Chris Blackhurst: Before we get too smug about London's wealth, maybe we should be asking more questions about foreigners with suspicious fortunes

Midweek View: Foreign cash is pouring in. But are these all people we'd like to do business with?

When I came to write this column, the person who oversees my words suggested I concentrate on "what they're talking about at the golf club".

Blimey. You don't want to know. Some of it really is unfit to publish – by any news organisation, let alone one such as this.

Much, though, is perfectly acceptable and it has a common thread. House prices recur repeatedly. They're on the rise again and the mood in the bar is fairly buoyant. Except that the same people who boast about the soaring value of their own property also complain that their grown-up children can't get on the housing ladder.

For those with younger offspring, the talk is all about the difficulty of getting school places or, rather, the difficulty of getting places at one of the top local private schools. The chat quickly turns to the influx of wealthy Chinese and Eastern Europeans who are paying for tutoring and are filling up the schools, and how unfair that is for us locals.

Given that part of the discussion that is unsuitable for wider consumption centres on the expected influx of immigrants from Romania and Bulgaria, there is a certain symmetry at work, the sub-text of which is we don't like foreigners, rich or poor, period.

Part of that hostility derives from living and working around the capital. London is awash with overseas money. In recent weeks, we've been subjected to article after article telling us how London is now the number one choice for the world's super-rich. We've had to endure descriptions of luxury West End apartments and been forced to ogle their cost.

There are two countries, we're told: London and the rest of the UK. Certainly, on the evidence of a trip north two weeks ago, that's correct. In London, expensive restaurants are heaving; high-end boutiques are humming, not closing; sports cars line affluent streets; employers complain of shortages of workers.

It's hard not to be smug that, while elsewhere is suffering, where we've chosen to live is doing all right – thank you. The problems experienced by other places do not seem to affect London as it drives ahead, largely immune from downturns and cuts. Austerity Britain? Not here, not in this club.

What we don't do is pause and reflect. We prefer not to dwell too much on the sources of this influx of cash. Two recent reports give some clue as to what may be occurring.

One is the "Financial Secrecy Index" for 2013. Published by the Tax Justice Network at, it highlights places around the world that provide safe haven for those individuals and corporations that abhor paying tax or declaring their worth, often for criminal reasons, and will go to great lengths to avoid doing so.

At first glance, the UK, which let us face it means London, scores a relatively lowly 21st. It's well behind the top four, which are, no surprise, Switzerland, Luxembourg, Hong Kong and the Cayman Islands. Our position – which is also below that of the US, Germany, Japan and Canada – is odd, however, given how we're constantly informed that London is a target for much of the world's dirty money.

Then you realise there is a clear, negative correlation: that the more secret a location is, the less important it is in terms of the worth of the financial services it exports. What's happening is easily explained: assets are stashed offshore, somewhere extremely private, but they're "controlled" from a clean, open jurisdiction – one where the rules are light touch and not so onerous, such as London.

So read the ranking the other way up. The UK – with all its money, world leadership in financial services and reputation for transparency – is at the top. Switzerland, not so vital and secret, finds itself pushed down.

The tax dodgers and crooks are washing their cash in a domicile that London recognises as "clean" (and we're very good at lauding jurisdictions that make great play of their secrecy) and then having it managed by a bank or investment firm in London.

It's a wheeze that makes a mockery of our claims to be tightening up, to be bringing down the shutters against the money launderers.

But who are they? We know about the Eastern Europeans. The major push is coming from Asia, more specifically China. Only yesterday, the Evening Standard revealed that hundreds of new flats to be built on the site of London's oldest brewery are likely to be bought by "rich and middle-class Chinese".

The Ram Brewery and seven acres of land in the centre of Wandsworth have been sold to a state-owned Chinese developer in a £600m deal. The planned 661 apartments, said Zhang Yuliang, chairman of the Shanghai-based developer, Greenland Group, are likely to be snapped up by his fellow Chinese.

That's not to say, before Greenland reaches for its lawyers, that the buyers will be criminals and the money they use ill-gotten. The truth is that some of it may be, they won't know.

A new study from Washington DC's Global Financial Integrity provides some indication of the scale of the problem. Between 2000 and 2011, $3.97 trillion (£2.42 trillion) in illicit funds left China.

In all, as much as 10 per cent of the country's annual GDP may be disappearing out of China, says the report, Illicit Financial Flows From China and the Role of Trade Misinvoicing. The latter is described as the illegal trade of legal goods and is held responsible for the outflow of $172bn in 2000, increasing to $602.9bn in 2011. A preponderance of that flow is rolled into the property markets of the West, having been squirrelled offshore in a secretive haven.

Colliers International, the property consultancy, reckon that mainland Chinese account for 20 to 40 per cent of all foreign investors in London, Toronto, Vancouver and Singapore.

On average, says Global Financial Integrity, 52.4 per cent of investments that flowed into tax havens involved capital acquired illegally via bribery and kickbacks. But the non-payment of taxes and the breaking of controls on the transfer of money overseas means that all the wealth is illicit.

We should not kid ourselves. Foreign cash is pouring into the UK, especially London. But are these all people we would like to do business with? And are the knock-on effects a price worth paying? I can see them now, a series of golf club debates. One thing is certain: they'd provide great television.

Start your day with The Independent, sign up for daily news emails
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Executive / Foreign Exchange Dealer - OTE £40,000+

£16000 - £40000 per annum: Recruitment Genius: A Foreign Exchange Dealer is re...

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

Day In a Page

The long walk west: they fled war in Syria, only to get held up in Hungary – now hundreds of refugees have set off on foot for Austria

They fled war in Syria...

...only to get stuck and sidetracked in Hungary
From The Prisoner to Mad Men, elaborate title sequences are one of the keys to a great TV series

Title sequences: From The Prisoner to Mad Men

Elaborate title sequences are one of the keys to a great TV series. But why does the art form have such a chequered history?
Giorgio Armani Beauty's fabric-inspired foundations: Get back to basics this autumn

Giorgio Armani Beauty's foundations

Sumptuous fabrics meet luscious cosmetics for this elegant look
From stowaways to Operation Stack: Life in a transcontinental lorry cab

Life from the inside of a trucker's cab

From stowaways to Operation Stack, it's a challenging time to be a trucker heading to and from the Continent
Kelis interview: The songwriter and sauce-maker on cooking for Pharrell and crying over potatoes

Kelis interview

The singer and sauce-maker on cooking for Pharrell
Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

Fashion: Ooh, Lady Chatterley!

Take inspiration from DH Lawrence's racy tome with equally racy underwear
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

Charlie Austin: ‘If the move is not right, I’m not going’

After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea