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Friday, November 11, 2022

‘London laundromat’: how golden visa scheme created UK haven for dirty money | Rich lists

A multimillionaire DJ and her husband were last year forced to hand £4m to the National Crime Agency (NCA) after admitting in a settlement that they had brought the money into the UK illegally through a $2.9bn (£2.1bn) money-laundering scheme nicknamed the “Azerbaijani laundromat”.

Izzat Khanim Javadova, who performs in London and Ibiza as DJ Mikaela Jav, and her husband, Suleyman Javadov, entered the UK years earlier after investing at least £2m under the “golden visa” scheme that has attracted thousands of wealthy people from Russia and former Soviet states to settle in Britain. Most moved to London, nicknamed “Londongrad” in some circles.

Javadova, a cousin of the Azerbaijani president, Ilham Aliyev, and a daughter of a former Azerbaijani MP, was granted a “tier 1 investor visa” during a “blind faith period” between 2008 and 2015, when 97% of investors were subject to scant checks on the legitimacy of their wealth.

Zamira Hajiyeva with green umbrella
Zamira Hajiyeva arriving at Westminster magistrates court in 2019 for her extradition hearing. Photograph: Jonathan Brady/PA

More than 3,000 people were granted investor visas during this period, including 705 Russians. They include:

● Zamira Hajiyeva, whose husband was the former chair of Azerbaijan’s state bank, who was served with the UK’s first unexplained wealth order after being found to have spent £1m a year at Harrods. Law enforcers alleged the money came from her husband Jahangir, who was sentenced to 15 years in jail in Azerbaijan.

● Nirav Modi, an Indian billionaire awaiting extradition over an accusation of defrauding a state-owned bank of £1.5bn.

● Mukhtar Ablyazov, the son of a former energy minister in Kazakhstan, accused of embezzling $5bn (£4bn) from a state bank and lying to a court about the scale of his vast fortune, including a £17m mansion on The Bishops Avenue in London.

After the 2018 Salisbury poisonings of Sergei and Yulia Skripal, a former Russian military officer and his daughter, the government launched a review into the investors awarded visas from 2008-2015. The review has yet to be published.

Meanwhile, new investors continued to take advantage of the visa system. The latest Home Office data shows 798 investor visas were granted in the year to September 2021, of which 82 were award to Russians – the highest 12-month total since 2018.

The scheme remained open, despite parliament’s joint intelligence and security committee saying in 2020 that it was “welcoming oligarchs with open arms”.

“It offered ideal mechanisms by which illicit finance could be recycled through what has been referred to as the London ‘laundromat’,” it said. “Russian influence in the UK is ‘the new normal’, and there are a lot of Russians with very close links to Putin who are well integrated into the UK business and social scene, and accepted because of their wealth. This level of integration – in ‘Londongrad’ in particular – means that any measures now being taken by the government are not preventative but rather constitute damage limitation.”

Chris Bryant MP outside parliament
Chris Bryant MP: ‘The UK remains the soft underbelly for dodgy Russian money.’ Photograph: Sophia Evans/The Observer

Chris Bryant, a Labour MP who sits on the foreign affairs select committee, said the UK “remains the soft underbelly for dodgy Russian money” and the investor visa programme had been a “gold-plated invite to launder money in the UK”.

The Home Office announced on Thursday that the scheme would end with immediate effect.

Bryant said the UK had become addicted to “dodgy money”, and questioned why Priti Patel, the home secretary, had not ended the scheme sooner, saying she was on the foreign affairs committee when it recommended closing it.

The scheme was launched by the Labour government after the 2008 global financial crisis to raise investment. A £2m investment allowed an application within five years, decreasing to three years with £5m, or to two years with £10m.

Prem Sikka, emeritus professor of accounting at the University of Essex and a Labour member of the House of Lords, said: “The City is hooked on dirty money. Foreign money, often illicit, has inflated the housing market [while] Britons can’t get on the housing ladder.”

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