City of London ‘Neither Powerful Nor Principled’ According To The Financial Times

It’s always useful to remind ourselves of what the other side thinks, and that sometimes at least parts of the Anglo-American business establishment view things the way we do! When Financial Times opinion columnist John Gapper says the City of London is not principled we fully agree; and the fact that he’s saying this entity doesn’t look so powerful is music to our ears. The repressive political structure of the City of London and the web of tax havens connected to it desperately need dismantling, and if it is weak we can bring this about sooner rather than later. Ultimately we will win the struggle to make the City of London democratic and see the business vote abolished. Here’s some of what Gapper has to say in his Financial Times Opinion Email:

Four weeks after the US crippled Oleg Deripaska’s London-listed holding company EN+ with sanctions, it is hard to find anyone in the City who recalls being close to him or his business… Board members have resigned, banks and legal advisers retreated and public relations companies made their excuses in the face of the US legal onslaught. The City’s decade-long romance with Russian finance has cooled sharply at the sight of conflict…

The City’s behaviour in first endorsing Russian money and then disowning it is less compliant than craven. President Vladimir Putin’s invasion of Crimea and his interference in overseas elections has provoked an aggressive US legal riposte, ostracising the circle of oligarchs around him. London has blithely sailed according to the prevailing winds.

This is familiar. In Anthony Trollope’s 1875 novel The Way We Live Now, the arriviste fraudster Augustus Melmotte gains a sheen of respectability by buying a house in Grosvenor Square and hiring minor aristocrats for his railway company’s board. Trollope drew on the City’s dalliance with the emerging markets of the time, the Americas…

“His (Deripaska’s) reputation was not great and you did not have to carry out too many background checks to have doubts,” says one banker who refused to sponsor financial offerings for Mr Deripaska… There were plenty of takers. Bank of America Merrill Lynch, Citigroup, Credit Suisse and JPMorgan were bookrunners with the Russian state-owned banks Sberbank and VTB. White & Case and Linklaters gave advice on US and English law to the company and its banks. Finsbury, the City PR firm, acted for EN+, while Portland once represented Mr Deripaska.

Philip Lader, former US ambassador to the UK, and Ivan Glasenberg, chief executive of Glencore, left Rusal’s board after it was designated, while Riccardo Orcel, head of VTB’s investment bank, and Dominique Fraisse of the French bank Natixis, resigned from the EN+ board. Global Counsel, the advisory firm headed by Peter Mandelson, dropped a contract to advise EN+…

Bankers retort that they followed the law as it stood. When it was legal to work for Mr Deripaska, they did, and now he has been declared persona non grata, they no longer will. They are supposed to do better than that. In its listings guide, the LSE pledges investors “balanced and globally-respected standards of regulation and corporate governance”, not mere legality.

Excitement over Russian flotations peaked a decade ago. When Russian owners realised they could gain higher valuations by listing assets globally, it provided a rush of business. Sixty-seven of the Russian IPOs from 2005 to 2014 came to the London market, leaving New York behind.

The US has had the last word. Despite the expulsion of Russian diplomats following the poisoning of Sergei and Yulia Skripal in March, the UK has imposed limited financial sanctions. It has been left to the US Treasury to administer the biggest blow to Russians in London by designating Mr Deripaska and signalling that no company associated with Mr Putin is definitely safe.

The City will gain comfort that Russian revenues had already tailed off — the US pounced after most of the fees had been paid. But Washington, not London, has decided how it must handle Russian financing. The Deripaska affair leaves the UK’s financial capital looking neither powerful nor principled.

The City of London’s approach to oligarchs is craven by John Gapper, Financial Times Opinion Email (reproduced in Australian Financial Review) May 3 2018. Read the full piece here:

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