Sadiq khan Announces London Property Foreign Ownership Inquiry – Who's He kidding?
By Graham Vanbergen – Sadiq Khan has an impressive pedigree for a politician. He was elected Mayor of London in the 2016 mayoral election, succeeding Conservative Party Mayor Boris Johnson. It was a landslide victory. Khan held the largest personal mandate of any politician in the history of the United Kingdom with 58.9% of the vote, and secured the third largest personal mandate in Europe. His election as Mayor of London made him the city’s first ethnic minority mayor, and the first Muslim to become mayor of a major Western capital.
Sadiq Khan is shrewd, or at least I thought he was.
Khan vowed to crack down on London property sales to foreign buyers and made it part of the reason to be voted Mayor of London with the words “My vision for London is a simple one – I want all Londoners to have the same opportunities that our city gave me: a home they can afford, a high-skilled job with decent pay, an affordable and modern transport system and a safe, clean and healthy environment.”
Khan has just announced an inquiry into the London property market. Khan is actually jumping on the back of a government instigated propaganda project to placate the people of an ever increasing scandal, with no chance of success whatsoever.
Time says this is an ‘unprecedented’ moment in London’s property market with Khan quoted as saying “Londoners need reassuring that dirty money isn’t flooding into our property market. Ministers must now make all property ownership in London transparent so we can see exactly who owns what.” All this has been said before and nothing came of it.
David Cameron won praise in 2013 after announcing at the Open Government Partnership summit in London that the UK intended to require companies registered in the UK to reveal the identity of their real owners in public filings at Companies House. This was then heavily watered down after the Queen was warned that her British territories were now the world biggest tax havens, harbouring tens of trillions of illegally stashed cash and assets that was described as a “web of secrecy jurisdictions”. The Tax Justice Network (TJN) said Britain now rules the world of tax havens. Many of Britain’s tax havens are now blacklisted by the European Commission as they ranked their combined wealth as ‘the most important player in the financial secrecy world.’
Back in mid 2015 the FT reported that David Cameron vowed again to tackle ‘dirty money’ in the UK property market with the Land Registry being forced to publish information on ownership by foreign companies. It won’t work for all sorts of technical reasons. One of those reasons was purely for political gain. On the one hand property prices are soaring leaving young professionals no chance of home ownership (angering new Tory voters and their parents) whilst enriching older Tory voters. Something had to be seen to be done and so a public relations damage control exercise got underway.
In August last year I wrote a piece for TruePublica entitled “Why Cameron’s promise to stop money laundering in London property is a lie.” The article demonstrated the sheer scale of cash the government would lose if transactions to foriegn buyers were stopped. Since the Conservatives came to power in 2010 the numbers of visas dished out to foreigners looking to buy a property in London has soared 600 per cent. And of course the government are not worried about falling house prices, a dramatic loss of VAT receipts, work for the professions and spare cash washing all over Britain’s capital city are they?
Global Witness commented “London appears increasingly attractive to the wrong people for the wrong reasons. Even Holmes and Watson would have their work cut out investigating the suspect cash flooding into its property market, because the system is so riddled with loopholes.”
Hundreds of £Billions worth of property in England and Wales are now owned by companies registered offshore, and 75% of properties whose owners are under investigation for corruption made use of this kind of secrecy. It is thought that over 100,000 properties are foreign owned in England and Wales. But, the truth is, not the government, nor the land registry office or police agencies have an idea of the true scale of property acquired with ‘hot money’ in London or Britain more widely.
At average current prices, just £10 billion buys 40,000 properties in England and Wales and yet we are told by the authorities that hundreds of billions have been used to buy property. Somehow, we are also expected to believe that represents just 100,000 units. Even at London prices, double the national average, £50billion buys that.
The Independent newspaper reported last July that The City of London is the money-laundering centre of the world’s drug trade. But the drugs trade is just one element of money laundering and if the drugs trade uses Britain as a laundromat, make no mistake, so will the rest of them.
The consequence is that money laundering in Britain is so widespread the authorities have been completely overwhelmed and lost control. Keith Bristow, Director-General of the UK’s National Crime Agency said in January 2015 that the scale of crime and its subsequent money laundering operations was “a strategic threat” to the country’s economy and reputation.
With the best of intentions, an investigation by Transparency International attempted to report on the scale of the problem last year. I challenged it as the statistics, when it comes to property ownership, indicated it was way off the mark. After a meeting with TI in London, it was clear they had limited resources to really uncover the true scale of property crime undertaken in Britain. And yet, as far as money laundering in the UK more widely is concerned Robert Barrington, the Executive Director of Transparency International, told parliament that “it seems likely that in terms of money laundering going through the UK system every year, it is at least £100 billion.”
What is surprising is that the government, allied with its own agencies have ended up so overwhelmed that it called in an organisation like TI to help it understand the landscape.
And yet all the evidence is there in plain sight. 116 local authorities saw an increase in empty homes, which makes up 36% of the 326 local authority areas in England last year. It now sees the highest number of privately owned vacant properties on record – ever.
The FT went with the headline last year “Alarm bells ring as ‘dirty cash’ floods UK property market”. The term ‘flood’ was not meant to be an understatement.
The National Crime Agency (NCA) which replaced the Serious and Organised Crime Agency just two years earlier estimated that “hundreds of billions of pounds are laundered through property each year” in the UK. They don’t mean just residential, they mean luxury homes, blocks of flats in every major city, shopping malls, building land, speculative transactions, commercial, lock-ups, the lot.
Donald Toon of the NCA clearly stated he was alarmed by the number of homes registered to complex offshore corporations, which have been bought with laundered money. He also added that the inflows of illegal cash are big enough to be responsible for driving London property prices artificially high as a result of overseas criminals wishing to insulate and protect their assets in the UK, and what they are effectively doing is distorting the market.
Market Oracle said at the same time “So it is not just the world’s dubious billionaires and oligarchs who have been flooding London with their wealth for safety from corrupt regimes.”
Is Sadiq Khan being honest with his inquiry? He knows that in April this year Theresa May, then Home Secretary, was about to introduce the most significant changes to the UK’s anti-money laundering laws mainly to protect the country from terrorist finance but in so doing would potentially curtail the number of foreign buyers of London residential property
May said at the time “Britain’s world leading financial system is at risk of being undermined by money laundering, illicit finance and the funding of terrorism. The laundering of proceeds of crime through UK institutions is not only a financial crime, it fuels political instability around the world, supports terrorists and extremism and poses a direct and immediate threat to our domestic security and our overseas interests.”
Does May think she can defeat the City of London? The reality is that the City of London caters for those above the law, it operates on the basis of bypassing democratic society as a whole, so new laws will achieve nothing. Britain already has money-laundering laws and they have emphatically failed.
If Sadiq Khan is being honest about money laundering and property ownership in London he is facing off with some of the world’s truly obnoxious and most dangerous villains walking this earth. Apart from the usual tax avoiders, laundered cash washing around Britain comes from despots, drug barons, weapons and munitions dealers and their manufacturers and middlemen, international terrorism finance at every level both individual and state supported, people traffickers, prostitution, racketeering, the list goes on.
Practically all financial commentators agree that the financial services industry based in the City of London facilitates a system that makes the UK the most corrupt nation on the planet. Even David Cameron’s own former adviser Steve Hilton branded the banking sector a “stitched-up, corrupt cartel.”
It is well known that the Tory party themselves are funded by bankers and oligarchs whose shadowy practices lead them to hide illegal money in offshore accounts that eventually end up buying property in London. Other than throwing a bit of rhetoric and propaganda around both May and Khan have no hope (and quite possibly no intention) of cleaning up the world’s biggest laundrette.