Why India’s middle classes are Modi’s ‘Muslims’

PM Modi is transferring wealth from the middle class to the poor, because the middle class will anyway vote BJP for nationalism & dislike of Muslims writes SHEKHAR GUPTA in The Print

Illustration by Soham Sen


One key headline-point from the Narendra Modi government’s latest Budget is the raising of top tax rates for the rich earning more than Rs 2 crore a year. The increase is steeper for the super-rich — above Rs 5 crore per year. The top tax rate now goes to 42.3 per cent.

It seems like such an awful example of the Indira Gandhi-style ‘soak-the-rich’ politics, people like us might say. Many others in deeply pink polity would hail it as uplifting evidence that Modi too has fully embraced the principles of socialism as mandated in the Constitution’s post-Emergency preamble. Never mind that he leads India’s most unabashed government of the Right into its second term.

Both are wrong. Because the Modi government isn’t really soaking the rich, but the middle classes, who also happen to be its most loyal vote bank. Question: Is their unquestioning loyalty the reason the government can afford to treat them like this?

Over the past five years, the Modi government has carried out probably the most spectacular and efficient transfer, or redistribution, of national wealth to the poor. It is tough to estimate it to the last decimal point, but between housing, toilets, cooking gas and Mudra loans, anything between Rs 9-11 lakh crore was distributed to the poor. That it was done with minimal leakage and with no discrimination of caste or religion has been acknowledged. It helped Modi win a bigger second majority. And where did this money come from?

Our immediate instinct would be to imagine it came from the rich. But not quite so. The government kept raising taxes on fuel as crude prices fell, and folding the bonanza into its pocket. Most of this came from the vehicle-owning middle classes.

You can conclude, therefore, that a spectacular transfer of wealth did indeed take place to the poor. But it came from the middle classes of all strata and not particularly the rich. It also bought enough votes from the grateful poor for Modi to sweep the election. 

All exit poll data, from the big cities to the urbanising states, tells you that the middle classes too voted overwhelmingly for the BJP. The rapidly urbanising state of Haryana, the richest in India with very few extreme poor, is a good example. The BJP was marginal here until 2014. This time it collected 58 per cent of the vote.


This is the most important political takeaway from the way Modi has run his economy. He has taken from those in the middle to give to those at the bottom, and both are voting for him with equal enthusiasm. The middle classes have emerged as his most rock-solid vote bank. And they happily pay for it.

Now come to the latest budget. Once again, there is that mere pretence of taking from the rich. But should it bother the rich?

CBDT data shows that in the last financial year only 6,351 individuals returned incomes above Rs 5 crore, with an average income of Rs 13 crore. How much additional revenue will the new tax rate bring? Just about Rs 5,000 crore. Not much more than a year’s turnover of the Indian Premier League. The poor will be thrilled the rich are being socked. And the really rich will complain in whispers but keep buying anonymous electoral bonds and dropping them off in one letter box — you can guess which one. Because if they don’t, the taxman might call. 

The poor are easily fooled, purely for their cheap thrills and entertainment, but the real joke is on the middle classes. Because, as in 2014-19, they’re the ones who will contribute the wealth to be transferred to the poor. To begin with, the finance minister gifted them additional taxes on petrol and diesel in the budget to ‘make up’, hold your breath, for the drop in crude prices.

This has followed a string of policies that can only be described as “soak the middle class” and not the rich. During the Modi years, Long Term Capital Gains tax (LTCG) on equities was introduced, dividend distribution tax (DDT) was increased, additional tax was levied on dividend income above Rs 10 lakh per year, surcharge on incomes between Rs 50 lakh and one crore was raised (unless you call them super-rich today), import duty on gold increased to 12.5 per cent from 10 per cent, and subsidies were reduced and taken away from the middle class, including on cooking gas. We’d welcome the removal of these non-merit subsidies. But remember who is paying.

That Modi and the BJP can continue to treat the rising and expanding middle class this way shows that they have gamed its mind perfectly. Its loyalty to them is fired not so much by economic impulse as by something more visceral: The resurgent, muscular Hindu definition of Indian nationalism that they have bought into. Add to this the dislike of the Muslim. Many of them may still find lynchings abhorrent, but they are quite happy to see Muslims completely out of the power structure: Cabinet, top government positions, and greatly reduced in Parliament.

My colleague and Political Editor D.K. Singh points out a remarkable set of figures on the number of times the BJP finance ministers have mentioned the middle class in their budget speeches. Generally, it’s averaged five. In Piyush Goyal’s interim budget speech, it suddenly shot up to 13 times. It was election eve, after all. In Nirmala Sitharaman’s now, it fell to three. Of course, she also completely forgot the promises Goyal had made to the middle class in his speech in February: Increase in standard deduction, TDS threshold, relaxation of tax slabs. Why should we bother when you will vote for us out of your love for us, while the poor vote with gratitude?

For decades, India’s Muslim minority was similarly gamed by our ‘secular’ parties. They knew Muslims will vote for them out of their fear of the RSS/BJP. That’s the reason they saw no need to do anything for the Muslims. Their vote came as ransom for protection. The BJP has now realised the majority middle class sees a similar fundamental compulsion to vote for it. That’s the reason we call them Modi’s ‘Muslims’.

How Britain can help you get away with stealing millions: a five-step guide

Dirty money needs laundering if it’s to be of any use – and the UK is the best place in the world to do it writes Oliver Bullough in The Guardian 


Kleptocrats, fraudsters and crooks steal hundreds of billions of pounds, dollars and euros from the rest of us every year, but that gives them a problem: how can they stop the rest of us knowing what they’ve done with the proceeds? They have to stop their haul looking suspicious, to cleanse it of any criminal taint, or face losing their hard-stolen cash.

Money laundering, as this process is known, is notoriously difficult to uncover, investigate and prosecute. Occasionally, however, an insider breaks cover – someone such as Howard Wilkinson, who blew the whistle on perhaps the largest money-laundering scheme in history, the movement of €200bn of suspect funds through the Estonian branch of Denmark’s biggest bank between 2007 and 2015, most of it earned in the dodgier corners of the former Soviet Union, some perhaps belonging to Vladimir Putin himself. 

“No one really knows where this money went,” Wilkinson, a former Danske Bank employee, told Denmark’s parliament last year. Once the money had got into the global financial system, “it was clean, it was free.”
Britain’s most famous money launderer is HSBC, thanks to its systematic cleansing of the earnings of the Latin American drug cartels over the second half of the last decade, for which it was fined $1.9bn by the US government in 2012. But that was a tiny operation compared to the Danske Bank scandal. If gathered together, the suspect funds moved through the bank’s Estonian outpost could buy HSBC, with more than enough left over to buy Danske Bank too.

The scandal has been big news in Denmark and Estonia, but barely grazed public consciousness in the UK. This is strange, because Britain played a key role. All of the owners of the bank accounts that first aroused Wilkinson’s suspicions had their identity hidden behind corporate structures registered in the UK – including Lantana Trade LLP, the one that may have been connected to Putin. That means this is not just a Russian, Estonian or Danish scandal, but something far closer to home. In November, Wilkinson told a European parliament committee that the countries hosting these companies are just as culpable. “Worst of all is the United Kingdom,” he said. “The United Kingdom is an absolute disgrace.”

The British government is supposedly committed to tackling grand corruption and financial crime, yet Britain’s involvement in this mega-scandal has never been mentioned in parliament, or been addressed by ministers. It is far from the first time that British companies have been involved in high-profile money-laundering. Among the characters who have used British shell companies to hide their money are Paul Manafort, disgraced former chairman of Donald Trump’s election campaign, and Viktor Yanukovich, overthrown president of Ukraine, among thousands of lower-profile opportunists.

It is increasingly hard to avoid the conclusion that Britain tolerates this kind of behaviour deliberately, because of the money it brings into to our economy.
That being so, why should hardened criminals be the only ones getting rich off Britain’s lax enforcement? Here’s how you too can use British shell companies to cleanse your dirty money – in five easy steps.

 

Step 1: Forget what you think you know

If you have ambitions to steal a lot of money, forget about using cash. Cash is cumbersome, risky and highly limiting. Even if Danske Bank had used the highest denomination banknotes available to it, that €200bn would have weighed 400 tonnes, an amount four times heavier than a blue whale. Just moving it would have been a serious logistical challenge, let alone hiding it. It would have been a magnet for thieves, and would have attracted some unwelcome questions at customs.

If you want to commit significant financial crime, therefore, you need a bank account, because electronic cash weighs nothing, no matter how much of it there is. But that causes a new problem: the bank account will have your name on it, which will alert the authorities to your identity if they come looking.

This is where shell companies come in. Without a company, you have to act in person, which means your involvement is obvious and overt: the bank account is in your name. But using a company to own that bank account is like robbing a house with gloves on – it leaves no fingerprints, as long as the company’s ownership information is hidden from the authorities. This is why all sensible crooks do it.

The next question is what jurisdiction you will choose to register your shell company in. If you Google “offshore finance”, you’ll see photos of tropical islands with palm trees, white sands and turquoise waters. These represent the kind of jurisdictions – “sunny places for shady people” – where we expect to find shell companies. For decades, places such as Anguilla, the British Virgin Islands, Gibraltar and others sold the companies that people hide behind when committing their crimes. But in recent years, the world has changed – those jurisdictions have been cajoled, bullied and persuaded to keep good records of company ownership, and to reveal those records when police officers come looking. They are no longer as useful as they used to be.

So where is? This is where the UK comes in. When it comes to financial crime, Britain is your best friend.

Here is the secret you need to know to get started in the shell company game: the British company registration system contains a giant loophole – the kind of loophole you can drive a billion euros through without touching the sides. That is why UK shell companies have enabled financial crime all over the world, from giant acts of kleptocratic plunder to sad and squalid frauds that rob pensioners of their retirement savings.

So, step one: forget what you think you know about offshore finance. The true image associated with “shell companies” these days should not be an exotic island redolent of the sound of the sea and the smell of rum cocktails, but a damp-stained office block in an unfashionable London suburb, or a nondescript street in a northern city. If you want to set up in the money-laundering business, you don’t need to move to the Caribbean: you’d be far better off doing it from the comfort of your own home.

Step 2: Set up a company

The second step is easy, and involves creating a company on the Companies House website. Companies House maintains the UK’s registry of corporate structures and publishes information on shareholders, directors, accounts, partners and so on, so anyone can check up on their bona fides.

Setting up a company costs £12 and takes less than 24 hours. According to the World Bank’s annual Doing Business report, the UK is one of the easiest places anywhere to create a company, so you’ll find the process pretty straightforward.

This is another reason not to bother with places like the British Virgin Islands: setting up a company there will cost you £1,000, and you’ll have to go through an agent who will insist on checking your identity before doing business with you. Global agreements now require agents to verify their clients’ identity, to conduct the same kind of “due diligence” process demanded when opening a bank account. Almost all the traditional tax havens have been forced to comply with the rules, or face being blacklisted by the world’s major economies.

This means there are now few jurisdictions left where you can create a genuinely anonymous shell company – and those that remain look so dodgy that your company will practically scream “Beware! Fraudster!” to anyone you try to do business with.

But Britain is an exception. While it has bullied the tax havens into checking up on their customers, Britain itself doesn’t bother with all those tiresome and expensive “due diligence” formalities. It is true that, while registering your company on the Companies House website, you will find that it asks for information such as your name and address. On the face of it, that might look worrying. If you have to declare your name and address, then how will your company successfully shield your identity when you engage in industrial-scale fraud?

Do not be concerned, just read on.

Step 3: Make stuff up

This third step may be the hardest to really take in, because it seems too simple. Since 2016, the UK government has made it compulsory for anyone setting up a company to name the individual who actually owns it: “the person with significant control”, or PSC. Before this reform it was possible to own a company with another company and, if that company was not British, the actual owner could hide their identity.

In theory, the introduction of the PSC rule should have prevented the use of a British shell company to anonymously commit financial crime. Don’t worry though, because it didn’t. Here is the secret: no one checks the accuracy of the information you provide when you register with Companies House. You can say pretty much anything and Companies House will accept it.
So this is step three: when you’re entering the information to create your company, make mistakes. Suspicious typos are everywhere once you start delving into the Companies House database. For instance, many money-laundering investigations involving the former USSR eventually bump against a Belgian-based dentist, whose signature adorns the accounts of hundreds, if not thousands, of different companies, including Lantana Trade LLP. When he was tracked down to his home address in Belgium last year, the dentist claimed that his signature had been forged and that he had no connection to the companies. Whoever was filing the documents was remarkably imaginative when it came to spelling his name. Every document filed with the UK registry has the same signature, but his name is spelt in at least eight different ways: Ali Moulaye, Alli Moulaye, Aly Moulaye, Ali Moyllae, Ali Moulae, Ali Moullaye, Aly Moullaye and, oddly, Ian Virel.

With such boundless opportunities for creativity, why not have fun? Recently, while messing about on the Companies House website, I came across a PSC named Mr Xxx Stalin, who is apparently a Frenchman resident in east London. It is perhaps technically possible that Xxx is a genuine name given to Mr Stalin by eccentric parents – but, if so, such eccentric parents are remarkably widespread.

Xxx Stalin led me to a PSC of a different company, who was named Mr Kwan Xxx, a Kazakh citizen, resident in Germany; then to Xxx Raven; to Miss Tracy Dean Xxx; to Jet Xxx; and finally to (their distant cousin?) Mr Xxxx Xxx. These rabbitholes are curiously engrossing, and before long I’d found Mr Mmmmmmm Yyyyyyyyyyyyyyyyyy, and Mr Mmmmmm Xxxxxxxxxxx (correspondence address: Mmmmmmm, Mmmmmm, Mmm, MMM), at which point I decided to stop.

As trolling goes, it is quite funny, but the implications are also very serious, if you think about what companies are supposed to be for. Limited companies and partnerships have their liability for debts limited, which means that if they go bust, their investors are not personally bankrupted. It’s a form of insurance – society as a whole is accepting responsibility for entrepreneurs’ debts, because we want to encourage entrepreneurial behaviour. In return, entrepreneurs agree to publish details about their companies so we can all check what they are up to, and to make sure they’re not abusing our trust.

The whole point of the PSC registry was to stop fraudsters obscuring their identities behind shell companies, and yet, thanks to Companies House’s failure to check the information provided to it and thus to enforce the rules, they are still doing so. How exactly could society find someone who gives their identity as Mr Xxxxxxxxxxx, and their address as the chorus of a Crash Test Dummies song?

Even when the company documents provide an actual name, rather than a random selection of letters, the information is often very hard to believe. For example, in September, Companies House registered Atlas Integrate Services LLP, which declared a PSC with a date of birth that showed her to be just two months old at the time. In her two months of life, she had not only found time to get started in business, but also apparently to get married, since she was listed as “Mrs”. The LLP’s incorporation document states: “This person holds the right, directly or indirectly, to appoint or remove a majority of the persons who are entitled to take part in the management of the LLP”. It does not explain how exactly a babe in arms would achieve this.

This is not a one-off. The anti-corruption campaign group Global Witness looked into PSCs last year, and found 4,000 of them were under the age of two. One hadn’t even been born yet. At the opposite end of the spectrum, its researchers found five individuals who each controlled more than 6,000 companies. There are more than 4m companies at Companies House, which is a very large haystack to hide needles in.

You don’t actually even need to list a person as your company’s PSC. It’s permissible to say that your company doesn’t know who owns it (no, you’re not misunderstanding; that just doesn’t make sense), or simply to tie the system up in knots by listing multiple companies in multiple jurisdictions that no investigator without the time and resources of the FBI could ever properly check.

This is why step three is such an important one in the five-step pathway to creating a British shell company. If you can invent enough information when filing company accounts, then the calculation that underpins the whole idea of a company goes out of the window: you gain the protection from legal action, without giving up anything in return. It’s brilliant.

But don’t dive in just yet; there are two more steps to follow before you can be confident of doing it properly.

Step 4: Lie – but do so cleverly

Most of the daft examples earlier (Mmmmmmm, Mmmmmm, Mmm, MMM) would not be useful for committing fraud, since anyone looking at them can tell they’re not serious. Cumberland Capital Ltd, however, was a different matter. It looked completely legitimate.

It controlled a company called Tropical Trade, which, in October 2016, cold-called a 63-year-old retired postal worker in Wisconsin identified in court filings as “MJ”. On the phone, a salesman offered her an investment product, which – he said – would make returns of 81%. He chatted about his wife and family and came across as “kind and trustworthy”, MJ later told police. “During two weeks in November of 2016, she allowed Tropical Trade to charge $34,500 on her Mastercard and Visa credit cards,” the filing states. When she tried to get her money back, her emails and calls were ignored, and she never saw it again.

She had fallen victim to the global epidemic of binary-options fraud. Binary options are a form of betting on the stock market that are now banned in many countries – including Israel, where much of the industry was based – since fraudsters used the idea to fix odds, keep winnings and target the vulnerable. According to the FBI, taken as a whole, these fraudsters may have been fleecing their marks of up to $10bn a year.

When US police came looking for the people behind Cumberland Capital Ltd, they searched the Companies House website and found that its director was an Australian citizen called Manford Martin Mponda. Anyone researching binary-options fraud might quickly conclude that Mponda was a kingpin. He was a serial company director, with some 80 directorships in UK-registered companies to his name, and features in dozens of complaints.

It already looked like a major scandal that British regulation was so lax that Mponda could have been allowed to conduct a global fraud epidemic behind the screen of UK-registered companies, but the reality was even more remarkable: Mponda had nothing to do with it. He was a victim, too.

Police officers suspect that, after Mponda submitted his details to join a binary-options website, his identity was stolen so it could be used to register him as a director of dozens of UK companies. The scheme was only exposed after complaints to consumer protection bodies were passed onto the City of London police, who then asked their Australian colleagues to investigate.

Companies House has since deleted Mponda’s name from documents related to dozens of other companies, but it was too late for “MJ” and thousands of other victims. A small number of the binary-options masterminds have been caught, but the money they stole has vanished into the labyrinth of interlocking shell companies, and the individuals behind Cumberland Capital have not been identified.

“Most of the binary-options firms claimed to be in the UK. People are more likely to deal with a UK company than a company in Israel, as it has a better reputation when it comes to finances,” said DS Alex Eristavi of the City of London Police’s investment fraud team. “Companies House records are provided in good faith. There’s not so much scrutiny as goes on in, say, Italy or Spain, where you have to go through the lawyers and do it properly. Here the information is submitted voluntarily. People don’t realise that, they take it as being carved in stone.”

So here is step four: don’t just lie, lie cleverly. British companies look legitimate, so look legitimate yourself. Steal a real person’s name, and put that on the company documents. Don’t put your own address on the documents, rent a serviced office to take your post: Paul Manafort used one in Finchley, the binary options fraudsters went to Liverpool, and Lantana Trade was based in the London suburb of Harrow.

The financial documents you file look better if they’ve been audited by an accountant, so file genuine-looking accounts, and claim they’ve been audited by a proper accountancy firm. That isn’t checked either, so just find an accountant online and claim you’ve employed them. Accountants quite regularly find themselves contacted about accounts they have never seen before, and make the unwelcome discovery they have been personally named as having approved them.

Steps 1-4: A brief recap

So, to summarise the tricks so far, if you want to create an impenetrable weapon for committing fraud: first, forget about the supposed offshore centres and come to the UK; then take advantage of the super-easy Companies House web portal; then enter false information; and finally make sure that information is plausible enough to deceive a casual observer.
We’re nearly there. It’s time for the final step. 

Step 5: Don’t worry about it

I know what you’re thinking: it cannot be this easy. Surely you’ll be arrested, tried and jailed if you try to follow this five-step process. But if you look at what British officials do, rather than at what they say, you’ll begin to feel a lot more secure. The Business Department has repeatedly been warned that the UK is facilitating this kind of financial crime for the best part of a decade, and is yet to take any substantive action to stop it. (Though, to be fair, it did recently launch a “consultation”.)

Before 2011, only registered company-formation businesses could access Companies House’s web portal, which meant there was a clear connection between an actual verified individual and companies being created, since you could see who had created them. There was still fraud, of course, but it was relatively easy to understand who was responsible.

In 2011, then-business secretary and Liberal Democrat MP Vince Cable decided to open up Companies House, and everything changed. After Cable’s reform, anyone with an internet connection, anywhere in the world, could create a UK company in about as much time as it takes to order a couple of pizzas, and for approximately the same amount of money. The checks were gone; there was no longer any connection to a verifiably existing person; it was as easy to create a UK company as it was to set up a Twitter account. The rationale was that this would unleash the latent entrepreneurship within the British nation by making it easy to turn business ideas into thriving concerns.

Instead of unchaining a new generation of British businesspeople, however, Cable let slip the dogs of fraud. At first, this rather technical modification to an obscure corner of the British machinery of state did not garner much attention, but for people who understood what it meant it was alarming. One such person was Kevin Brewer, a Warwickshire businessman who had been in the company forming business for decades, and who attempted to warn Cable of the potential risks inherent in the new policy.

The method Brewer chose to make his warning was perhaps slightly unwise. He registered a company – John Vincent Cable Services Ltd – with Vince Cable listed as the sole shareholder, then wrote to the business secretary to explain what he had done. It was intended as a demonstration of how easy it is to file unverified information with Companies House, but it failed to focus attention in the way he had hoped. Jo Swinson MP, who worked with Cable, wrote Brewer a stern letter, telling him he should not have done what he did, and assured him that the new system was very good. Brewer concluded that the coalition government was not going to take his concerns seriously.

In 2015, there was a general election, Cable lost his seat, the Conservatives formed a majority government, and Brewer decided to try again with the same stunt. He created Cleverly Clogs Ltd, a company apparently owned by three people: James Cleverly MP, Baroness Neville-Rolfe, who was a minister in the business department, and a fictional Israeli called Ibrahim Aman. Brewer was no more successful in persuading Tories than he had been at persuading Liberal Democrats, however. At that point, he gave up on his attempt to show the government it was enabling limitless opportunities for fraud.

There is, it turns out, a simple explanation for why successive governments have failed to do anything about it. Last year, when challenged in the House of Commons, Treasury minister John Glen stated that Companies House simply couldn’t afford to check the information filed with it, since that would cost the UK economy hundreds of millions of pounds a year. This is almost certainly an exaggeration. Anti-corruption activists who have looked at the data say the cost would in fact be far less than that, but the key point is that the reform would pay for itself. As Brewer has pointed out, “the burden of cost is one thing. But the cost of fraud is far greater.”

VAT fraud alone costs the UK more than £1bn a year, while the National Crime Agency estimates the cost of all fraud to the UK economy to be £190bn. The cost to the rest of the world of the money laundering enabled by UK corporate entities is almost certainly far higher. Spending hundreds of millions of pounds to prevent hundreds of billions’ worth of crime looks like a sensible investment, however you look at the data, particularly since the remedy – obliging Companies House to check the accuracy of the information filed on its registry – would be so simple. (When I put this to Companies House, they provided the following statement: “We do not have the statutory power or capability to verify the accuracy of the information that companies provide. However, tackling abuse of the register is a key priority and that’s why we work closely with law enforcement partners to assist their investigations into suspected cases of economic crime and other offences.”)

That is not to say that the government has taken no action. It is illegal to deliberately file false information in registering a company, and punishable by up to two years in prison. In late 2017, Companies House at last alerted prosecutors to the activities of one persistent offender. The target of the prosecution was Kevin Brewer, for the crime of trying to inform politicians about how easy it is to create fake companies.

He was summonsed to appear at Redditch magistrates’ court and, on legal advice, pleaded guilty in March 2018. After adding together his fine, and the government’s costs, he is £23,324 the poorer – quite a high price to pay for blowing the whistle. He is paying it off at £1,000 a month, and remains the only person ever convicted of spoofing the UK’s corporate registry, which is quite a remarkable demonstration of Companies House’s failure to do its job. 

Following his conviction, Brewer’s company National Business Register was removed from the list that Companies House publishes of company formation agents, which had been a key source of new business for him. “There are company formation agents on that list who have permitted huge amounts of fraud, and I’ve been excluded for trying to expose it. I find it incredible that they should turn a blind eye,” he told me. “Is it deliberate? Are they actually trying to get this money into the UK? I don’t want to believe it, but I can’t explain it any other way.”

We don’t know the answer to that, but it does give us lesson number five: don’t worry about it. Commit as much fraud as you like, fill your boots, the only reason anyone would care is if you kick up a fuss. And what sensible fraudster is going to do that?

Inside the 21st-century British criminal underworld

There are almost 5,000 criminal gangs in the UK. But the old family firms are gone – today’s big players are multinational, diversified and tech-savvy writes Duncan Campbell in The Guardian

Who rules the underworld today, and where do they conduct their business? Once there were the familiar mugshots and Runyonesque nicknames, the clubs and pubs where the usual suspects gathered, plotted and schemed. Now organised crime is run like any other business, and its leading figures look like every other broker or tycoon. We have entered into a world of what Sir Rob Wainwright, until recently Europe’s most senior police officer, calls “anonymised” crime. The underworld has become the overworld.

The National Crime Agency has estimated that £90bn of criminal money is being laundered through the UK every year, 4% of the country’s GDP. London has become the global capital of money-laundering and the beating heart of European organised crime. English is now the international underworld’s lingua franca. Crime is an essential part of the British economy, providing hundreds of thousands of jobs, not just for professional criminals – the NCA reckons there are 4,629 organised crime groups in operation – but for police and prison officers, lawyers and court officials, and a security business that now employs more than half a million people.

Just as the names of familiar shops have been departing from the high street, the old family firms of criminals are disappearing, whether in London, Glasgow, Newcastle or Manchester. And just as British football fans have had to learn how to pronounce the names of the legions of new foreign players, detectives have had to learn to do the same for the increasing number of new criminals. Britain was once dealing with drugs imports from half a dozen countries; now it is more than 30. A young person who would in the past have sought an apprenticeship in a trade or industry may now find that drug dealing offers better career prospects. And, apart from drugs and guns, British trading channels now facilitate the trafficking of women from eastern Europe and Africa for prostitution and children from Vietnam as low-level drug workers.

The underworld’s modus operandi has shifted in the past quarter century. “The international nature of crime and technology are probably the two biggest changes,” says Steve Rodhouse, the NCA’s head of operations. Speaking at the NCA’s unprepossessing headquarters in Vauxhall, south London, Rodhouse explains how the agency’s work has mushroomed. “Pretty much all of the NCA’s most significant ‘high-harm’ operations now involve people, commodities or money transferring across international borders. The days of having a drugs gang, a firearms gang or a people-trafficking gang have changed because of the concept of polycriminality. Groups satisfying criminal markets, whatever they may be, is now much more common. These are businesses and people are looking to exploit markets, so why confine yourself to one market?”

Wainwright, who served as Europol chief for nine years, has also noted this internationalisation of crime. Addressing a Police Foundation gathering just after his retirement last year, he said that Europol, the European equivalent of Interpol, having expanded since its foundation in 1998 when “it consisted literally, of two men and a dog – admittedly, a sniffer dog – in Luxembourg,” now dealt with 65,000 cases a year. By 2018, he reckoned that 5,000 organised crime groups were operating across Europe and the mafia model had been replaced by a “more nimble” model, with 180 different nationalities operating, mixing legal with illegal business and working with between 400 and 500 major money-launderers. This was multinational business with specialists in recruitment, movement, money-laundering and the forging of documents.

The internet, of course, is a major factor. Wainwright likened its effect on crime to that of the motorcar in the 1920s and 30s, when suddenly criminals could escape at speed and take advantage of new markets. He cited the dark web, which he said was selling 350,000 different illegal items – 60% of which were drugs – but including everything from guns to pornography and even operating a ratings system for speed of dispatch and quality. The combination of new faces of whom the British police – and often Interpol and Europol – were unaware, along with an increasingly tech-savvy pool of criminals able to disguise their identities, made for a toxic cocktail. Crooks anonymous.

One group with little interest in anonymity are the Hellbanianz, a gang of cocky young Albanians based in Barking, east London. They went online in spectacular fashion in 2017 via Instagram and YouTube rap videos to flaunt their ill-gotten wealth and firepower.

Their most prominent member, Tristen Asllani, who lived in Hampstead, was jailed for 25 years in 2016 for drug dealing and firearms offences which included possessing a Škorpion submachine gun. He was caught after a police chase in north London which ended when he crashed his car into a computer repair shop in Crouch End. A photo of Asllani, showing him stripped to the waist after he had apparently spent long hours in the prison gym, appeared on a social media page called My Albanian in Jail, with a caption saying “Even inside the prison we have all conditions, what’s missing are only whores”.

The flashy cars and bundles of banknotes on display in the Hellbanianz videos were the result of the importation of cocaine and cannabis, but the gang was also involved in the weapons trade. The pictures showed £50 notes wrapped around a cake and their HB logo written in cannabis. After they were arrested and jailed, other gang members have posted pictures of themselves, taken with smuggled mobile phones, from inside prison where they cheerfully inscribe their gang name on the walls.

Muhamed Veliu, an Albanian investigative journalist, who knows London well, says that the Hellbanianz have been on the crime scene in east London for many years. “They are sending a bad message to young Albanians. By seeing such photos, they think the streets of UK are paved with gold … Bizarrely, despite the fact they are in the prison, they show the outside world photos of their life behind the bars.” He said that there was a concern that the British media stereotyped all Albanians as criminals but, he added, the 2006 Securitas robbery, in which two Albanians played key roles in the theft of £53m from a depot in Kent, was regarded with some national pride back home. “It was ‘the crime of the century’, it was seen as very different from making money from prostitution, which is the lowest form of crime. It is wrong, of course, but they did need bravery to get involved, and at least they went for a bank – that was the feeling in the Albanian community.” There are currently around 700 Albanians in British jails.

“Albania is Europe’s largest producer of cannabis,” says Tony Saggers, the former head of drugs threat and intelligence at the NCA. “It is important not to stereotype, but the Kosovan war led to Albanians pretending to be Kosovan in order to get asylum in the UK. Many of the people who came just wanted a better life, but there were criminals among them who were able to set up illicit networks … The UK criminal has a get-rich-quick mentality while the Albanians’ strategy was get-rich-slow, so they have driven down the price of cocaine in the UK. They knew that if they expanded, they could undercut the market.” It helped that their reputation preceded them. “The Albanian criminals may be ruthless and potentially murderous when controlling their organised crime,” said Saggers, “but when they come to the UK they try to be more charismatic and they use fear – ‘We’re here, we need to get on,’ that sort of approach. So there is little violence from the older Albanian criminals in the UK, because they know that violence attracts more attention.”

The Albanians had already established themselves in a darker fashion when 26-year-old Luan Plackici was jailed in 2003 and said to have made more than £1m from trafficking “poor, naive and gullible” young women who thought they were on their way to jobs as waitresses or barmaids. Some had to service up to 20 men a day to pay for the £8,000 “travel bill” from Romania and Moldova.

The international nature of people-trafficking was exposed fully in 2014 by a trial of a gang that imported more than 100 women into Britain. The trial ended with the gang leader, Vishal Chaudhary, being jailed for 12 years. Chaudhary, who lived the high life in Canary Wharf in London, contacted young women through social networks in Hungary, the Czech Republic and Poland, offering work as receptionists, nannies or cleaners in England. But when they got to the UK, the women were forced to work in brothels. Chaudhary’s team, all of whom were jailed, consisted of his brother, Kunal, who worked for Deloitte in Manchester, a Hungarian heavy called Krisztian Abel and the latter’s sister, Szilvia, who helped recruit the women.

 

A cannabis farm discovered in a house in Oldham in 2013. Photograph: Christopher Thomond/The Guardian

There are numbers of young people involved in what the legal system terms “forced criminality”. The lawyer Philippa Southwell has specialised in such cases, which apply in particular to young Vietnamese people brought illegally into the UK by traffickers and forced to work in cannabis farms to pay back debts of up to £30,000 that their parents have undertaken in order for them to have a new life in Europe.

“The modus operandi of criminal organisations is to target children or young adults, trafficking them across the world in a journey that can take months,” Southwell says. “Those being trafficked from Vietnam, often transit via Russia, Germany and France, by boat, lorry and even by foot. Once at their destination, they will be locked in a premises and made to tend the cannabis plants, by watering them and ensuring the lighting is on. These cannabis grows are sophisticated multi-million-pound drug operations, with the electricity often being extracted illegally and high-value equipment used. The windows of the buildings may be nailed shut. The farms normally operate in rural areas where the chance of detection is reduced.”

The boys and young men were in a form of debt bondage, but no matter how hard they worked, their debt never seemed to be paid off. “There is a misconception within the criminal justice system that they are free to leave because the doors may not always be locked,” says Southwell, “but the reality is that they have nowhere to go – they are controlled through threats of violence, debt bondage, isolation, fear and other complex control methods that are regularly used by traffickers.”

From the Chinese opium dealers in the 1920s, the Italian gangsters in the 30s, the Maltese pimps in the 50s, the West Indian Yardies in the 60s, the Turkish heroin dealers in the 70s to the east Europeans gangsters and Nigerian fraudsters today, there has long been an unfair tendency to blame foreigners as dominant figures in the underworld. While they may have all had their parts to play, the homegrown British villain – whether artful dodger or ruthless kingpin – has always been the bedrock of the underworld.

“Everyone wants to be a gangster,” says BX, a young former gang member from north-west London. “Everyone’s seen it on TV and that’s what they want to be. They look at music videos and it looks like the people in them are making hundreds of thousands of pounds, although the reality is that they are still living at their mum’s house. Most of them come from estates and they see their parents going to work, struggling to pay the bills. They come home, their mum’s not there, and all the places where kids could play are closing down. Nine times out of 10, they leave school without qualifications. So if you’re broke, if you can’t get a job, you’re going to take the opportunity. My parents had no clue what I was up to – I didn’t come back with any marks on my face.”

The recent upsurge in knife attacks has focused attention on gangs. At one stage last year, there were six separate knife murder trials underway at the Old Bailey, all gang-related, all involving more than one defendant, none older than 22. “It’s not a black thing, it’s not a white thing, everyone’s doing it,” says BX. “There’s no: ‘I’m black, he’s white, we can’t get along’ any more.” There were still ample opportunities for smaller-time dealers: “You can make a grand a week.”

An organised gang carrying out robberies on scooters in London in 2018. Photograph: MET Police

The hierarchy of gangs remained a key factor. “If you’re a drug dealer, you have to find people who will do your dirty work for you. The way it works is the elders, who are, say, 24 or 25, they see you doing well, so they might take you under their wing. The young kids acting as look-outs, they’re thinking: ‘I’m part of that guy’s enterprise. That could be me in however many years, I could get promotion.’ As they say, loyalty brings forth royalty.”

Territory is important commercially. “If you’re doing five keys (kilos) a week and then suddenly you’re only doing three a week, it doesn’t take long to realise that someone’s out there taking your customers. So you have to eliminate the opposition. How do you do that? By either taking them out, or tipping off the police. You are never supposed to snitch, but I know one guy, from Southall, who’s a millionaire now; he was in competition with a guy from the same area so he informed the police.” There’s a not-unfounded suspicion that some informers have continued to commit crimes while under police protection. “All the old-school rules – they’re gone. I know people who work with the police to get immunity for themselves. I know one who everyone knows works with the police, he’s even been shooting people, but you type his name into Google you won’t find anything about him and, believe me, his record is way longer than my arm.”

The risks are high. “Of the people I grew up with, only three of us haven’t been to jail, although I’ve been arrested many times. My older brother has been in and out of jail – nine months here, six weeks there. But there are less police than ever, so that gives you the incentive, and even if you get arrested, you’re not going to do that long.”

While the young gangs have largely replaced the old family-based crews, so have young, helmeted, scooter-riding robbers smashing their ways into jewellers and mobile phone shops taken on the role of the old sawn-off shotgun-wielding bank robbers.

While those smalltime home-grown villains may still thrive, an increasing number of members of the British underworld have followed old imperial traditions and headed abroad to cut out the middle-man, establishing themselves not only in the traditional bolt-hole of Spain, but in the Netherlands, Thailand and South Africa. The person who was to rewrite the rulebook on drug dealing is the street-smart Liverpudlian Curtis Warren, better known by his nicknames Cocky or the Cocky Watchman. Born in 1963, his criminal career started at the age of 12 with a conviction for car theft. By 16, he was on his way to borstal for assaulting the police. Other offences followed, but it was only when he moved into the drugs business, working out of Amsterdam, that he established his reputation as one of the most prolific traffickers of modern times – Interpol’s “Target One” and the subject of a joint British–Dutch investigation codenamed Operation Crayfish.

While Warren’s move to Amsterdam, where fellow British dealers also established themselves, seemed like a smart idea in that he was less exposed to the British police, it was also a weakness, because the Dutch authorities were able to tap his phone without restriction and secure the evidence they needed. (Although they also required English help in translating Liverpudlian for them.) In October 1996, police in the Netherlands seized 400kg of cocaine, 60kg of heroin, 1,500kg of cannabis, handguns and false passports. Nine Britons and a Colombian were arrested, and Warren was soon portrayed as the biggest fish in the net. He was jailed for 12 years for a conspiracy to import what was claimed to be £125m of drugs into Britain. The Observer suggested he was “the richest and most successful British criminal who has ever been caught”, and he was the only drug dealer to make it on to the Sunday Times rich list. T-shirts with an old mugshot of Warren on them were still for sale in Liverpool 20 years after Operation Crayfish.

After his release from jail in the Netherlands in June 2007, Warren was only a free man for five weeks. He headed to Jersey, but was under constant surveillance and soon arrested. In 2009, he was convicted of conspiring to import £1m of cannabis into Jersey and jailed for 13 years. Warren was alleged to have invested his wealth in everything from petrol stations to vineyards, football clubs to hotels. A Jersey court ordered him to pay £198m after he failed to prove his business empire was not built on the proceeds of cocaine trafficking. Detectives had secretly recorded him boasting during a 2004 prison visit of funnelling huge amounts of cash via a money launderer. “Fuckin’ ’ell, mate, sometimes we’d do about £10m or £15m in a week,” he told some of his visitors. “I was bragging like an idiot and just big-talking in front of them,” was Warren’s explanation later. The Jersey attorney general, Timothy Le Cocq QC, described him as “one of Europe’s most notorious organised criminals”. His failure to pay the money resulted in a further 10 years’ jail time.

He told Guardian journalist Helen Pidd, when she interviewed him in jail in Jersey, that he disapproved of drugs: “I’ve never had a cigarette in my life or a drink. I’ve never tasted alcohol or anything. No interest.” His ambition after he was freed was to leave England – “and never come back”. He added: “I just wish I’d not been such a worry to me mum.”

Few people were better qualified to comment on Warren than former NCA man Tony Saggers, who was an expert witness in Warren’s trial and proceeds hearing. “Curtis Warren was a forerunner,” he said. “You get people like him who come from a tough background, a council-house environment, and he had a sort of bare-faced courage in some respects, to put himself in places like Venezuela and Colombia, which were probably even more dangerous then than they are now. He put himself at the other end of the supply chain, and in a way established that pattern for the elite drug trafficker. But nowadays, high-level, high-profile criminals play less and less of a role, and make use of others below them in a detached way.”

Other British criminals have also cast their nets wide during the past two decades. One of the best-known was Brian Wright, once one of Britain’s most active cocaine smugglers, who was nicknamed The Milkman – because he always delivered. He operated from both Turkish-controlled Northern Cyprus and Spain. In 1998, he was alleged to have imported almost two tonnes of the drug, with the result, according to one customs investigator, that “the cocaine was coming in faster than people could snort it”. The Dublin-born Wright owned a villa near Cadiz, which he named El Lechero – the Spanish for milkman – and had a box at Ascot, a flat in Chelsea’s King’s Quay and used some of his proceeds to fix races on which he then bet, thus laundering his drug profits. Finally arrested in Spain, he was brought back to England and, in 2007, at the age of 60, found guilty at Woolwich crown court of conspiracy to supply drugs and jailed for 30 years.

Some very successful scams have been perpetrated on elderly Britons. John Palmer, who had been involved in the Brink’s-Mat bullion robbery (from whence he got his nickname “Goldfinger”) made his fortune in a crooked timeshare business in Tenerife. A ruthless operator, he took advantage of thousands of gullible souls, many of them elderly holidaymakers, who believed his spiel about the fortunes they could make by investing in timeshare apartments that were never built. Outwardly, he appeared to have it all: the yacht, the cars with the personalised number plates, dozens of properties. He even made it to No 105 in the Sunday Times rich list. “Remember the golden rule,” was the motto he loved to quote, “he who has the gold makes the rules.” But in 2001, he was convicted of a timeshare fraud in which 16,000 victims lost an estimated £33m and served eight years in prison.

Then, in 2015, Palmer was shot dead by a hitman in his garden in Essex. There were rumours that he was killed because he might have been cooperating with the Spanish police over another fraud case. His co-accused were convicted in Spain in May this year and the police in Britain have duly issued a fresh appeal for help to find his killer – with a reminder that there is a £100,000 reward on offer in case that tempts an elderly underworld grass.

Any notion that Spain might still be a safe haven for expat criminals was dispelled in 2018 when Brian Charrington – a close associate of Curtis Warren and regarded as one of the major international drug dealers of his generation – was jailed for 15 years for trafficking and money-laundering in Alicante in 2018. Described in the Spanish press as “el narco que escribia en Wikipedia”, because of his reputation for updating and correcting his Wikipedia entry, the former car-dealer from Middlesbrough had been arrested in 2013 at his villa in Calpe, on the Costa Blanca, an area where some estate agents offer bulletproof glass as a special feature along with the spa bath and barbecue area. There had been wild rumours of crocodiles in his swimming pool, but disappointingly, the police found none.

Charrington was alleged to have brought vast quantities of drugs into Spain via a yacht docking in Altea, north of Benidorm. He claimed his money came legitimately. “I buy and sell villas and I pay my taxes,” he told the court, but was still fined nearly £30m. Following a lengthy investigation involving Spanish, British, Venezuelan, Colombian and French police, his assets, including a dozen houses and his cars and boats, were impounded. After his sentence, his Wikipedia entry was speedily updated.

The titles of true crime memoirs published in the past decade or so tell their own tale. The Last Real Gangster by Freddie Foreman came out in 2015; The Last Gangster: My Final Confession by Charlie Richardson arrived just after his death in 2012; The Last Godfather, the Life and Crimes of Arthur Thompson, was published in Glasgow in 2007. A requiem for the old British underworld.

In many ways, it was already slipping into a haze of nostalgia. The television series Peaky Blinders has spawned its own fashion accessory industry. You can now buy Peaky Blinders cufflinks shaped like razor-blades, or wear a Peaky Blinders cap and waistcoat from the new David Beckham clothing line, something that might have prompted a dark smile from the ruthless and acquisitive 1920s Birmingham gang on whom the series was based. The website henorstag.com even recommends “the Peaky Blinders look” as perfect for a stag night: “For a theme the ladies will love, you will need to capture the stylish world of the early 20th century with black peak caps, stylish grey or black suits with waistcoat, as well as a dusty black coat and shoes in order to complete the look.” (Add a cosh and a cut-throat razor and you’ll really slay ’em.)

While the Kray twins brand continues as the underworld’s equivalent of Marks & Spencer – a framed letter from Ronnie Kray in Broadmoor is currently on offer on eBay for £650 – changes in the law have made criminals less prepared to boast about past crimes. In the old days, under the “double jeopardy” rule, once you were acquitted of a murder, you could never be tried for it again. That rule was overturned with the 2003 Criminal Justice Act, so the days when a villain could explain in their memoirs how they got away with a crime have gone. The 2009 Coroners and Justice Act made it an offence for criminals to profit from accounts of their crimes, so they could no longer sell their stories, or at least officially. The 2002 Proceeds of Crime Act and its increasing use against career criminals has meant that illicit incomes can be seized.

No wonder the Hatton Garden burglary of 2015 – that “one last job” carried out by the elderly “diamond wheezers” – received such attention. Even one of the “last of the last”, Fred Foreman, was hoping he was going to be offered a role in it. “I heard that Terry (Perkins, one of the ringleaders) was looking for me, not long before the burglary took place, so I presume that would have been what it was about,” he says.

Perkins died in his cell in Belmarsh prison last year. Foreman, who made his name with the Krays in the 1960s, now lives in sheltered accomodation in west London. He doubts that the current generation of gangsters will ever write their memoirs: “I don’t think that anyone who has turned to crime these days is going to live long enough to build up a reputation, are they?”

But the recruiting sergeants of the underworld – poverty, greed, boredom, envy, peer pressure, glamour – will never be short of volunteers, whether they live long enough to make a name for themselves or not.

After urging land reform I now know the brute power of our billionaire press

A report I helped publish has led to attacks and flat-out falsehoods in the rightwing media. It’s clear whose interests they serve writes George Monbiot in The Guardian

  

‘As their crucial role in promoting Nigel Farage, Brexit and Boris Johnson suggests, the newspapers are as powerful as ever.’ Photograph: Christopher Pledger


All billionaires want the same thing – a world that works for them. For many, this means a world in which they are scarcely taxed and scarcely regulated; where labour is cheap and the planet can be used as a dustbin; where they can flit between tax havens and secrecy regimes, using the Earth’s surface as a speculative gaming board, extracting profits and dumping costs. The world that works for them works against us.

So how, in nominal democracies, do they get what they want? They fund political parties and lobby groups, set up fake grassroots (Astroturf) campaigns and finance social media ads. But above all, they buy newspapers and television stations. The widespread hope and expectation a few years ago was that, in the internet age, news controlled by billionaires would be replaced by news controlled by the people: social media would break their grip. But social media is instead dominated by stories the billionaire press generates. As their crucial role in promoting Nigel Farage, Brexit and Boris Johnson suggests, the newspapers are as powerful as ever.

They use this power not only to promote the billionaires’ favoured people and ideas, but also to shut down change before it happens. They deploy their attack dogs to take down anyone who challenges the programme. It is one thing to know this. It is another to experience it. A month ago I and six others published a report commissioned by the Labour party called Land for the Many. It proposed a set of policies that would be of immense benefit to the great majority of Britain’s people: ensuring that everyone has a good, affordable home; improving public amenities; shifting tax from ordinary people towards the immensely rich; protecting the living world; and enhancing public control over the decisions that affect our lives. We showed how the billionaires and other oligarchs could be put back in their boxes.

The result has been four extraordinary weeks of attacks in the Mail, Express, Sun, Times and Telegraph. Our contention that oligarchic power is rooted in the ownership and control of land has been amply vindicated by the response of oligarchic power.

Some of these reports peddle flat-out falsehoods. A week ago the Mail on Sunday claimed that our report recommends a capital gains tax on people’s main homes. This “spiteful raid that will horrify millions” ensures “we will soon be joining the likes of China, Cuba, Laos and Vietnam in becoming one of the world’s few Marxist-Leninist states”. This claim was picked up, and often embellished, by all the other rightwing papers. The policy proved, the Telegraph said, that “keeping a hard-left Labour party out of office is not an academic ideological ambition but a deadly serious matter for millions of voters”. Boris Johnson, Philip Hammond and several other senior Tories weighed in, attacking our “mad” proposal.

But we made no such recommendation. We considered the idea, listed its possible advantages and drawbacks, then specifically rejected it. As they say in these papers, you couldn’t make it up. But they have.

There were dozens of other falsehoods: apparently we have proposed a “garden tax”; we intend to add “an extra £374 a year on top of what the typical household pays in council tax” (no such figure is mentioned in our report); and inspectors will be sent to people’s homes to investigate their bedrooms.

Dozens of reports claim that our proposals are “plans” hatched by Jeremy Corbyn: “Jeremy Corbyn’s garden tax bombshell”; “Jeremy Corbyn is planning a huge tax raid”; “Corbyn’s war on homeowners”. Though Corbyn is aware of our report, he has played no role in it. What it contains are not his plans but our independent policy suggestions, none of which has yet been adopted by Labour. The press response gives me an inkling of what it must be like to walk in his shoes, as I see my name (and his) attached to lurid schemes I’ve never heard of, and associated with Robert Mugabe, Nicolás Maduro and the Soviet Union. Not one of the many journalists who wrote these articles has contacted any of the authors of the report. Yet they harvested lengthy quotes denouncing us from senior Conservatives.

The common factor in all these articles is their conflation of the interests of the ultra-rich with the interests of the middle classes. While our proposals take aim at the oligarchs, and would improve the prospects of the great majority, they are presented as an attack on ordinary people. Progressive taxation, the protection of public space and good homes for all should strike terror into your heart.

We’ve lodged a complaint to the press regulator, Ipso, about one of the worst examples, and we might make others. But to pursue them all would be a full-time job (we wrote the report unpaid, in our own time). The simple truth is that we are being outgunned by the brute power of billionaires. And the same can be said for democracy.

It is easy to see why political parties have become so cautious and why, as a result, the UK is stuck with outmoded institutions and policies, and succumbs to ever more extreme and regressive forms of taxation and control. Labour has so far held its nerve – and this makes its current leadership remarkable. It has not allowed itself to be bullied by the billionaire press.

The old threat has not abated – it has intensified. If a newspaper is owned by a billionaire, be suspicious of every word you read in it. Check its sources, question its claims. And withhold your support from any party that allows itself to be bullied or – worse – guided by their agenda. Stand in solidarity with those who resist it. 

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