What can post-Soviet tycoons invest in Europe?
The rural youth has always tried to move closer to town. There they can find jobs, money, and prospects. It is much simpler to go to strange lands and pursue your happiness there than try and oppose the Ruin at home. The same regularity seems to be at work at a larger, global level: Ukrainian VIPs purchase real estate abroad en masse. Thus they protect their own capitals and still continue to parasitize on their home land. Apparently they believe that they thus come closer to Europe, though it often is just the other way around: Europe receives post-Soviet impulses.
Ukrainian mass media reported recently that nearly 20 wealthy Ukrainian citizens had bought real estate in Baden, Germany. This fine company is partly made up by former officials and civil servants. Among them is Alina Aivazova, wife of Kyiv’s mayor Leonid Chernovetsky, former deputy prosecutor general Oleksandr Shynalsky, and former deputy mayor of Kyiv Irena Kilchytska. In April this year all Ukrainian mass media spread the news published by The Guardian. The British daily had written about an anonymous Ukrainian who “via his lawyers in Ukraine purchased two apartments at the residential complex One Hyde Park, newly opened in Knightsbridge, London’s exclusive neighborhood.”
Just a few days later it was known that the three-storied apartments with the total area of 2,200 square meters had been bought by the Donbas billionaire Rinat Akhmetov at 153.8 million euros. Besides, later it was reported that he was planning to spend nearly 67.8 million euros “on carpets and curtains,” i.e. on the furnishing of the apartments. The sums sounded stunning even for Brits – although they should have been used to such news, moreover, after 2008, when Olena Franchuk, daughter of Ukraine’s ex-president Leonid Kuchma, bought a five-storied cottage in London at 159 million dollars. In its time this property was considered the most expensive in Britain.
And yet it is the Russian oligarchs that lead in the purchasing of foreign property. Their special pre-sence in London prompted a few journalist investigations. In 2009, Mark Hollingsworth of The Financial Times and TV producer Stewart Lansley wrote and published a book titled Londongrad: From Russia with Cash; The Inside Story of the Oligarchs. The book soon became a bestseller and was translated into other languages including Russian.
“Of course, Russians were not the first to bring big money to London. There were other heroes before them. … And at last, the 1990s came, the time of Russians. The first wave of guests from the former Soviet Union was almost exclusively made up by the middle class, professional business managers. They came to study or work for international companies or the British affiliations of Russian companies, e.g. Aeroflot or the Bank of Moscow. They were wealthy of course, but they led an inconspicuous life between the two capitals, London and Moscow, since their families often remained at home. Very few of them got residence permit. For example, the 1991 census shows only 27,011 Brits who mention the Soviet Union as their former fatherland (in comparison, today experts assess their number at 300,000).
“But back then, Londoners didn’t realize they hadn’t yet seen the real Russian money. Only in 2000 the third wave of filthy rich Russians began to arrive in the British capital, the wave of oligarchs. The New Russians, with their provocative behavior, were passing into oblivion; they were replaced with wealthy individuals, who above all valued anonymity and safety. It goes without saying that soon Roman Abramovich became the most typical example of a Rus-sian oligarch in London. He curiously combines two features of super-rich existence, love for luxury and need for well-protected privacy,” write the authors of Londongrad.
The book describes the modus Vivendi of four Russian oligarchs: Roman Abramovich, Boris Berezovsky, Mikhail Khodorkovsky, and Oleg Deripaska. The authors also touch upon the reasons for the tycoons’ “migration” from Russia: “Each more or less conspicuous oligarch had explicit reasons for having moved to London. Abramovich indulged in his passion for demonstrative consumption. Deripaska, who had been banned from the US, used London as a base for building his global business empire. Khodorkovsky tried to mend his reputation here even before his arrest, when he entered the chosen circles of the British political and business elite. Berezovsky sought shelter in the British capital from Russian justice and accusations of tax evasion. But there also was something in common that brought them together in one city within a few prestigious streets.” And this “common thing” is the legislative system of Great Britain, which would always deny extradition, even despite the deterioration of relations between London and Moscow.
However, as Hollingsworth emphasized in his commentary to the Russian service of Radio Liberty, the very “style in which Russian oligarchs run their business is suspicious: it is often very obscure, secretive, causes legal complaints, and creates lots of problems, conflicts, and lawsuits. Russian politics, too, will interfere not infrequently, like in the case of Aleksandr Litvinenko’s assassination in London.” This was reflected in the relations between Moscow and London: Britain’s Prime Minister David Cameron first visited Moscow in September this year. Before him, prime minister Tony Blair was in the Russian capital in 2005.
A PLACE UNDER THE SUN
Together with luxury homes, Russian and Ukrainian businessmen buy themselves not only a place under the sun, but also the loyalty of foreign governments, while the West, for whom democracy and the rule of law are something more than just fine words, gives in to the luring six-figure capitals. Semen NOVOPRUDSKY, executive secretary at The Moscow News, believes that the oligarchs see Western Europe as “a wonderful springboard for the converting of their currency into real estate.” Plus they feel a lot safer there than at home. Also, few seem to protest against the investments brought by the post-Soviet oligarchs. Does Europe react to this in some way or another? “I think that in such situation there should exist a dual approach,” says Novoprudsky. “On the one hand, what matters is if the purchase of real estate by this particular individual violates the laws of this particular country. On the other, it is important to know this individual’s standing in his own home country, and if there are any legal proceedings initiated against him at home. If so, how he can be estimated from the viewpoint of international law. It is clear that the situation both in Ukraine and Russia allows to open proceedings against any oligarch. But at the same time a whole lot of reasons can be found for making it into a political case.”
“I think it would be interesting to write a separate book about Ukrainian oligarchs, too,” said one of the authors of Londongrad, Mark HOLLINGSWORTH, in his commentary to The Day. “However, there is a lot of similarity between Russian and Ukrainian billionaires, since they accumulated colossal capitals in a very short time, being relatively young. Besides, most of their wealth is due to close connections with government.”
What do you think lures rich foreigners, especially Ukrainian and Russian, to Britain?
“The main reason why Ukrainian billionaires like Viktor Pinchuk or Rinat Akhmetov bought real estate in Great Britain is that their capitals and investments will be safe here. They also love the style of London, and the local schools which their children can attend. The neighborhoods where they have bought houses, like Knightsbridge and Kensington, have a remarkably low level of crime. They also know that their assets will not be frozen and that British judges are indeed independent, unbiased, and fair.”
How do Londoners react to the recent purchase of a three-storied penthouse near Hyde Park by the Ukrainian oligarch Rinat Akhmetov?
“Most Londoners were shocked to hear that Akhmetov had paid 135 million pounds for apartments which are not even a detached house. They think this property is not worth the price Akhmetov paid. But if he is worth billions, this doesn’t matter at all. They also believe that he might have spent 35 million pounds to buy fantastic property and spend the remaining 100 million pounds to help ordinary Ukrainians climb out of poverty.”
How does such purchasing of property by Ukrainian and Russian oligarchs influence the image of London?
“I think that these huge sums of money paid for London property create an idea that the British capital is turning into a city for a handful of the chosen ones, international super-tycoons, and make it into paradise for foreign oligarchs. Central London has become outrageously expensive, because international business tycoons are ready to pay anything for property there. This results in increase of real estate prices for Brits.”
