UK to scrap golden visa because of pressure from its links to Russia
By Jeph Ajobaju, Chief Copy Editor
London has announced plans to scrap its “gold-plated” visa scheme allowing foreign investors a fast-track to settling in the United Kingdom because of its abuse by Nigerians and Russians with dirty money that has turned the city into “Londongrad”.
Wealthy individuals and companies from around the world invest legitimately in UK financial and property markets. Most Most non-European Union (EU) citizens do so to obtain UK residence permit and eventual citizenship, as allowed by law.
But Transparency International has identified more than £5 billion of property bought in the UK with “suspicious wealth”, 20 per cent of it from Russia.
Vladimir Putin’s aggression in Ukraine irks the West and puts pressure on the British government to lift the lid on and sanction his Russian oligarch allies who launder money into the lucrative UK property market.
Nigerians included
Nigerians are also in the loop, as revealed in the Pandora Papers published in October 2021 by global media outlets, including Nigeria’s PREMIUM TIMES.
The Pandora Papers named several Nigerian personalities – Governors, judges, public servants, politicians, among others – who invested millions of pounds in the UK property market using offshore companies to hide their identities.
To name just four Nigerian public officials who acquired such assets without declaring them to the Conduct of Conduct Bureau (CCB) as required by law:
- Ogun Governor Dapo Abiodun, whose luxury home in London Bola Tinubu lodged in during his medical treatment last year.
- Mohammed Bello-Koko, whom President Muhammadu Buhari appointed substantive Nigerian Ports Authority (NPA) Managing Director on 15 February 2022, after acting in that capacity since 6 May 2021.
- Senator Stella Oduah, who bought a property in London with N5 billion cash and whose investigation by the Economic and Financial Crimes Commission (EFCC) has been killed by federal Attorney General Abubakar Malami.
- Stella Ogene, a judge in Delta State who incorporated an offshore company in Seychelles in 2009 and through it bought a London property for £224,000 in 2010. She retired from the judiciary in 2020.
But by far the biggest non-EU foreign investors in the UK property market for the purpose of obtaining residency are Saudis, Emiratis, other Middle Eastern billionaires; and Russian oligarch billionaires – many of them allies of Putin.
Two among the most famous Russians are
- Evgeny Lebedev, who owns the London Evening Standard by acquiring a 63 per cent stake in it in 2020.
- Roman Abramovich, who bought Chelsea Football Club in 2003.
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Auditor says fed Accountant withdrew N1.6b without approval
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UK under pressure over links to Russia
The BBC reports below why and how the British government that has tolerated money laundering for decades is now turning the screw on crooked investors:
Visas offering foreign investors fast-track residency in the UK are expected to be scrapped by the government, amid pressure over UK links to Russia.
A government source confirmed reports of an announcement next week on Tier 1 investor visas, which offer residency to those spending at least £2 million.
The scheme was introduced in 2008 to encourage wealthy people from outside the EU [European Union] to invest in the UK.
It has been under review for some time, after concerns it is open to abuse.
However, the expected announcement next week comes amid pressure on ministers to cut UK ties to Russia over the threat of invasion to Ukraine.
Russia has amassed more than 100,000 troops along Ukraine’s border – but denies it is planning an invasion.
The Tier 1 (investor) visa, often called a “golden visa”, offers residency to those investing £2 million or more in the UK, and allows their families to join them.
Holders of these visas can then apply for permanent residency in the UK, at a speed depending on how much they invest.
A £2 million investment allows an application within five years, shortened to three years with £5 million or two years if £10 million is invested.
The Home Office said it had already reformed the scheme to ensure it is not used to facilitate corruption, and did not rule out further changes.
A spokesperson added it would report “in due course” on an ongoing review of visas granted before changes to the scheme in 2015.
Russian citizens have 14,516 UK investor visas
The Home Office has issued 14,516 investor visas to Russian citizens since the scheme opened in 2008.
Several changes have been made since its introduction, including extra checks on how and when applicants acquired their wealth.
Banks are also now required to complete certain checks before opening accounts for applicants – who are also required to submit extra paperwork if their qualifying funds are invested through a chain of different companies.
In 2020, Parliament’s intelligence and security committee argued for a “more robust” approach to approving Tier 1 visas as part of a report on Russian influence in the UK.
Amount of Russian ruble in the UK
The UK has been considering sanctions against Russia over Ukraine but Foreign Secretary Liz Truss has told the BBC “there have been issues in the past with illicit finance in London, which we are clearing up”.
Why is it difficult to tackle the issue?
Many wealthy individuals and companies from Russia and around the world invest legitimately in UK financial and property markets.
But the anti-corruption organisation Transparency International has identified more than £5 billion of property bought in the UK with what it says is “suspicious wealth”, one-fifth of which has come from Russia.
A Home Office report says the UK has seen “a significant volume of Russian, or Russian-linked illicit finance”, which is spent on things like luxury property, cars and school fees, and sometimes as donations to cultural institutions, which allow individuals to “launder their reputation”.
When it comes to property, which can be owned through companies rather than in the names of individuals, information sometimes does not come easily.
The Overseas Company Ownership database for England and Wales says only four of 94,000 properties where the registered legal owner is an overseas company, are listed as being owned by Russian companies.
But it’s possible that many more property purchases could ultimately be owned by Russian individuals, using companies based overseas in places such as the British Virgin Islands (BVI).
The scale of the use of these companies was revealed in a major leak of almost 12 million documents known as the Pandora Papers in October 2021.
It exposed hidden wealth, tax avoidance and, in some cases, money laundering by some of the world’s rich and powerful people.
Researchers identified more than 700 offshore companies which owned UK properties, and found that 5 per cent of them were owned by Russian citizens.
One example was Alexei Chepa, a Russian politician and businessman, who used a BVI company to buy a 10-bedroom mansion in Holland Park in 2011 – it was sold last year for £25 million.
His representatives said the purchase “would have followed absolutely the proper processes as advised at the time”.
Why the UK is attractive to Russian investors
London has long been a popular destination for wealthy Russians to settle in, or to purchase property and investments.
The UK’s “golden visa” – Tier 1 (Investor) visa scheme – offers residency to those rich enough to invest £2 million or more in the UK, and allows their families to join them.
This scheme is expected to be scrapped by the government shortly amid pressure over UK links to Russia.
But currently, holders of these visas are able to apply for permanent residency in the UK, along with their families. How quickly they can apply depends on the size of their investment:
- Two years with £10 million
- Three years with £5 million
- Five years with a £2 million
Russian companies have also been able to raise large sums in share sales on the London Stock Exchange.
An energy firm (En+ Group) was one such beneficiary. At the time of its initial public offering, the company was controlled by Oleg Deripaska, an associate of Putin.
A House of Commons report in 2018 called on the government to close the gaps “in the sanctions regime that allowed a company such as En+ to float on the London Stock Exchange”.
Action the government taken so far
In 2018, the UK government introduced a mechanism to confiscate property without first seeking a criminal conviction.
These Unexplained Wealth Orders (UWOs) put the onus on the individual to prove where the cash had come from to purchase the property.
However, UWOs have been used just four times, and only one has resulted in property being surrendered so far.
Another tool available to courts is the Account Freezing Order (AFO). It allows courts to freeze funds in a bank or building society if they suspect the money is linked to criminal activity.
The introduction of the AFO has been more successful so far than the UWO, according to a report from the Chatham House think tank, which points to action taken against the niece of Syrian president Bashar al-Assad and the son of a former Moldovan prime minister.
The government said in 2016 that it had plans to fight money laundering through a comprehensive register of beneficial ownership for UK property.
Beneficial ownership refers to the person who ultimately owns or controls a property and benefits from it.
These plans were mentioned in the 2019 Queen’s Speech, but the government has not yet announced when it plans to bring forward legislation.
Lord Faulks, a former Conservative justice minister, has said that Downing Street under Theresa May “leant on him” to stop him introducing such a measure in 2017 and then again in 2018.
The UK government has said its existing sanctions on Russia would be widened in the event of Russian action against Ukraine.
The Foreign Office says the new measures will allow the UK to act “in lockstep with the US and other allies to freeze assets and ban travel”.
Individuals linked to the Kremlin would be targeted, their UK assets would be frozen, and they would be banned from entering the UK, and be unable to do business with any UK business or individual.
