Scene one: A courtroom, just off the Strand in London in 2011. The room is small and functional. There are cases of mauve-and-blue files near a wall. Halogen strips illuminate lawyers making polite argument as slips of paper are passed back and forth. Lady Justice Gloster smiles as Laurence Rabinowitz, QC, the counsel for Boris Berezovsky, mispronounces the name of Roman Abramovich, the defendant. Abramovich, a few places away, remains expressionless.
Scene two: An isolation cell in Moscow in 2009. Sergei Magnitsky, a corporate lawyer who has investigated wrongdoing at the highest levels of the Russian state, is lying on the floor. He has been held without trial for 11 months. He has been beaten with batons. He has been deprived of sleep. Pleading for his life, he calls for a doctor. He is met by a phalanx of riot police, who bludgeon him to death. His only crime, according to campaigners, was to “tell the truth”.
Keep these two scenes in mind as we try to “tell the truth” about the chicanery that followed the Boris Yeltsin privatisations. This is a story that will encompass the question, ducked for so long, about whether the ownership of Chelsea Football Club should be removed from Abramovich through legal decree, but it will also call out the near-silence that has surrounded one of the biggest scandals in British sport. This is an issue that should have been confronted far earlier.
First, let’s explore why Magnitsky was murdered and why a clause in his name may soon be a part of British law. Magnitsky worked for Bill Browder, an American hedge-fund owner. As told in Browder’s startling book Red Notice, the financier had been the victim of a £150 million tax fraud from which Vladimir Putin’s associates had benefited. Magnitsky, Browder’s lawyer, had courageously named the men he believed were guilty. The Kremlin responded by having him jailed, assuming that this would be the last of it. The power of Putin is so absolute that few people dare stand up to him.
Browder had different ideas; successfully lobbying the American Congress for a change in the law to hit Putin’s cronies where it hurts most. Officials in Russia siphon off money from legitimate businesses through threat and intimidation. They then squirrel the money out of the country, into prime assets in the West, ready for their retirement and holidays, and as a bolthole to escape justice when Putin finally leaves office. The Magnitsky Act of 2012 is, in part, about confiscating that money. It is not anti-Russian, but pro the Russian people who have been swindled by gangsters and oligarchs for so long.
As Browder put it in a column in The Mail on Sunday: “It only takes a stroll through Belgravia in west London to see this. Every self-respecting member of the Putin regime has an expensive home in Britain. They like our property ownership laws, which guarantee them title and give them a safe asset abroad should they ever need to flee.
“For them, there is no greater status symbol than a townhouse in Belgrave Square or Eaton Terrace. They send their children to public school and enjoy shopping on the Kings Road. It is important to remember that Putin’s cronies have bought these grand houses with billions stolen from the Russian state. Our response should be to seize these houses, bank accounts and shares.”
Browder is right. The US has already passed a version of the Magnitsky Act and has seized the assets of dozens of corrupt Russians. The law sent a chill through Putin’s kleptocracy. We should introduce a beefed-up version of the same law. Why should anyone be allowed to benefit from defrauding their own people and then enjoy the trappings of gilded privilege in London?
And this takes us back to scene one. For, in his legal scrap with Berezovsky, Abramovich opened up for the first time about how he amassed a personal fortune of £8 billion. Jonathan Sumption, QC, his lawyer and now a judge in the Supreme Court, admitted that the auction that handed Abramovich control of Sibneft, the Russian energy giant, was “rigged”. The court also heard that it was a “stitch-up”. In essence, this was one of a series of deals in which Yeltsin handed the mineral wealth of the Russian people to the oligarchs at a fraction of its true cost in return, it is claimed, for free advertising on their TV channels in the build-up to the 1996 election.
Paul Gregory, the economist, described the Sibneft deal as “the largest single heist in corporate history and a lasting emblem of the corruption of modern Russia”. Abramovich’s involvement may only have gone so far as the “stitched-up” auction, but surely that is corruption.
For Yeltsin, the gamble worked. He won the election having trailed in the polls. As for Abramovich, who has always denied knowledge of anything corrupt, he became rich beyond his dreams. The deal enabled him to emerge victorious from the notorious aluminium wars.
He bought a fleet of yachts, helicopters, his own private Boeing and homes around the world, including a £125 million London mansion in Kensington. He also bought Chelsea FC, presumably confident that his assets would be safe in a nation that has long enjoyed the cash flowing from oligarchs. A strong UK version of the Magnitsky Act could change all that. It could enable the state to determine whether assets owned in Britain were paid for with ill-gotten cash. If our legislators have the courage to draft a rigorous clause, the deal could be looked into and it is not just Abramovich’s homes and private assets that may then be at risk, but Chelsea FC.
This could also bring to an end a long-running saga that has shamed the English game and received scant scrutiny. In football, the oligarch is mentioned affectionately for his engaging grin and enigmatic personality. People eulogise the money he has lavished on Chelsea and his charitable causes. This is moral chicanery, however.
How can a man be praised for spending a fraction of the wealth that, according to his barrister, was obtained through a stitch-up?
The closeness of Putin and Abramovich can be seen by examining Putin’s Kleptocracy: Who Owns Russia?, the book by Karen Dawisha, professor of political science at Miami University. “Abramovich helped fund the purchase for $50 million of Putin’s first presidential yacht,” she writes.
Regular readers will know that this subject has often been tackled in this space, triggering hate mail and anonymous threats.
As for Putin’s enemies, they have met all manner of curious ends. Berezovsky ended up dead in a locked bathroom, a ligature around his neck. A British coroner recorded an open verdict but US intelligence officials suspect an assassination.
Buzzfeed has chronicled 13 other suspicious deaths in the UK, including Alexander Perepilichnyy, who suffered a heart attack while jogging, and Alexander Litvinenko, who died after drinking tea laced with a radioactive substance. A public inquiry found that Litvinenko’s assassination was probably ordered by Putin himself. Yesterday, Nikolai Glushkov, who was a friend of Berezovsky and who testified in the case against Abramovich was also found dead.
Putin cronies act with impunity because they have, for too long, got away with it. They have never feared retribution because policy has been so lax. British political parties have taken Russian money, guaranteed anonymity for investors in London and only belatedly tackled issues such as Baltic defences and the strategic danger of Russia’s gas export monopoly.
This could be about to change. History teaches that bullies are only stopped when they are met by a stern response. That is why the Magnitsky law is not just about justice, but geopolitics. It is one of the few usable weapons that Putin and the oligarchs fear. As for Abramovich, he may be wondering, perhaps for the first time, whether that rigged auction is finally about to catch up with him.