Clevelandgrad doesn’t sound as good as Londongrad, but the tentacles of money from the kleptocracy born from the ruins of the Soviet Union reach the Ohio city, as well as the British capital. The oligarchs close to Russian President Vladimir Putin have in the United States, in addition to private jets in California, superyachts in Florida or luxury mansions in Aspen or New York, real estate businesses and metallurgical factories in unsuspected corners of the Midwest. Corners like Cleveland.
All these goods are in the crosshairs of the sanctions imposed a month ago by the United States and its allies in response to the invasion of Ukraine. And it is not a closed list. Biden significantly expanded it this Thursday, during his visit to Brussels, to cover 400 Russian politicians, companies and plutocrats.
The oligarchs on that payroll have hitherto moved inadvertently into the American system, based on welcoming wealth, legal or illegal, without asking too many questions. Neither the war in Donbas nor the annexation of Crimea in 2014, nor even Moscow’s interference in the 2016 elections that ended Donald Trump in the White House, had convinced Washington to do much about it. This time it is different, although the obstacles for the sanctions to be effective have not changed.
This is explained by the investigative journalist Casey Michel, author of the book American Kleptocracy (St. Martin’s Press). lead by subtitle How the United States created the largest money laundering system in history. He published it in November, and the war has unexpectedly turned it into the manual for the use of an impunity that is not exactly new: already in 1999, on New Year’s Eve when Putin took over the Kremlin, Richard Palmer, who had been a CIA agent in Moscow, he warned Congress that kleptocrats and former KGB members were awash in black money in the United States.
Michel applauds the sanctions, “fantastic in themselves, much more daring than might be expected (and above all, than Putin expected), but also insufficient.” “If they are not accompanied by reforms that reinforce transparency and serve to combat money laundering, it will be very easy for them to circumvent them. It is urgent to abolish the rules that allow the anonymity of shell companies and trusts in the United States, ”he says.
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A senior official from the National Security Council, who has been working for months on this punishment program and who asked to remain anonymous, acknowledged the problem to EL PAÍS last week. “Harassing the oligarchs is one of the most important legs of the US response to unwarranted and unprovoked Russian aggression, and there will be more, no doubt, that I cannot elaborate on, because that would allow the sanctioned to move their assets before we freeze them. But it’s not just about adding names to the list, it’s about figuring out how to get at their possessions and businesses, which are usually hidden under layers of anonymous signatures,” he explained.
He also recalled that Congress approved a law in 2020, still pending application, that requires the government to identify these intermediaries, who benefit from particularly lax regulations in places such as the small state of Delaware, home of President Joe Biden, who , in practice, is a tax haven with a million inhabitants that is home to 1.5 million companies, as Michel recalls, adding that its capital, Wilmington, is the “world mecca for shell companies”. An initiative called the Enablers Act (something like the achievers’ law) is also in process, which extends this obligation to lawyers, investment advisers, accountants, art dealers or public relations in contact with dirty money.
The Department of Justice also created a working group called KleptoCapture earlier this month to pursue “corrupt Russian oligarchs,” as defined by US Attorney General Merrick Garland. And last week, the Treasury and Justice departments also signed an agreement to coordinate the efforts of G-7 members. The senior official of the National Security Council gave as an example the case of Spain (which is not a member of the club), where “three superyachts have been seized”, before adding that the United States has created something that it called the Team Zillow (for the most famous real estate portal in the country, similar to Idealistic), designed to locate and act on the oligarchs’ mansions near the Kremlin.
It makes sense: the spectrum of the businesses of Putin’s friends in the United States is wide, but he has shown a penchant for real estate: between 2015 and 2020, it is estimated that some 2.3 billion dollars were laundered in the United States. [unos 2.094 millones de euros] through real estate deals, according to a report by the Washington-based organization Global Financial Integrity, which is dedicated to investigating illicit money flows.
Those tangible assets are also the easiest to identify. And so some of the targeted oligarchs are rushing to get rid of them before they freeze; the Financial Times reported this week of desperate moves in New York to hastily sell properties from high standing. It is more difficult to tie the knot with investments in private equity funds, venture capital funds and hedge funds. US law does not require these firms to verify the identity of the investors, nor to be exquisite with the origin of that money, something that the banks are obliged to do by an anti-money laundering rule from the 1970s.
One such company is Concord. Founded in 1999 and based in Tarrytown, New York State, this consultancy doesn’t like advertising, so it doesn’t have a website. Like others of its nature, it is cutting ties with the Russian oligarchs at a forced pace during these weeks. The same can be said for the lawyers who represent them and the firms operating in Washington to pressure lawmakers. They are what is known in the city as the “K Street people”, but the definition is due more to a state of mind than to a postal address: most of them were based in that artery of the federal capital decades ago, but today hardly a trace remains. According to data compiled by OpenSecrets, a sentinel organization of the relationship between politics and money in the United States, Russian oligarchs have spent some 500 million dollars on this type of influence, completely legal, since 2014, when the first sanctions for the annexation of Crimea arrived. .
It is also common for these companies to open their revolving doors to congressmen when they leave. One of the best known is called Mercury, which represented Sovcombank, a bank that was included in the first round of punishments and came out again in the last: on Thursday, 17 members of its board of directors were singled out by the United States.
Mercury’s partner is David Vitter, who was a Republican senator from Louisiana from 2005 to 2017. As of February, Vitter was still advocating for his client, Sovcombank. He wrote to members of Capitol Hill to avoid punishing a financial institution “with strong ties to the United States and the West.” On March 3, Biden announced that he was freezing the bank’s assets in the United States and prohibiting its citizens from doing business with it. In light of that, Mercury has suspended his relationship with the Russian bank. They simply could not continue to do business together.
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