Wealthy Russians seek financial refuge in UK

by Lynn Berry  /  AP , LONDON

Sun, Nov 11, 2007 - Page 12

Roman Abramovich is Russia's richest man, with an estimated fortune of more than US$20 billion. But if you want to see his money, visit London.

Abramovich owns the Chelsea soccer club, one of Britain's most famous. He has also bought several homes in the British capital and countryside, including a 162-hectare country estate that once belonged to the late King Hussein of Jordan.

Russian businessmen have flourished under Russian President Vladimir Putin, with the number of millionaires rising sharply every year.

But despite Russia's growing economy and Putin's firm grip on the government, many of the country's wealthiest still have little faith that their money or their families are safe.

London has become their refuge. Russians have been sinking billions into property to establish a foothold in Britain, seen as more important now than ever as Putin's second term winds down and uncertainty rises over who will be president after elections next spring.

"With 2008 approaching, anyone now who has money wants to put it in a safe place," said Grace Margolies, a real estate agent who is half Russian and works exclusively with the Knight Frank agency's Russian clients.

Most of the Russians in London keep a low profile, but their growing presence is felt. Russians bought 316 properties last year worth at least US$2 million each, a survey by the agency showed. They bought 65 in 2000, the year Putin became president.

In all, an estimated 300,000 Russians, including about a dozen of Russia's new billionaires, have homes in the British capital.

The Russians find in London a financial climate that has long attracted wealthy foreigners, including Arab royalty with their oil billions. Under Britain's favorable tax regime, their assets are secure.

When Russians shop for a London residence, security is high on their list of requirements, Margolies said. They want a doorman, alarm systems and closed-circuit television surveillance.

Security is also among the reasons an increasing number of Russians send their children to Britain's private schools and universities, said Hilary Moriarty, director of the national Boarding Schools Association.

Two years ago, Elizaveta Slesareva, 15, was newly enrolled at St. Peters, a boarding school in the medieval city of York. At the midterm break, she was going back to Moscow to visit her parents and was worried about the trip, headmaster Richard Smyth said.

Shortly after returning home, she was killed along with her parents when their Mercedes was sprayed with bullets.

Her father, Alexander Slesarev, was the owner of Sodbiznesbank, which had been at the heart of a banking crisis in 2004. The Central Bank pulled its license, accusing Sodbiznesbank of money laundering, and not all of the depositors received their money back.

The wealthy Russians in London maintain an element of secrecy to their lives, a sign of the Soviet culture of fear that has returned under Putin. They do not stand out as Russian and are drawn to quintessentially British neighborhoods, such as Mayfair and Knightsbridge.

But they were thrown into the spotlight last year when former KGB officer Alexander Litvinenko was poisoned in London with a nuclear substance. His family and friends have blamed Putin, who has denied any involvement.

The British and Russian governments have traded charges of cover-up. Britain has criticized Russia's refusal to hand over the main suspect in Litvinenko's death, also a former KGB officer.

Putin, meanwhile, has accused Britain of harboring Russian "criminals and terrorists." Britain has refused to extradite Boris Berezovsky, a billionaire tycoon and fierce Kremlin foe who was Litvinenko's patron. Russian prosecutors say Britain also has refused to turn over two of Berezovsky's associates and three other Russians who once worked for Mikhail Khodorkovsky, who was the wealthiest man in Russia in 2004.

Most of the Russian children come for the final two years of school and then stay for university. There were 383 new Russian pupils at the beginning of the 2006-2007 school year, showing a steady increase over past years, said a census by the Independent Schools Council. More than 2,000 Russians are enrolled in British universities.