Britain’s Money Laundromat develops a Leak


pexels-photoOddly, moments after I had published my latest blog post, I happened to look up that day’s front page of The Guardian newspaper, only to discover that the “Exclusive” covered the money laundering theme of my own blog post.

“UK at heart of $3bn secret payments by Azerbaijan”, the headline reads, proving that I was quite right calling Britain the most corrupt country in the world. It is alleged in the article that Azerbaijan’s ruling elite operated a secret scheme to pay prominent European politicians, journalists and businessmen, laundering money via a network of obscure British companies, or rather Scottish Limited Partnerships.

The latter is, incidentally, a theme dealt with in a crime novel by Ian Rankin. Rankin gets his most famous creation, Inspector John Rebus of Police Scotland, involved in a money-laundering scandal that sees Rebus track down various villains operating in Rankin’s (and Rebus’) home town, Edinburgh. Scottish Limited Partnerships enable organised crime to establish bogus companies, using tax havens like the British Virgin Islands, Seychelles and Belize offshore banks corporate “partners”. Rankin’s novel introduces us to a man from a wealthy family background, who is now involved in corporate crime to cover the huge losses he incurred with his own banking and stockbroking efforts. His is the corrupt heart that beats beneath the glorious architecture and highly respectable face Edinburgh puts on for millions of tourists each year. Outwardly he is a member of Edinburgh’s elite, rich and successful, envied by many. But in private he’s a failure in his chosen line of business, a potential murderer and a drug addict.

pexels-photo-351264The real-life investigation of The Guardian asserts that Azerbaijan’s leadership made in excess of 16,000 secret payments between 2012 to 2014, aiming to influence European politicians and journalists as part of an international lobbying campaign to deflect international condemnation of the country’s president, Ilham Aliyev, and those close to him.

According to The Guardian, there is at present no suggestion that all of the recipients of these payments were aware of the original source of the money they received, as the payments arrived via a disguised route.

The Guardian’s investigation and various leaked documents show that Britain’s lightly regulated corporate landscape makes it easy for organised crime and corrupt regimes to move large sums of money around without attracting the beady glare of tax authorities and regulators. Dubbed the “Global Laundromat”, the money-laundering operation is staggering in its size. Seven million pounds alone were spent in the UK on buying luxury goods and paying for private school fees.

One of Europe’s leading banks, Danske, was unwittingly caught in this “laundromat” scheme via their branch office in Estonia, where large sums of Azerbaijan’s illegal money were being “laundered”. Danske first noticed the irregular payments in 2014, when it was investigating an unrelated money-laundering issue and stumbled across the Azerbaijani angle. Since then Danske has tightened its procedures in all its branches.

Ian Rankin and Alexander McCall-Smith both use the city of Edinburgh in Scotland as background for many of their novels and short stories, but they couldn’t be more different in their approach. While McCall-Smith’s Edinburgh is heart-achingly beautiful, often mildly eccentric, but always affluent, respectable, kind and funny, Ian Rankin’s Edinburgh is sinister, rotten to the core, impoverished and life-threatening.

Both authors use the Scottish city as another character in their stories, and we get to see many different aspects of the ancient city by the sea, both in terms of geography and psychology. McCall-Smith clearly loves the city (see his Isabel Dalhousie/Philosophers’ Club series as well as his 44 Scotland Street series), while Ian Rankin has more of a love-hate relationship with Edinburgh. Both authors treat readers to an intimate dissection of what life in Scotland’s best known city is like, and how living there influences people’s actions.

taxes-tax-evasion-police-handcuffsHow these latest real life revelations about Britain’s involvement in international money-laundering schemes will influence future storylines of UK legislature remains to be seen. That far greater transparency is needed in the UK’s offshore banking and corporate sectors is evident. Practically all the other EU countries have been pushing for this for ages. There are various legal measures afoot that will alter how Scottish Limited Partnerships can be set up and operated in the future. But critics say these changes to UK corporate law are not far reaching enough.

Prime Minister Theresa May is too incompetent and weak as a leader of the Tory-led government to effect positive change during her tenure. We have already seen May back down on various issues related to corporate greed, most notably on worker representation in board rooms and corporate fat cats’ exorbitant pay packages. But it’s not just the domestic angle that’s worrying.

Imagine President Frump, when he proposes the USA should do “lots of great deals with Britain” straight after the UK leaves the European Union in March 2019. President Frump favours “deregulation” of the financial sector, so the UK’s money laundromat may have sprung a temporary leak, but there are already plenty of “engineers”, domestic and foreign, working to fix this regrettable problem.

BTW, before he became President of the United States of Xenophobia, Mr Frump was also busy trying to build a hotel complex in Baku, Azerbaijan. He may have eventually cancelled the deal, but it still leaves huge question marks over Frumpy’s ability to judge who he should do business with and who he should stay well clear of.

pexels-photo-342945Thus, corruption is here to stay. It will continue to prosper as Britain’s greatest, and most reliable, money spinning venture – poisoning every corner of the kingdom, from blustery cold Edinburgh down to the sunnier shores of Brighton, like a relentless worm gnawing its way through a once golden apple, leaving nothing but a blackened, stinking morass in its wake.