How do you bring a person to reason? You should grab where it hurts. That is the West’s strategy in the Ukraine conflict. Russian billionaires, who live a luxurious life in London or New York, are said to be afraid for their fortunes. In the event that Russian President Vladimir Putin gives the order to invade Ukraine, Europe and the US threaten to confiscate the wealth of some oligarchs. The oligarchs in the West are part of Putin’s power apparatus – if you sanction them, you also hit the president. But is that even possible?
In order to freeze the oligarchs’ fortunes, you need to find out where they are and who owns them. This is very difficult, because the oligarchs themselves usually do not own the real estate, yachts, companies and securities: the official owners are usually companies with straw people as managing directors. And the owners of these companies are in turn other companies registered in yet other countries. The names of the oligarchs appear only rarely in the documents.
Therefore, the investigation effort, for example, to assign a specific London property to a specific oligarch, is very large. In addition, the possible confiscation must comply with the principles of the rule of law. Those affected regularly defend themselves against such measures in court, and the state, like the British think tank, is in bad hands Chatham House found in a study: The British criminal justice authorities have little chance against the highly paid and highly qualified international law firms, which Russian oligarchs pay enormously high fees to, due to their understaffing.
Stricter penalties are needed for the accomplices
The West wants to credibly threaten Russian oligarchs? Then governments should start by targeting the lawyers, accountants and bankers who studied in the West, live here, enjoy the benefits of democracy and at the same time help oligarchs, kleptocrats and criminal gangs to disguise the origins of incriminated fortunes. Tougher penalties against this clique of accomplices are needed.
But this measure alone is not enough. The Ukraine conflict is an expression of the escalating global conflict between democracies and autocracies of the Russian type: In this conflict, money is used as a weapon. The US presidential elections in 2016, the Brexit referendum in Great Britain, but also the most recent parliamentary and presidential elections in EU countries have been torpedoed by malicious disinformation campaigns – presumably controlled and financed by Russia. This covert exertion of influence happens, for example, via PR companies whose owners and clients hide behind opaque corporate and financial structures.
The development of party donations is similar. British experts are certain that donations from post-Soviet kleptocrats are now politically influencing the conservative Tories. The “caviar diplomacy” of the Azerbaijani autocrat Ilham Aliyev in the Council of Europe showed that German parliamentarians were also susceptible to attempts at bribery.
Anonymous company structures must be banned
Western democracies must stop this infiltration in their own interest – regardless of the Ukraine conflict. Law enforcement agencies need more staff to do this. Anonymous company structures – which Western democracies offer almost self-destructively and which oligarchs naturally use with gratitude – should be forbidden. But the most important instrument is: wealth whose owners are unknown or whose origin is of dubious origin must be frozen by the western authorities until the real owner can prove that he acquired the wealth legally and paid tax. The Italian state has been treating the assets of suspected mafia members in this way since the 1980s.
This effective enforcement of a shift in the burden of proof in the fight against money laundering is not an insubordinate attack on privacy. Rather, wealth owners use it to demonstrate their integrity. After all, ordinary people have to do this too – annually in their tax return.