MARK HOLLINGSWORTH AND STEWART LANSLEY
LONDON GRAD
FROM RUSSIA WITH CASH

THE INSIDE STORY OF THE OLIGARCHS

‘There are no barriers to a rich man’

- Russian proverb

Table of Contents

Cover Page

Title Page

Epigraph

LIST OF ILLUSTRATIONS

CHAPTER 1 The Man Who Knew Too Much

CHAPTER 2 The Russian Billionaires’ Club

CHAPTER 3 Putin’s Purge

CHAPTER 4 Hiding the Money

CHAPTER 5 The Russians Have Landed

CHAPTER 6 Boys with Toys

CHAPTER 7 The Big Game Hunters

CHAPTER 8 The Curse of Yukos

CHAPTER 9 Plotting Revolution

CHAPTER 10 Murder Inc.

CHAPTER 11 Showdown

CHAPTER 12 Paint the Town Red

BIBLIOGRAPHY

NOTES

INDEX

ACKNOWLEDGEMENTS

Photo Insert

Also by Mark Hollingsworth and Stewart Lansley

Copyright

About the Publisher

LIST OF ILLUSTRATIONS

Roman Abramovich and Daria Zhukova © Big Pictures

Chelsea win the Premier League © Reuters

Mikhail Khodorkovsky © Camera Press

Vladimir Putin and Oleg Deripaska © PA

Boris Yeltsin and Boris Berezovsky © PA

Boris Berezovsky in Surrey © Camera Press

Alexander Lebedev, Mikhail Gorbachev and Bono © Getty Images

Evgeny Lebedev, Mikhail Gorbachev and Geordie Greig © Getty Images

Naomi Campbell and Vladimir Doronin © Big Pictures

Pelorus in St Petersburg © PA

Helicopter in Sardinia © Big Pictures

Roman Abramovich’s Boeing 767 © Rex Features

Natalia Vodianova and Justin Portman © PA

Damien Hirst and Daria Zhukova © Getty Images

Christian Candy and Nick Candy © Getty Images

Prince Michael of Kent © Camera Press

Lord Bell © Camera Press

Nat Rothschild © Getty Images

George Osborne © PA

Queen K © Getty Images

Lord Mandelson © Camera Press

Stephen Curtis © PA

Pennsylvania Castle © Rex Features

Helicopter crash site © Rex Features

Alexander Litvinenko’s FSB credentials © Litvinenko/PA

Alexander Litvinenko © PA

Alexander Litvinenko in hospital © Getty Images

Anna Politkovskaya © PA

Paul Klebnikov © PA

Andrei Lugovoi © Corbis

Badri Patarkatsishvili and Boris Berezovsky © PA

Fyning Hill estate © Getty Images

Oleg Deripaska’s London home © Rex Features

Russian women in London © Aleksei Kudikov/Eventica

Russian gathering in Trafalgar Square © Aleksei Kudikov/Eventica

Ksenia Sobchak © Landov

Polina Deripaska, Tatyana Dyachenko, Valentin Yumashev © Landov

Dmitri Medvedev © Nikas Safronov

Vladimir Putin © Nikas Safronov

Chocolate heads © Getty

CHAPTER 1 The Man Who Knew Too Much

‘I have dug myself into a hole and I am in too deep. I am not sure that I can dig myself out’

- STEPHEN CURTIS, January 2004

6.56 P.M., WEDNESDAY, 3 MARCH 2004. A brand-new white six-seater £.5-million Agusta A109E helicopter lands under an overcast sky at Battersea heliport in south-west London. Waiting impatiently on the tarmac and clutching his two unregistered mobile phones is a broad-shouldered 45-year-old British lawyer named Stephen Curtis. He is not in the best of moods. Three minutes earlier he had called Nigel Brown, Managing Director of ISC Global Ltd, which provided security for him, regarding disputed invoices sent to a Russian client. ‘This is causing problems!’ he shouted and then paused. ‘Look, I have to go now. The helicopter is here.’

Curtis climbs aboard the helicopter and manoeuvres his bulky frame into the passenger cabin’s left rear seat. A member of the ground staff places his three pieces of hand luggage on the seat in front of him and the pilot is given departure clearance. At 6.59 p.m. the chopper lifts off into the gloomy London sky. It is cold and misty with broken cloud at 3,800 feet, but conditions are reasonable for flying with visibility of 7 kilometres.

The lawyer turns off his mobile phones and sits back. After a day of endless and stressful phone calls from his £4 million luxury penthouse apartment at Waterside Point in nearby Battersea, he is looking forward to a relaxing evening at home at Pennsylvania Castle, his eighteenth-century retreat on the island of Portland off the Dorset coast.

By the time the helicopter approaches Bournemouth Airport, after a flight of less than one hour, it is raining lightly and the runway is obscured by cloud. The Agusta is cleared to land and descends via Stoney Cross to the north-east where, despite the gloom, the lights of the cars on the A27 are now visible in the early evening darkness. The pilot, Captain Max Radford, an experienced 34-year-old local man who regularly flies Curtis to and from London, radios air traffic control for permission to land on runway twenty-six.

‘Echo Romeo,’ replies Kirsty Holtan, the air traffic controller. ‘Just check that you are visual with the field.’

‘Er, negative. Not this time. Echo Romeo.’

The air traffic controller can only see the helicopter on her remote radar monitor. Concerned, she increases the runway lighting to maximum intensity. This has the required effect and a mile from the airport the pilot radios: ‘Just becoming visual this time.’

‘Golf Echo Romeo. Do you require radar?’ asks Holtan.

‘Yes, yes,’ replies Radford, his voice now strained; he repeats the word no less than eleven times in quick succession.

Suddenly, the chopper descends sharply to the left. It then swings around almost out of control. Within seconds it has fallen 400 feet. ‘Golf Echo Romeo. Is everything O.K.?’ asks a concerned Holtan.

‘Negative, negative,’ replies Radford.

They are just 1.5 kilometres east of the threshold of runway twenty-six when the height readout is lost on the radar. For the next fifty-six seconds the pilot confirms that he has power but then suddenly, frantically, radios: ‘We have a problem, we have a problem.’ As the chopper loses power, at 7.41 p.m. Radford shouts down the open mike: ‘O.K., I need a climb, I need a climb.’

Radford hears a low horn, warning that the speed of the main rotor blades has dropped. He keeps his finger on the radio button and can be heard struggling to turn out of a dive, but he has lost control. ‘No. No!’ he shouts in a panic. They are his last words.

The helicopter, now in free fall, nose dives into a field at high speed and explodes on impact, sending a fireball 30 feet into the air. The aircraft is engulfed in flames, with the debris of the wreckage strewn across a quarter of a mile. ‘I heard a massive bang and rushed up to the window and just saw this big firewall in front of me,’ recalled Sarah Price, who lives beneath the flight path. ‘The whole field appeared to be on fire. It was horrific.’

Some thirty-five firefighters rush to the scene, but the two men aboard - Stephen Curtis and Max Radford - die instantly. Later that night their charred bodies are taken to the mortuary at Boscombe, Dorset, where an autopsy is performed the following day. Their corpses are so badly burnt that they can only be identified using DNA samples taken by Wing Commander Maidment at the RAF Centre of Aviation Medicine at Henlow in Bedfordshire.

The news of Curtis’s dramatic death was not only deeply traumatic to his wife and daughter, it also sent shock waves through the sinister world of the Russian oligarchs, the Kremlin, and a group of bankers and accountants working in the murky offshore world where billions of pounds are regularly moved and hidden across multiple continents. That was not all. Alarm bells were also ringing in the offices of Britain’s intelligence and law enforcement agencies, for Stephen Curtis was no ordinary lawyer. Since the 1990s he had been the covert custodian of some of the vast personal fortunes made from the controversial privatization of the country’s giant state enterprises. Two of his billionaire clients - Mikhail Khodorkovsky and Boris Berezovsky - had entrusted Curtis to protect and firewall their wealth from scrutiny by the Russian authorities.

The Russians liked and trusted the highly intelligent, gregarious Curtis. Generous, a heavy drinker, loyal, amusing, and extravagant, he slipped naturally into their world. Also impatient, ruthless, and aggressive when required, he restructured their companies, moved their funds between a bewildering series of bank accounts lodged in obscure island tax havens, established complex trusts, and set up an elaborate offshore ownership of their assets. On their arrival in London he found them properties, introduced them to the most powerful bankers, entertained them late into the night, and recommended private schools for their children and even Savile Row tailors for their suits.

By early 2004, Curtis had not only introduced his wealthy new Russian clients to many aspects of British life, but he was also the guardian of many of their secrets. He was the only person who could identify and unravel the opaque ownership of their assets - property, yachts, art, cars, jewellery, and private jets as well as their bank accounts, shareholdings, companies, and trusts. ‘Stephen knew everything because he set up their whole infrastructure,’ said a close friend. He salted away billions of pounds in an intricate, sophisticated financial maze, which the Russian government later tried, mostly unsuccessfully, to unravel.

Operating from his office in a narrow, four-storey Mayfair house at 94 Park Lane, Curtis found that working for oligarchs was also lucrative. The product of a relatively modest upbringing himself, Curtis amassed a sizeable personal fortune from his new clients, enough to enable him to acquire his own helicopter, a private aircraft, and a penthouse apartment in London, as well as Pennsylvania Castle. He donated substantial sums to charity, entertained his friends at the castle, and hosted expensive holidays in the Caribbean.

But Stephen Curtis was a lawyer who knew too much. Although he loved flirting with risk and thrived on the pressure and excitement of working with the Russians, he also became increasingly nervous about his own vulnerability and the safety of his family. At the time of his death he was caught in the middle of an epic power struggle, one of the highest-stakes contests between state and business ascendancy in the world - between the most powerful man in Russia, President Vladimir Putin, and its wealthiest businessman, Mikhail Khodorkovsky.

By October 2003, Curtis had been working for Khodorkovsky for six years when his billionaire client was arrested at gunpoint in central Siberia for alleged massive tax evasion and fraud. A month later the Mayfair lawyer found himself further embroiled in the conflict when he was appointed chairman of the Gibraltar-based Menatep, the bank that controlled Yukos, Khodorkovsky’s $15 billion oil company. Russian newspapers suddenly began referring to a ‘mystery man’ in Gibraltar who controlled Russia’s second-biggest oil producer. Billions of pounds were at stake, the political survival of Putin was in the balance, and Curtis was billed to play a pivotal role in the forthcoming court drama.

In March 2004 the trial of Khodorkovsky was imminent and the pressure on Curtis was intense. On the morning after his death on 3 March, the offices of two Swiss companies connected to Yukos were raided by Swiss police at the request of the Russian prosecutors. Documents were seized, suspects were interviewed in Geneva, Zurich, and Freiberg, and Swiss bank accounts containing $5 billion were frozen.

Moreover, just a few weeks earlier Curtis had taken another critical and high-risk decision: to cooperate covertly with British police officials. Until only recently a back-room lawyer (secretive, low profile, discreet), he found himself suddenly thrust into the spotlight as chairman of a highly controversial Russian company. Sensitive and highly strung at the best of times, he felt increasingly exposed in this new role. Sooner or later he feared the Russian authorities would come knocking on his door asking questions about his own role in alleged tax avoidance and the filtering of cash out of the country.

As he was legally obliged, Curtis had been scrupulous in reporting ‘suspicious transactions’, or the merest hint of criminal activity, to the National Criminal Intelligence Service (NCIS) at Scotland Yard, which investigates money laundering and organized crime. In May 2003, for example, he had filed a suspicious transaction report about one of his Russian clients. Now he needed protection for another reason: he feared that he might become the target of commercial enemies - rival oil companies and minority investors of Yukos who claimed that they were being defrauded. He also knew that contract killings in Russia were commonplace. ‘I have dug myself into a hole and I am in too deep,’ he told a colleague. ‘I am not sure that I can dig myself out.’

In the last few weeks of his life Curtis was under constant surveillance by commercial and Russian state investigators and was considering moving offices. His telephones were tapped and in early 2004 his security consultants discovered a small magnet used to secure a listening device at his country home in Dorset. According to Eric Jenkins, an uncle who often visited him in Gibraltar, where his nephew lived for most of the year, Curtis received numerous anonymous threats and intimidating phone calls. He took them seriously enough to hire a bodyguard. ‘There certainly were death threats against Stephen,’ confirmed Nigel Brown, whose company also provided security for Curtis’s clients Berezovsky and Khodorkovsky. ‘The timing of his death was very suspicious and there were people out there who had a motive to kill him. He just knew too much.’

At first Curtis dismissed the threats, but when one phone call mentioned his wife and 13-year-old daughter, he decided to act. In mid-February 2004, deeply worried, he approached the Foreign Office and NCIS and offered full but covert cooperation. He would provide information about Russian commercial activities in Britain and the oligarchs’ assets, in return for protection for himself and his family. Up to that point his relationship with NCIS had been a limited, almost standard form of cooperation, a role many solicitors play. For NCIS Curtis was a potentially prized informant with insider knowledge of controversial Russian business activity in London. He was immediately assigned a controller, but after only two meetings the NCIS officer was transferred to another operation. Curtis asked to be assigned another controller but before this was done, he was dead.

A week before the fatal crash Curtis had told a close friend at his apartment at Waterside Point, ‘If anything happens to me in the next few weeks, it will not be an accident.’ He had laughed nervously but he was not joking. He had played the messages left on his mobile phone to colleagues at his law firm. ‘Curtis, where are you?’ asked a voice with a Russian accent. ‘We are here. We are behind you. We follow you.’ At the inquest his uncle, Eric Jenkins, testified that his nephew had repeated the same words of warning to him.

The frequent threats convinced some of Curtis’s colleagues and relations that he was murdered. ‘Definitely’, one former employee of his law firm claimed. ‘It was done by remote control. They knew about his flight plans in advance because they were tapping his phones.’ Dennis Radford, the father of the pilot, told the subsequent inquest that he did not think that the Air Accidents Investigation Branch (AAIB) had properly investigated the possibility of foul play. ‘The lack of security at Bournemouth Airport is such that, had anybody wished to sabotage the aircraft, they would have unchallenged and unrestricted access for that purpose,’ he said.

Witnesses say that they heard an unexplained and incredibly loud bang just before the crash. ‘I heard a kind of thump noise and the dog started barking, so I came outside and I heard another couple of bangs. It made a particularly harsh noise, as if the engine was malfunctioning,’ Jack Malt, who lives near the crash site, testified at the inquest. ‘There was a period of silence in the moments before the explosion so I guess the engines must have cut out,’ said Sarah Price, who lives 300 yards from the site of the crash. She also heard a massive bang just before the explosion. And Gavin Foxwell, another local resident, told the inquest that the helicopter made ‘a stuttering, unusual sound, as if it was struggling to stay aloft’.

The death of Stephen Curtis remains a mystery to this day. However, no credible evidence of sabotage or murder has ever been discovered. The investigation by the AAIB concluded:

The possibilities of unauthorised interference were considered. An improvised explosive device could have been positioned in the cabin or the baggage hold. All cabin doors at the undamaged skin of the baggage door were, however, recovered from the accident site. No evidence of damage other than consistent with ground impact was found on any of them. In particular no high velocity particle impacts were noted in any of these door components.

At the inquest Paul Hannant, the Senior Inspector of the AAIB, said, ‘If you are going to bring an aircraft like this down, you have either got to destroy the main rotor system or interfere with the main gearbox. The only other real way is to interfere with the controls. If you disconnect the controls, that would be immediately apparent to the pilot…Any attempt to use a corrosive device or a remote control device would also have been apparent to Captain Radford.’

Ultimately, deteriorating weather conditions and pilot inexperience were blamed for the crash. According to the AAIB inspector, ‘The most likely cause of the accident was that Captain Radford became disorientated during the final stages of the approach to Bournemouth Airport.’ Yet, while the weather on the fateful night of 3 March 2004 was poor - light drizzle, broken cloud, and overcast sky - flying conditions were not especially hazardous. As his father Dennis later claimed, ‘Max had flown many, many times in considerably worse conditions than that. And if he became disorientated, why was he on the radio describing the runway and talking to the control tower twenty-nine seconds before the crash?’

At the inquest assessments of Radford’s experience and competence were mixed. He had been a pilot since 1993, had recorded 3,500 flying hours, and had been flying Curtis regularly. During his operational training for flying the new, upgraded Agusta A109E, Radford consulted two flight instructors. ‘I felt his confidence exceeded his competence,’ testified Alan Davis, but Richard Poppy concluded that Radford was ‘competent’ to fly the Agusta A109E. While the AAIB found that he had not used instrument flying since 2000, they accepted that he was very familiar with the route and had ‘already achieved seventy-eight hours’ over the previous two months.

The inquest jury at Bournemouth Town Hall took just over one hour to reach a verdict of ‘accidental death’. Despite the verdict, however, some close relations remain sceptical to this day. They point out that Radford was a responsible, cautious pilot who had refused to fly Curtis in the past when the weather was poor, notably for a New Year’s Eve party at Pennsylvania Castle.

Curtis’s former security advisers remain suspicious, too. Nigel Brown is adamant that it was an assassination and is highly critical of the police. ‘What I cannot understand is why there has never been a proper murder investigation’, he has said. ‘There was a just cause of suspicion because Stephen had received death threats, there was a motive because of what he knew, and there were suspicious circumstances. But the police did not interview me or my colleagues or Stephen’s clients or his employees. Usually, the police would interview the last person to speak to him and I was that person. We may not know for sure what happened to Stephen but I think there could have been a more thorough inquiry.’

While Curtis’s wife Sarah has never believed that her husband was murdered, she has reflected on why it was a Russian businessman who first informed her about the death of her husband. ‘I am sorry that Stephen is dead,’ he told her. The police did not telephone until an hour later to say that ‘there has been an accident’.

It is a measure of the accuracy of the premonitions Curtis had about a premature death that he left detailed instructions for his funeral. This was partly influenced by his superstitious, almost fatalistic nature. He believed in ghosts and in the afterlife and always thought that he would die young. ‘I will never make old bones’, he once said, well before he met the Russians.

But Curtis had also been diagnosed with leukemia and a rare blood disease. This manifested itself in bizarre ways. During a sailing trip he once hit his head heavily on the boom of the boat and a friend was stunned to see his bloody flesh wound apparently heal before his very eyes. Curtis needed regular blood transfusions to stabilize him and took Warfarin to thin his blood and prevent clotting. He also wore surgical stockings to inhibit deep-vein thrombosis. After two operations at a private clinic, he was told that he could no longer travel by airplane because this would worsen his condition. But he could fly by helicopter, which was why, just three months before his death, he upgraded to the Agusta A109E.

Typical of his flamboyant and irreverent personality, he requested that his funeral should not be a mournful event but a ‘celebration of his life’ and that mourners were ‘not obliged to wear traditional black’. On Wednesday, 7 April 2004 some 350 relations, friends, and business associates gathered inside All Saints Church in Easton on the Isle of Portland near the Curtis family home at Pennsylvania Castle. Such was the lawyer’s popularity that a further 100 stood outside and loudspeakers were installed to broadcast the proceedings. At 1.50 p.m. a glass carriage bearing Curtis’s coffin arrived, drawn by two blackplumed horses and adorned with flowers that spelt the word ‘Daddy’. The carriage was followed by a Rolls-Royce Phantom, carrying his widow Sarah and his daughter Louise, and two Bentleys and a Ferrari, ferrying other relations and close friends.

Preceded by a Scottish piper who played the ‘Skye Boat Song’, the coffin was carried by six bearers into the church, followed by a tearful Sarah and Louise, both wearing pink coats and dresses. As they slowly walked down the aisle, Sarah noticed the intense, brooding figure of Boris Berezovsky, dressed in black, in the congregation with his girlfriend, two bodyguards, and a Russian entourage. Most of Curtis’s clients attended. Notable absentees were representatives of his clients IKEA, which did not want to be associated with his controversial Russian clients, as well as most Yukos executives. Indeed, the only Yukos executive to attend was Vasily Alexanyan, a close friend of Curtis and the oil company’s former legal director. Alexanyan was furious that his colleagues had boycotted the funeral despite the risky operations Curtis had conducted for their company.

At 2.00 p.m. the service began with traditional hymns, followed by a piano solo by Louise. It was evident that Curtis was well loved. One speaker described him as epitomizing a line from Rudyard Kipling’s poem If, which reads: ‘If you can talk with crowds and keep your virtue/or walk with kings - nor lose the common touch’. His closest friend, Rod Davidson, told the congregation, ‘In business he was in a league of his own. He would start off with an earthquake, build it up to a crescendo and [was] always setting his sights beyond the stars…He was the most generous of men and I think of him now at the pearly gates giving St Peter a red Ferrari and providing Playstations for the cherubs.’

But there was also palpable tension in the air because of the conspicuous and, to some, menacing presence of the Russian contingent, who attracted frequent nervous glances. When Berezovsky and his colleagues left their seats at the end of the service, the remainder of the congregation moved out of the way to let them pass first.

The local mourners and Sarah’s friends were mostly conventional, middle-class English people who lived quiet, rural lives in the pristine Dorset village of Easton. They were hardly used to the hard Russian faces or the battery of television cameras, photographers, and police that greeted them as they left the church that bright spring afternoon. To the local villagers it must have looked like the cast of The Godfather or The Sopranos had arrived.

Sarah was devastated by her husband’s death, but she was also confused by and concerned about the media attention. ‘Why are there so many cameras here?’ she asked outside the church. ‘I don’t understand.’ A former secretary, Sarah’s life was family, music, friends, the castle, and the English countryside. Stephen had told her nothing about his secret life in London, Gibraltar, and Russia. A lover of James Bond films, Curtis revelled in this covert existence. He compartmentalized his life, mainly to protect Sarah. ‘I don’t want to know,’ she once remarked and would have recoiled from the dark, cut-throat world of the Russian super-rich.

Sarah recognized none of the Russian mourners.‘Who’s this? Who’s that?’ she asked one of Stephen’s colleagues in a state of increasing bewilderment. ‘What on earth was my husband doing with those Russians?’ she asked another friend. Not wanting to worry her, they declined to answer.

After the service the procession escorting Curtis’s body was accompanied by the song ‘You’ll Never Walk Alone’, with Sarah’s soprano voice ringing out the final words as she followed her husband’s coffin. The burial took place in the gardens of Pennsylvania Castle, attended only by family and close friends. Curtis was laid to rest to the strains of the bagpipe melody ‘Highland Cathedral’.

As the guests mingled in the marquee after the burial the atmosphere was tense and apprehensive. Many former clients were anxious to know the identities of the other guests and whom they worked for. ‘It was a weird situation for a wake,’ said a former employee of Curtis’s law firm. ‘People were looking over their shoulders to see who was talking to who. The strange thing was that I knew some of our clients knew each other, but they would not acknowledge each other at the funeral in case they were photographed or associated with other clients. It was very bizarre, almost comical.’ At 9.45 p.m. a spectacular fireworks display erupted over the English Channel.

The funeral of Stephen Langford Curtis brought together an uneasy, unsettling gathering of two cultures: the conventional, light-hearted, understated English middle class and the dark, intense, stern-faced, focused Russian business elite.

Little more than a decade earlier the Russian presence in Britain had been barely noticeable. It would have been rare to hear a Russian accent in a Knightsbridge boutique, a Mayfair restaurant, or even on the London underground, let alone at the funeral of a mysterious, even obscure, British lawyer. There was no sign then of what was to come: the arrival in Britain of a wave of middle-class, affluent Russians. The influx that followed the collapse of communism in 1991 started slowly but by the end of that decade the Russian desire to move to London had reached what one insider has described as ‘fever pitch’.

Although there are no official figures for the size of the London-based Russian and former-Soviet community, it is widely accepted that by 2008 it numbered well in excess of 300,000. This was large enough to spawn four Russian-language newspapers, the glossy magazine New Style, a plethora of Russian networking clubs and internet sites, and a host of Russian social events.

Although by then the Russian community was diverse, most of its members were ordinary professionals who had chosen to live, work, and settle in London. Many had British husbands or wives. It is this group, rather than the oligarchs, who jokingly referred to London as ‘Moscow-on-Thames’. Some worked for international organizations or Russian companies based in London while others had set up their own businesses. Some found jobs as estate agents, in the City, and in retail to target or cater for Russian clients. They mostly came to Britain to escape the crime, political uncertainty, and economic turbulence and were a very select middle-class group compared with the wider Russian population.

Some still commuted back and forth from Moscow, by commercial rather than by private jet. Flight SU247 from Moscow touched down at Heathrow on Friday evenings, carrying what its Aeroflot crew called ‘voskresnuy muzh’, which translates as ‘Sunday husbands’. These were transcontinental commuters, a mix of oil executives, bankers, and importers and exporters who had homes and families in London but who worked in Moscow. For them it was a weekly ritual: Friday and Sunday nights on a four-hour flight, weekends in London, and the week in their Moscow office.

Dominating this steady stream of migrants was a tiny but much more high-profile group - the oligarchs, a tiny cadre of privileged insiders who had acquired Russia’s state-owned natural resources and, by the end of the 1990s, had come from nowhere to join the ranks of the world’s super-rich. While some of Russia’s nouveaux riches - billionaires and multi-million-aires - have remained in Russia, most have moved or built a base abroad, shifting their mountain of assets with them. While a few have selected Israel, New York, or Switzerland, most have chosen London. From the millennium, this group scattered its new-found wealth like confetti, helping to transform London into the world’s leading playground of the super-rich, contributing to runaway property prices, soaring profits for luxury goods retailers, and bringing displays of opulence not seen since the 1920s.

Some of the Russian ultra-rich were, through fear of arrest, driven out of Russia and took up residence in London. Others became international super-nomads, living partly in London, partly in Russia, while travelling the globe in their private jets and luxury yachts. Many kept a discreet foot in both camps. Along with the next tier of the Russian rich, the oligarchs were lured by London’s accommodating tax laws, compliant banking system, relaxed lifestyle, unobtrusive City regulations, elite schools, and independent judicial system.

This book tells the story of four Russian oligarchs: Boris Berezovsky, the intense, extrovert fugitive who has plotted against Putin’s Russia from his gilded London base; Roman Abramovich, the wily, reserved owner of Chelsea Football Club whose multi-billion-pound oil fortune came from outmanoeuvring his former friend and now bitter enemy Berezovsky; Mikhail Khodorkovsky, the intellectual who naively believed that he was more powerful than the state and ended up in a Siberian jail; and Oleg Deripaska, the ruthless young pretender and aluminium magnate who rose to become the richest of all of them, helped along by his cosy relationship with Vladimir Putin.

During the course of the 1990s these four men built huge fortunes at electric speed by exploiting the flawed post-Soviet scramble to build a Western-style market economy. Though it was Russia itself that was the source of their personal wealth, it was London that provided the backdrop to the next phase in their meteoric climb up the global rich lists.

For Abramovich, London has helped to satisfy his apparently insatiable appetite for conspicuous consumption. For Deripaska, banned from entering the United States, the capital has been a crucial base for building his diverse and colossal global business empire. Before his incarceration, Khodorkovsky used London to woo the British political and business establishment in his international campaign to transform his tarnished global reputation. For Berezovsky, who has been fighting extradition since 2001, London has provided a refuge from Russian prosecutors who have accused him of alleged tax evasion and fraud, charges that he has strenuously denied.

In contrast to the corrupt, politicized judiciary in Russia, London has also offered legal sanctuary and a fair due process of law. While indicted Russian businessmen have been arrested and detained in Spain, France, Italy, and the United States, Britain has refused to accept any of the dozens of extradition attempts by the Russian authorities, souring diplomatic relations in the process. ‘I think they [Russians] feel that this is a country of law,’ said Berezovsky. ‘They feel that they are well protected here.’¹

London has long attracted the extravagantly rich, but the post-millennium wave of foreign wealth was unprecedented. In the decade up to 2008, trillions of pounds of foreign capital settled in the UK. For those who make money out of money, it was a golden decade for tax lawyers, accountants, and bankers. ‘The British have found a new vocation,’ said William Cash, the well-connected publisher who founded Spear’s Wealth Management Survey, the glossy quarterly that chronicles the activities of the super-rich. ‘That is being the financial bag-carriers of the world. Britain’s ruling classes used to own the wealth. Now they’ve become the fee-earning servants, servicing the global financial elite.’²

By 2007, before the devastating impact of the global economic meltdown of the following year, London had displaced New York as the financial capital of the world. It did so by providing an unrivalled tax avoidance industry and a much lighter regulatory touch. After 9/11 and a series of highprofile financial scandals on Wall Street, the US Government passed a new law - the Sarbanes-Oxley Act - which imposed much tougher corporate requirements on the disclosure of information, accountancy procedures, and the process of listing on the New York Stock Exchange. This made New York less attractive to the world’s business rich and London seized its chance. The United States also introduced much tighter visa restrictions for foreign businessmen, which did not compare favourably with the more open UK border controls.

For moneyed Russians London also provides logistical advantages: the flight from Moscow is just four hours, while south-east England enjoys a ring of airports with facilities for private jets. According to James Harding, editor of The Times, ‘From London it is possible to work a normal day and talk to Tokyo in the morning and Los Angeles in the afternoon. A businessman can get on a plane from Moscow and be in central London in five hours, from Bombay in seven, even from Beijing in nine. This is one of the reasons why over the past twenty-five years London has turned itself into an international marketplace while New York has remained essentially a domestic financial capital.’³

However, tax remains the primary factor. ‘New York is obviously very stable, but most of the other big centres of wealth management would have questions over them’, said David Harvey of the Society of Trust and Estate Practitioners whose members unashamedly help wealthy families pay as little tax as is legally possible.‘Tokyo’s gone through a period of depression, Singapore is relatively new, and Germany was until recently a tax-heavy jurisdiction. If you’re looking to avoid tax legally, you’re as well going to London as anywhere else.’⁴

The UK boasts an unrivalled tax-avoidance industry - and an abundance of highly paid accountants able to devise complex ways of hiding an individual’s wealth. In 2007 the International Monetary Fund ranked London alongside Switzerland, Bermuda, and the Cayman Islands as ‘an offshore financial centre’.

Most countries have required their residents - including wealthy foreigners - to pay domestic taxes on their worldwide income and capital gains. In the UK foreigners can claim they are ‘domiciled’ abroad even though they may have lived in Britain for years and have British passports. Under this rule, ‘non-domiciles’ would only pay tax on their UK income and not on overseas income, usually the bulk of their earnings. Furthermore, by purchasing property through offshore trusts, foreign buyers could avoid both capital gains tax when they sell and most of the stamp duty usually paid at the initial purchase.

For a Russian billionaire living in London, his earnings from his homeland have been tax-free in the UK.‘There is one reason above all why these people are coming to London and that is the tax law,’ said Natasha Chouvaeva, a London-based Russian journalist. Although this advantage was partially reduced in 2008 when, following a mounting media and public outcry, the government introduced a £30,000 annual levy on non-domi-ciled residents, it was an inconsequential sum for the superrich.

The origins of the oligarchical influx lie in the privatization of Russia’s vast and valuable state assets in the 1990s, an explosive process that enriched the few, opened up a huge gulf between rich and poor, and enraged the Russian people. A World Bank report in 2004 showed that, in effect, thirty individuals controlled 40 per cent of the $225 billion output of the Russian economy in its most important sectors, notably in natural resources and automotives. The study concluded: ‘Ownership concentration in modern Russia is much higher than in any country in continental Europe and higher than any country for which data is available.’⁵

Little of this unprecedented accumulation of wealth has been invested in Russia in business or charity. Rather, most of the money has been secreted abroad, with billions of dollars hidden in a labyrinth of offshore bank accounts in an array of tax havens, from Switzerland and Jersey to the British Virgin Islands and Gibraltar. Much has ended up being deposited in and managed by British banks. Stashed away, it has been almost impossible to trace. Despite attempts by Russian and British law enforcement agencies, little of it has been recovered and requisitioned back to Russia.

Russia is where the money originated, but it has not been a comfortable place to spend it - too many people pointing fingers in Moscow restaurants, too much scrutiny by the tax police, and the constant fear of assassination. The Russian rich cannot go anywhere without bodyguards and bullet- and bomb-proof cars. Even wearing bespoke suits attracts attention. But in the UK or Europe they have been able to go mostly unrecognized and can relax, spending their gains without fear of censure or of being called to account. After buying their multi-million pound town houses and country estates, they have indulged their sybaritic lifestyles, cruising in St Barts, skiing in Gstaad, and shopping in Knightsbridge.

For their wives it has been heaven. ‘London is a metropolis,’ said Olga Sirenko, who edits a website for Russian expatriates. ‘It is fashionable. It has all the boutiques and the culture. Moscow doesn’t have that kind of chic.’ Aliona Muchinskaya, who has lived in Britain since 1991 and runs her own PR company, says that Russians now dismiss Paris as being ‘too dowdy and villagey’. London, by contrast, is ‘bustling and busy with its restaurants and nightclubs. Russians can hire Rolls-Royces and private jets more easily here.’

On arrival in London the first port of call for the affluent, socially aspiring Russian was to the estate agent, notably Savills, Knight Frank, or Aylesford. Deals were cut at high speed: no mortgages, just cash. In 2006 one-fifth of all houses sold for over £8 million went to Russians. For properties over £12 million, the figure was higher still. But Russians have been extremely selective in location, not merely restricting themselves to the golden postcodes - SW1, SW3, W1, and W8 - but only to certain streets and squares within them. Owning a British country property is also prestigious. Again, their choice of location has been very specific: St George’s Hill and Weybridge and Wentworth Park, both in Surrey.

The next decision for the oligarch seeking to emulate the British aristocracy was which top boarding school to send their offspring to, for a British education is another motivating factor for moving to the UK. Public schools generally offer high academic standards and a secure, friendly environment. In Moscow, by contrast, kidnapping is a constant and real fear. While London’s elite estate agents set up offices in Moscow and St Petersburg to woo ultra-rich buyers, British public schools, colleges, and universities have also sent their senior teaching staff to Russia on recruitment drives.

By 2008, it was no longer surprising to find Russian students at British schools and top universities, whether it was Abramovich’s teenage daughter at an independent all-girls’ school in London or foreign minister Sergei Lavrov’s daughter at the London School of Economics. School numbers soared from 2000 and some Russian parents started to seek schools where there were no other Russians. The fees - up to £30,000 a year - may not have been a problem, but old habits died hard. A headmistress of one top girls’ public school told the story of a Russian whose daughter had failed the entrance exam and who offered her a suitcase full of cash. He promised to pay for anything - a new gym, classrooms, a swimming pool. ‘Things don’t work like that over here,’ said the bemused headmistress. At another top school a parent asked permission to land his helicopter on the cricket field when visiting his child.

While most Russian children eventually return home, an English education is regarded as a commercial benefit. ‘I know that some oligarchs only hire students with a Western education,’ said Boris Yarishevsky, president of the Russian Society at the London School of Economics.⁶ This also extends to politicians. ‘I know people whose fathers occupy really high positions in the Russian government and I know they study in London,’ he added. ‘I don’t think that they would want me to give out their names, though.’⁷ It is quite possible that one day Russia - like many African and Middle Eastern states - will elect a President who has been educated at a British private school.

The UK has long been a haven for Russian exiles and dissidents. Anti-tsarist radicals flocked to London in the early twentieth century and Revolutionary Congresses were held here every two years. At the 1907 Social Democratic Congress the New York Times reported that an arrest warrant had been issued for one notable attendant, Vladimir Ilyich Lenin: ‘A Famous Rebel in London. Lenin Will Be Arrested if he Returns to Russia - Real Name Ulianoff ’ ran its headline. Lenin was not a permanent exile but visited the city six times between 1902 and 1911. At Seven Sisters Church in Holloway, north London, he met workers whom he described as ‘bursting with socialism’, while the area around Whitechapel and other parts of the East End swarmed with radicals. During one of his trips Lenin saw Hamlet at the Old Vic and visited Speaker’s Corner and the National Gallery. It was at the British Museum in 1902 that he first met Leon Trotsky, who had just escaped from Siberia.

After the 1917 Revolution, relatively few affluent Russians fled to London - only 15,000 by 1919. Far more moved to the Slavic states, to Berlin, and to a lesser extent to France and China, particularly Shanghai. Those who did arrive in Britain were a mix of aristocrats and middle-class liberal intellectuals, notably the family of the philosopher Isaiah Berlin who arrived in 1919 and settled in the Surrey town of Surbiton. ‘I am an Anglophile, I love England,’ Berlin once reflected. ‘I have been very well treated in this country, but I remain a Russian Jew.’⁸ Other descendants of this first wave of Russian immigration include the actress Dame Helen Mirren (born Ileyna Vasilievna Mironov), winner of an Oscar for The Queen, and the Liberal Democrat leader Nick Clegg.

During the Cold War there was always a sprinkling of new Russians coming to London. Some were dissidents fleeing the gulags; others were high-level KGB defectors who ended up rubbing shoulders in London with White Russians - mostly the offspring of those who had fled Russia after 1917. The latter lived mostly quiet lives, spoke good English, and were largely Anglicized. The 1991 Census recorded 27,011 residents living in the UK while claiming the former Soviet Union as their place of birth. Most of them would have been Russian.

The collapse of the Eastern Bloc in the late 1980s had a dramatic impact on the pace of Russian arrivals, unleashing a new and unprecedented wave of migration from Russia and former Soviet and East European states. In 1991 the British Embassy in Moscow issued barely 100 visas - to a mixture of those working for Russian companies, students, and Russians who had married Britons - while only one Russian living in the UK was granted citizenship. Even by the mid-1990s, Londoners would have started to become aware of the occasional unrecognizable foreign accent in a shop or in the street - those Russians who did come congregated in a few favourite restaurants and nightclubs - but otherwise the early arrivals remained largely anonymous. Gradually that trickle turned into a flood. By 2006, the number of Russian visas issued had soared to 250,000, while the number granted citizenship in that same year had risen to 1,830. Berezovsky has likened the twenty-first-century Russian wave to the influx of nineteenth-century Russians to Paris. ‘It used to be that Russian aristocrats spoke French and went to France,’ he said. ‘The modern Russian speaks English and feels more comfortable in England.’⁹

The early Russian migrants - mostly professional middle class but by no means wealthy - were joined within two or three years by a quite different stratum of Russian society. These were what their countrymen dubbed ‘the new Russians’, and they started to arrive between 1993 and 1994. This is the group that was beginning to make money, though not on the same subsequent scale, out of Boris Yeltsin’s economic reforms, the easing of restrictions on private enterprise, and the first wave of privatization. They were a mix of state bureaucrats, entrepreneurial hustlers, Kremlin insiders, and former KGB officials; others were members of emerging Russian-based criminal gangs.

This group of ‘new Russians’, who were always outnumbered by ‘ordinary’ Russian migrants, were by and large not coming to London to settle down. They came on short-term tourist or business visas, to attend a conference or a business meeting, or on shopping and spending trips. As one Russian already living here who knew some of them put it, ‘At this time there was no real dream to come and settle in London. It was difficult to get a permanent visa except illegally, work permits were scarce, and most of this group could make much more money in Moscow than in London. They had money and came here for a week or two at a time to burn it.’

During the 1990s, Britain gradually eased its entry regulations. Tourist and business visas became easier to acquire. Especially welcomed by the authorities were those with money. Anxious to encourage investment from abroad, the government bent the rules to encourage the arrival of the super-rich. ‘Essentially, if you are coming to the country with money to spend, you’re very much welcomed with open arms,’ said John Tincey, Vice-Chairman of the Immigration Service Union, in 2007.¹⁰

In 1996 the Conservative government of John Major introduced a new ‘investor visa’ for those wanting to make the UK their main home and able to invest at least £1 million in the country. Of this at least £750,000 had to be invested in either government bonds or UK-registered companies. Those investing in this way were, after five years, allowed to apply for permanent residency and eventually UK citizenship. Only one other country in the world - the United States - operated such a scheme (though with a much lower entry fee) and a number of wealthy Russians took advantage of the rule. All they needed to do was meet the investment cash criterion.

The process of seduction worked. The Russians, along with the super-rich of other nations, poured into Britain. As Forbes magazine described it in 2006: ‘London attracts the elite of the world’s rich and successful. It can lay claim unchallenged to one title: it is the magnet for the world’s billionaires.’¹¹

Once here, the newly enriched Russians were not shy about spending their way through the capital. They quickly became addicted to high living the British way. In London, history, culture, and the attractions of consumer spending often come together in classic British brands that seem to have a special appeal. The more traditional, the more alluring: shopping at Fortnum & Mason and Burberry, buying a £900 bottle of port at the St James’s wine merchant Berry Bros & Rudd, tea at Claridge’s, and dinner at Rules. The Russians also took to two other British institutions, London’s leading auctioneers Sotheby’s and Christie’s. Here, at the height of the art boom of the mid-noughties, they could be found outbidding other collectors and leading international dealers for the works of French Impressionists and contemporary British artists.

But the staggering spending of Russians is not based just on a crude materialistic desire for luxury goods; it also stems from a fatalistic mindset and generally pessimistic approach to life. For centuries the Russian people have suffered enormous hardship, poverty, starvation, and brutal repression: an estimated 20 million died during Stalin’s regime, and another 1.1 million perished during the siege of Stalingrad alone during 1942-3. Even after the collapse of the Soviet empire, millions continued to live in a state of permanent insecurity and anxiety exacerbated by a harsh winter climate, economic instability, and a corrupt rule of law. Even the new billionaires and their families believe that they could lose everything tomorrow. A favourite Russian saying goes: ‘Never say never to poverty or prison. Both could happen tomorrow.’ This is why they spend. And they also believe in another Russian adage: ‘That which does not grow and expand will expire and will then die.’

For the Russian male the addiction to spending has manifested itself in the acquisition of yachts, jets, and cars. ‘We have a positive attitude towards the English car culture,’ said Alexander Pikulenko, motoring correspondent for the Moscow radio station Ekho Moskvy.¹² In 2007 an estimated 40 per cent of Mercedes-Benz sold at their central London showroom went to Russians. The Russians also brought the good times to the UK’s fledgling private aviation industry and helped turn scores of Britain’s own home-grown entrepreneurs, such as the young property tycoons Candy and Candy, into multi-millionaires almost overnight.

For Russian women London’s luxury shops became the magnet for this ‘rouble revolution’, with Harrods the favourite. Many Russian wives - and probably their daughters as well - would no doubt love their husbands to buy it. There is a joke that Russian émigrés like to tell. On his deathbed a wealthy Russian summons his wife to his side. ‘Olga, when I die, will you promise that you will do something for me? Promise that you will bury me in Harrods.’ Shocked, his tearful wife begs him to reconsider, telling him that he is rich enough to build his own mausoleum in Moscow. ‘No, no, no,’ he interrupts. ‘Don’t you see, if I am buried in Harrods, at least I know you will visit me at least once a week.’ A close second to Harrods is Harvey Nichols, just up the road, where, at the height of the London boom, they employed six Russian-speaking assistants on its five shop floors.

For specialized jewellery the oligarchs’ wives and mistresses would move closer to the West End. Almost every shop in Old Bond Street started to employ a Russian speaker, while top jewellers like Asprey and Theo Fennell attributed their increase in profits from the late 1990s to their expanding Russian client base and their taste for expensive one-off designer pieces. Russian wives would think nothing of buying a £5,000 alligatorskin bag and a £90,000 diamond ring. ‘They are like children in a sweet shop,’ observed one employee.

After a morning being chauffeured around their favourite fashion stores, the wives and daughters would retreat for lunch to Roka in Charlotte Street, the Russian-style tearoom and restaurant, Troika, in Primrose Hill, or Harvey Nichols’ Fifth Floor Restaurant. Their husbands preferred the bars at the Dorchester and Lanesborough hotels for early evening drinks. Then it was dinner at the most expensive, exclusive restaurants, notably Le Gavroche and Cipriani in Mayfair. Even being halfway across the world was not a problem. Late one afternoon Roman Abramovich was in Baku in Azerbaijan and told his aide that he wanted sushi for dinner. The aide ordered £1,200 worth of sushi from Ubon in Canary Wharf, the sister restaurant of Nobu, the fashionable Japanese Park Lane restaurant. It was then collected by limousine, driven to Luton Airport, and flown 3,000 miles by private jet to Abramovich in Azerbaijan.¹³ At an estimated total cost of £40,000, it must rank as the most expensive takeaway in history.

Behind the glitz, the glamour, and the wealth lies another side of the Russian invasion. Their arrival may have transformed London financially, but it has also turned Britain’s capital into a murky outpost of Moscow. While the tycoons have been applauded by the City, luxury goods manufacturers, and property magnates, they hardly represent a harmonious community. Behind the mass spending sprees lies a much more sinister world of bitter personal feuds. Many of the Russians are at war with each other as well as with the Russian state. As a result, former friends and business partners have become sworn public enemies.

At issue is the ownership of billions of pounds’ worth of assets.‘They are ruthless,’ said one who has had regular business dealings with the wealthiest Russians. ‘Their word means nothing. They will shaft you if they are given half a chance. It is the law of the jungle. Many of them owe huge sums of money to others.’

Their presence, then, has also introduced to Britain some of the uglier elements of the Russian state. ‘As soon as the oligarchs arrived, so the politics followed them. That is why they all take such elaborate and expensive security precautions,’ another businessman explained.

The cut-throat political and business battles being fought for control of the nation’s vast oil, gas, and mineral resources were once confined to Russia itself. Gradually, however, those bitter corporate and personal wars spilt over into Britain. For a while they went unnoticed, at least by the press and the public, if not by the security services. It was only in December 2006, after the former Russian state security officer turned dissident, Alexander Litvinenko, died a long, painful, and public death in a London hospital as a result of polonium-210 poisoning that the implications of Britain’s wooing of Russian billionaires and dissidents became fully apparent. The British government wanted their money but only if they kept their acrimonious internal battles at the border. Litvinenko’s murder exposed the frailty of this strategy of benign tolerance.

As one Russian who personally knows several oligarchs put it, ‘The UK government may not care how these guys made their money or what they get up to as long as they don’t bring their dubious activities into Britain. But we can’t have it both ways. We can’t let them in and expect the seedy elements to stop short of the English Channel.’

The country’s leading expert on Russian history, Professor Robert Service of St Antony’s College, Oxford, agrees: ‘The British government has collaborated with the City of London in offering a haven for businessmen from Russia who need to expatriate their money. More circumspect, New York and Stuttgart have failed to compete in pursuit of Russian capital. Britain asks few questions about the provenance of new Russian wealth. Hence the hitmen who keep on arriving on our shores to settle accounts by violent means.’¹⁴

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