How the Kazakh elite put its wealth into UK property

Despite an anti-cor­rup­tion pledge by David Cameron five years ago, Britain is still a prime des­ti­na­tion for klep­to­crats’ illic­it finance

Expensive London prop­er­ty is pop­u­lar with wealthy over­seas buy­ers. Photograph: Global Warming Images/Rex/Shutterstock

Ministers face claims they have allowed the rul­ing elite of Kazakhstan to secret­ly invest vast chunks of the country’s wealth in the London prop­er­ty mar­ket after fail­ing to intro­duce promised new trans­paren­cy laws.

Former prime min­is­ter David Cameron pledged at an anti-cor­rup­tion sum­mit in London in 2016 that the UK would end the secret off­shore own­er­ship of prop­er­ty. More than five years lat­er, a pro­posed reg­is­ter of for­eign own­ers of UK prop­er­ty has still not been introduced.

The upris­ings in Kazakhstan last week reflect­ed wide­spread anger at for­mer pres­i­dent Nursultan Nazarbayev’s three decades of rule and the vast for­tunes amassed by a priv­i­leged few.

Property worth hun­dreds of mil­lions of pounds in London and south­ern England has already been iden­ti­fied as bought by Kazakhstan’s wealthy elite in the past two decades. The gov­ern­ment is now under pres­sure to fast-track new laws to intro­duce the reg­is­ter pledged by Cameron.

David Lammy, shad­ow for­eign sec­re­tary, said: “The gov­ern­ment has abject­ly failed to get to grips with the UK’s role in mon­ey laun­der­ing, cor­rup­tion and illic­it finance. London is the des­ti­na­tion of choice for the world’s klep­to­crats look­ing to store ill-got­ten wealth. It is no good using tough words against the Putin regime, or crit­i­cis­ing Kazakhstan’s human rights record, while being a soft touch for the elites that sus­tain and prof­it from auto­crat­ic regimes.”

David Cameron, prime min­is­ter in 2016. Photograph: Andy Rain/EPA

There are near­ly 90,000 com­pa­nies in England and Wales owned off­shore by com­pa­nies incor­po­rat­ed in secre­cy juris­dic­tions.

A report enti­tled The UK’s Kleptocracy Problem, pub­lished last month by the think­tank Chatham House, iden­ti­fied 34 prop­er­ties bought by the Kazakh rul­ing elite from 1998 to 2002 at a cost of about £530m. John Heathershaw, pro­fes­sor of inter­na­tion­al rela­tions at Exeter University and lead author of the report, said: “Most of the prop­er­ty is linked to Nazarbayev’s fam­i­ly or mem­bers of the rul­ing elite that are close to them.” Experts say the port­fo­lio is like­ly to be “the tip of the ice­berg” because many oth­er prop­er­ties will be owned by off­shore shell com­pa­nies which do not dis­close their ben­e­fi­cial owners.

Heathershaw said London was a pop­u­lar des­ti­na­tion for rul­ing elites with sus­pi­cious wealth because it was a glob­al cos­mopoli­tan and finan­cial hub; it pro­vid­ed a range of legal firms offer­ing aggres­sive rep­u­ta­tion man­age­ment ser­vices; and it offered the chance to mix with influ­en­tial fig­ures in polit­i­cal, roy­al and busi­ness circles.

He said: “London has been real­ly impor­tant for the polit­i­cal elite in Kazakhstan and that includes the rela­tion­ships they have devel­oped with indi­vid­u­als such as Tony Blair and Prince Andrew.” Blair pro­vid­ed advice to the Kazakh regime and Prince Andrew has been close to some of its wealth­i­est individuals.

The Kazakh elite’s prop­er­ties bought dur­ing Nazarbayev’s pres­i­den­cy include Prince Andrew’s mar­i­tal home, Sunninghill Park in Berkshire, bought in 2007 for £15m by oli­garch Timur Kulibayev, the son-in-law of the for­mer Kazakhstan president.

It also emerged in ear­ly 2020 that Nazarbayev’s daugh­ter Dariga Nazarbayeva and grand­son Nurali Aliyev own prop­er­ty in London worth at least £80m. The National Crime Agency issued unex­plained wealth orders, which are used to track sus­pi­cious funds, against three prop­er­ties: a man­sion in The Bishops Avenue, one of the most expen­sive roads in the cap­i­tal; an apart­ment in Chelsea; and a man­sion in Highgate, north London. The orders were dis­missed by a judge who found the NCA had not proved any link between the pur­chase of the homes and crim­i­nal funds.

Protesters clash with police dur­ing a ral­ly over a rise in ener­gy prices in Almaty, Kazakhstan, 5 January 2022. Photograph: Alexander Kuznetsov/EPA

Oliver Bullough, author of Moneyland, a book which inves­ti­gates how illic­it­ly gained wealth can be moved around the world, said the upris­ings in Kazakhstan were linked to the unin­ter­rupt­ed flow of the country’s wealth into cities such as London. According to a KPMG report, 162 peo­ple con­trol about half of Kazakhstan’s total wealth.

Bullough said: “Kazakhstan’s elite has been able to extract a vast amount of wealth and leave ordi­nary peo­ple with very lit­tle. And the pri­ma­ry enabler of that extrac­tion has been the UK.”

Ben Cowdock, inves­ti­ga­tions lead at Transparency International UK, an inde­pen­dent anti-cor­rup­tion organ­i­sa­tion, said the UK should now be exam­in­ing if it can impose sanc­tions on any of the rul­ing elite in Kazakhstan who may have ben­e­fit­ed from illic­it funds.

He said: “Kazakhstan is a klep­toc­ra­cy and there are high lev­els of cor­rup­tion at the high­est ech­e­lons of pow­er. The UK should be seek­ing the evi­dence to take action, but it’s extreme­ly dif­fi­cult in a coun­try which has essen­tial­ly legit­imised cor­rup­tion. They’ve tak­en con­trol of all the country’s assets and shared them out among the rul­ing elite.”

Nazarbayev’s where­abouts remain unclear this week and there has been spec­u­la­tion he may have left the coun­try. Nazarbayev, 81, stood down as pres­i­dent in 2019, but until last week still wield­ed con­sid­er­able pow­er and was chair of the country’s pow­er­ful secu­ri­ty coun­cil. He has now been removed from this post.

A UK gov­ern­ment spokesper­son said: “The gov­ern­ment will estab­lish a new ben­e­fi­cial own­er­ship reg­is­ter of over­seas enti­ties that own UK prop­er­ty, in order to com­bat mon­ey laun­der­ing and achieve greater trans­paren­cy in the UK prop­er­ty mar­ket. It is essen­tial that the reg­is­ter strikes the right bal­ance between improv­ing trans­paren­cy and min­imis­ing bur­dens on legit­i­mate com­mer­cial activ­i­ty. The gov­ern­ment will leg­is­late when par­lia­men­tary time allows.”

Original source of arti­cle: https: https://www.theguardian.com/

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