You may not have noticed, owing to all the noise about the party-that-wasn’t, but on Wednesday the foreign secretary, Liz Truss – a potential successor to Boris Johnson should he ever, heaven forfend, lose the confidence of the Tory Party – warned us all about the future of the world.
Democrats were losing ground, she said, in a speech at the Chatham House thinktank in London. Those who believed in freedom must stand up and be counted if they were to ensure “democracies don’t just survive, they thrive”. In this, she is right: democracy is under attack everywhere, with kleptocrats such as Vladimir Putin amassing ever more wealth, power and influence while western governments squabble over things such as inshore fishing rights.
As such, her speech was an important warning, except for one startling omission: Britain is a primary enabler of the autocrats she is so worried about; we are butler to the world’s worst people. Our shell companies hide their money, our private schools educate their children, our lawyers defend their reputations, our financial markets fund their companies, and our banks launder their money. It’s absurd to talk about the threat that dictators pose to our democracy without acknowledging how without our assistance they wouldn’t be a threat at all. It’s like condemning a war without mentioning you supplied the weapons, or criticising a party that took place in your own house.
She boasted of Britain’s place in Nato, of its development aid, of its “cyber-security partnerships”, yet all of the problems that these interventions are supposed to solve are worsened by the unregulated financial system centred on the City. The Russian kleptocrats whom Nato is opposing keep most of their wealth offshore, with houses in London their favourite assets and City lawyers their tireless defenders. The aid payments that go to help the crises in Nigeria, South Sudan or Libya are just sticking plasters over wounds worsened by entrenched corruption, again enabled through the UK. Hackers who defraud people of billions of pounds a year launder their money through our poorly regulated economy.
Of course, Britain is not the only place that moves this money or serves these criminals, but this government is increasingly an outlier in its failure to acknowledge our role. This week, Joe Biden’s White House published a lengthy, thoughtful and impressive strategy on tackling corruption, which it has identified as a security priority, since kleptocracy empowers the nation’s enemies and weakens its friends.
“Corrupt actors hide their money in the United States all the time. We can no longer provide them a shadow under which to operate,” wrote the treasury secretary, Janet Yellen, and the USAID administrator Samantha Power in an article announcing the strategy. “Combating corruption abroad, therefore, begins at home, and our first step must be to expose the owners of shell companies and other illicit funds.”
In contrast to that, Truss failed to satisfactorily answer a question from the audience on the British role in laundering money after her speech at Chatham House, choosing instead to talk about how we shouldn’t talk about the empire. If she’d only hung around until after lunch, however, she would have realised quite how colossal her omission was, since on Wednesday Chatham House also hosted the launch of a major report by a group of academics that forensically dissected Britain’s role in enabling corruption, and came to conclusions that were all the more alarming for the sober language they were described in.
“The UK has a kleptocracy problem,” they wrote. “The country’s international reputation has already been undermined by the inflow of suspect capital from the servicing of post-Soviet elites. Beyond this question of image, there are serious questions to consider of the integrity of the UK’s public institutions and the equitability of its laws.”
This isn’t just one problem, though: it is a whole ecosystem, with each aspect sustaining the others in an interconnected and impenetrable web. Ferocious lawyers protect the kleptocrats’ dirty money from scrutiny by underfunded police officers by hiding it in crooked banks behind impenetrable shell companies from offshore territories so it can be spent in prestigious establishments on luxury goods to be stored in top-end property. Meanwhile, when amoral reputation managers threaten nosy journalists with ruinous lawsuits, leading institutions accept it and label their generous donors “philanthropists”, and light-fingered politicians do nothing to upend this whole profitable system.
Truss boasted of Britain’s soft power – “from the Beatles to Sarah Gilbert to Tim Berners-Lee” – but our most significant influence on the world right now lies in our world-class enablers, who protect anyone willing to pay their fees from the consequences of their actions, and leave everyone else behind. Looked at globally, Britain’s primary role is not as a champion of democracy, helping ensure that everyone is equal before the law and has a say in how those laws are created, but a genuine threat to it.
What is depressing is that not much more than five years ago the British government seemed to understand this. It convened a major anti-corruption summit in London, and wrote draft laws that would actually help drive dirty money out of the country. It is only under Boris Johnson that it has lost interest in the matter.
If Truss actually wants to do something for democracy, she could pick up those bills – one reforming Companies House, the other exposing the real people behind the 100,000-odd UK properties owned by shell companies – and get them turned into law. There is plenty more that needs doing, from adequately funding our law enforcement agencies to overhauling our convoluted anti-money laundering regulators, but that would be a step towards driving kleptocratic cash out of the country, and turning Britain into a genuine champion of liberty.
Oliver Bullough is the author of Moneyland: Why Thieves and Crooks Now Rule the World and How to Take It Back