Elementary Money Laundering
Does a Dead Kazakh KGB Chief Own Sherlock’s House?
A new transparency report links Rakhat Aliyev, the former son-in-law of Kazakhstan’s dictator, to a famed Baker Street address in London.
Jagshemash, the game’s afoot. The home of the world’s most famous fictional detective may be owned by the deceased No. 2 secret policeman of Kazakhstan. A new deep-dive investigation conducted by the London-based transparency watchdog Global Witness suggests that Rakhat Aliyev, along with his alive and highly influential son Nurali, may be the ultimate legal owners of Sherlock Holmes’s celebrated house at 221b Baker Street—or rather, the site where the house would have been had it existed. (There’s a Sherlock museum carrying that exact address located in the wrong place, a few doors down.)
In total, “companies and people that can be directly and indirectly connected to Rakhat Aliyev and Nurali Aliyev,” the Global Witness report concludes, “are behind a portfolio of British companies that own £137 million worth of property on Baker Street and a £9.3 million mansion in Highgate,” the final resting place of Karl Marx, no less.
Nurali has not publicly acknowledged the allegations. His father was discovered hanged in his Vienna jail cell in February of this year, a black end to an equally black career. The estranged son-in-law of Kazakhstan’s notorious dictator Nursultan Nazarbayev, Aliyev fell out with the first family after they accused him of plotting a coup and sentenced him in absentia in 2008. Before that, he’d been the country’s ambassador to Austria as well as the former Deputy Head of the KNB, Kazakhstan’s successor organ to the KGB.
Aliyev was also, characteristically, an oligarch with an untold fortune first made in the Central Asian sucrose industry, by which he earned himself the Foxy Brown-ish sobriquet “Sugar.” Accusations abounded that he used Europe to launder ill-gotten gains. As of June 2015, he still had assets frozen in Malta, which alleged that Aliyev used its financial system to wash €100 million he’d obtained through bribes related to his tenure at the KNB. At the time of his death—an apparent suicide—he was still subject to several ongoing financial crime investigations in the European Union.
As one might expect, Aliyev had a violent streak, too. The bodyguard of former Kazakh Prime Minister Akezhan Kazhegeldin claims that Aliyev personally tortured him to try to get the bodyguard to implicate Kazhegeldin in a treasonous overthrow of the regime. In fact, Aliyev wound up in Austrian prison after he was charged with a dual homicide dating back to 2011, his alleged victims having been two Kazakh bankers whose bodies, as the BBC reported at the time, were “buried in lime-filled barrels on waste ground in Almaty.” He denied perpetrating the murders.
So what links this dodgy Kazakh to the immortalized pile of violin strings and tobacco pipes?
Global Witness scrutinized four UK-registered companies, all owned by the same parent entity, which was registered in the British Virgin Islands. This is one of many offshore jurisdictions beloved by billionaires, gangsters, and government officials (in most cases, these tend to one and the same person) from authoritarian regimes. From 2008 to 2010, the companies bought the Baker Street properties, although on behalf of whom was never disclosed to Britain’s Land Registry, which doesn’t require that the ultimate legal beneficiaries of any companies buying up British properties be disclosed. But there were plenty of circumstantial ties back to Aliyev.
For one thing, Massimiliano Dall’Osso, the Italian managing director of a German metals company linked to Aliyev and the latter’s second wife, is currently the director of three of the four UK companies. (Dall’Osso denied to Global Witness that Aliyev owned any of them.) Moreover, the fourth company, Greatex Limited, which sold off 231-237 Baker Street in 2009, has a Geneva-registered namesake, Greatex (Suisse) SA. A Kazakh national, Mukhamed Ali Kurmanbayev, was one at point director of both. And the president of the Swiss company when it was registered? None other than Nurali Aliyev, Rakhat’s son, who was a mere 22 years old at the time.
Nurali, who studied at Sandhurst Military Academy—Britain’s West Point—is today worth a reported $200 million in his own right. He’s currently the deputy mayor of Astana, Kazakhstan’s capital, and despite the ill repute in which his dead father is held back home is also said to be Nazarbayev’s favorite grandson and anointed successor.
“These wealthy oligarchs all come to London because it’s a really good place to put your money,” Simon Farrell QC, a British attorney who specializes in corporate crime and money laundering, told The Daily Beast. “It’s a fantastic place to hold property because it’s a secure democracy where the rule of law is taken seriously, where the judiciary is not corrupt and where you can trust the legal profession. In many parts of the world the super-rich can’t be sure that their assets will be safe.”
Indeed, London has now earned the unflattering designation of the world’s No. 1 money-laundering capital, with an estimated $1 billion pouring in each month, 40 percent of it doing so through what Spear’s, the flagship magazine for a premier “wealth management and luxury lifestyle media brand,” has termed “irregular channels.”
Arguably the largest reservoir for those channels is real estate. A stunning £122 billion in real estate in England and Wales is held be companies registered outside England and Wales, according to Global Witness. “If I was a criminal and I wanted to hide assets looted from a foreign country, I could easily buy a property in London via six corporate structures, in the Seychelles, Liberia, the British Virgin Islands, all over the world,” Farrell said. “On the Land Registry it will say, Squirrel Limited, British Virgin Islands. The chances of you finding out who actually owns that house are virtually nil, and it’s a real problem. I see this all the time in criminal and civil cases. It’s standard practice in Mayfair, Chelsea and Holland Park, for example—most of those huge houses are owned by companies through this type of corporate structure.”
The ease with which any foreign tycoon with a suspect or inscrutable revenue stream can buy up castles, posh flats, and mansions was only underscored in a recent Channel 4 documentary which aired on British television, titled From Russia With Cash. It featured a man posing as a crooked official from Russia’s Health Ministry. He flat-out confessed to five different estate agencies—including Marsh & Parsons, whose motto is “The Only Way is Ethics”—that he had stolen money from the Russian government budget and wanted to use it to buy a flat for his high-maintenance girlfriend (he said he was married with kids back in Russia, naturally).
In each instance, the agents didn’t so much as flinch, much less call the cops. In fact, almost all of them offered to put “Boris” in touch with good solicitors who could “discreetly” arrange the purchase of properties in the millions through offshore anonymous holding companies.
From Russia With Cash proved such a scandal that it prompted an early day motion in parliament recommending “that corporate transparency become a Land Registry requirement so that any foreign company intending to hold a property title in the UK is held to the same standards of transparency required of UK registered companies, so preventing London or other locations from becoming a safe haven for the corrupt.” So far, the motion has 38 MPs signed up.
The “Boris” from the Channel 4 documentary is actually Roman Borisovich, a former banker turned anti-corruption activist. The Daily Beast contacted him about Global Witness’s report linking Aliyev pere et fils to London’s no-questions-asked property market. “Maybe this exposé will finally hurt British national pride and change their attitude to money laundering in their capital,” he said. “They have been called a ‘nation of butlers and money launderers’ before, but that did not do it. Maybe the fact that a Kazakh KGB chief likely owns their beloved 221b Baker Street will?”
—With additional reporting from Nico Hines