Consider This from NPR - Oligarch Assets Parked in the US Are Hidden in a Web of Financial Secrecy

Episode Date: April 2, 2022

Since Russia invaded Ukraine, there has been intense focus on Russian oligarchs - elites with enormous wealth and close ties to Russian President Vladimir Putin. The United States and international allies have imposed travel bans and economic sanctions on the billionaires, freezing accounts and impounding yachts and private jets. The goal is to disrupt the covert money funneled to Putin and his regime and to make the oligarch's lives difficult enough that they might pressure Putin to loosen his grip on Ukraine.Now President Biden's KleptoCapture task force faces the difficult and time consuming task of tracking down assets hidden in intricate webs of financial secrecy - many created by US regulations - that allow the oligarchy to hide their money and maintain power. We speak with Paul Massaro, a congressional foreign policy adviser who specializes in sanctions and illicit finance. In participating regions, you'll also hear a local news segment to help you make sense of what's going on in your community.Email us at [e-mail] more about sponsor message choices: podcastchoices.com/adchoicesNPR Privacy Policy

Support for NPR comes from NPR member stations and Eric and Wendy Schmidt through the Schmidt Family Foundation, working toward a healthy, resilient, secure world for all on the web at theschmidt.org. Tonight, I say to the Russian oligarchs and the corrupt leaders who built billions of dollars off this violent regime, no more. In President Biden's first State of the Union address, he came down hard on Russia's invasion of Ukraine. And he also made clear his administration's dim view of the Russian oligarchs and what he described as their dirty money. We're joining with European allies to find and seize their yachts, their luxury apartments, their private jets.

We're coming for you, ill-begotten gains. Since the invasion, there's been a lot of talk about these Russian elites, their enormous wealth, and how that wealth connects to Russian President Vladimir Putin. But after all this, maybe you're still wondering just who are these oligarchs and why are they referred to that way? And how did they get all that money? So Russian oligarchs, they are, for the most part, people who over the past two decades have amassed billions of dollars, mostly by virtue of a close friendship or other personal or business acquaintance to Russian President Vladimir Putin. Spencer Woodson is with the International Consortium of Investigative Journalists. They often own large parts or entire parts of what had been state-owned enterprises. Sometimes they make hundreds of millions or billions of dollars selling those same former state-owned enterprises back to the Russian state. And they serve the interests of Vladimir Putin and follow his orders and in some cases pay money into networks that are believed to be essentially Vladimir Putin's own secret wallet. This isn't the first time that the U.S. and the international community have gone after the oligarchs, impounding and freezing assets to make their lives uncomfortable, to loosen Putin's grip, and shut off covert sources of funds to him

and his regime. Sanctions were also imposed when Russia occupied Crimea. Consider this, Russia's war against Ukraine has created an urgency around dismantling the oligarchy. But hunting down assets will mean taking a hard look at some of the U.S. financial systems that help hide corrupt wealth. That's coming up. From NPR, I'm Michelle Martin. It's Saturday, April 2nd. This message comes from WISE,

the app for doing things in other currencies. Send, spend, or receive money internationally, and always get the real-time mid-market exchange rate with no hidden fees. Download the WISE app today, or visit WISE.com. T's and C's apply. Support for NPR and the following message come from Carnegie Corporation of New York, working to reduce political polarization through philanthropic support for education, democracy, and peace. More information at carnegie.org. Dozens of oligarchs, their families, and associates have been added to U.S. sanctions lists.

And in the past few weeks, there have been high-profile international seizures of assets from a handful of Russian billionaires. We woke up this morning to news that the United Kingdom has frozen the assets of seven Russian oligarchs, one of whom is Roman Abramovich, the man who since 2003 has been the single owner of Chelsea Football Club. He's now been sanctioned by the British government. All of his assets have been frozen. He's also been hit with a travel ban. We wanted to know more about the effect that these sanctions could have and how they will be enforced. So we called Paul Massaro. He's a congressional foreign policy advisor who specializes in sanctions, illicit finance, and counter-corruption. I asked him about the scope of these sanctions targeting oligarchs and how they compare to what's been

levied in the past. We have been calling for many years for sanctioning oligarchs, going after the oligarchs who are really the appendages of Putin's regime, Putin's now rogue state in the West. However, there's always been a little bit of hesitancy to do this given how powerful they are, their lawyers, their lobbyists, the billions of dollars that they control. But it seems all of that has been kind of wiped off the board and we are going for it now. I want to dig into a little bit more about who's been targeted and why. But I want to pick up on something you just said, which is that these people, their wealth, their possible criminal dealings, connection to President Putin is not new. So why now? Why did it take Russia invading Ukraine to take these steps? Well, yeah, I mean, that's the great question is how we got to here, how we got to, you know, Putin going on, you know, live TV and capturing the whole world's attention as he says he's going to wipe Ukraine off the map and then proceeding to

invade Kiev. I mean, it's been over a decade now of essentially Putin engaging in all sorts of malicious activity from the invasion of Georgia in 2008 to the first invasion of Ukraine in 2014, to cyber warfare, to assassinations, both successful and unsuccessful in the United Kingdom and in other democratic countries, to the abuse of Interpol to go after political opponents and dissidents. But there's always been this feeling of, well, there's got to be a way to work with them. This is Russia. You know, this is an important country in the world. It's a big country. It has a lot of oil and gas and resources and so on and so forth. But that is now gone. That's the big change that's happened. With the attack on Kiev and this all-out war on Ukraine,

even the West, which had been sort of asleep for so long, almost in a wishful thinking or self-imposed denial about who Putin is, has woken up in a massive way and said, okay, enough is enough. We are going to target this state like we've never targeted before and target this tyrant like we've never targeted him before. Do you have a sense of why specific people were targeted? Yeah. So, I mean, these are oligarchs that are very close to Putin. I think that right now we're thinking in terms of who do we have the most evidence on, who has the most obvious assets, who would do the most damage to the Putin rogue state, and so on and so forth. I mean, some of this is going to be pragmatically driven. So this is

hard stuff to do. I mean, I think that we need to emphasize what a difficult task we have before us. You know, there's been now 20 years of financial anonymity, anonymous trusts, anonymous shell companies. These guys have the best lawyers and lobbyists in the world, the best accountants. It's not like we can magically snap our fingers and get all this stuff. We don't really know where a lot of it is either, but we're going to find out. Okay. Can I just ask a question though? Because one of the New York newspapers has actually printed a map with some of the properties held by some of these figures with names attached. Some of them have two and three multimillion dollar properties in the same neighborhood. So I guess I'm just wondering why if a New York newspaper has a map

with these people's properties listed on it, why doesn't the U.S. government know where they are? So the properties, the physical property, is going to be the easiest stuff to get. That's the stuff that we can really target. Some of the stuff that's harder to get and is actually worth a lot more are the slush funds, the anonymous bank accounts, and so on and so forth. I mean, we're talking about really, you know, multi-million dollar properties versus multi-billion dollar accounts. You know, we want to get after everything. And this process is going to take, it's going to take a little while, right? It's not something that you can just do immediately. There are very strong protections against the, you know, the seizure of property by the government in the United States. And for good

reason, you know, you have a right to your property in this country, and it's a very important right. Before you let you go there, it just sounds to me as though you're saying this is a very lengthy process. And so if that's the case, how will this be helpful in the current crisis, where so many people are literally being slaughtered so what what is the the the end game goal would seem to me to demand accountability in the long term but is there any near-term benefit to this yeah there is and this is where the sanctions piece and the sort of ability to seize and then forfeit down the line right comes from is you can in the short term we can disable these individuals you know um this is in the long term we're going to be able to get this money.

And then I also will say that there is at least one bill floating through Congress right now that would allow essentially a special authority to confiscate this property given the kind of wartime nature of what's going on. It would be a temporary authority to move more quickly on these things so that you can get to go from sanction to seizure to forfeiture more quickly. That was Paul Massaro. He's a congressional foreign policy advisor who specializes in sanctions, illicit finance, and counter-corruption. Coming up, the role that the U.S. and its allies play

in shielding oligarch money. It's Consider This from NPR. Experts say that so far, the Russian assets that have been affected by sanctions are just a drop in the bucket. For sanctions to be effective, the U.S. and their allies have to track down vast amounts of money spread throughout the West. It's all over the place. Julia Freelander is a senior fellow at the Atlantic Council and director of the Economic Statecraft Initiative. She says Russian offshore wealth tied to real estate and other assets could total as much as a trillion dollars, money that is essentially stolen from the Russian people. This is a result of the state-captured oligarchs who have pilfered assets from domestic Russian

industry, from the economy, and moved them abroad through an elaborate money laundering system to hide them in offshore jurisdictions and in dollars and in stable financial markets. These guys have used a complicated financial network, offshore jurisdictions, shell companies and trusts and similar financial arrangements to hide the true nature of those assets to the point that it's really hard to find them. This money was welcomed with open arms. There was recently some great undercover reporting done in New York

when a real estate agent after a real estate agent was wide open to taking what was obviously corrupt money. Tom Burgess is a reporter with the Financial Times and author of Kleptopia, How Dirty Money is Conquering the World. There's an entire industry that has grown incredibly wealthy servicing this international kleptocracy, not just Russians, of course, but kleptocrats from across the world. A big part of the problem is that some U.S. financial systems help safeguard the very money that President Biden's new klepto capture task force has vowed to track down. Hundreds of millions and billions of dollars don't just hide themselves. That's Spencer Woodson again, the reporter with the International Consortium of Investigative Journalists. There are lawyers in New York and Delaware and London who are expert in creating structures of

shell companies and secretive trusts. There are laws in both the United States and the UK that allow people to use LLCs and other incorporations that really leave no trace of who actually owns them. And once you have that in place, a person with money that is derived from political corruption or criminal activity can really operate with a lot of freedom. Tom Burgess says the problem is much deeper than pressuring a handful of Russian oligarchs. And it's time that Western nations stop ignoring the bigger picture that's been right under their noses. What strikes me as absolutely remarkable in this situation is that the premise of the UK government's position, and to a lesser extent that of, you know,

the European governments and indeed, I suppose, the US government is, we are aware of massively valuable assets in our own economies, in this case, in the British economy, controlled by people so close to Vladimir Putin, so close to this kleptocratic dictator, who is now stealing an entire country, that we feel that if we apply financial pressure to these people that will either influence Putin to change course or it will lead these very wealthy people to start to plot against him to have a change of regime right that's the purpose of these sanctions that one of those two things will happen if a few of Putin's cronies are designated for sanctions and it becomes difficult for them to do business in the West, well, he'll get new ones because the secrecy system remains. We've seen this before in other kleptocracies that have come under pressure.

The danger, if we don't address financial secrecy, I think, is that we treat the symptoms and not the disease. It's Consider This from NPR. I'm Michelle Martin. Support for NPR and the following message come from the Kauffman Foundation, providing access to opportunities that help people achieve financial stability, upward mobility, and economic prosperity, regardless of race, gender, or geography. Thank you.