Andrey Borodin’s political asylum in London: A symptom of deepening Russia-West tension?

Mr Borodin denies the charges brought against him and claims he is being persecuted for political reasons. He also claims that alleged irregularities at the Bank of Moscow which were discovered after its takeover by state-controlled VTB in February 2011 – and which necessitated a state bailout totalling US$14 billion – are to be attributed to problems at VTB itself and that the bailout provided an opportunity for assets to be siphoned off. In his version of the story, he fell into disgrace because he called for an investigation of the circumstances surrounding the bailout. 

Borodin has also claimed in an interview with the Vedomosti newspaper that the chief orchestrator of the campaign against him is Dmitry Medvedev, who was President of Russia at the time of the bailout of the Bank of Moscow and is now Prime Minister. He alleges that he was ousted from the Bank of Moscow in what he dubbed a "corporate raid”. The implication is that Borodin may have crossed Medvedev because of his long-standing association with former Mayor of Moscow Yury Luzhkov (and Luzhkov’s billionaire wife, Yelena Baturina), whom Medvedev sacked in 2010 amid allegations of corruption.  

Andrey Borodin thus joins the group of Russian oligarchs who have elected to go into exile rather than face charges in Russia; these include Boris Berezovsky, Vladimir Gusinsky, Leonid Nevzlin (an associate of Mikhail Khodorkovsky) and Yevgeny Chichvarkin. Details vary, but the common thread is alleged criminal misconduct in Russia and the accused claiming political motives for the charges brought against them. 

The most outspoken members of this group are now gathered in the UK. Boris Berezovsky has launched from London repeated PR campaigns against President Vladimir Putin’s regime since its inception in 2000. Berezovsky, incidentally, claims to number among the friends of the late Alexander Litvinenko, who died in the UK capital in 2006 under suspicious circumstances. The Litvinenko case remains a source of major friction between Russia and the UK, with Moscow refusing to extradite the alleged suspect in the killing of Litvinenko. 

The UK is also the home of choice of former US citizen William Browder, the chief architect of the Magnitsky Act recently passed by the US Congress, against whom the Russian authorities have just levelled fresh charges of financial misconduct. For its part, London is highly unlikely to cooperate with Moscow by extraditing Browder.

It could be argued that given Russia’s sweeping and often chaotic transformation, the clash between the new oligarchy and the state – and often, no doubt, the "state mafia” – was unavoidable. Thus it is hardly surprising that individuals who happened to have fallen foul of the state would invoke "politically motivated persecution” as their first line of defence. What is surprising, though, is that Russia and the West – and, in particular, the UK – have allowed cases such as those of Borodin to damage their mutual relations. It seems that instead of advancing their common interests in the fight against criminality, Russia and the West are sliding ever deeper into a stand-off from which only the criminals can benefit.

 

 

 

 

For 400 years, the most reliable continental ally England, and then Britain, has consistently been – Russia. Nobody in the British media or policymakers bothers to remember this now, but the pattern has been amazingly consistent: Long periods of time of rivalry that almost always remained peripheral, such as the Great Game rivalry in Central Asia in the late 19th and early 20th century, or the four and a half decades of the Cold War. But in every major conflict of that period, England/Britain and Russia found themselves on the same side. Only in the Crimean War did they stumble into a direct war, and it proved to be a needless disaster for both sides. 

In the 20th century, Britain and Russia or the Soviet Union, to the surprise, even amazement, of many people in both countries, found themselves on the same side in both world wars to survive against Imperial and then Nazi Germany.

In all of these major conflicts, the financiers of the City of London recognized the underlying issue of survival and supported the repeated alliances with Russia.

However, since the days of Prime Minister Tony Blair, Britain has drifted into a policy of welcoming Russian oligarchs and being a welcome home for the billions of dollars, pounds or rubles in flight capital they brought with them. This has not made Britain popular in Russia. The latest expression of this growing conflict is the controversy over Andrey Borodin.

Ironically, all this has been going while one of Britain’s biggest and most important corporations, British Petroleum has been doing big business in Russia through its TNK-BP joint venture with Russian partners. BP is now closing a sale of its share in the company to Rosneft, in return for which the British oil giant will get a 20 percent equity stake and a board seat.

Analysts say this giant deal will be a major boon for BP. It will boost its opportunities to drill for enormous reserves in the Russian Arctic. And it will generate the huge sums in cash the company urgently needs to pay off its many claimants for damages in the United States following the Deepwater Horizon explosion and oil spill disaster in the Gulf of Mexico in 2010

The new row over Andrey Borodin, therefore, illustrates major conflicts in Britain’s business and diplomatic dealings with Russia.

For hundreds of years, Britain has benefited from Russia’s friendship against major threats to both countries. But today, the undoubted huge benefits of having hundreds of billions of dollars in Russian oligarchs’ flight capital based in London conflicts with BP’s massive and continuing business partnership with Russian oil majors. 

What Britain and Russia really need to do is to negotiate a legal framework with Russia in which criminal cases and the pursuit of suspects in both countries can be resolved. The two nations still offer each other far too much allow their fundamental relationship to needlessly deteriorate because of squabbles over criminal cases.

According to British Foreign Secretary William Hague, there have been many positive developments in UK-Russia relations since he assumed the post in 2010. "The visits to Moscow by the prime minister in 2011, and to London by President Putin last year, demonstrate the strengthening of political contacts at the highest level," he said. He also stated that Russia and the UK, as G20 and G8 hosts respectively, were bound to collaborate on matters of bilateral trade, innovation, science and higher education.

All very laudable, I am sure. But before we start applauding Mr Hague for these most welcome statements it would be interesting to know if he had any say in the recent decision to grant political asylum to Mr Andrei Borodin, former head of the Bank of Moscow, and other Russian "dissidents" who come to the UK to escape alleged political persecution in their homeland.

These days, the individuals granted asylum in Britain in no way fit the image of persecuted dissidents or refugees as we used to know them. In the old days Soviet dissidents fled their native country carrying a couple of suitcases packed with books and old clothes. Not anymore. Now they land in London with millions and often billions of dollars stashed in foreign banks. They can thus easily afford the most expensive real estate as well as the best lawyers and PR experts who will help them to concoct their stories of horrible persecution at the hands of Putin's KGB machine. Such "persecution” definitely qualifies them for political asylum – it is routinely granted practically without exception. There is also the following interesting pattern: the more money they bring to their asylum, the easier it is for them to get political refugee status.

Mr Borodin recently bought a Henley-on-Thames residence, the 300-year-old Park Place, for a reported £140 million, even though a portion of his billion-dollar fortune remains frozen in Switzerland. Have you ever heard of political dissidents with £140 million-homes and Swiss accounts of that size? It is hard to guess how much he paid to his lawyers from BCL Burton Copeland, but it looks like it was worth it. Money talks even in the country that regards itself as a bastion of the rule of law. Ironically, even the Financial Times, which never misses a chance to throw a rock at the Kremlin's windows, had to admit, in a story replete with Kremlin bashing, that regulators and independent auditors from the respected Deloitte & Touche firm found that "actions of the former Bank of Moscow management caused significant losses within the bank."

The UK political establishment simply ignores those highly regarded auditors' opinions as well as those of the Swiss public prosecutors who ordered the freezing of Borodin's accounts. From now on Borodin can safely posture as yet another of Putin's victims deserving protection by the British state.

The whole shebang reminds one of a similarly cynical behavior of the British government in the past. A few years ago Moscow accused a member of the British Embassy of using an electronics-stuffed rock to transmit messages to certain recruited Russian agents. The accusations were met with uproarious laughter at the awkwardness of these charges. But the laughter died down when the guy who actually was running this spy operation confirmed that Britain was indeed behind a plot to spy on Russians with a device hidden in a fake plastic rock. It was Jonathan Powell, former chief of staff to Prime Minister Tony Blair, who admitted in a BBC documentary that allegations made by the Russians in 2006 – dismissed at the time with a shrug – were in fact true.

Have we heard any apologies from the media from any of those who were then laughing so hard? Not a word. Dead silence. Best forgotten.

According to one of the commentators on an FT forum, Borodin and the likes of Borodin should not be allowed to "buy” UK citizenship. This is a privilege that should not be sold. Certainly not to individuals who miraculously become fabulously rich even without a plausible cover story.

The UK has long been the home of choice of the world’s wealthy and their families. Apart from its reputation for legal fairness and its long tradition of offering shelter to political and religious refugees, the obvious attractions include the country’s political stability, its highly developed real estate market and not least the quality of private education offered in the global lingua franca. 

When Putin became President in 2000, relations between Russia and the UK were put on a surprisingly cordial footing: then Prime Minister Tony Blair and his wife paid a private visit to St Petersburg in March of that year, just ahead of the elections that brought Putin to power. But those relations very quickly soured against the background of the invasion of Iraq (in which the UK played a leading role and which Russia opposed). Increasingly, the UK authorities and media criticized Putin for his alleged backsliding on democracy and for what they dubbed authoritarianism. A not insignificant role in this unfortunate development was played by the very vocal Boris Berezovsky, who opted to reside in London in 2000 and was granted political asylum three years later. But one of the main reasons for the deterioration in Russia-Britain relations was the death in 2006 of Alexander Litvinenko: in vain British investigators sought the extradition of Andrey Lugovoi, their chief suspect in the alleged killing of Litvinenko. 

There were no top-level official contacts between the two countries from June 2007 (when Blair briefly met with Putin at the G8 summit) to September 2011, when current Prime Minister David Cameron visited Moscow.

Today the UK (along with its close ally, the US) remains one of the main Western critics of the Russian leadership. The new wave of wealthy "political refugees” from Russia has taken advantage of this situation, and this, in itself, has only made Russia-UK relations even worse.

If the reports of Borodin’s being granted political asylum in the UK are confirmed  – and it should be noted that the British government has not yet confirmed them (it refuses to comment on individual cases) – this would be the most contentious UK political asylum decision ever taken for a Russian oligarch. Anyone knowledgeable about Russian business would know that the only political background to Borodin’s plight was the move to clean up Moscow City Hall post-Luzhkov: while divesting the City's controlling stake in the Bank meant that the new owners would want to replace the management (including Borodin as CEO) – this is not exactly political.

Over the past decade or so the Russian government has become accustomed to the UK taking in individuals from Russia under this or the other pretext. So it will not be surprised if Borodin has been granted political asylum – in fact, it will not have expected anything else. For that reason the impact on already poor bilateral relations will be marginal only.  

All this assumes that the UK is not actually interested in solving financial crimes committed by foreigners. London has a reputation as a "safe sanctuary" for shady people of means from the ex-USSR and other less-developed places, and I think it's loath to lose it – as it would by extraditing the likes of Borodin – in return for the chance of improving its relations with Russia.

In general, I think we should treat the idea that Western countries give out political asylum out of genuine humaneness with skepticism. See the Dutch refusal to give Alexander Dolmatov, wanted in Russia in connection with the May 6th riots, political asylum. Was it because of their respect for Russian judicial sovereignty? Or did it have something to do with his work at military factory - and possibly, his preference for suicide over spilling military secrets?

In short, it's a very cynical game they play. London calls Russia a "mafia state" while sheltering those very mafiosi in Mayfair. The Europeans lecture Moscow about rule of law, but then see it fit to grab 7-10% of the value of all deposits in Cypriot (where many Russians, far from all of whom are tax evaders, bank). 

From Russia's perspective, we have to note that concessions and a pacifistic attitude have never brought much in the way of benefits from the West. For instance, Ukraine has allowed in Europeans visa-free for years now, but it is Russia – which insists on mutual reciprocity in relations – that is far more advanced in negotiations to institute visa-free travel with the EU.

As North Korean diplomat Jon Yong Ryong said, "a high-handed policy should be countered by a tough-fist policy." In other words, nobody will respect you if you don't first respect yourself. Instead of piteously whining about British "hypocrisy" and "double standards" and other moralistic claptrap, Russia should take a cue from the DPRK and retaliate in kind. In this particular case, it could make it clear that big-time British financial fraudsters and tax evaders (no need to bother with little fishes) are welcome in Moscow provided they make the requisite "investments." Not only will it feel good to give the "doctor" some of his own medicine, but it actually stands a chance of incentivizing future British cooperation on financial crimes by hitting their Exchequer. As an added bonus, it also wouldn't hurt Moscow's quest to become a global financial center.

It's all nice, civilized, and pathologically passive-aggressive. In other words, if Russia were to follow my advice, it would be all the closer to "convergence" with true Western standards. And I've been told that's a good thing.