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The Conservatives Have a Long History of Taking Money From Russia

TJ Coles explores the Conservative Party’s decades-long attempts to schmooze Russian oligarchs

UK Prime Minister David Cameron and Russian President Vladimir Putin in 2015. Photo: Russian Federation

The Conservatives Have aLong Historyof Taking Money From Russia

TJ Coles explores the Conservative Party’s decades-long attempts to schmooze Russian oligarchs

The Government is being accused of not doing enough to limit the Russian money flowing into the British economy, some of it linked to President Vladimir Putin.

This criticism, triggered by the war in Ukraine, implies that the problem is relatively new. However, this is not a passing trend but is rather a core part of the Conservative fundraising system.

The cycle operates something like this: rich donors finance the party with the understanding that, in return, they will be further enriched by a low-tax, low-regulation environment.

Ergo, by 2018, an estimated half of Russia’s wealth was held overseas: around £1.5 billion in London property owned by Russian ex-pats.

For more than 30 years, more than 20 companies worth a combined £400 billion have been listed on the London Stock Exchange, bringing reported total Russian investments in the UK to £27 billion. Russian-linked donors have given an estimated £2 million to the Conservative Party since Boris Johnson took over as Prime Minister in July 2019.

But the story dates back even further.

Kompromat and Courtship

The Labour Party, anti-war campaigners and trade unions have a mostly unfair reputation for being historical stooges of the Soviet Union – an erroneous perception created by the right-wing press. Indeed, the links between the Conservative Party and the Soviet bloc extend well into the 20th Century.

After the Second World War, Naval Commander and Conservative MP for Harrow, Anthony Courtney, was down on his financial luck. Hoping to profit from a consultancy business, Courtney threw parties for Russians as part of the Soviet Trade Delegation in London. At a Moscow trade fair in 1961, however, Courtney walked into a honeytrap. His affair with KGB asset, Zina Volkova (not to be confused with Trotsky’s daughter), was captured on film via hidden cameras in hotel rooms. This was Operation Proba: a KGB sting designed to blackmail and recruit UK MPs.

Courtney refused to be blackmailed but lost his seat in 1966 and ended up divorced. He hinted that another Conservative MP had also been the subject of a kompromat operation.

Ray Mawby was the Conservative MP for Totnes, Devon, from 1955 until 1983. A junior minister in the 1960s and Assistant Postmaster General, he was also a spy for the Czech Security Service. Following a cocktail party at the Czechoslovak Embassy in 1960, Mawby was recruited by the Czech Security Service and codenamed ‘Laval’. He reportedly took £400 a year in exchange for information on the UK Government. Mawby supposedly ended his spying in 1971.

After intelligence operations, such as spy ring scandals, the USSR focused on financial arrangements. The history of Russian money in London can be traced back to at least the 1980s – one that blends geopolitics and economics.

Successive US and UK governments, notably those led by Prime Minister Margaret Thatcher and President Ronald Reagan, had been working to bring down the Soviet Union. This was not because they cared particularly about dictatorships – the US and UK have a long history of selectively supporting autocrats – rather, the ideological battle between East and West primarily concerned economics, with Thatcher and Reagan firmly favouring the free market.

In their drive to promote libertarian economics, the Conservatives courted numerous Soviet businesses and politicians – efforts that caused some consternation in Washington.

In July 1981, Reagan spoke at the Ottawa Conference on the need to limit Western “strategic goods and technologies” to the USSR. In January 1982, after the Soviets declared martial law in Poland, Reagan personally wrote to Thatcher to remind her of the commitments made at conference. “The uncontrolled export of technology and critical equipment for the Soviet military infrastructure must be stopped,” he wrote.

The Financial Times reports: “The [US-led] sanctions, on manufactured goods and technology, threatened British jobs… and hundreds of millions of pounds in contracts to supply parts for the Western Siberian gas pipeline.”

Thatcher’s main concern was maintaining the profitability of John Brown Engineering, the Scotland-based company contracted to supply the USSR with turbines to the tune of £400 million. By 1983, UK exports to the USSR totalled $735 million.

In November 1984, shortly before Soviet chief Mikhail Gorbachev arrived in London, Thatcher convened an informal meeting of academics and business people to brief the Foreign Secretary, Geoffrey Howe. One academic later recalled finding zero trace of the meeting in official papers, suggesting that the briefings were “sofa consultations”.

By the mid-1980s, Gorbachev was leading ‘perestroika’ – the restructuring of the Communist Party that many in the West interpreted as a first step away from state ownership and towards privatisation. With Reagan’s presidency in decline and George HW Bush coming to power, Thatcher said of Gorbachev’s initiatives: “It’s a great, massive turnaround”.

In 1989, Thatcher and Gorbachev signed the Russian Federation-United Kingdom Bilateral Investment Treaty, which came into force three years later, just as the USSR collapsed.

In 1991, it was reported that the British firm Orbicom had brokered a deal with the Soviet energy company, Neftekhimkombinat. Similar deals had led to what Petroleum Intelligence Weekly described as the “Soviet tax maze”. Examples included Anglo Suisse (and others) producing Soviet oil under the so-called White Nights initiative, as well as Royal Dutch-Shell operating via joint ventures with European firms.

The End of History

After the collapse of the USSR, and with John Major now Prime Minister, the 1990s saw an influx of wealthy Russian businesspeople to London.

Parliament’s Intelligence and Security Committee report, released in July 2020, says that the ‘investor’ visa scheme introduced by the UK Government in 1994 allowed these affluent individuals to simply buy access to Britain. This led to the creation of what the committee called “industry enablers” – lawyers, financiers, PR firms – who laundered the image of wealthy Russians.

Donations from oligarchs and financial ties to Russian businesspeople continued during David Cameron’s time as Prime Minister, from 2010 to 2016 – while the number of visas offered to wealthy foreigners, including Russian oligarchs, boomed.

From 2010 to 2014, more than £1.1 million was donated to the Conservative Party through British citizens who were formerly Russian citizens, their associated companies, or those who were married to Russians. Russian-linked Conservative donor Alexander Temerko even paid £90,000 for a bronze bust of Cameron at a Conservative fundraising bash in 2013.

Lord Greg Barker, Energy Minister under Cameron, is reportedly paid millions every year by aluminium firm EN+ – a company linked to Putin’s alleged associate, Oleg Deripaska.

In 2018, the US Treasury Department’s Office of Foreign Assets Control found that Deripaska had “acted or purported to act for or on behalf of, directly or indirectly, a senior official of the Government of the Russian Federation”. In other words, it accused him of being a Putin puppet. Despite that, no action was taken against Deripaska in the UK – who has previously said that the US allegations were based on “false rumour and innuendo”.

A decade earlier, New Labour lynchpin Peter Mandelson and future Chancellor George Osborne sailed to Corfu to meet with Deripaska. Their host alleged that Conservative fundraiser Andrew Feldman was present in an effort to raise cash for the party (something denied by those involved).

In 2014, former Foreign Secretary and now Prime Minister Boris Johnson played a £160,000 tennis match with businesswoman Lubov Chernukhin, the wife of Putin’s former deputy finance minister, as part of a Conservative Party fundraiser. Chernukhin has also paid £135,000 to have dinner with Theresa May, when she was Prime Minister. In February 2020, Chernukhin paid a further £45,000 to play tennis with Boris Johnson, alongside the co-chair of the Conservative Party, Ben Elliot.

In 2018, Johnson warned against creating a “miasma of suspicion” against wealthy Russian expats – despite the Government launching an investigation into the investor visa programme due to money laundering concerns. Senior Conservative figures have reiterated these convictions in recent days – claiming that the party does not accept money from Russian oligarchs while failing to answer questions about the due diligence that is applied to prospective donors.

Thatcher’s trade and investment initiatives during the 1980s and the use of London as a laundromat for post-Soviet privateers has given rise to the present predicament. The task of uncoupling the economy, and the Conservative Party, from Russian money, is one that will not happen overnight. Indeed, the status quo has been decades in the making.

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