“Moneyland” is an urgent exposé of the world of mega-wealth

Moneyland. By Oliver Bullough. Profile Books; 298 pages; £20. To be published in America by St. Martin’s Press in May; $28.99.

FROM the outside, 29 Harley Street looks like any other office block in central London. But it is an entry port to Moneyland, Oliver Bullough’s term for a virtual country populated by the mega-rich and their hangers-on. The building came to prominence when Ukrainian anti-corruption campaigners investigated Mezhyhirya (pictured), the once-secret retreat of Viktor Yanukovych, Ukraine’s disgraced former president. The ownership of the grotesquely luxurious palace passed through this respectable London address before ending up in anonymity in Liechtenstein.

Mr Bullough and others found that 29 Harley Street was the registered office for more than 2,000 other companies. An outfit based there that provides registrations has created 10m firms in the past 16 years, in jurisdictions ranging from Britain to the Seychelles. As Mr Bullough stresses, none of this is necessarily illegal. There are respectable reasons to incorporate abroad, and to use the shield of anonymity that companies and trusts provide. Rich people and celebrities may have legitimate fears about kidnapping, extortion or privacy breaches. Some of the money involved is what he calls “naughty” (deriving from clever tax planning) rather than crooked.

All the same, Moneyland has huge costs. It generates a climate of impunity for looters. Prosecutions for grafts are rare, restitution following convictions rarer. Information in public registries is scant. Mr Bullough followed one ownership trail that led via Harley Street to a woman who had been dead for five years.

The obvious villains are foreign plutocrats. But the real scandal is the way ritzy bankers, lawyers, accountants and PR people enable money stolen in poor, ill-run countries to be invested in rich, safe ones. There are limits to how much cash the pillagers can spend in their own misruled domains, but the ability to teleport money invisibly around the world means, as Mr Bullough puts it, that the rich can continue eating without ever feeling full.

Defining these flows, let alone tracing them, is hard. Weak legal systems mean that what looks like brazen theft to the outside world may not technically count as crime. In the worst-run countries power and wealth are so entwined that the owner-managers have no need to flout the law; if you write the rules yourself, you don’t need to break them. Mr Bullough, a former Moscow correspondent, tells a grim story of Ukraine’s health system, in which officials ransacked the medicine and equipment budgets, leaving patients to suffer.

The invisible money trail goes through offshore jurisdictions such as Nevis, a Caribbean island where an official laughingly dismisses Mr Bullough’s suggestion that its corporate secrecy and abundant scandals might be linked. But it also involves seemingly reputable locales such as the City of London and parts of the United States. Nevada, for instance, is creating ingenious corporate vehicles that add new layers of impenetrability—such as trusts that can be foreign in American law yet count as American under overseas regulations.

Clever lawyers devise Chinese puzzles of these structures. In another of Mr Bullough’s examples, a trail ended in three anonymously run companies that owned each other. Even armed with warrants, investigators run into corporate-secrecy laws and daunting costs in time and money. For journalists or activists, life is even harder, especially in places like England that have costly and risky libel courts. Mr Bullough gives tantalising accounts of two investigations into corrupt behaviour which never saw the light of day because of the mere threat of legal action.

This is just one way in which dark money—billions of dollars a year—corrodes both its source and its destination. Among those selling goods and services to the mega-rich, it encourages a pathological incuriosity about the origins of clients’ fortunes. Prices, especially for high-end property, rocket. As the gravy train rolls on, halting it becomes harder: too many livelihoods depend on the ride. By tolerating it, and benefiting from it, the West undermines any efforts to complain about corruption, money-laundering and foreign interference in its politics.

Thus Moneyland is not just a financial community; its tentacles spread to other parts of life, too. A scintillating chapter deals with the market in citizenship: the mega-rich can, in effect, buy their way to a new and easier life through investing in countries such as St Kitts, gaining a passport (perhaps in a new name) that enables untroubled, visa-free travel. Best of all is a sinecure representing one of these countries abroad, bringing a diplomatic passport—and immunity from prosecution.

Land of the free

Nobody voted for Moneyland. Mr Bullough explains how the designers of the post-war financial architecture tried to keep international financial flows under control, with a network of fixed exchange rates based on the dollar’s convertibility to gold. The City of London disrupted this arrangement in the 1960s, first with the Eurodollar market (trading America’s currency outside the scrutiny of its authorities) and then the Eurobond market (enabling anonymous lenders to invest footloose money in reputable securities).

Moneyland is not a conspiracy, Mr Bullough notes. Rather it is a system, nurtured by incentives and disincentives stemming from loopholes in national legislation and gaps between jurisdictions. Curbing it is entirely possible—for example by insisting that those buying (or selling, or renting) high-end property must declare and verify their real identity. Jailing the money-launderers’ pinstriped accomplices, when they do break laws, would help too.

The most contentious argument in this devastating exposé is that the right to decide where and how money can be spent and invested lies not only with its owners, but with its creators—governments, which, in Mr Bullough’s view, should impose capital controls to jam the illicit flows. That is a controversial idea; the free movement of money has been a conduit not just of economic growth but of freedom itself. Nevertheless, as this urgent book makes clear, the tables have turned. Unchecked, invisible cash flows now promote not democracy and liberty, but kleptocracy and misery.