Moneyland: The Inside Story of the Crooks and Kleptocrats Who Rule the World

by Oliver Bullough

London wears many different faces, depending on whom it’s talking to. There is the pageantry and ceremony of the Changing of the Guards: all red-jacketed soldiers, glossy horses and cheering crowds. That’s for the tourists. There is the steel and glass of the City, London’s financial district, garrisoned by an army of bankers and clerks who teem across the bridges in the early morning. That’s for the business folk. There are the suburbs, with their semi-detached houses, hedges, no-through-roads and parks. That’s for the locals.

Manafort’s secrets were so well defended that had Robert Mueller not started investigating the former Trump campaign chairman, he would almost certainly have gotten away with his crimes. And this is a worrying thought, because there are many other people still using the exact same system. House number 2 on Woodberry Grove is or has been home to thousands of other companies—16,551, according to one database—as have the addresses Manafort used in the Grenadines, and in Cyprus, not to mention those in the United States.

No one wanted to defend Ukraine against armed and well-trained Russian-backed insurgents. Corruption had so hollowed out the state that it had all but ceased to exist, except as a means of illegal enrichment. Why, after all, would anyone defend something that spent its time making their lives miserable? Corruption robbed the whole country of legitimacy.

As one lawyer in Ukraine put it: “The choice isn’t between taking a bribe or being honest; it’s between taking a bribe or your children being killed. Of course you take the bribe.”

The top three and a half dozen people now own as much as the bottom three and a half billion. How is democracy possible with that kind of gulf in wealth and power between citizens?

The top 10 percent of Russians own 87 percent of everything, a higher proportion than in any other major country—and a pretty stark fact, coming as it does out of a place that was communist just three decades ago.

Transparency International (TI), the anti-corruption campaign group, publishes an annual Corruption Perceptions Index, in which it rates almost all the countries of the world by how corrupt they are, from Denmark and New Zealand at the clean end, down to North Korea, South Sudan and Somalia at the other.

Money flows across frontiers, but laws do not. The rich live globally; the rest of us have borders.

This one was the cheapest, at a mere £15 million, which is perhaps why he had left it empty. “Our main priority is to highlight the large number of empty buildings in London and to try to ensure they don’t go to waste when there are so many homeless people,” Jed Miller, one of the anarchists who appeared in court to argue against the eviction, told journalists. “These offshore companies which own so many empty buildings in London are using them to minimize their tax liability. That is diverting money away from crucial services.”

Across England and Wales, more than 100,000 properties are owned offshore, just like Yanukovich’s and Manafort’s properties were. It is impossible to say how many are empty, but perhaps as many as half of the new builds at the top of the market are barely used, according to one study. These are not houses for living in, but house-shaped bank accounts.

This concept of “offshore”—of being legally absent while physically present—was a useful one, and the term started to be employed to describe financial transactions as well.

these fallen dictators may have been living in South America but they weren’t all locals. In the early 1960s, there were plenty of people still alive who had looted Europe in the Second World War, parked the proceeds in Switzerland, and skedaddled to Argentina. It must have been very frustrating for Nazi war criminals to have money sitting in Switzerland and no prospect of a decent return. Finally, thanks to Ian Fraser and his team, they had a risk-free and tax-free method to make their secret stash earn a living.

Nevis prospers by renting its sovereignty to rich people who believe America is over-litigious, that women get too much money in divorce settlements, and that lawyers lie in wait for the successful. These beliefs are widespread among the rich, and Moneyland has given them the power to do something about it.

the same things that attract the naughty money—privacy, security, deniability—also attract the evil money. A start-up trying to fake it till it makes it would want to use 29 Harley Street for the same reason that criminals would: its address gives them a degree of prestige they could not otherwise obtain, and for a mere £50 a month.

the president promised some new equipment to improve treatment and diagnosis. It was supposedly, according to the news broadcasts, an entirely routine visit to mark World Cancer Day, but it was in reality a propaganda trip, an attempt to make this venal and self-interested kleptocrat appear to be a nice guy, someone who cared for the people he had been stealing from throughout his lengthy political career.

“They wouldn’t even let us drive onto the site,” he told me. “In front of me was a car bringing food for the patients—milk, I think, and various other things—and they wouldn’t let them enter either. The driver had to plead with the guards for, like, ten minutes. It wasn’t that our work was paralyzed so much but that there were serious inconveniences for the patients, for the staff, for anyone trying to walk around the institute. And on top of that there were snipers everywhere. It was a whole day. I think people just hated him even more by the end of it.”

Different groups specialized in different aspects of the healthcare scam, but in general the pattern was the same. Health ministry officials allied with private sector companies to dominate a part of the budget, whether that was supplying medicine or equipment, repairing buildings, or controlling the passage of new legislation. Business was conducted via shell companies in Cyprus to hide the scams from oversight, and billions of dollars were sucked out of the country. Anti-corruption activists worked out that, in 2012, Ukraine’s health ministry was overpaying for HIV and TB medications by 150–300 percent, compared to charities that bought the same drugs; and this was at a time when there wasn’t enough money to provide anti-retrovirals to everyone who needed them. The same handful of distributors popped up again and again, hiding behind shell companies, and competing against themselves in a process that looked transparent but which was really a sham. The whole process was protected by senior officials, and everyone got a share.

“Of course we could complain, but then they wouldn’t treat us,” one said, as she caressed the hairless head of her little boy. “You need to pay to get into a regional hospital, pay to get to the institute, pay to get an operation. If you complain, they’ll send you back, they can say there’s nothing they can do for you. Do you have children? Yes? Well, there you are, you wouldn’t risk them, would you?”

“On the one hand, I understand that, yes, they’re taking bribes, that it’s awful. How can you take a bribe from a child with this diagnosis? But on the other hand, I think: ‘OK, they’re taking €100, but they need to live, too. They also have to go places and get things.’ I think you understand what I’m talking about, it’s the system. Everything is connected. I am more than convinced that every hospital in Ukraine works in the same way,” she said. Later, after we left the kitchen, she was a little harsher in her assessment: “I try not to criticize the doctors in front of the parents, because they have to trust their doctors,” she said. It was a good point. Criticizing the doctors for being corrupt was like criticizing the clouds for raining. That was just the way they were. It would be better to spend your time finding an umbrella.

Teva listed the payments as sales/marketing expenses, and as consultancy fees, which were then paid for by the Ukrainian state by means of inflated invoices. That in turn left less money in the budget to pay doctors’ salaries, or any of the other things needed to run a medical system. Those doctors were then forced to recoup their salaries and their maintenance costs at the bottom of the pyramid, from their patients. Meanwhile, at the tip of the pyramid, the management extracted the money—from Teva, or the dozens of other healthcare companies vying to sell their products in Ukraine—via their control of the procurement process.

With so much hidden behind the shifting screens of offshore, it is difficult to know what is really going on. Marchenko said he knew of a big European pharmaceutical company that had broken ties with its Ukrainian distributors because it feared they were corrupt, taking up with a new Ukrainian partner instead. Marchenko was surprised to discover, however, that the new partner was owned by the same people as the old one, and the realignment had been entirely cosmetic, obscured by shell companies and designed to keep US prosecutors off the big company’s track.

Every ex-colony is different, and those that have turned into impoverished dictatorships all have their own reasons for having done so. Inherent in this process, however, is the very nature of colonies. They were created and run to enrich the colonial power. No matter how honest the officials sent out to administer them, their job remained to extract value from the colony and to send it home. State export agencies, for example, set prices for agricultural products in colonies all across Africa. They were originally created—or were said to have been originally created anyway—to help farmers, but the agencies quickly became a way of squeezing money out of peasants by paying below-market rates for their crops, then reselling the crops abroad for the enrichment of foreigners. The flags flying over the capital cities changed during the 1950s and 1960s, but the decisions taken by those in government often remained remarkably consistent.

The way Afanasiev told it, an extra passport was a form of insurance for his clients, since they could never be sure what the Kremlin would do next. It is simply sensible to have a second passport in your safe, so you always have the option of dropping everything, hopping on a plane and getting out. Your money is offshore already and, once you have a new passport, you are effectively offshore yourself, beyond the reach of your home country’s law enforcement.

In December, Estrada’s lawyers approached him with the first salvos of what looked like being an extremely expensive battle over the division of their family assets. He replied with something entirely unexpected: he was an ambassador, the British law could not touch him, she would get what she was given. He had bought an asset even more valuable than a passport or a visa: safety from the law.

The basic problem was that, if a British court could declare a foreign diplomat’s status to be a sham, a foreign court could do the same to a Brit. “The conduct of foreign relations … could be seriously hampered if the acceptance of accreditation of diplomats and Permanent Representatives was not regarded as conclusive,” the government’s lawyers argued.

In 2010, after Yanukovich won election as president, Zlochevsky became natural resources minister. That position gave him oversight of all energy companies operating in Ukraine, including the country’s largest independent gas company, Burisma. The potential for a conflict of interests should have been clear, because Zlochevsky himself controlled Burisma. But there was no public outcry about this, because almost no one in Ukraine knew about it. Zlochevsky owned his businesses via Cyprus, a favored haven for assets unobtrusively controlled by high-ranking officials in the Yanukovich administration.

The credibility of the United States was not helped by the news that, since May 2014, Vice President Joe Biden’s son Hunter had been on the board of directors of Burisma, Zlochevsky’s company. The White House insisted the position was a private matter for Hunter Biden, and unrelated to his father’s job, but that is not how anyone I spoke to in Ukraine interpreted it. Hunter Biden is an undistinguished corporate lawyer with no previous Ukraine experience. Why then would a Ukrainian tycoon hire him?

Hunter Biden failed to reply to questions I sent him, but he told the Wall Street Journal in December 2015 that he had joined Burisma “to strengthen corporate governance and transparency at a company working to advance energy security.” That was not an explanation that many people found reassuring. The Washington Post was particularly damning: “The appointment of the vice president’s son to a Ukrainian oil board looks nepotistic at best, nefarious at worst,” it wrote, shortly after Hunter Biden’s appointment. “You have to wonder how big the salary has to be to put US soft power at risk like this. Pretty big, we’d imagine.”

Any doctor will tell you that the guiding mantra for dealing with newly arrived patients is that common things are common. If you see hoofprints, think horses, not zebras; if you see an otherwise healthy man vomiting and suffering from diarrhea, think gastroenteritis, not assassination ordered at the highest levels of a foreign government.

Priscilla was arguing that, if inequality keeps increasing, rich people will buy more luxury goods, so shares in companies producing luxury goods will keep outperforming the broader market. If Kapur’s clients keep investing in those shares, they can keep making money out of the rise in inequality, which they can spend on luxury goods, which will boost those shares, which will increase inequality further, so more luxury goods will get bought, which will boost those shares, and so on. It was a virtuous circle, for anyone clever enough to invest in it. The basic message was the same one as that learned by Pnina Tornai’s wedding dress boutique, or by the estate agents of west London: there’s a lot of money to be made from those who don’t ask too many questions about where money comes from.

Nevada’s state motto is “Battle Born,” which reflects the fact that it gained statehood during the American Civil War, as part of a rushed effort by the Union to conjure new states into existence and thus gain extra votes for Abraham Lincoln. It was, at the time, the third-largest state in the Union (after California and Texas), and yet had only 40,000 inhabitants. It therefore struggled to pay for itself, particularly when output from its silver mines started to decline a decade or so after the war ended, which is why it has been constantly casting around for new sources of revenue ever since. One lucrative vein of business has been undercutting the regulations of California, its larger, more populous and much richer neighbor. Las Vegas has long made a handsome living by offering services to residents of nearby Los Angeles that they couldn’t get at home, and Reno has done the same for its neighbors in San Francisco: quickie divorces, shotgun weddings, gambling, low taxes, marijuana. Even prostitution is legal in Nevada, which makes it unique in the United States.

Swiss banks loved to claim that their bank secrecy had been designed to protect Jewish wealth from Nazi confiscation, and kept quiet about all the dictators whose money they also hoarded, or the tax dodging they facilitated. In effect, the refugees were being used to run interference for the others, and to make the Swiss banks look high-minded, rather than like the criminogenic institutions that they were.

It may well be that TEAS does raise all its income from members, or that Tale Heydarov has another source of earnings. But if that is so, the evidence has never been presented, which leads to corrosive speculation that money embezzled from Azerbaijan’s state budget could have found its way to London, been spent on MPs, and thus persuaded them to praise the Azerbaijan government in the House of Commons. This is clearly a very worrying thought, and not the kind of speculation that helps expand faith in democracy.

How many of the 10,000 successful primary applicants for EB-5 visas are buying US residency with stolen money? More worryingly, how many of them are purchasing entry to the US in order to subvert it from within? Answering these questions requires transparency as to the source of the money involved, and the property that it’s buying. Any efforts to answer them are therefore clearly doomed while Trump remains president, thanks to his opposition to efforts to shine light into the inner workings of the economy.

So far, too many citizens have believed the claims of the likes of Donald Trump or, in Britain, Nigel Farage, who argue that if we just tighten our borders against immigrants, we can make our countries great again. The real threat to the liberal order is not the poor immigrants, but unaccountable money. Offshore bandits are looting the world, and this looting is undermining democracy, driving inequality and sucking ever-greater volumes of wealth into Moneyland, where we can’t follow it.