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Western enablers help Russian oligarchs hide their wealth

DANIELLE KURTZLEBEN, HOST:

Since the start of Russia's invasion of Ukraine, Western nations, including the United States, have placed sanctions on a number of Russian oligarchs who are close to Russian President Vladimir Putin. The hope is that putting financial pressure on the oligarchs would in turn increase the pressure on Putin to back off from Ukraine. One problem - it's hard to know how effective those sanctions are because Russian oligarchs have a lot of experience hiding their wealth abroad.

To learn more about that, we called Spencer Woodman of the International Consortium of Investigative Journalists. He wrote a piece recently titled "How A Network Of Enablers Have Helped Russia's Oligarchs Hide Their Wealth Abroad." And Spencer Woodman joins us now. Welcome.

SPENCER WOODMAN: Thanks for having me.

KURTZLEBEN: So let's start with something really basic. The term Russian oligarchs is in the news a lot right now. Tell us, what is the significance of Russian oligarchs? Where's their money from, and why do they matter?

WOODMAN: So Russian oligarchs are, for the most part, people who, over the past two decades, have amassed billions of dollars, mostly by virtue of a close friendship or other personal or business acquaintance to Russian President Vladimir Putin. They live lavishly. They often own large parts or entire parts of what had been state-owned enterprises. Sometimes they make hundreds of millions or billions of dollars selling those same former state-owned enterprises back to the Russian state. And they - you know, by most accounts, they serve the interests of Vladimir Putin and often, in some cases, follow his orders and, in some cases, pay money into networks that are believed to be essentially his - Vladimir Putin's own secret wallet.

KURTZLEBEN: So let's get into your reporting on how they're hiding their wealth. Are there common methods that a lot of these oligarchs use?

WOODMAN: Yeah, there are. You know, our years of reporting on this subject has really taught us that hundreds of millions and billions of dollars don't just hide themselves. There is a whole network of professionals. There are interconnected industries of financial and legal professionals who help this happen. There are lawyers in New York and Delaware and London who are expert in creating structures of opaque shell companies and secretive trusts that, even on their registration documents - you know, those registration documents can be very hard to get - even if you get them, frontmen and proxies might be listed. So even a law enforcement agency that gets a hold of private corporate registration documents might not have the full picture.

Then there are the luxury goods that these companies go and purchase, and these are luxury real estate. This is yachts, art, things like that. The yacht dealers, the art dealers, the people who sell private jets, they are all also expert in dealing with these opaque companies to often ask no questions and leave no fingerprints of the ultimate owner of these assets.

KURTZLEBEN: Right. Well, on that note, you've reported on them. Let's turn our attention to those enablers in the system - the bankers, the lawyers, the facilitators. Who are these people that are helping to hide the money as far as we know right now?

WOODMAN: Well, a lot of it starts with lawyers. They kind of provide a - you could almost see it as a fixing service. They - you know, an oligarch comes to them. They say, hey, I want to park my money in London real estate. How can I do it secretively? Those lawyers often will go to what's known as a corporate formation agent. These can be based in London. They can be based in Delaware. They can be based in the British Virgin Islands, the Cayman Islands or Cyprus. These are all places that have pretty extensive corporate secrecy laws that allow trusts and shell companies to operate with a lot of discretion while remaining completely anonymous. And that is what authorities now, as they are seeking to freeze and seize assets of oligarchs all around the world - that's what they're up against. That's the big challenge, untangling all of this, especially after years of not paying as much attention as maybe they should have.

KURTZLEBEN: And your organization, the International Consortium of Investigative Journalists, has reported for years on this dark offshore economy that allows wealthy and often corrupt individuals all over the world, not just in Russia, to move money around in secret. That was the subject of the Panama Papers and the Pandora Papers investigations. But you've also written that no true systemic change has occurred since those investigations were published. Why is that?

WOODMAN: I think systemic change is a hard thing to come by, obviously. There have been significant incremental changes. Early last year, Congress passed the Corporate Transparency Act, which ushered in a lot of due diligence rules and things like that or professionals who deal with luxury goods and other things that have high volumes of cash and high risks for money laundering. But in the bigger picture, there has been a lot of pushback from industry, and there's been a lot of pushback from the wealthy interests who use these secretive jurisdictions and opaque vehicles like shell companies. Our last project, the Pandora Papers, probably the thing that was the most jaw-dropping finding was just the extent to which politicians themselves all around the world were invested in the offshore world. And these are the people who hold the most power to create a more just economy.

KURTZLEBEN: That was Spencer Woodman of the International Consortium of Investigative Journalists. Spencer Woodman, thank you so much for speaking with us.

WOODMAN: Thank you. Transcript provided by NPR, Copyright NPR.