Oliver Bullough - Everybody Loves Our Dollars - S8 | E17

Thanks very much for having me on the show.

Yeah. I hadn't really thought of myself as voyaging up a river to try and retrieve...

Okay. Yeah. I mean, it's a fantastic book, obviously, one of the great books. And I think, you know, obviously at the beginning of Heart of Darkness, it's situated on the River Thames, you know, they're sitting on a boat on the River Thames and then he tells the story about going up the Congo. And there's always, all the way through, there's that sort of implied analogy between the Heart of Darkness, the river going up into Congo and sort of the, you know, darkest Africa as it was then understood as this sort of unknown, savage continent. But the parallel that's drawn with the Thames going up into the City of London, which is where the capital was coming from to fund the kind of raping and pillaging of these colonies. So, you know, actually there is a real parallel with a lot of how I think about the world. The period I'm sort of obsessed by begins in the 1950s and particularly in the 1960s with the creation of offshore finance, the reinvention of the City of London as an offshore financial center rather than a colonial center, the development of places like Nevada, South Dakota, Delaware as offshore centers, obviously the famous tax havens throughout the Caribbean, and this form of globalized, unaccountable money that became a new phenomenon. We've all become completely accustomed to it, but it was really a new invention in that post-colonial era. And so, you know, it ties into, I suppose, what Conrad was writing about because it is this new iteration of colonialism, you know.

Yeah, Karl Marx said, you know, that colonialism was the last form of capitalism, which I felt quite optimistic of the old guy, you know, the idea that it couldn't get more rapacious, but actually it turned out that it could.

Yeah, so I mean, this offshore finance now, you know, tends to be talked about in the context of, you know, how the cartels move their money or, you know, terrorist groups move their money, but that isn't where it came from at all. You know...

Tax dodging, and particularly in the Caribbean, so Cayman Islands, Bahamas, and so on, we're talking about Americans dodging taxes and, you know, a sort of surprisingly wide range of people dodging taxes. I mean, there's a book with a really detailed account of how Creedence Clearwater Revival dodged taxes back in the '60s, which is so improbable that, you know, they had their own kind of tax shelter. And, you know, meanwhile on our side of the Atlantic we had, you know, Switzerland, obviously, Jersey, Guernsey, other tax havens that helped Europeans dodge taxes. And then in other parts of the world, they have different places. So, you know, it's this desire from, you know, wealthy citizens of, you know, the US and European countries to opt out of that kind of New Deal post-war arrangement whereby there was a sort of, you know, more or less social democratic system whereby, you know, people would be supported if they fell on hard times and taxes would be high to pay for that, and there was a sort of understanding that money and democracy were in opposition to each other and we needed to protect democracy from the influence of money. You know, fortunately for the owners of money, they were able by using modern technologies, the jet aircraft and so on, to kind of opt out of that by moving their money overseas and outside the reach of the national governments. This created this whole network of offshore money, you know, in the City of London, in Switzerland, in the Bahamas and so on, which gradually eroded the ability of governments to police what wealthy people were doing. And I mean, it's kind of amazing if you look back to the 1960s what the federal government used to do in terms of controlling what rich people could do. There were limits on, you know, the amount of debt you could take out to buy shares, like really strict limits. There were limits on the interest rates that banks could charge. There were, you know, really ferocious limits on, you know, I mean, the taxes were very, very high.

Exactly. I mean, you know, that Beatles song, you know, Taxman, you know, it's a marginal tax rate here in the UK at the top rate of 95%. Which is extraordinary. And then, but then gradually, fortunately for the owners of lots of money, they got these services offshore, which dissolved, you know, these restrictions. And that's what I call naughty money. Yes. You know, and...

Yeah. I mean, but still, I mean, you know, I think you need to make a distinction between tax dodges and cartels, terrorists, that kind of thing, you know, one's worse than the other. Yes, and so, but it is naughty money creates the pathways and then the people who were selling the services realized they could offer them to, you know, corrupt dictators, to terrorist groups and so on, and they did, and then that's when the rot really, really set in.

I mean, so to put it in context, I'm a Russianist, really, by inclination. I don't live in Russia anymore for fairly obvious reasons, but I lived in Russia for seven years or something. I traveled there a lot even after I left permanently. And I've traveled very widely in the old Soviet Empire. And I became, well, fascinated after the 2014 Ukrainian revolution by the fact that there was this sudden window when no one really knew who was in charge. In fact, no one was really in charge. It was just sort of if you were sufficiently confident and you had the hutzpah, you could get away with almost anything, which I mean...

Yeah. I mean, the Russians famously took advantage of this to annex Crimea. I took advantage of this to just go and poke around all the president's palaces. The president of Ukraine, Viktor Yanukovych, had been astonishingly corrupt. You know, a really...

Well, I mean, he was a kind of—Russia relied on him, but he was his own kind of thug as well. He wasn't just a bought thug. He, you know, he was a thug on his own account. He was just a nasty piece of work. His press secretary—his press secretary once bit me, which is the only time I've ever been bitten by a press secretary.

Yeah, it was very weird. Quite painful.

I know. She—no, she was trying to stop me asking a question and trying to hold me back, but I was stronger than her, so I was just pushing forward. And so in order to try and prevent me from getting to him, she bit me really hard on the shoulder. So anyway, that kind of gives a bit of a sense of the general Yanukovych vibe.

But he had fled this popular uprising, leaving behind stuff he couldn't carry, which included his palace, which was a sort of—it's a log cabin, but a log cabin on, you know, monstrous steroids. I mean, of an astonishing proportion, sort of, you know, set in a park that he'd stolen with all these kind of temples. He had a kind of—like a kind of cod Spanish galleon thing down by the water, which, you know, where they hung out. There was an enclosure for shooting wild boars. They'd bring in wild boars and put them in this enclosure and then kill them. It was just grotesque. And then he also had a hunting lodge in a forest outside Kyiv. And I went there with one of the revolutionaries who was also interested in this stuff and we were just poking around. And that was—I mean, it was a slightly less tasteless but still pretty grim. Yeah, and that was when I said, you know, it was so extraordinary, you know, that these palaces, it wasn't like they were hidden behind high walls. You could see them, you know, it was pretty obvious what was going on. And I said, you know, 'How did you let him get away with this?' And he replied, you know, in a degree of, you know, I mean, not furious, but with a degree of crossness, he said, you know, 'Listen, we didn't know what was happening. You know, this—you're not even standing in Ukraine at the moment. You're standing in England. Look it up.' And I didn't really know what he meant by that, but I went back and I did look it up, and you can look up on the registry of who owns what. And indeed, that piece of land was owned by a company which was registered in London. It was owned by a completely legitimate-looking company registered on Harley Street, which is a really, you know, pretty posh street in central London, which is famous for private healthcare, and just off Oxford Street. And then that was in turn owned by a foundation in Liechtenstein, and it was all completely opaque and murky. You couldn't tell who owned it. But what was amazing about it was this was the first realization for me that Ukrainian corruption isn't Ukrainian. It's global. That it uses all the tools of the global financial system and you can't understand it as a Ukrainian phenomenon. You need to understand it as a global phenomenon. And as this outgrowth of this, you know, incredibly complex, murky, ever-shifting financial system that allows people to hide their money and move their money and spend their money without anyone knowing what they're doing. And Yanukovych had been deeply plugged into this. But he, you know, but he was a thug, you know, a mob boss. He didn't know how to structure a shell company. And he had all these people, you know, lawyers in the UK and Austria and places who did this for him. You know, famously, political consultants, you know, from the US who were helping him win elections. He, you know, he basically had bought all these services, kind of corruption services, and embedded himself in the global economy. And it was the first insight I had really into how modern corruption, you know, what we call kleptocracy, how that works. The extent to which this is not the old kind of corruption where there's just a deal between someone pays a bribe and someone takes the bribe and you slip it in their handshake or you give them a brown envelope or whatever. It's not that. This is talking about huge amounts of money moving via bank accounts in totally different countries, all of it owned by shell companies that you never know who owns it, and it's completely unaccountable. And that was—that just appalled me and fascinated me, and I decided to try and just understand what was going on and how this had happened and how this was possible and what it meant. And so that's what I do now. I mean, it's, you know, I thought it would—to be honest, it's quite funny looking back at it now. I thought that what I was describing was so appalling that the only reason it could possibly exist was because people didn't know about it. Right? It was just—it wasn't possible that this could be tolerated. And I kind of assumed a lot of the problems would be solved before I could finish writing the book. But then...

Yeah. Out there somewhere.

Yeah. Yeah. But the impacts are extraordinary and dreadful.

So yeah, I naively assumed all I had to do was write a book and then someone would read it...

Sort that out.

Yeah. Not so much, as it turned out. And then I wrote another book, and again, and now I've written another book, and, you know, I mean, it just carries on. It's a very lucrative business for a lot of people in both of our countries, in the UK and increasingly now the US.

I mean, so—but one thing the US has always been very, very good at. Yeah, there are some ways that the US is sort of behind European countries in the kind of direction I'd like to go. So, particularly around transparency of shell company ownership and stuff like that. But there are other ways in which the US was traditionally miles and miles ahead, and that was particularly around investigation and prosecution of financial criminals. Partly because of the history of prosecuting the mafia, but for lots of reasons. The US was always way ahead of European countries on that. You know, that has sadly declined, and particularly with the developments around cryptocurrencies now, the US is pioneering a whole new financially innovative form of corruption and money laundering which I don't think it understood the consequences of.

I mean, it's, you know, it's hard to say because crypto—there are lots of different kinds of crypto. So, you know, people use it for speculating and I suppose that's—I mean, it's a bit pointless, but fine. People use it for straight fraud and then there's people who use it for money laundering and there are different kinds of crypto being used in different ways, but, you know, it is—it's certainly enabling an incredible growth of particular kinds of crime, particularly fraud, you know, these things like these romance frauds, you know, what they refer to as pig butchering scams. Yeah. You know, which are growing, you know, inordinately in—well, I mean, all over the world. And that...

So all of these scams, they all kind of work in a similar way, which is that someone will reach out to you via social media or over the telephone and will find a way to part you from your money. They might claim that your computer is at risk and then you need to move your money to a safe bank account, or they might pretend to be in love with you and that you need to give them money to pay for the visa, or they might claim it's an investment opportunity or whatever. You know, it is—it's very, very sophisticated and, you know, and it is an industry which is run, you know, in a centralized way by very, very sophisticated organized crime groups. But what's particularly dark and distressing about it is that a lot of the people who are actually contacting you to claim to be in love with you or to claim to have an investment opportunity, they are also victims. They have often been trafficked to be—yeah, imprisoned in compounds with, you know, surrounded by barbed wire and if they step out of line they get zapped with cattle prods and so on. So, you know, there is a—it's victims all the way down. These are trafficked people who are defrauding vulnerable people and all of this is enabled by the ease of moving money in cryptocurrencies. You know, there are huge growths of these kind of scam compounds, particularly in Southeast Asia, places like Cambodia, but also in other parts of the world. You see it in Georgia, for example, in other places too. And this is, you know, how modern criminality works. It's so easy to move money and so hard to then find it or to recover it after it's been moved that basically, you know, there's no disincentive for the criminals. They're never going to get caught. They're never going to get prosecuted.

Yeah. I mean, you know, in the US, which is the only country that really ever investigated this stuff much to begin with, there has been definitely an effort to push efforts away from that kind of work and in other directions. But then, you know, over on our side of the Atlantic, we never really did it in the first place very much. I mean, it's been, you know, it's been a source of sort of shame for a long time that, you know, none of these kleptocrats and oligarchs who established themselves in London and bought property and everything, that none of them ever get prosecuted. You know, this is a very safe place for them.

I mean, it is, you know, it's one of the things that's always quite entertaining about doing this work is how—like you say, how banal so much of it is. You get in your head, particularly if you've read about these places on paper, the idea that these particular addresses are kind of, you know, they're sort of almost, you know, epic destinations of criminality. And so Woodbury Grove was the home of a company formation agent that was used by Paul Manafort to hold some of his business interests when he was operating.

Manafort supported Yanukovych and was of course a Republican operator in the US with great controversy. But yeah, Woodbury Grove was just a—it was just a really dull office building. But I mean, you know, just of the fourth rank, you know, a really quite substantial walk away from the final stop on the tube line on the Northern line. You go all the way to the end and then you keep walking for 15 minutes and you finally turn off the main road onto this side road and you find this squalid little office block and that was where his companies were. But it was a sort of, you know, just one of these funny things, you know, you've got a few hours spare, why not go and have a look? And then, you know, you get there and all of your visions of the sort of, you know, the glamour of crime are just dispelled because you could, you know, you could imagine there are some poor people working in there for the minimum wage. Yeah, doing this drudge work, you know, but the crimes that they're enabling are, you know, world-class, are huge. And you see this again and again. I mean, you know, so many of these company formation places are just like that. I mean, you go to the British Virgin Islands, which is a, you know, a major center of shell companies used in crimes all over the world, and it's similar. I mean, it's perfectly nice, but these are just boring office blocks with just boring work being done in them, you know, and everything—the glamour just—it's just not there. There's nothing. I mean, I, you know, I—you have the same in Nevada, talking to a company formation guy in Nevada and he just lived in, you know, in attractive houses next to a golf course, you know, sort of, I don't know, about 45 minutes' drive outside Reno, and, you know, and there was just nothing there. And that's what's so weird about it all is it's just these multiple nodes in this system, none of which are really very interesting in and of themselves, but collectively they add up to this incredibly potent kleptocratic wealth-moving machine. And, you know, and the amount of money involved is just, you know, awe-inspiring. I mean, you know, the effort of people who try to estimate how much money is laundered every year, you know, it could be up to $5 trillion. You know, that's a—if you had a trillion dollars and you wanted to, you know, to try and count them, that would take you 30,000 years. You know, so, you know, $5 trillion, that's 150,000 years' worth of counting of individual dollars to get to $5 trillion. It's so much money. And it's all of it moving through these kind of banal places like Woodbury Grove.

Yeah.

I mean, I was going to say just partly it's very well defended. You know, there is a—there is a whole industry of people whose job it is to prevent you writing about this stuff. Yeah, you know, I had a—in my first book about money—I wrote a couple of books before about Russia, but my first book about Moneyland, you know, I wrote about this reality TV show, Say Yes to the Dress. Which is just—in case the listeners haven't ever watched it, I highly recommend it. It's fantastic. And it's set in a bridal boutique. And brides go in, you know, three a week and they buy their dresses and they look fantastic and there's drama and tears and, you know, and all the stuff you get around a wedding. And there's, you know, one episode when they have these VIP brides with unlimited budgets and it's all very exciting because there's so much money involved and, you know, and one of the VIP brides is introduced as like being like almost a princess from Angola, you know, she's got so much money and every penny she spends is, you know, marked up on the screen, you know, it's like, you know, whatever it is. What happened?

Isn't this great? And isn't she going to be happy? And doesn't she look beautiful? And don't her bridesmaids look amazing? And, you know, fair play, they do, they look great if you like that kind of thing. It's a bit over the top for me, but okay. Yeah. And then what was wild about it is then her father, who at the time was the vice president of Angola, sued me for having revealed—yeah, sued me in Portugal and in Germany and they also tried to sue me in Scotland. That didn't amount to anything. For having exposed, you know, this and presented him as a bad person. But I was just, you know, as I was telling the judges who fortunately decided that I had no case to answer and that he should go away, that I was saying, 'I didn't—this is not investigative journalism. I didn't do any investigative journalism. I watched an episode of Say Yes to the Dress.' Like, you know, I'm not—there was no whistleblower blew the whistle on herself by doing this on television. And that—but what was so strange about that was that, I mean, that took—it took years for this case to finally wrap up and, you know, there was all these lawyers who were willing to take his money to find a jurisdiction where he could bring this case and, you know, and to try and sue me for having revealed his secrets even though the secrets had already been revealed. And, you know, and that, you know, scaled up, you see that again and again and again. You have to be—it's something that a lot of American journalists don't really understand because it's a different tradition, but in Britain and in other European countries the libel laws are really strict and you have to be very careful about what you're saying and how you're saying it because it's not so much because you think you might lose a case, because you can be very confident in the work you've done, but just the expense of fighting a case means that you're just bankrupt before you even begin. And this whole industry is built up to protect, you know, the money in Moneyland from being exposed. And yeah, and it makes it quite difficult to try and do the work I do.

Yeah, that came—that came. It was a dis—yeah, that was a dispiriting case. There was a, you know, an oligarch, you know, being generous calling him an oligarch. I mean, you know, there were ruder words you could use. And, you know, and he had made his money in lots of ways, but including in the sale of knockoff designer clothes in colossal quantities, so fake designer clothes. Including like Dolce and Gabbana, all the brands that you would expect. And it was amazing because I figured out who his children were who were living in Western Europe very happily and spending daddy's money. And one of them, his daughter, was living this very luxurious life and had a—she shared a lot of stuff on Instagram including photos of her—selfies actually—with Dolce and Gabbana, like the people, and like Domenico...

Well, because she was, you know, she was buying clothes and she was at fashion shows and she was in that.