Inside the palace-turned-kleptocracy-museum of former Ukranian president Viktor Yanukovych
What do American billionaires, Russian oligarchs, and London bankers have in common? They’re all residents of Moneyland, the shadow country where the rich can buy anonymity and impunity.
“In the decade after 2000, the richest 1 percent of the world’s population increased its wealth from one-third of everything to a half,” writes Oliver Bullough in the first chapter of Moneyland.
It’s the kind of statistic we’ve all probably heard at some point and half-remembered — simple, definitive numbers to convey what most of us already knew intuitively: the ultra rich are screwing us, and the intensity of that screwing seems to be increasing exponentially.
Even though we’ve basically accepted that the fabulously wealthy seem to live by different rules, the public’s brief glimpses into what that truly means, in tangible terms, are fabulously lurid. The Panama Papers. Jeffrey Epstein being able to keep a harem of underage girls for decades using money no one seems to know the origin of. Actors and hedge fund managers being able to buy their children prestigious college degrees. Fund manager Jho Low taking money from Malaysian taxpayers to finance yacht parties, gambling excursions, and notably, the production of The Wolf Of Wall Street. Paul Manafort laundering money earned doing PR for kleptocrats and spending it on python-skin jackets.
We suspect these stories are all somehow related, but the precise how of it is difficult to explain — mostly because the schemes involved are complex by design, cooked up by people with the means to sue you into bankruptcy if you report on them. The schemes differ in the details but they’re all the same in the end, money flowing upward, toward those with the most.
As with the 2008 financial crisis, all of that virtual money moving from entity to abstract entity requires some good metaphors to make sense of it. Luckily Bullough, like Big Short author Michael Lewis before him, has a knack for them. Beginning with the one in the title.
“This is the place that I call Moneyland — Maltese passports, English libel, American privacy, Panamanian shell companies, Jersey trusts, Liechtenstein foundations, all added together to create a virtual space that is far greater than the sum of its parts. The laws of Moneyland are whichever laws anywhere are most suited to those wealthy enough to afford them at any moment in time.”
“It is as if the very wealthiest people in countries like China, Nigeria, Ukraine, and Russia have tunneled into this new land that lies beneath all our nation-states, where borders have vanished.”
Reporting on the very wealthy isn’t just idle fascination or some true crime escapism. In his book, Bullough connects the crimes of Moneyland to what it means for the rest of us. How does it affect our ability to afford a house or apartment, for example, when 50% of residential real estate purchases over $5 million in the United States are made through opaque shell companies? As wages stagnate and housing prices explode, how does all that free-flowing capital from the world’s crooks and their enablers inflate and distort markets the rest of us rely on?
In his book, Bullough makes the case that not only does all that free-flowing capital have the ability to distort markets, it’s actually a direct threat to democracy itself. Is Donald Trump really a “Russian asset,” or are Trump and Putin just two symptoms of the same problem of unaccountable global capital? I spoke to Bullough by phone this week.
Can you explain the general concept of Moneyland?
Essentially, where it came from was I used to live in the former Soviet Union. I went there hoping it would become a sort of democratic part of the western world, and it didn’t. Instead it became a place ruled by a series of corrupt dictators or semi-dictators. And I suppose Moneyland was my attempt to figure out why. This is about corruption and the way that the theft of vast amounts of money is perpetrated. That process of investigation led me into Moneyland.
Essentially, where it came from was I used to live in the former Soviet Union. I went there hoping it would become a sort of democratic part of the western world, and it didn’t. Instead it became a place ruled by a series of corrupt dictators or semi-dictators. And I suppose Moneyland was my attempt to figure out why that happened. And this is about corruption and the way that the theft of vast amounts of money is perpetrated. That process of investigation led me into Moneyland.
Moneyland is almost like a parallel country, in that it’s a place where, if you are rich enough, you get to write your own rules. You have your own passports, your own legal process, your own education system. You get to essentially choose what rules you follow. And so one follows from the other. The reason why all these countries that I lived in and cared about turned out to be such a mess was because we in the west had created Moneyland. We’d created a parallel system for very wealthy people to avoid responsibility, and then we exported that system, and that’s what ruined them. It was the system that’s ruining the world, really. It’s extremely harmful to everything that I like, which is why I wrote the book.
We like to imagine that kleptocracy is this sort of Russian problem, and that everything we don’t like is connected to Russia somehow. I mean, the West had a hand in creating that corruption right from the beginning, right?
Kleptocracy doesn’t work in just one country. You need to be able to hide your money in lots of different places in order to spend it. You steal it in one place, hide it in another place, and then you spend it in a third place. And yeah, it was invented in the West, specifically in London. It was a joint venture between London and Switzerland, in order to allow wealthy people to dodge taxes and make a profit from doing so. We then exported that system to countries with weaker institutions, like Russia.
It’s what I call the dark side of globalization, the way that money can move between jurisdictions and hide its ownership. And once you can hide your ownership of money, then you can essentially never have to account what you do with it or where it comes from. What’s happened to Russia is just one of the most grotesque examples of a sort of malaise that is afflicting the whole world. We prefer to talk about nasty Mr. Putin, when actually it’s this system of evading responsibility that’s causing all the damage.
How much have you been following the Jeffrey Epstein case? It feels like a glimpse into Moneyland for a lot of people.
I have to an extent. I mean, I’d be nervous to comment on it thoroughly. But yeah, that’s going to have multiple aspects for multiple different dimensions. But I mean, I think any wealthy person anywhere can become a Moneylander if they want to. I was just looking at a DOJ indictment of this guy, Jho Low, who was involved in the 1MDB scandal, I was just looking at his properties in London today. He had five or six properties in London, all of them owned by different offshore companies. Had they not been named in a DOJ indictment, you never would’ve known those companies belonged to him. They could belong to anyone. It’s an incredibly simple trick, and relatively cheap, just own your property via a British Virgin Island company rather than your own name, and you’ve totally disguised the fact that the proceeds to buy it came from the 1MDB Sovereign Wealth Fund. The tricks are very simple. This isn’t rocket science. It’s just that arranging your assets in this way is a bit of a pain, and so you need to employ someone to do it for you. It’s a parasitical system that is sucking up more and more of the world’s wealth, basically.
The 1MDB thing was going to be actually my next question. Have there been any developments in that?
Well, I mean, it’s ticking along. Why I’m writing about it is as a sort of Moneylandish offshoot. They’re having great difficulties publishing that book in the UK, because in UK we’ve got these very strict defamation rules. And Jho Low has retained a particularly fearsome legal firm, who are targeting everyone from book shops to the publishers, to Amazon, with letters saying, “Don’t have anything to do with this book, or if you do, there’ll be legal consequences.” That’s classic Moneyland behavior. You look around the world, you find a country with the most favorable laws, and then you base your operations there. He had very little connection to the UK, he had some property here, but otherwise, he’s just using the UK and its strict libel laws to defend himself against journalists around the world. This is classic.
Tell me about the kleptocracy tours that you run in London.
Well, the kleptocracy tours were just a bit of fun, really. Because the problem is, when you talk about anything with these huge amounts of money and obscure financial instruments, people’s eyes glaze over, right? But it’s really important. We’re talking about the theft of hundreds of billions, trillions of dollars from incredibly vulnerable people. And how do you make that real? The idea was that we’d put people in a bus and point out where the money ends up. Because London is, along with New York, is one of the great endpoints for this money. Crooks from around the world have bought property in London, and this means that ordinary people can’t afford housing anymore. You have a very inflated housing market.
It was like a Hollywood bus tour, but instead of pointing out where, I don’t know, Britney Spears gets her hair cut, you point out where the Deputy Prime Minister of Russia had his apartment, or where the son of the President of Egypt, or where Jho Low, or whoever. I mean, it is a target-rich environment. There is so much of this money out there, and it is being stolen from people who really need it and it’s being spent on a fourth house, a fifth house, a sixth house.
In the book, you go to the former estate of Viktor Yanukovych, who’d been siphoning money from Ukraine. Can you paint us a picture of the things you saw there?
It’s a crazy place, because Kiev’s a great city, but it’s pretty run down. So the streets tend to be a bit pothole-y, the apartment blocks haven’t been maintained much since they were built and they tended not to have been built that recently. And then, I would go through gates and this high fence and suddenly you’re through the looking glass. It’s like a sort of magical world where the grass is perfectly green and the lawns are perfectly mowed, and there are all these water gardens. And then you go through an underground passageway and there’s a kind of gym complex. And then into the palace, which is all gold and paintings, and this ludicrous overstuffed furniture. Everything is so expensive and vulgar. There was like a chapel upstairs with all these icons…
And it’s a log cabin! That’s what’s so extraordinary. I think Yanukovych saw himself… I know he did, because he had all these videos lying around… he saw himself as a hunter. And he had these certificates saying, “Hunter of the year.” And all these weapons and stuff. I think he imagined a log cabin with kind of a rustic, “I’m a man of the woods” kind of a vibe. And so he built this log cabin, but it’s six stories high. By all accounts, it’s the biggest log cabin in the world. It’s a strange contradiction between a sort of folksy, look at me, Mr. Backwoods man, and just the absolute utmost vulgar crassness with gold and decoration and bling. It’s horrible. But then again, it’s that thing, what are you going to spend money on?
Everything was awful, really. Down at the side of the river, it was on the edge of a reservoir, so it was very wide, there was a yacht harbor, and in the harbor there was a kind of floating dock which then converted into a galleon, it looked a bit like a pirate ship. And I think he presumably went in there with his friends to just drink and eat and pretend to be pirates. If you’ve got kind of infinite money, what do you spend it on? This is one of the lessons of Moneyland, people always spend it on crap. It’s just vulgar crap. It’s never sensible things, or useful things. It’s one of the real insights doing this research, just the extent to which there’s this sort of top end of the market everywhere, which is just vulgar and crap.
What are some other of the most shameless examples of corruption and buys from government officials?
Well, I mean, my personal favorite example is this, which is in the book, there’s an episode of Say Yes to the Dress, the reality show. There’s this extraordinary episode where the daughter of an Angolan cabinet minister turns up and drops $200,000 on wedding dresses. It’s an unimaginable amount of money in Angola, where a significant proportion of the population lives on less than a dollar a day.
And what was amazing about it, it wasn’t so much that she did it, it was the fact that this was exposed not by some clever bit of investigative journalism. She exposed it herself by voluntarily appearing in a reality television show. It’s something so ordinary to her, that she would go and do this, that she didn’t even think that it was unacceptable to spend that kind of money when your dad is a minister in a country with an HIV epidemic and terrible maternal mortality and all this. It’s just extraordinary.
What was her father’s official government salary at that point?
I didn’t figure it out exactly, what her father was, but the president of the country was earning $6,000 a month. So it’s unlikely that the minister, who’s called Bornito De Sousa, was earning that much. Even if he was earning that much, that’s all of the money he would’ve earned in more than two and a half years. And that’s just one aspect of his daughter’s wedding, just the clothes for the women. Meanwhile this shop in Manhattan is boasting about it. That’s what was so amazing about it. The normality of it. That’s what they do. They spend this kind of money.
So, there’s this pervasive conspiracy theory that Trump is an agent of Putin, or that they’re in cahoots somehow. Wouldn’t it be less crazy just to say that they’ve both been heavily involved in Moneyland?
Yeah, I think that’s right. I don’t agree that Trump is an agent of Putin. I think that that’s a bit of silliness. They’re both manifestations of a much bigger problem.
To be honest, if this was just a KGB problem, it’d be fine, right? You could solve that. It’s much much worse than that. I mean, it sounds silly to say this, but if the US president was a Russian agent, that would be a much less serious problem than what America and the world is currently facing. You have an entire shadow financial system that operates to the benefit of the most powerful and wealthy people in the world, and is making them ever more powerful and more wealthy, to the detriment of the rest of us.
I mean, I get very frustrated when you hear an awful lot about Trump being controlled by Putin, because it seems to me to be almost playing into the narrative that Putin wants — that he’s this criminal mastermind. He doesn’t want you to think that actually there’s this whole secret financial system. Because if people hear about that, we might stop it. It’s frustrating to me that that’s the narrative that gets more traction.
If you’re the Trump organization, and a lot of your business is selling luxury apartment towers in third world countries, wouldn’t that expose you to a customer base that’s mostly Moneylanders?
Yeah, of course. I mean, not exclusively, but a large extent of that. It’s the same customer base that spends $200,000 on wedding dresses in Manhattan. Particularly after the financial crisis, there were only a relatively limited number of people in the world who could afford that kind of top end real estate. It’s the same all across the board, not just Trump, but all the other property developers, the people who do well from selling these EB-5 visas for wealthy investors. It’s the same business. If you ask too many questions you’re costing yourself money. That’s just the nature of the beast.
Can you tell me about the policies that used to be in place to prevent what happened with Moneyland, and what changed?
Well, I mean, that’s the massive question. It’s sort of hard to imagine how differently the world used to work. They created this system after the Second World War, which really made it very difficult to move speculative money between countries. Which makes it very difficult to hide money, because your money is always exposed to the scrutiny of your own government. It was very hard to move money around, and that, essentially, made it hard to dodge taxes.
And it was the invention by London bankers, of “offshore,” this sort of parallel legal space, where the rules didn’t apply. And that’s what created Moneyland. It’s been immensely damaging. Because you end up with a kind of regulatory race to the bottom by countries, to try and get a business back off each other. All the business moves to London, so New York tries to compete and cuts its regulations. So London counter competes and cuts its regulations, and then Hong Kong joins in, and Singapore joins in, Dubai joins in. And you end up with this constant spiral downwards. You call it a race to the bottom, but there is no bottom. You can always deregulate. And so that’s the issue, the whole concept that has underpinned the world in the last 60 years, this idea that if we deregulate, we’re going to end up with the business. It doesn’t work, because someone else will always deregulate further.
We need to have a return to the concepts that underpinned the immediate post-war order, whereby capital flows weren’t the priority. You’re prioritizing standard of living and prioritizing equality. That’s what we need a return to, but how on earth you achieve that in the age of Trump and Brexit, I’ve absolutely no idea.
Wouldn’t it help, just as a start, to not allow the purchase of high-end real estate through shell companies?
I mean, absolutely. Yeah, that would be a big blow to it. But that’s just the start. You have these small jurisdictions that make quite a good living out of helping the very wealthy to avoid scrutiny elsewhere. And that’s the problem. It’s this mismatch between the fact that money is globalized and regulation isn’t. Money will always go where it’s treated best. So how do you square that circle? You either need to de-globalize the money, or you need to globalize the regulations. And that is a very hard thing to try and achieve.
There’s a lot of demand to sort of take back control of our borders, and to build walls on borders and so on all over the world, but none of these populist upsurges are talking about restricting money flow. And that seems very telling to me.