The cash was part of a fund-raising blitz that helped propel Prime Minister Boris Johnson’s party to victory in 2019. Records track $630,225 to a Russian bank account. It is illegal for political parties to accept donations of more than 500 pounds from foreign citizens who are not registered to vote in Britain. Mr. Kopytov is not listed on the national voter register, records show. It is not clear why the Barclays alert arrived three years after the donation, or whether the authorities had investigated it.
Source: New York Times
By Jane Bradley
May 12, 2022, 3:00 a.m. ET
LONDON — One of the biggest donors to Britain’s Conservative Party is suspected of secretly funneling hundreds of thousands of dollars to the party from a Russian account, according to a bank alert filed to Britain’s national law enforcement agency.
The donation, of $630,225, was made in February 2018 in the name of Ehud Sheleg, a wealthy London art dealer who was most recently the Conservative Party’s treasurer. The money was part of a fund-raising blitz that helped propel Prime Minister Boris Johnson and his party to a landslide victory in the 2019 general election.
But documents filed with the authorities last year and reviewed by The New York Times say that the money originated in a Russian account of Mr. Sheleg’s father-in-law, Sergei Kopytov, who was once a senior politician in the previous pro-Kremlin government of Ukraine. He now owns real estate and hotel businesses in Crimea and Russia.
“We are able to trace a clear line back from this donation to its ultimate source,” Barclays bank wrote in a January 2021 alert to the National Crime Agency. The bank, which maintained some of the accounts used in the transaction, flagged the donation as both suspected money laundering and a potentially illegal campaign donation.
A lawyer for Mr. Sheleg acknowledged that he and his wife received millions of dollars from his father-in-law in the weeks before the donation. But they said that was “entirely separate” from the campaign contribution.
“There is absolutely no basis for suggesting that Mr. Kopytov’s gift for his daughter was intended as, or for the purpose of making, a political donation to the Conservative Party,” the lawyer, Thomas Rudkin, wrote in response to questions from The Times.
It is illegal for political parties to accept donations of more than 500 pounds from foreign citizens who are not registered to vote in Britain. Mr. Kopytov is not listed on the national voter register, records show. It is not clear why the Barclays alert arrived three years after the donation, or whether the authorities had investigated it.
It is no secret that wealthy Russian industrialists have given heavily to the Conservative Party over the years. Mr. Johnson once played a game of tennis with the wife of a Russian former minister in exchange for a $270,000 donation. But those donors were British citizens, while documents filed in Mr. Sheleg’s case say the money came from a foreign source.
For decades, Russian wealth has poured into the London economy, enriching the lawyers, accountants and real estate brokers who ironed out the details. British leaders looked the other way, even as the Kremlin sowed disinformation, meddled in elections and tried to co-opt politicians.
Now, as President Vladimir V. Putin of Russia lays siege to Ukraine, Mr. Johnson and his government are vowing to change course and get tough on Russian money. The donation, and Mr. Sheleg’s subsequent ascent in the party, shows just how difficult that will be.
Banks in Britain are required to alert law enforcement officials to suspected criminal behavior. They do so through the National Crime Agency, which receives more than half a million suspicious-activity reports each year. Most come from financial institutions, but law firms, real estate agents and casinos also contribute.
Alerts can include reports about suspected terrorist financing, romance scams or benefit fraud. Former officials say they receive so many alerts that some never get read — a fact that will be an obstacle to the government’s crackdown on Russian oligarch money.
There is no indication that the Conservative Party or Mr. Johnson knew about the source of the donation as outlined in the alert. But under English law, political parties are responsible for ensuring that their donations come from legal sources.
Lawyers for Mr. Sheleg said that the party made no requests for additional information or documentation when he made the donation.
A spokesman for the Conservative Party said that it accepts money only from permissible donors and that all donations “comply fully with the law.” He would not say whether the party ever investigated the donation or whether it planned to keep the money.
Mr. Kopytov, whom the alert identified as the ultimate source of the donation, is the father of Mr. Sheleg’s wife, Liliia Sheleg. He served in Ukraine’s pro-Kremlin government of Crimea until Russia annexed the area in 2014. Since then, he has largely disappeared from public view.
Corporate filings show that he owns two hotels in Crimea. The source and extent of Mr. Kopytov’s wealth at the time of the donation, however, is unclear. Company filings from that period show business connections only to nonprofit organizations, small or inactive businesses, with his most valuable shares worth less than $300.
Mr. Kopytov, in a statement provided by Mr. Sheleg’s lawyer, said he was a Ukrainian citizen and had not donated to any British political party.
“I have no interest in British politics whatsoever,” he said. “Any donations made by my son-in-law to a British political party have nothing to do with me or with the money I gifted to my daughter.”
The alert said that $2.5 million was transferred from Mr. Kopytov’s bank account in Russia in January 2018. That money pinged across Europe between empty bank accounts belonging to Mr. Sheleg and his wife.
Next, the money landed in an offshore account linked to Mr. Sheleg’s family trust.
Five weeks later, it bounced back into the couple’s joint account in Britain, the records say. The next day, $630,225 was wired to the Conservative Party’s bank account. The transactions were made in dollars, the records show. The party recorded it as a £450,000 donation.
“Kopytov can be stated with considerable certainty to have been the true source of the donation,” the alert reads.
Mr. Sheleg’s lawyer said that is not the case. He said the $2.5 million was a gift, derived from a property sale, which was transferred to the family trust to repay a loan. Mr. Sheleg then borrowed money from that trust to donate to the Conservative Party, he said.
Bank investigators were suspicious, however, because all of the Shelegs’ personal bank accounts used in the transactions had a balance of zero before the money from Mr. Kopytov arrived, the report said. All returned to zero when the money left. This “would make it very difficult to argue that the donation was somehow from Ehud or Liilia Sheleg’s personal wealth,” the alert said, misspelling Ms. Sheleg’s first name.
Asked about the zero balances, Mr. Sheleg’s lawyer said account balances fluctuate. What is important, he said, was that Mr. Sheleg did not depend on the money from his father-in-law in order to make the donation.
Rapid transfers in and out of multiple bank accounts, particularly between different countries and offshore jurisdictions, are sometimes signs of what anti-money-laundering officials call “layering.” The process is intended to hide the source of the funds, and officials have urged banks to be on the lookout for such transfers, which may help explain why the donation was flagged.
Suspicious-activity reports are confidential by law. A spokeswoman for Barclays and a spokesman for the National Crime Agency refused to discuss the matter. The crime agency often refers these reports to other agencies to investigate. A spokeswoman for the Electoral Commission, the lead agency for investigating campaign finance, said it was unaware of any allegations against Mr. Sheleg.
Mr. Sheleg made several more donations in the following months, including one of £750,000, making him the party’s largest donor that year. The documents reviewed by The Times say nothing about those subsequent donations.
Warnings about Mr. Sheleg’s financial background and connections to Russia surfaced soon after the donation and did nothing to slow Mr. Sheleg’s political ascent — or to stop the party from accepting millions more from him.
Months after the donation, the British political and investigative magazine Private Eye reported that Mr. Sheleg had hosted Russia’s ambassador in London at the height of the fallout from the annexation of Crimea. Around that time, Mr. Sheleg became partners with a businessman in Cyprus accused of connections to organized Russian crime groups, the magazine reported. Photos showed Mr. Sheleg and his business partner meeting the president of the Russian republic of Tatarstan.
Lawyers for Mr. Sheleg said he had met the businessman accused of connections to Russian organized crime groups only “three or four” times and was not his partner. Mr. Sheleg met with the president of Tatarstan for “business purposes” only, the lawyers said.
By the time those revelations had been published, Mr. Sheleg was no longer just a donor. In fall 2018, he became a treasurer of the Conservative Party, a position responsible for fund-raising and ensuring that the party follows campaign-finance rules.
The warnings came at the height of concerns about Russian influence in Britain. Kremlin agents had just been accused of poisoning a former Russian spy, Sergei V. Skripal, on British soil, igniting furious calls for more sanctions against Russia.
Yet when a British opposition lawmaker called for an investigation into Mr. Sheleg’s donations and his “troubling connections” to Russia, the chairman of the Conservative Party at the time said Mr. Sheleg should not need to reveal the source of his wealth and raised the threat of libel.
And when Mr. Johnson became prime minister in July 2019, he immediately appointed Mr. Sheleg as the party’s sole treasurer. Mr. Sheleg conceived of and helped create a secret advisory board, later revealed by the Times of London, made up of ultrawealthy Conservative donors. He was knighted soon after.
During his time as treasurer, the party received a surge in Russia-linked donations. Mr. Sheleg also donated generously himself: a total of £3.8 million from 2017 to 2020.
In September 2021, seven months after Barclays alerted law enforcement officials to the donation, Mr. Sheleg quietly left his role as party treasurer. There is no indication that his departure is linked to any investigation into him, the donation or the source of his wealth.
Law enforcement officials have never contacted Mr. Sheleg in relation to his donation, his lawyers said.