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Russian sanctions: all eyes on the assets

Written by Alice McCool on Tuesday, 29 July 2014

Today, further economic sanctions on Russia were announced. But what is the value of freezing assets and imposing travel bans as sanctions – and should they be used in fight against corruption too? 


Today, further economic sanctions on Russia were announced. The focus is on companies in the banking, oil and defence sectors. And according to the Guardian today we will see:

“Another eight names of individuals and three entities…on the EU blacklist of Russians subject to asset freezes and travel bans. Four of the new individuals on the sanctions lists were described by an EU officials as “cronies” of President Putin”

In the run up to this announcement over the past week or so there has been much debate concerning the effectiveness of asset freezing as sanctions against Russia in light of the Ukraine crisis. While this is an important discussion, Transparency International UK believes the primary use of asset freezing and travel bans should not be as a political weapon but as step towards recovering the gains stolen by the political and resources-resources-business elite from ordinary citizens around the world.

These funds sitting in the UK represent misery for millions of people globally. The money has been stolen from corruption-resources-corruption-resources-health and corruption-resources-corruption-resources-education budgets from infrastructure and law enforcement, and many other areas of public spending. This both degrades those services and removes funds that should rightfully be invested in their country of origin. You can find out more about how this issue should be tackled in the UK here.

Whether the freezing of assets should be used as a method of negotiating in this diplomatic crisis or not some longer standing issues remain. The first is how corrupt money from Russia and elsewhere ended up in the UK in the first place. The second is when the discontent in Ukraine is over and the UK and Russia are pals again, will recent questions surrounding the corrupt money from around the world lining London’s pockets fade into obscurity?

This is a valid concern. As we pointed out earlier this year as members of the G8 the Russian and British Governments committed to “prosecute acts of corruption and to preventing corrupt holders of public office from gaining access to the fruits of their kleptocratic activities in our financial systems” through denial of entry, anti-bribery laws and proper checks on the accounts of politically exposed persons. This was eight (yes, eight) years ago. Hmm.

The last, and probably less obvious issue, is party funding. This has been a bee in TI-UK’s bonnet for a while, and one of the benefits of the attention now being given to the issue of Russian money in the UK is to look at how it is spent and what influence it is buying. We think a cap on political party donations would be an important step towards tackling the undemocratic influence money has in our political system.

It is a positive step that the UK is becoming more active in freezing the assets of individuals who may be linked to corruption. But this can’t just be a tactic in international diplomacy. It is about time the wider issue was tackled head on longer term. The UK has been benefitting from the proceeds of corruption for too long. In the words of TI Russia’s Elena Panfilova:

“In the last decade we have seen in so many Western countries a strange – and to a certain extent hypocritical – attitude towards corrupt money from systemically corrupt countries. There is evidence that corrupt laundered money that is invested in the national economy is viewed as some kind of “noble” laundered money. Everyone knows that it is laundered but since it is not the proceeds from drug human or arms trafficking, it is OK to accept it.

The bad news for those who share this attitude is that it is not OK. Corrupt money may appear to be more “noble” and slightly “cleaner” than money that stems from other forms of organised crime but it is still criminal and it still brings to the host country not only the profit of investment but all the dirt of its origin. And if the host country is too slow to react and too weak in its position then relatively soon this dirt will take root and will become a national problem. It is not an assumption, it is an axiom.”

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Read 6461 times Last modified on Tuesday, 24 November 2015 12:18

Alice McCool

Alice formerly worked for Transparency International UK as our Campaigns Officer. You can tweet her via @McCoolingtons.

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