Corfu is a scene in the great Russian buy-up of Britain
The Osborne scandal testifies to the governing class's capitulation to Moscow money and the loss of a moral antenna
Once it was the Kremlin that came begging to people like George Osborne for cash. In the old cold war, it secretly sold off the Soviet Union's gold reserves to pay for desperately needed grain imports. Mikhail Gorbachev and Boris Yeltsin sought bail-out after bail-out from the west, strongly backed by Margaret Thatcher and John Major. Now it is the other way round: Russia sits on a vast pile of cash, and we are selling principles and self-respect.
Even before the financial crisis, London was the global leader in the respectability business: offering rich Russians the chance to turn their ill-gotten billions into prestige. Whether you wanted an entree to high society or to popular culture, British go-betweens and highly paid PR barons were willing to provide it. Buy a football team, sponsor a charity, or make a hefty donation to a posh boarding school - and you suddenly gain the right upmarket cachet. In exchange for what are to them trivial amounts of cash, the numerous oligarchs bought priceless respectability and safety. As fugitives from Russia found, Britain is a safe place - police and bodyguards work smoothly together; Russian extradition warrants count for little.
In retrospect, that respectability was sold rather cheaply. With the war in Chechnya and imposition of state control on Russia's once pluralist media still in full swing, the British establishment decided that Russia under Vladimir Putin was a place to do business. The Russian tycoons - some of them ex-gangsters or ex-KGB - were seen as at worst a bit roguish. Tony Blair went for nights at the opera with his "friend" Mr Putin, the undertaker of Russia's political freedom. Britain's elite - the Rothschilds and Murdochs, even minor members of the House of Windsor - hobnobbed lavishly and sometimes lucratively with the "new Russians".
Those who found their eyebrows rising or their stomachs heaving were told not to be so fuddy-duddy. Surely we should be glad that Russia was now roughly on the right track: rough capitalist diamonds are better than communist coals. Those who refused to play along soon got discreet warnings about the litigiousness of London's new elite.
The banks, accountants and law firms joined the rush to the trough. Instead of upholding the principles - however shaky - on which our financial system is based, they have entered into the fray of Russian business, and connived in its attempts to subvert and evade those principles. Companies that are little more than criminal conspiracies, stealing billions of dollars from the Russian people for the benefit of unnamed shareholders, have their accounts signed off by our finest auditors. Top lawyers help them to conceal their identities and bombproof their business models. Bankers handle the cash and manage the dense web of offshore companies that conceal a trail pointing tantalisingly back to the Kremlin.
In the shadows of Whitehall, officials are aghast at the way in which Russian money is buying friends and influence in our politics, public administration, independent regulatory bodies and businesses - particularly energy. All three parties have parliamentarians who are loyal members of the Kremlin chorus. British Tories, for instance, supported an attempt to make the former KGB man Mikhail Margelov president of the parliamentary assembly of the Council of Europe.
But the Lib Dems, and particularly Labour, have little to be proud of either, as the fracas over Oleg Deripaska shows. It is not just the unsolicited non-donation to the Conservative party that is so shocking. It is that anybody claiming respectability in British public life thought it appropriate to have even social dealings with oligarchs like Mr Deripaska - who rose to power and riches first in the aluminium business in the 1990s, which witnessed some terrifying violence, and then at the court of Mr Putin.
But even so, it cannot have escaped the notice of Peter Mandelson or George Osborne that Mr Deripaska is a man unable to enter the United States. A private briefing from the FBI - easily arranged in London - would have revealed that American officials are unhappy with some of Mr Deripaska's business associates.
Mr Deripaska's defenders point out that he has never faced any criminal charges and blame his visa difficulties on unsubstantiated allegations from rivals. Moreover, Mr Deripaska has himself denied any wrongdoing in this and other controversies.
A brief chat to informed British officials should have made it abundantly clear to Messrs Osborne and Rothschild, as well as Lord Mandelson, that dealings with Mr Deripaska should be limited, formal and cautious.
The British governing class has not just mislaid its moral antenna. It has also forgotten that Russia is a national security threat: a point underlined repeatedly and publicly by MI5. Nato is now making contingency plans to defend its members from Russian attack for the first time since the end of the old cold war. Yet on the home front, we seem to have surrendered without a fight.
• Edward Lucas is the author of The New Cold War: How the Kremlin Menaces Russia and the West