The London-Kazakhstan connection

This is an audio transcript of the FT News Briefing podcast episode: The London-Kazakhstan Connection

Marc Filippino
Good morning from the Financial Times. Today is Friday, January 14th, and this is your FT News Briefing.

[MUSIC PLAYING]

Everyone says office space is dead, but, you know, don’t tell Google. And it’s not yet a household name, but powerful market maker Citadel Securities may list on the public market. Plus, we’ll look at a London industry that masks corruption and abuse of power by elites in countries like Kazakhstan.

Tom Burgis
London, you know, has been very slowly losing an empire and gaining a set of services it can sell to the world’s new powers.

Marc Filippino
I’m Marc Filippino, and here’s the news you need to start your day.

[MUSIC PLAYING]

Google is buying a billion-dollar office space in London. This is in addition to a huge new headquarters that it’s in the process of building right nearby. This comes as millions of square feet of UK office space have been shut or converted into other uses. Google said it sees the office as a place for in-person collaboration and connection. Part of the new investment will be used to repurpose existing office space.

[MUSIC PLAYING]

Our next story is also about London and its connection to Kazakhstan. The central Asian country was just rocked by massive political protests, and the government’s crackdown killed more than 160 people.

[Protest noise]

Those protests were fuelled by frustration with the government, decades of post-Soviet autocracy and rising inequality. Basically, the ruling elite in this resource-rich country controls most of the wealth, and much of that wealth is in London. But the city isn’t just a place where Kazakh elites park their money. FT investigations correspondent Tom Burgis says London has become a kind of headquarters for the global elite. He’s written a book about this, and here he draws the connection between the recent protests and the British capital.

Tom Burgis
So one of the first places where the protest broke out recently was Zhanaozen, which is an oil town, I understand. And almost exactly 10 years ago, that was the place where Kazakhs found out what happens to you if you cross a kleptocracy. And, there were some protesters in the town square, they were protesting against corruption among other things, and the regime security forces opened fire on them and then tortured the survivors in the most grotesque ways. And as it happens, the few weeks after that, the president, Nazarbayev, who’s due to give a speech at the University of Cambridge knew you have to wear a different face when you give a speech at the University of Cambridge, so he turned to someone whose consultancy had been active in Kazakhstan, and he was a brilliant communicator, Tony Blair.

Marc Filippino
. . . As in the former UK prime minister. Tony Blair at that point was running a consultancy, and he was working with central Asian regimes. So as the Kazakh dictator Nursultan Nazarbayev is getting ready to go to Cambridge, Blair sent him a document.

Tom Burgis
In the document I’ve seen, he sends him his advice on how to spin this massacre so that Nazarbayev looks as though he’s standing up for stability in a volatile region. And Nazarbayev goes ahead and does that. He goes to Cambridge and gives his speech and describes himself as this bastion of stability rather than someone presiding over the murder and torture of his own people. And I think that’s a pretty striking example of how sometimes it must be said with good intentions these big western figures can help to legitimise and prolong the rule of these kleptocrats.

Marc Filippino
And it’s not just PR advice. Tom says London is home to an entire industry of British people providing specialised services to what Tom calls global kleptocracy.

Tom Burgis
London, you know, has been very slowly losing an empire and gaining a set of services it can sell to the world’s new powers. If you come to London, if you’re a kleptocratic dictator, a corrupt dictatorship and you come to London, you and your allies, you’ve got everything you could possibly need. You’ve got lawyers to frighten journalists. You’ve got more lawyers to fend off any law enforcement interest in the origins of your immense riches. You’ve got a state agency that will help you put enormous sums into British real estate; the Kazakh regime has put about half a billion. You’ve got the concierge services; people who will get your children into the right schools and kind of launder your family the way you might launder your fortune. And then you’ve got the top-end PR companies that will serve you as well as any propaganda operation ever did. And then you’ve got the private spies in Mayfair. You’ve got everything you could possibly want to try to make illegitimate, corrupt rule look like it’s the legitimate will of the, in this place, the Kazakh people, and to cement your power home by burnishing your image and creating political alliances abroad, and also the ability to target your enemies using these private spies and lawyers and the press and so on. So a full suite of services available in an afternoon in London.

Marc Filippino
But Tom says the attitude is starting to change.

Tom Burgis
Especially as there are more and more deaths in the UK like the Litvinenko case, but also, you know, the attempted poisoning in Salisbury. More of a realisation that this is not without cost being open to these kleptocratic interests coming to the UK. And I think as there’s a growing realisation among especially MPs of the kind of national security implications of being entwined with these kind of regimes, then there is now a push for greater regulation, better funded law enforcement and paying more attention to the national security risks of this.

Marc Filippino
And one of the things that’s supposed to be happening is that all companies operating in the UK are now supposed to disclose the names of the people who own them.

Tom Burgis
In theory, any person of significant control of a company registered in the UK should be identified at Companies House, right? So there should be public records of that because the one thing that this whole enterprise relies on is corporate subterfuge and secrecy and the ability of kleptocrats to disguise their holdings. Now, in theory, the UK has some of the best legislation about this but it’s not enforced. There’s all sorts of nonsense in Companies House and clearly bogus filings, thousands upon thousands of them no doubt. It’s the same with the white-collar crime institution so, for instance, Serious Fraud Office has had its budget knocked back again and again by these years of austerity. It’s constantly receiving political criticism, sometimes for bad mistakes it has made in its underfunded way. So the UK is, I think, awakening to this problem but is not getting close to committing to addressing it.

Marc Filippino
That’s Tom Burgis. He’s the FT’s investigations correspondent and the author of the book Kleptopia: How Dirty Money is Conquering the World. By the way, Tom did reach out to Nazarbayev’s office for a response. They did not respond to his request for comment.

[MUSIC PLAYING]

This week, US hedge fund billionaire Ken Griffin sold a stake in his company Citadel Securities to a pair of big-name venture capital firms. Now this is a really big deal and not just because of the money involved, $1.2bn by the way, but it’s important because it’s Citadel Securities.

Katie Martin
It’s one of the most important bits of the plumbing behind US financial markets that most normal people have never heard of.

Marc Filippino
That is, of course, our markets editor Katie Martin.

Katie Martin
It handles like a huge chunk of equities trades, of stock market trades. It’s something, like 27 per cent of all the deals that are executed in the market somehow go through Citadel Securities. And it’s an even bigger chunk in the retail market. So little brokers, I say little brokers, but brokers that cater to amateur investors like Robinhood and whatnot, they send their trades effectively to Ken Griffin’s Citadel Securities to get the deals done.

Marc Filippino
So when Ken Griffin decides to sell a big stake in his company for the first time since Citadel Securities was founded 21 years ago, that got people thinking about one thing — IPO.

Katie Martin
This massive market maker could end up being a listed stock in and of itself, and that would be really fascinating because as I mentioned, Citadel Securities does a lot of the back-end trade execution stuff for Robinhood. And I’m sure you remember a year ago Robinhood was . . . 

Marc Filippino
Oh yes . . . 

Katie Martin
. . . instrumental in this enormous explosion of trading in GameStop. The fact that at a certain point, Robinhood had to say, OK, there are too many people buying this stock now, we have to switch it off and stop people being able to do it, the conspiracy theories online, and they are largely completely plucked out of thin air but nonetheless very deeply believed, is that somehow Ken Griffin had something to do with this, and Citadel Securities was instrumental in switching off the trading. And there’s a lot of people in the amateur investing world who are still incredibly angry, rightly or wrongly, with Ken Griffin and with Citadel Securities. So the idea of it reaching public markets itself, I think, would just, it’s just going to be fascinating. I can’t wait.

Marc Filippino
That’s the FT’s markets editor Katie Martin.

[MUSIC PLAYING]

The Kremlin yesterday said the US and Nato have failed to address its security grievances. The two sides met this week to try and defuse Moscow’s threat of a military action in Ukraine. So what’s next for Russia and Europe? Join me on Twitter Spaces for a chat about this, along with our top editors and correspondents covering the story. The conversation starts at 12.00pm EST, 5.00pm London. We’ve put a link to the conversation in today’s show notes.

[MUSIC PLAYING]

You can read more on all of these stories at FT.com. This has been your daily FT News Briefing. Make sure you check back next week for the latest business news.

[MUSIC PLAYING]

The FT News Briefing is produced by Fiona Symon and me, Marc Filippino. Our editor is Jess Smith. We had help this week from David da Silva, Peter Barber and Gavin Kallmann. Our executive producer is Topher Forhecz. Cheryl Brumley is the FT’s global head of audio, and our theme song is by Metaphor Music.

This transcript has been automatically generated. If by any chance there is an error please send the details for a correction to: typo@ft.com. We will do our best to make the amendment as soon as possible.