What's the mood in the City right now? It is one of watching and waiting and hoping. And, in several cases, running for the hills.
The investment community hates uncertainty. Some, not many, thrive on it. They’re the hedge funds and traders who love volatility. The rest, the bulk, hunker down, not prepared to commit to anything until they have a better idea of what the future looks like.
As a result, the moment Russia attacked Ukraine, most deals were put on hold. Planning and preparations are taking place as if there will soon be a return to normal, but there are few clinching negotiations and irreversible signings.
They’re running algorithms and trading programmes based on different commodity prices and scenarios, but it’s very much a waiting game. The truth is that, overall, the Square Mile, starved of credible inside information, is gazing at the 24-hour TV bulletins like everybody else.
It's a rare point, for markets and their super-smart actors who like to stay ahead. For once, while a war unfolds and without any real indication of how bad it might get and how it could end, they’re stuck.
Meanwhile, those with Russian interests are frantically going through their files and shredding what they can. They are contacting PRs and preparing statements trying to put distance between themselves and Vladimir Putin and his regime.
But as they look in the mirror and steel themselves for an aggressive call from the media or from politicians looking to expose them or from the authorities now hell-bent on applying sanctions and freezing assets, they can seek reassurance that they were not the only guilty party.
Sure, some elements in the City went out of their way to work for oligarchs and cronies of the Russian president. The fact is, though, they were encouraged to — and not in the first place by a Tory party anxiously canvassing for donations as is widely portrayed, but by a Labour government keen to give Britain a boost after the 2008 financial crisis.
That’s when the concept of the “golden visa” was introduced, when British residency was granted in exchange for seven-figure investments. The scheme worked like this: investments of £2m or £5m or £10m could be made, in gilts or government bonds or British businesses, in return for permission to apply for permanent residence in five, three or two years respectively. After that, they had the opportunity to gain British citizenship.
Many of those taking up the “tier 1 investor visa” to give its official title were Russian. Why? Russians were attracted by the open, efficient, legal courts systems and the private schools, and London’s lifestyle, the high-end dining and shops. English is the universal language and the UK is between Moscow and the US. And London is a leading global financial and commercial centre. These were all heavily appreciated by the Russians. Also, thanks to the way Russia was administered from Moscow, favouring a privileged inner circle and ignoring corruption, there were more of them, having exploited routes to riches that were simply unavailable in many other countries.
In truth, as well, the British government and numerous advisory firms went out of their way to make them feel at home.
An entire industry grew up around assisting the Russians, not only with the albeit limited official paperwork, but in aiding them with their choice of residences, decor, schools, limousines and hiring their domestic staffs. Nothing was too much trouble. Glossy magazine articles and TV programmes were devoted to the new designer “bling” wearers who had descended on London.
Among the more snobbish elements of society, the Russians were treated with a certain amusement for their “bad taste” and novelty value. Rarely did they inspire actual animosity. Professional service and concierges, wealth advisors, private banks, fashion boutiques and department stores, restaurants, luxury car dealers, high-end estate agents and property developers – they were all extremely glad of the converted roubles.
No questions were asked, as the Russians used PO Box addresses in secretive offshore tax havens as cover, hiding behind nominee names. Blind eyes were turned to their incredible wealth and its origins – that often they had been able to go from living hum-drum existences in relatively ordinary jobs somewhere in Russia to netting fortunes in barely any time at all.
Between 2008 and 2015, some 700 Russian millionaires and billionaires took advantage of the scheme. In 2015, in response to concerns that some were arriving with illegally obtained funds, the system was tightened to require audits of their cash and business interests. Even so, another 202 went on to obtain the golden ticket, while only seven applicants were rejected. More than 250 of their family members were also allowed to settle.
Since the invasion of Ukraine, the UK Home Secretary Priti Patel has been quick to scrap the fast-track system. This has not been enough for Labour, however. Chris Bryant, the former Labour minister, said the government should review “each and every” visa issued under the scheme. “If they think corrupt elites are threatening our national security, they cannot just sweep this under the carpet,” he said.
Yvette Cooper, the shadow home secretary, said: “For years, the Conservatives failed to stamp out the influence of Russian money in the UK.”
Both Mr Bryant and Ms Cooper fail to acknowledge it was Labour that created “Londongrad”, that their own side is responsible for opening the floodgates in the first place.
All this, against a backdrop of the Alexander Litvinenko poisoning (2006), the annexation of Crimea and the beginning of hostilities between Russia and Ukraine (2014) and the Salisbury attempted assassination of a former spy and subsequent death of a local resident via the spraying of Novichok nerve agent (2018).
City folks did their bit alright and they should be examining their consciences. But they were by no means alone. Plenty of politicians and officials also have soul searching to do.
