How London Relies on Fossil Fuel Dark Money

Other | Wednesday 13th February 2019 | The Media Fund

Words by Nick Gordon 

I remember reading somewhere that a city’s lofty skyline served a dual purpose: to offer inspiration for the masses to work harder so that they, too, can one day work in this building or one like it and receive its bountiful riches on offer.

The other is to serve as a reminder to the poor exactly who dominates whom.

Whether this is true or not is not something I know; however, I am at times reminded of this whenever I look out at the uninterrupted view of the Shard from my living room, and Canary Wharf from my bedroom, from my flat located in the poorer part of South East London.

But exactly what happens within these glistening towers located in London’s sprawling financial districts was part subject of DeSmog’s 2018 three-part investigation series, Empire Oil: London’s Dirty Secret.


The series - a first that is expressly written for public consumption - blew the lid on the secretive underbelly of London’s lucrative fossil fuels industry. And to a degree exposed the UK’s claim of being a global leader in climate change as nothing more than a hypocritical, meaningless platitude.

The publication shone light on reports of ‘environmentally damaging activities in politically unstable regions’; complex corporate structuring and fraud; tax avoidance and evasion measures; plundering of African natural resources and looting of local finances equating to billions of pounds in lost revenue. As well as unlawful imprisonment of, and violence against, local protesters.

Speaking to its author and lead investigator, environmental reporter Chloe Farand, I get personal insight into the story that many are not writing about and, seemingly, the government is largely ignoring.

Originally, the focus of the 6-month report was of North Sea companies’ links with Africa. But that all changed when Chloe realised the companies were not operating from Scotland but out from London.

London is not an obvious oil hub. There is a broad understanding in the UK that Scotland is where the oil is at,” states Chloe.

Chloe’s first major reveal was that a lot of these London-based oil companies were listed on the little-known, unassuming Alternative Investments Market (AIM).

AIM is the younger sibling to the London Stock Exchange quickly earning ‘cowboy’ notoriety because of its unique ‘light touch’ regulation; notably that of its nominee advisors (Nomads).

All companies listed on AIM require nominee advisors. These nomads serve a dual role: to act as AIM’s regulator but who are also employed by the listed company to provide oversight and due diligence; creating a clear conflict of interest for any organisation appointed as nominee advisor. A position where the regulator is paid by the company it is to regulate; as Chloe’s article states:

“In some instances, nomads can also act as brokers for the same companies they regulate and earn a commission for the work.”



Chloe soon realised this relatively unknown junior stock exchange was a “huge area of interest” as there are many “small to mid-cap oil, gas and mining companies listed on AIM and there’s not a lot of coverage on this” compared to the FTSE 100/250 market. It was this that set the intrepid reporter on the labyrinthine trail of murky connections, fraudulent practices and environmentally destructive impacts in various African regions.



Primarily because of its cavalier approach to regulation “AIM became a haven for corruption and fraud to go unchecked and unnoticed” said Chloe, who is also careful to add, “It’s not to say that everyone is guilty of this” [but because of] “the opaque systems that are put in place, when there is corruption and fraud it’s so difficult to get to the bottom of it; and it’s so difficult to hold these companies accountable”.

One major stumbling block to combating fraud and generally holding those to account is that by using the offshore financial system, beneficiaries of AIM-listed companies have the right to anonymity and do not have to be disclosed to investors. Allowing serial offenders of fraud to relist companies without potential investors – or quizzical reporters – knowing who they are and in turn learning of their dubious past or outright criminal history.

Investors in companies listed by oil magnate Frank Timis would certainly have benefitted from knowing that his previously listed companies had been “engulfed in allegations of wrongdoing”. One such company, Regal Petroleum, defrauded investors by overstating oil reserves, for which it was fined a comparatively paltry, yet record-breaking, £600,000.

Regal Petroleum went on to release the following statement: “...while disappointed by the outcome, is nonetheless pleased to finally divorce the Company from this historic episode.

And well pleased it should feel. To view this fine as punishment is to call on one to stretch their imagination – £600,000 is a great return on investment for oil, gas & mining firms that rake in billions, from which main beneficiaries can then go on to re-offend using other listed corporate entities the way a drug dealer uses burner mobiles.

As an English celebrity once joked about tackling London traffic, but which, quite sadly, perfectly sums up this particular farce: “It only costs £50 to use the bus lane.

AIM also serves as a springboard for major fossil fuel conglomerates to tap into politically unstable and environmentally fragile, but resource-rich regions, where bribery and corruption take a real toll on the local population.

Smaller companies are used as scouts for oil and mining locations who then sell this information on to the majors.

So, sometimes these companies aren’t necessarily little fish in a little pond,” remarks Chloe, “they’re actually feeding into a bigger system. And these larger (FTSE) oil companies – whether they’re buying an oil field or an asset – doesn’t have to do due diligence on these smaller (AIM-listed) companies; there’s an assumption that this has already been done by that market.

If, then, lack of regulation is at the heart of the problem concerning AIM, why has the government been slow to enact stricter regulatory oversight?

So much of the UK economy relies on the City and financial services. London is the hub for mining companies from all over the world and there’s a concentration of investors and lawyers and accountants who would do that kind of work, and that is very much at the heart of the UK economy today and very much the heart of the London economy,” said Chloe going over familiar territory. “There’s huge vested interest for these companies to stay in London and for others to follow. Especially in a post-Brexit world.



What this all adds up to is a UK that has to appear attractive to current oil, gas and mining companies as well as to drum up future business, whilst simultaneously meeting its climate agreements in a case where the two are mutually exclusive; particularly so, in light of the latest IPCC 2018 special report.

Regulatory oversight would also threaten the larger ecosystem of dark finance.

A threat which was realised when, recently, the UK government pledged to force overseas territories to publish ownership registries, which would lift the veil on beneficiary owners.

States such as the Bahamas and Cayman Islands pushed back against this proposal because “their economy depends on this”.

So, is there anything the public can do to prevent the continued pollution of the planet, the plundering of wealth from poorer nations and the general skulduggery of it all?

Awareness is key…” offers Chloe, advising, “a really good starting point, knowing about it; sharing it. If people want to take more active or proactive steps then divestments for sure. Looking at your pension funds, but you might not know where your money is being invested. But it’s true that a lot of the big pension funds invest heavily in oil and gas. There are pension funds that offer sustainable clean or green investments that people can look at."

"If more people did that pension funds would invest differently.

She continues, “Due diligence can also be carried out for those who invest on AIM, by carrying out basic research on the companies they invest in, or seeking the help of a financial advisor to divest from oil and gas.”

The public can also write to their MPs concerning this matter.

However, Chloe stresses that people should not necessarily divest from AIM completely. AIM was specifically created for fast-growing companies to be able to develop and scale up quickly.

British online fashion and cosmetic retailer ASOS was one such company that did so with great success and is today a huge company that contributes its fair share towards the UK tax economy.

To read DeSmog’s Empire Oil series, visit:

Nick Gordon is a freelance photographer, traveller and current writer/contributor on behalf of the Media Fund.