Andrew Craig-Bennett

The deck chairs of the Christina

How the Russian invasion of Ukraine could upend the cosy set-up most shipowners have enjoyed since the 1950s. By Andrew Craig-Bennett

The Russian government decided to do the unthinkable this February, and invade a neighbouring state on the grounds of old-fashioned irredentism.

It is easy to start a war, but as every schoolboy knows, plans never survive contact with the enemy, and things start to happen fast in ways that political leaders cannot control. Stopping a war can be difficult.

From this, some things follow. The nation which is most closely associated with Russian offshore money and with wealthy Russian expatriates is Britain. Britain is seen as a politically stable place to park money in real estate, whilst the British legal and banking systems, and indeed British purveyors of luxuries, like superyachts and private jet aircraft, are well able to look after people with serious money.

These systems for hiding wealth safely and for looking after the seriously rich were developed in London 70 years ago, to look after a different group of wealthy expatriates – the Greek shipowners who were worried that the Greek civil war might end with Greece becoming a communist state. The subtle political impetus for the development of these systems to protect the wealth of Greek shipping families came from a well-known friend of Greece and Greek shipping, Sir Winston Churchill, who liked to spend holidays as the guest of Aristotle Onassis, onboard Onassis’ yacht, the Christina (pictured), and who had agreed with Stalin 10 years earlier that Greece would stay “in the West”.

If you are in shipping, you have grown up with a set of legal fictions which were originally American, but which were developed by London lawyers, with the encouragement of Churchill, to help the Greeks.

These are part of your “mental furniture”, and if you are in shipping and less than, say, 50 years old, you have grown up with the formal acknowledgement of those fictions, and with a series of codes written round the fictions, in the form of the ISM Code, Port State Control and the procedures and processes that hang off them. The effect has been to remove national governments’ ability to tax, and otherwise to control, merchant shipping, whilst giving shipping quite effective international regulation. Two cheers for that London institution, the IMO.

You have seen shipping become safer, and a great deal cleaner, with the help of classification societies and other industry bodies and indeed with the help of insurers, as national governments have abandoned the attempt to regulate the ships that operate under their flags. We don’t find this strange, until we try to explain it to non-shipping people.

The searchlight of public interest that is now being shone on London’s rich Russians is going to catch shipowning. The British are starting to feel ashamed of, and even embarrassed by, the close relationship between Russian offshore money and British politics.

Prime minister Johnson is careful to say that cash gifts to his political party all come from Russians who are also British citizens, 700 of whom became British by spending a couple of million pounds in Britain, and he carefully forgets to say that the law requiring political donations to be made only by British subjects is there because 40 years ago John Latsis bunged the Conservative Party, then headed by Mrs Thatcher, two million quid, and there was a scandal.

There is another scandal now. It’s bigger. We don’t know how big this one will become; it’s still growing. What we can see at this stage is that if governments look past the veil of incorporation to grab an oligarch’s superyacht, the legal fictions that they brush aside are those that protect shipowners’ assets. This isn’t surprising; the legal fictions have the same origin and the same purpose. What we can’t be sure of, now, is whether they will survive. ●