to cocaine addiction in August 2020.
By leveraging the threat and cost of legal action to prevent publication of damaging information in the first place, law firms in the reputation management sector thus offer more than just the right to a legal defence. Regarding Yakunin, for instance, one British journalist recently revealed that ‘upwards of 50 percent of the critical material on the oligarch [ends up] on the cutting-room floor’, due largely to concerns about legal threats.
This is but one oligarch amid a far broader series of similar stories regarding those from other kleptocratic states. As another British investigative journalist who has written extensively on post-Soviet oligarchs said: ‘They hint that they’re very rich, while we have limited financial resources and they will just close us down. That doesn’t always work, but that does have a chilling effect. It’s intimidating, and it’s gotten out of control.’
Donating to political parties
Boris Johnson’s nomination of Evgeny Lebedev to a life peerage in 2020 was not without controversy. Not only was it viewed by many as cronyism (Johnson and Lebedev have been friends and political allies since 2009), one expert on Russian security issues said it showed Johnson’s ‘contempt for Britain’s intelligence agencies’, as Lebedev’s nomination came days after the release of the UK parliament’s Russia report which highlighted the risks posed to UK democracy by the Russian elite. Despite security agency concerns about Lebedev (who became a British citizen in 2010 but retained Russian citizenship) posing possible security risks because of his father, a former KGB agent, his confirmation was approved after discussions between 10 Downing Street and the House of Lords appointments commission. The peerage granted Lebedev the title ‘Baron Lebedev, of Hampton in the London Borough of Richmond upon Thames and of Siberia in the Russian Federation’.
Only British citizens and companies are legally able to donate money to UK political parties, but this includes an increasing number of naturalized citizens of Russian and Eurasian background who have given money to the governing Conservative Party. We may ask why this tiny section of the UK population is disproportionately represented among donors to the governing party. One answer is that we should not be surprised that those businesspersons who made their fortunes partly due to their close links to those in power in Russia and Eurasia are so keen to give to the political masters of their adopted country. Their purpose may be instrumental – to gain access and influence decisions – or part of efforts to gain status – to enter the elite and join their conversations.
Only British citizens and companies are legally able to donate money to UK political parties, but this includes an increasing number of naturalized citizens of Russian and Eurasian background.
A second answer lies in the aggressive approach to fundraising taken in recent years by Conservative Party co-chairman Ben Elliot – an approach dubbed as ‘cash for access’ where, following a sizeable donation, the rich gain access to senior party figures, including the prime minister, at exclusive dinners. Elliot also co-founded and runs luxury concierge service Quintessentially, which caters to the needs of high-net-worth individuals, although Elliot’s spokesperson claimed that the company ‘is entirely separate from his voluntary role as Conservative party chairman’.
Business figures seeking to develop links with politicians and vice versa is hardly a new phenomenon, but since the turn of the 21st century the relationship between transnational capital and the influence of corrupt states has become a more prominent issue in the UK, especially in light of Russia’s attempts to interfere in elections abroad. This increases the risk that, after obtaining British citizenship for themselves, their families and associates, erstwhile oligarchs may seek advantage not only for themselves and their companies, but potentially for their countries of origin.
Lubov Chernukhina (Annex, number 85), the wife of former Russian deputy finance minister Vladimir Chernukhin, donated more than £2.1 million to the Conservative Party after becoming a British citizen – enough to attend monthly meetings with the prime minister and be one of the party’s top 10 donors.
However, an October 2021 Pandora Papers investigation claimed that Lubov’s wealth flows through Vladimir’s secretive offshore structures which ‘raises the question over the extent to which it is Vladimir, not Lubov, who may be the ultimate source of some of the cash flowing into the Conservative Party’. An earlier leak of US Financial Crimes Enforcement Network (FinCEN) documents showed that her husband had received $8 million (£6.1 million) from a Russian politician, Suleyman Kerimov, who was later sanctioned by the US. In response to news articles that reported this information, lawyers representing the Chernukhins declined to say whether Vladimir Chernukhin had received this $8 million, but stated that Lubov Chernukhina had never received money derived from Kerimov or any company related to him. They added that Lubov’s donations to the Conservative Party had never been ‘tainted by Kremlin or any other influence’ and had been declared in accordance with Electoral Commission rules.
Some donors also have criminal convictions arising from their backgrounds in Eurasia. It must be noted that it is not the origins of the persons themselves which raise concerns, but the origins of the wealth, the nature of their business relations in Russia and Eurasia, and any loyalties and obligations that arise from these relations.
Between 2010 and 2019, the Conservative Party received over £3 million from donors with a Russian business background, including from former arms dealer Alexander Temerko. Since then, the volume of donations appears to have increased. Among other major donors are individuals who, while not themselves of Russian or Eurasian background, have made their money doing business in the region. These include Mohamed Amersi, who has given more than £500,000 to the Conservative Party since 2018, and who the Guardian reported as having been one of the advisors on a transaction in 2010 involving the purchase of shares by Swedish telecoms company TeliaSonera from their local partner, based offshore in Gibraltar, which was subsequently revealed to be beneficially owned by Gulnara Karimova (Annex, numbers 93–97). Mr Amersi’s lawyers commented to the Guardian that any suggestion he ‘knowingly’ facilitated corrupt payments was false.
The 2020 report of the UK parliament’s Intelligence and Security Committee regarding Russian influence quoted the Secret Intelligence Service on ‘the very muddy nexus between business and corruption and state power in Russia’. The report warned of the intersection of this nexus with British politics, stating that:
With an absence of transparency requirements on universities and charities, and no legal requirement to check the sources of wealth behind a political donation, British social and political institutions remain open to hidden influences from Russian and post-Soviet elites. Such weaknesses are chronic and institutional – they are not just about a small number of examples of wrongdoing. But UK state and society have the power to fix them.