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Ultimate Source For Russians Oligarchs And The Impact Of Sanctions On Them

You Can’t Just Take A Russian Oligarch’s London Townhouse. Ultimate Source For Russians Oligarchs And The Impact Of Sanctions On Them

Reforms will help the government challenge their source of wealth. But will this lead to more assets being seized?

It has taken Russia’s invasion of Ukraine for the U.K. to pursue more concerted action against the flow of dirty money through the City of London and the capital’s property market. Government reforms announced on Monday focused on lifting the veil of secrecy around corrupt real-estate ownership. These are just the first steps toward potentially seizing assets — but the steps are significant.

Multimillion-pound properties in London have proved a convenient and safe place to stash Russian fortunes. Hereon, anonymous foreign beneficiaries of U.K. real estate will face restrictions on selling if they hide behind shell companies. Whether these changes lead to a sudden outbreak of transparency in the property sector remains to be seen.


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Assuming the chain of ownership extends to trusts in offshore jurisdictions, the U.K. would still appear reliant on cooperation from those overseas authorities. And the first line of legal defense will be to argue that the suspect properties are indeed owned by corporate entities rather than individuals – just as the big banks and consulting firms own houses for client meetings.

If the success of those measures is doubtful, one related change could make a more substantial difference: the new regime for “unexplained wealth orders,” whereby the U.K. National Crime Agency forces people to demonstrate they obtained suspect wealth legitimately.

While these are a conceivably valuable weapon in the fight against money laundering, their effectiveness so far has been limited. Cases are necessarily tortuous as they involve delving into history and unpicking opaque legal structures.

Legal resources matter here: the targets’ pockets are deep, and they can afford to throw money at securing the best-resourced law firms and slickest advocates in a legal war of attrition. For the government, the stakes are high. Failing in an unexplained wealth order has historically meant picking up the other side’s astronomical bill. That falls on a taxpayer purse already strained by the pandemic.

But under the reforms, a U.K. law-enforcement agency will no longer automatically have to pay the other side’s costs if it loses. It just has to persuade the court the failed action was reasonable. That radically alters the economics and legal dynamics, and should enable the NCA to bring more cases.

The tail wags the dog in U.K. litigation: The “loser pays” model means potential costs determine whether an action is bought in the first place. If one side can proceed with an effective indemnity, it changes the game.

The key question now is whether more cases will lead to more wins — and, ultimately, to confiscation of assets. This could be a critical moment for the judiciary.

Oligarchs will be aware that U.K. courts have historically been resistant to depriving people of property rights without strong justification. It’s an almost instinctive aversion. The distinction between a corporate and a human actor is also firmly entrenched. Both tenets are enablers of secret, indirect real-estate ownership; both now face challenge.

Cabinet Minister Michael Gove is assessing how to seize British property owned by Russian oligarchs with links to Vladimir Putin without paying them compensation, but government lawyers are concerned about legal objections because this would undermine property rights, the Financial Times reported. Nevertheless, the political and legislative context is evolving rapidly. And that is likely to feed through to the courts.

“The cornerstone of common law is that property rights are respected. I think that is changing,” says Jonathan Fisher, a visiting professor at the London School of Economics. “We have seen a number of cases where confiscation has been upheld in financial crime.” Judges may be willing to allow an erosion of property rights so long as it’s proportionate, he says.

The courts will be busy, the arguments will be drawn-out and the so-called London laundromat will continue to generate fees for the legal teams involved. But outspending the government on lawyers may no longer be a viable strategy for those with something to hide.


Updated: 3-6-2022

Teen Sets Sights On Oligarchs’ Yachts After Tracking Musk’s Jet

The Florida teen who soared to fame tracking Elon Musk’s private jet has turned his sights on the yachts of Russian billionaires.

Jack Sweeney, a freshman at the University of Central Florida, started tracking the aircraft of Russian oligarchs at the end of February. Now he’s following their yachts as the tycoons come under increasing sanctions pressure following Russia’s invasion of Ukraine.

Sanctions on Russia’s elite are seen by many as a way to increase pressure on President Vladimir Putin, who counts billionaires like Yevgeny Prigozhin and Igor Sechin as part of his inner circle. Italy and France have seized the superyachts of several oligarchs in recent days as authorities seeks to prevent them moving their assets.

Sweeney started tracking the private jets of Russia’s super-rich after receiving a number of requests. Using a list of planes being tracked by a blog called “Radar Spots,” Sweeney set up a Twitter account that has garnered more than 390,000 followers in just days.

Updated: 3-16-2022

Broke Oligarch Says Sanctioned Billionaires Have No Sway Over Putin

In an exclusive interview, Mikhail Fridman—one of Russia’s original oligarchs—argues that punishing billionaires like him shows a troubling misunderstanding of power in Russia.

When I first called Mikhail Fridman to ask if he would talk about what it’s like to be sanctioned, he all but hung up on me. A couple of days later, he said he still didn’t think it was a good idea. After further back and forth he finally agreed, proposing we meet at a hotel in London’s Mayfair district.

I countered with his home, Athlone House, a Victorian estate he bought in 2016 for £65 million ($85 million at the current exchange rate).

He didn’t like that, which is how we ended up at a cafe in North London, speaking for almost two hours against the constant sound of an espresso machine grinding in the background.

Wearing a blue cashmere sweater, a T-shirt, and jeans, he arrives a few minutes early, looking slightly frazzled. In the two weeks since Russia invaded Ukraine, the world as he knew it—as we knew it—had ended.

Fridman hadn’t thought Putin would launch a full-scale invasion; in the runup to the war, he says, he’d told colleagues at LetterOne, his private equity firm in London, that he couldn’t imagine Russians fighting Ukrainians.

This thought reflects his personal story: Fridman, 57, was born and raised in the Soviet Union in the western Ukrainian city of Lviv. He was a first-wave oligarch, making a fortune in banking and energy before Putin’s rise to power.

His parents are Ukrainian citizens who until recently lived part of the year in an apartment in Lviv, a city known for anti-Russian sentiment and leadership in Ukrainian nationalism. “I know every corner of that city,” he tells me. “I always thought Ukraine would resist.”

On the day the invasion began, Fridman was in Moscow on a routine business trip. He quickly hightailed it back to London, where he spent the following days fielding frantic calls from Ukraine. He and his partners own one of the country’s biggest banks and hold a stake in its largest telecom operator, KyivStar.

His message to his executives: Use as much company money as you need to ensure the safety of employees and their families. On Feb. 25, the day after Russian troops crossed into Ukraine, he sent a letter to his staff at LetterOne, later released to the public, decrying the conflict as a “tragedy” and saying “war can never be the answer.”

For Fridman, it was a rare political statement, and he stopped short of directly criticizing Putin. Even so, he says that statement could make it dangerous for him to return to Russia. The following Monday, his charity organization, the Genesis Philanthropy Group, announced it would donate $10 million to Jewish organizations supporting refugees in Ukraine.

None of this helped him avoid the fate of some fellow Russian tycoons. Nor did his years of networking in the U.S. and Europe. On Feb. 28 his lawyer pulled him out of a meeting with the news that the European Union had sanctioned him and his longtime business partner, Petr Aven, who was heading Alfa-Bank, Russia’s largest privately held bank and a key part of Fridman’s Alfa Group Consortium.

The lawyer started to rattle off what it meant: travel bans, frozen accounts. Fridman could barely register the words. “I was in shock,” he tells me. “I almost didn’t understand what he was saying.”

What’s clear to him now, he says, is that the EU doesn’t get how power actually works in Russia. If the point of sanctions is to motivate people like him to apply pressure on Vladimir Putin, he says, that’s worse than unrealistic.

“I’ve never been in any state company or state position,” Fridman says. “If the people who are in charge in the EU believe that because of sanctions, I could approach Mr. Putin and tell him to stop the war, and it will work, then I’m afraid we’re all in big trouble. That means those who are making this decision understand nothing about how Russia works. And that’s dangerous for the future.”

Fridman was worth about $14 billion before the war, according to Bloomberg. He’s now worth about $10 billion on paper and is in the strange position of being an oligarch with essentially no cash. When the U.K. followed the EU and sanctioned Fridman on March 15, his last working bank card in the U.K. was frozen.

He tells me he now must apply for a license to spend money, and the British government will determine if any request is “reasonable.” It appears that this will mean an allowance of roughly £2,500 a month. He’s exasperated, but careful not to compare his woes with those of Ukrainians suffering from the war. “My problems are really nothing compared with their problems,” he says.

The penalties against Fridman are merely one salvo in an unprecedented round of measures that make Russia the world’s most-sanctioned country. Its economy has been devastated by measures such as freezing much of the Russian central bank’s $640 billion in reserves, kicking some of the country’s biggest banks out of the financial messaging system known as SWIFT, and banning or limiting imports of Russian oil. The country’s economy is expected to shrink 35% in the second quarter.

The moves that have grabbed the most attention, however, have been the freezing of the assets of Russia’s oligarchs, a seeming endless list of billionaires with yachts, jets, and mansions in some of the most exclusive enclaves of the Western world, including London, the south of France, and Italy’s Lake Como.

(Fridman says that he doesn’t own real estate apart from his London home, a house in Moscow, and a flat for his parents in Latvia, and that he has neither a yacht nor a plane to seize.) Juxtaposed with the scenes of Russian troops destroying towns and killing innocent civilians in Ukraine, pictures of confiscated yachts make the public feel good.

Fridman’s “Why me?” might be beside the point. “Personal sanctions against the oligarchs are not a precise instrument,” says Sergey Parkhomenko, an adviser to the Kennan Institute at the Woodrow Wilson Center in Washington. “I know a lot of much worse oligarchs in Russia than Fridman and Aven. The sanctions are not a fair instrument. It’s a weapon of mass destruction.”

“It’s an indirect approach, with one of the strategies being that if the oligarchs close to Putin are being pressured, they will pressure Putin,” says Adam Smith, a partner at the law firm Gibson, Dunn & Crutcher and a former senior U.S. Department of the Treasury official who advised on sanctions from 2010 to 2015.

“The U.S. sanctioned oligarchs before—starting in 2014 and then several in 2018—and the success of that strategy is spotty, both in terms of whether the oligarchs stopped supporting Putin and whether they were harmed.”

Even so, the sanctions imposed so far look scattershot—some hits, some misses, and some mere scrapes. The U.S. hasn’t sanctioned Fridman, Aven, or their partner German Khan. The EU sanctioned Fridman and Aven as individuals, but the U.S. and EU have imposed only light restrictions on Alfa-Bank, which generated much of their wealth. Other inconsistencies jump out.

The U.S., the U.K., and the EU sanctioned Alisher Usmanov; he’s blocked from accessing his yacht and private jet, but the U.S. immediately turned around and gave licenses to allow some of his companies to continue doing business.

A number of high-profile targets have dodged restrictions. State-controlled Gazprombank has largely remained untouched because of its central role in Europe’s gas trade.

Fridman’s argument that he’s not positioned to exercise influence over the Kremlin reflects how the role of Russia’s billionaires has been turned on its head since the 1990s. Back then, Fridman was one of the original seven oligarchs, the semibankirschina.

As a group they backed President Boris Yeltsin’s reelection campaign and had sway over the Kremlin. When Putin came to power in 2000, he imposed his own model: The new deal was that if they stayed out of politics, they could continue running their businesses.

Putin destroyed oligarchs who violated that arrangement, most notably Mikhail Khodorkovsky, who spent 10 years in jail after he tried to get into politics. In his 22 years in power, Putin has helped create a new crop of oligarchs, who have grown rich from state contracts and running state-controlled companies.

For Fridman, the sanctions represent an end to a decades-long campaign for acceptance outside Russia. For 20 years he and Aven have made annual trips to Washington to meet with members of Congress and think tanks in an attempt to cultivate what Fridman calls a “constructive relationship” between Americans and Russians around business.

He and Aven were often sought after for their insight into the country’s ever-changing political landscape. In 2004 they set up an Alfa fellowship program that funded more than 200 American, British, and German citizens to work and travel in Russia in an effort to “advance knowledge of Russia in the West.” Fridman tells me that when talk of sanctions arose, he expected that those relationships would protect him.

“We sincerely believed we are such good friends of the Western world that we couldn’t be punished,” he says. “The Alfa fellowship program has probably hundreds of alumni, a lot of them pretty successful people.”

Fridman and Aven have been among the most prominent billionaires to take money off the table in Russia. In 2013, Alfa Group pocketed $14 billion from the sale of oil company TNK-BP to state-controlled Rosneft. That deal came less than a year before Putin annexed Ukraine’s Crimean Peninsula, triggering an initial wave of sanctions against Russia.

It looked as if Fridman and Aven had gotten out just in time, though they retained such Russian assets as Alfa-Bank and a stake in X5, the country’s biggest supermarket chain.

They plowed the proceeds into stakes in a string of European assets, including Spanish supermarket Dia, health-food retailer Holland & Barrett, and energy company Wintershall DEA AG. Fridman and his partners consolidated their mobile phone investments in a series of deals to create Veon Ltd., chaired by Gennady Gazin, a Ukrainian American who joined Ukrainian President Volodymyr Zelenskiy’s national investment council last year. Because neither Fridman nor his other partners individually have majority control over those businesses, they are expected to escape sanctions.

I ask Fridman why he didn’t just get out of Russia and offload Alfa Group. After all, he’d already made a fortune. “It’s not easy to sell such a big company,” he says. “Besides, it’s the company I built from the first brick, so emotionally it’s not so easy. These businesses are like my kids.”

The EU flagged Fridman and Aven’s meetings in the U.S. as one justification for sanctions, citing their 2018 trip to Washington, which it called an “unofficial mission to convey the Russian government’s message on U.S. sanctions and counter-sanctions by the Russian Federation.”

Fridman disputes this characterization, saying a think tank called the Atlantic Council invited them, as it had done several times previously, to discuss what was happening in Russia. “We’ve never ever been sent by the Russian government in any capacity,” he says.

Brussels also alleged that Fridman and Aven were connected to Putin’s eldest daughter, Maria, who the EU said ran a charity project set up by Alfa-Bank called Alfa-Endo, a health-care program for Russian children. The allegation came from a Reuters report in 2015 that said she worked on the project as a doctoral candidate. “She never ever used to work with us in any capacity,” Fridman says. “I haven’t ever seen her in my life. I don’t know who she is.”

Fridman says he’s tried to stay out of politics, a difficult thing for a billionaire overseeing one of Russia’s biggest taxpayers. In practice he’s had to strike a balancing act. He was friends with Boris Nemtsov, the opposition leader who was assassinated outside the Kremlin in 2015.

The following year he took part in a Russian documentary about Nemtsov alongside other opposition leaders—an unusual move for a Russian oligarch—and expressed regret that he’d spent less time with Nemtsov in the years before his death because of concerns it would be toxic to his business.

Other moves were consistent with a desire to not anger the Kremlin. In 2012 he asked Vladimir Ashurkov, then a top executive at Alfa Group, to step down because he was working with opposition leader Alexei Navalny.

“Fridman said that they had to deal with authorities on a daily basis and they didn’t want to be involved in politics,” says Ashurkov, now executive director of Navalny’s Anti-Corruption Foundation.

“I can see his point. If you run a big business in Russia, even if you don’t agree with what the government does, you still need to be on good terms with them to avoid raiding or some other kind of punishment.” Fridman and Aven were not on Navalny’s much publicized list in 2021 of 35 oligarchs he said should be sanctioned because of human-rights abuses and corruption.

Others still see Fridman as a massive beneficiary of Putin’s system and deserving of sanctions. Ilya Zaslavskiy, who worked at TNK-BP until 2010 and is now at the Center for International Private Enterprise in Washington, called for sanctioning Fridman and Aven as part of a list of eight billionaires he drew up in 2021 called “Kremligarchs,” calling out their “proximity to Putin.”

His report points to Alfa Group working with figures closely associated with the Kremlin, including Alexander Vinokurov, the son-in-law of Foreign Minister Sergey Lavrov, who ran A1, Alfa’s investment arm, from 2014 to 2017. Both the EU and the U.K. have sanctioned Vinokurov. Fridman and his partners have engaged in multiple lawsuits against journalists in efforts to quash allegations that they were close to the Kremlin.

The EU, in its sanctions listing, had less to say about Fridman than Aven. It called Aven one of about 50 wealthy Russian businessmen who regularly meet with Putin in the Kremlin, quoting from the Mueller Report into Russian meddling in the 2016 U.S. elections.

Aven told Mueller’s investigators that “any suggestions or critiques that Putin made during these meetings were implicit directives.” The EU said Aven doesn’t “operate independently of the President’s demands.”

Fridman says he’s never met Putin one on one but has met him in groups of business leaders. He dismisses the significance of Aven’s meetings with Putin.

“The power distance between Mr. Putin and anybody else is like the distance between the Earth and the cosmos,” he says. “Mr. Aven was just approaching this like, ‘Thank you very much for taking the time.’ To say anything to Putin against the war, for anybody, would be kind of suicide.”

Even though the U.S. has not sanctioned Fridman, the EU and U.K. measures led his accounts to be frozen; the day after Brussels announced sanctions, he found his bank card didn’t work. Now he’s trying to figure out how to pay for small things such as a house cleaner.

“Maybe I should clean the house myself,” he says with a nervous chuckle. “That’s fine. I used to live in a small dormitory room with four men when I was a student, but after 35 years it’s unexpected.”

Fridman and Aven have stepped down from all their company boards and management positions, including Alfa-Bank and LetterOne, which told them not to come into the office anymore. Their partners, Khan, Alexey Kuzmichev, and Andrei Kosogov, also resigned from LetterOne at the same time that its board announced it would donate $150 million to support the relief effort ongoing in Ukraine.

Fridman says he has two months to challenge the EU’s sanctions. He’s working with Roger Gherson, a lawyer in London known for working with Russian clients on visas, though not on sanctions. Fridman holds an Israeli passport, but when I ask whether he might move to Israel, he waves off the idea. He doesn’t own a home there and doesn’t have access to money to buy one. “I’m a prisoner here,” he says.

As we talk, Fridman returns more than once to what he sees as the illogic of the sanctions. While the EU hit him personally with blanket sanctions, the U.S. and the EU restricted only Alfa-Bank’s ability to raise debt or equity financing of longer than 14 days. Is he actually suggesting that these allies should impose harsher sanctions on Alfa-Bank?

“I don’t think it would be effective, and I would not be happy, but at least I would understand why they did it,” he says. “I don’t understand the logic behind punishing me. The general perception of ordinary Westerners is that, ‘Oh those greedy oligarchs could approach Putin and tell him to stop.’ Why do they think this?”

Just before we met, he says, he got a call from a Ukrainian friend who was helping relatives flee Kharkiv, Ukraine’s second-biggest city, which Russian forces have indiscriminately bombed. Fridman says he offered his parents’ two-bedroom apartment in Lviv, which has so far avoided direct Russian hits.

He says the flat is now a temporary home for 15 refugees. Meanwhile, Jewish organizations in Ukraine keep asking where his $10 million donation is.

A few days after our meeting, the U.K. sanctioned Fridman, and this time he calls me, with no obvious reason except to say that things are getting worse. He sounds at a loss. “I don’t know how to live,” he tells me. “I don’t know. I really don’t know.”

Superyachts Detained In Spain, Another Denied Fuel In Norway

* Luxury Ship Held In Catalonia Is Said To Belong To Igor Sechin
* Former KGB Agent’s Vessel Stranded In Norway As Suppliers Balk

Spanish officials impounded two more yachts as they investigate sanctions against Russia and Belarus, while another tycoon’s boat is stuck in Norway after suppliers refused to provide the fuel needed for it to depart.

The Crescent, a 135-meter (443-foot) superyacht with two helicopter landing pads and a swimming pool, was detained Wednesday in the eastern region of Catalonia, according to the Spanish transportation ministry. The ship’s owner isn’t publicly known, though it is believed to belong to Russian Igor Sechin, head of Moscow-based Rosneft Oil Co., according to Reuters, which cited a police source it didn’t identify.

In Norway, the 68-meter Ragnar, owned by former KGB agent Vladimir Strzhalkovsky, is stranded without fuel in the northern town of Narvik. The ship’s captain has contacted just about every supplier in the area without success, according to public broadcaster NRK.

Around the world and especially in Europe, the yachts of Russian billionaires have come under scrutiny as governments and organizations mount a sanctions campaign against the country for its invasion of Ukraine. In many cases, authorities are rushing to block vessels before they can sail out of reach in international waters.

The Crescent was the second yacht detained by Spanish authorities in the past two days, following Tuesday’s impounding of the 48-meter Lady Anastasia in Majorca, the ministry said. On Monday, officials also blocked the 85-meter Valerie from leaving Barcelona. The three boats have an estimated combined value in excess of $700 million.

Earlier this month, French customs officials detained another Sechin superyacht, the Amore Vero, near Marseille as it was preparing an urgent departure, according to the French finance ministry.

Sechin, 61, a close ally of Russian President Vladimir Putin, has been sanctioned by the U.S., U.K. and the European Union. Before being named chief executive officer at Rosneft, one of the world’s largest public oil companies, he served as deputy prime minister of Russia.

In Narvik, local fuel supplier Sven Holmlund said it’s obvious why no one wants to sell to the Ragnar.

“It takes five minutes from watching the news, and you’ll get tears in your eyes,” Holmlund said in an interview, referring to war footage.

Rune Edvardsen, the town’s mayor, said the situation is a problem that needs to be settled politically. Norway isn’t an EU member, but has said it will join Brussels’ sanctioning of Russia over Ukraine.

While neither Strzhalkovsky nor the yacht have been sanctioned, suppliers are still wary, said Edvardsen, who is talking with local suppliers and other government officials.

“The government does not want businesses and persons to apply their own sanctions against Russian companies,” Bjornar Skjaeran, Norway’s minister of fisheries and ocean policy, told the local newspaper Fremover Wednesday.

In the meantime, the yacht can get power from the port, “so they’re not freezing to death,” Edvardsen said.

Oligarch ‘Lawfare’ In U.K. Courts Must Be Stopped, Says Johnson

* U.K. Government Pledges Crackdown On So-Called SLAPP Lawsuits
* Lawmakers Say System Being Used By Rich To Silence Journalists

Wealthy individuals that use the British legal system to silence their critics face a reckoning, the U.K. government warned as it looks for fresh ways to curb Russian influence in the country.

The U.K. will accelerate plans for legal reforms against so-called Strategic Lawsuits Against Public Participation, known as SLAPPs, the U.K. government said Thursday. Changes to libel laws, bolstering the rights of reporting in the public interest’ and capping the amount claimants can win are being considered, it said.

“For the oligarchs and super-rich who can afford these sky-high costs the threat of legal action has become a new kind of lawfare,” Prime Minister Boris Johnson said in the statement. “We must put a stop to its chilling effect.”

SLAAPs are a tactic used by the wealthy to put financial pressure on opponents and use the U.K.’s strict libel and privacy laws to stifle criticism. Lawmakers including Labour Party leader Keir Starmer have raised concerns that the tactic is used to censor journalists and activists.

The reforms come after a London court recently dismissed a libel claim from a Kazakh mining company against journalist Tom Burgis for his book that looked at how dirty money makes its way into Western economies. Catherine Belton, the author of a book about Vladimir Putin who was sued by a number of oligarchs including Roman Abramovich, told lawmakers this week that better defenses to protect journalists were needed.

The number of these sorts of suits has surged in recent years, jumping from 69 in 2018 to 114 in 2020, according to a study from the Coalition Aginst SLAPPs in Europe.


As Chelsea Sale Lures Bids, U.K. Just Wants Abramovich Gone

* As Many As 30 Bidders Could Show Up By Friday’s Deadline
* The Government Will Have To Look At More Than Just Money

It won’t just be hard cash that determines the future of one of world football’s most prized assets.

Chelsea spent almost two decades demonstrating how the power of money can triumph on the pitch under its owner Roman Abramovich. Now the sanctioned Russian billionaire is being forced to relinquish the London club, and Europe’s reigning club champion finds itself in a mess that involves investors, politicians and increasingly restless fans.

As many as 30 bidders could show up by Friday’s deadline for indicative offers, according to a person familiar with the situation, after everyone from a British property tycoon to a U.S. hedge fund founder was reported to have shown an interest in recent days.

Raine, a New York-based investment bank hired by Abramovich prior to his sanctioning by the British government, will collect the offers. Chelsea expects one or more bids to exceed the 3 billion-pound ($4 billion) minimum price tag put on the club earlier this month, the person said.

But the aim is for a quick sale to get the club out of Abramovich’s hands, according to a person familiar with the government’s thinking. The only legal red line is that it shouldn’t be sold to a sanctioned individual, said the person, who declined to be identified as the process unfolds.

While the government doesn’t want to get involved in picking a winner, it will have the final say if the bidder does not meet expectations.

Chelsea’s descent from the apex of football to the turmoil of war and uncertainty over its future took less than a month. Its sale is now taking place as ownership comes with more public scrutiny and in a sport where financial wisdom is often overshadowed by emotion.

The U.K. last week froze Abramovich’s assets, altering the way Chelsea is run, and complicating plans for a sale because any deal needs to be agreed both by the Russia owner and the government. So far, the government hasn’t given any more detail on what it is looking for from the bids.

Deadline Day

As Friday’s deadline approached, the list of potential bidders grew longer. They included a consortium headed by the American billionaire Todd Boehly and the British businessman Jonathan Goldstein, and a group assembled by property entrepreneur Nick Candy. There was also one linking the Ricketts family who own the Chicago Cubs and Ken Griffin, the founder of the Citadel hedge fund, according to people familiar with the situation.

In addition, media reports have also mentioned other names, including the Saudi Media Group, Josh Harris, the co-founder of Apollo Global Management, the New York Jets owner Woody Johnson, and Oaktree Capital, the U.S. asset manager that provided debt finance to a company linked to Inter Milan.

Any new owners need to pass the Premier League’s tests, though that’s unlikely to be a stumbling block. Newcastle United’s recent takeover by Saudi Arabia’s Public Investment Fund was approved by the Premier League despite criticism from activists including Amnesty International.

More importantly, bidders will have to prove sufficient financing is already in place for what is likely to be the biggest deal in English football history, people familiar with the situation said.

“The government will be sensitive in relation to new owners, but at the same time the priority will be to ensure that none of the proceeds end up in Abramovich’s bank account,” said Kieran Maguire, a football finance academic at Liverpool University.

Shy Banks

There’s also the question of reputation. The government will want to sell the club to an owner without as little baggage as possible. Some big-name investment banks are reticent to get involved with what could be a controversial transaction, according to people familiar with their thinking.

Already some fans have been critical on social media of some potential bidders because of past comments. The sale also comes a year after the reaction from fans and politicians ultimately sank the breakaway European Super League, of which Chelsea was a part.

There’s no doubt the sale, though, is a rare opportunity. Chelsea is the first of a top six club in Europe’s most lucrative football league to come up for purchase since John Henry’s Boston Red Sox bought Liverpool for a reported 300 million pounds in 2010.

The issue for investors, though, is that a team can lose its place in the top spots that qualify for European competitions. That’s a potential risk for Chelsea in seasons to come as the club faces its new financial reality.

Chelsea is continuing to negotiate with the U.K. government over the implementation of the sanctions license that has so far enabled the European champions to keep playing. At least there was one success: It managed to increase its 20,000-pound mandated budget to take the players to Middlesbrough in northeast England for a weekend game.


Updated: 3-18-2022

Abramovich’s Luxury Jet Among 100 Planes Cited Over U.S. Rules

* Aircraft Exported To Russia In Apparent Violation, BIS Says
* Planes Made In U.S. Or With American Content Can’t Be Serviced

The Biden administration identified billionaire Roman Abramovich’s Gulfstream business jet among 100 for apparent violations of the nation’s export controls imposed over Russia’s invasion of Ukraine.

The sanctions apply to commercial and private aircraft destined for Russia and Belarus in recent weeks, the Commerce Department’s Bureau of Industry and Security said in a statement Friday. Other planes were listed as belonging to carriers including Aeroflot PJSC.

Abramovich was listed as the owner or operator of a Gulfstream G650ER, a long-range, twin-engine business aircraft considered one of the most prestigious in private aviation. Introduced in 2008, the G650 series gave parent Gulfstream bragging rights as the maker of the world’s biggest luxury jet until Bombardier’s Global 7500 debuted in 2018.

The Commerce Department said it wants to notify the public that providing any form of service to these aircraft requires authorization. Anyone doing so without it, including within Russia, would be subject to enforcement actions including jail time, fines and loss of export privileges, Commerce said.

“We are publishing this list to put the world on notice — we will not allow Russian and Belarusian companies and oligarchs to travel with impunity in violation of our laws,” Commerce Secretary Gina Raimondo said in a statement.

The restrictions hit any U.S.-made airplane or any made in another country with more than 25% U.S.-origin controlled content if destined for Russia, part of new controls imposed on Feb. 24.

Updated: 3-20-2022

Silicon Valley’s Wealthiest Russian Is Carefully—Very Carefully—Distancing Himself From Putin

Yuri Milner built a $3.9 billion fortune, thanks to early funding from Kremlin-connected sources. He says that’s all in the past.

Starting in the early 2010s, getting an invitation to Yuri Milner’s château in Los Altos, Calif., meant you’d made it into Silicon Valley’s most exclusive of exclusive circles. Milner is known for placing what proved to be extremely lucrative bets on Airbnb, Alibaba, Twitter, Facebook, and other startups—and for being a prolific patron of the sciences.

He was friendly with the late Stephen Hawking and is known to socialize with Mark Zuckerberg and actor Ed Norton. When Milner hosted a watch party for the HBO series Westworld, Google co-founder Sergey Brin showed up.

Milner is also an exceedingly wealthy Russian who started his venture capital career with help from Alisher Usmanov, an Uzbek-born metals magnate close to Russia’s president, Vladimir Putin. Most people who know Milner have shrugged off his connection to a pro-Putin oligarch. Milner’s business—early-stage tech investing—is far removed from the world of the Russian oligarchs who got rich by acquiring state assets at dirt-cheap prices.

And the money from Usmanov, as well as from state-controlled VTB Bank PJSC, came during the presidency of Dmitry Medvedev, when the Obama administration was urging a “reset” of Russian-American relations.

But now, as Putin’s army is shelling Ukrainian cities, Usmanov and VTB are on sanction lists. And Milner is on the defensive. “I cannot go back and change history,” he says during several hours of Zoom interviews with Bloomberg Businessweek. “I cannot change the fact I was born in Russia. I cannot change the fact we had some Russian funds.”

Milner’s nonprofit, Breakthrough Prize Foundation, and his venture capital firm, DST Global, have both released statements condemning “Russia’s war against Ukraine, its sovereign neighbor,” as DST’s put it. A Breakthrough Foundation statement, credited to Chairman Pete Worden, referred to Russia’s “unprovoked and brutal assaults against the civilian population.”

Milner and his organizations have pledged $14.5 million to fund humanitarian efforts.

Even so, Milner himself is careful when speaking about the war in Ukraine. He declines to express an opinion on Putin, instead citing the statements made by his organizations, and calls the war a “heartbreaking tragedy.”

Now 60, he holds up a black-and-white family photograph, taken around 1970. It shows him as a boy, wearing a knit hat, in Zaporizhzhya, Ukraine, where he says he spent many summers with his father’s family.

Days earlier, he says, he and a cousin helped evacuate a family friend, an elderly woman, from Cherkasy; her husband decided not to leave. “I fully stand behind statements made by DST Global and the Breakthrough Prize Foundation,” he says.

Milner, whose net worth is $3.9 billion, according to the Bloomberg Billionaires Index, is navigating a precarious situation. There’s a long history of foreign cash of dubious origin finding its way into Silicon Valley—most notably the funds from Saudi Arabia that continued to flow even after the dissident journalist Jamal Khashoggi was brutally murdered by government agents.

But the war in Ukraine has galvanized the West, says Ayako Yasuda, a finance professor at the University of California at Davis. “Startups do have real reasons to worry about receiving funding from DST,” she says.

There’s a risk that Milner could be tainted by the association, causing entrepreneurs to skip those lavish parties and turn down funding offers from DST. Investors might also hesitate to recommit to the firm when it next raises money, and Milner’s philanthropic work, most notably a series of rich awards for scientific achievement known as the Breakthrough Prize, could lose its cachet. Milner plays down those risks.

“Facts are on our side,” says Milner, arguing that DST has long been independent of Kremlin interests. He spoke from Dubai, where he was helping to fundraise for a company he declines to name. He’s still a Russian citizen but also holds Israeli citizenship.

He’s been living in the U.S. on a so-called O-1 visa, for people of “extraordinary ability,” a common path for foreign-born tech entrepreneurs. He paid $100 million for the estate in Los Altos in 2011 and today considers the U.S. his home.

If Milner is frustrated, it’s partly because his move to the U.S. was made during a yearslong campaign to separate himself from his controversial early backers. “The great irony is that we are the least Russian fund right now and have been because we made a consistent effort,” Milner says. DST, he says, hasn’t taken any money from Russia since 2011, when it raised a $900 million fund, nor has it made any investments in Russia.

Milner notes that, until recently, most Western banks were doing business with Russia, years after he’d stopped. He says he hasn’t seen Usmanov in about five years and hasn’t been to Russia in eight.

To support his claim about separating himself from Kremlin-connected cash, he shares a letter dated March 19 from his chief financial officer, Kenneth Leung, that outlines the steps DST takes to comply with banking “know your customer” and anti-money-laundering provisions. “If he lies,” Milner deadpans, referring to Leung, “he will go to prison.”

The firm is actively working on a handful of deals in various stages of diligence, he says. Having raised a ninth fund of almost $4 billion in 2021, DST won’t need to fundraise again for a year or two, and Milner says he thinks investors will stay loyal.

Some left DST in recent years, but it wasn’t because of politics, he says. It was because in 2018 he raised his fees to 25% of profits, up from 20%.

Milner has powerful defenders. “Yuri Milner has been a valued friend and partner to me, our firm, and many of the U.S.’s best new technology companies for nearly two decades,” Marc Andreessen, a board member of Meta Platforms Inc. (a.k.a. Facebook), wrote in a March 1 tweet.

Max Levchin, the Ukrainian-born chief executive officer of the financial technology company Affirm Holdings Inc., calls Milner a good friend. “He has been a visionary investor, and equally importantly, a passionate supporter and promotor of real science,” Levchin said in a statement.

Ryan Petersen, CEO of freight giant Flexport, has taken a series of investments from DST, the most recent in February, and says he wouldn’t hesitate to accept more. “I have zero concerns,” he says, adding that any questions he had about DST’s investors were fully satisfied years ago. “Yuri has incredibly high ethics.”

He calls efforts to connect Milner to the Kremlin “on some level a little crazy” and suggests that they are discriminatory, conflating Milner’s birthplace with Putin’s policies.

Milner’s status comes from his success as an early-stage investor and from his interest in science. Named after the great cosmonaut Yuri Gagarin, Milner has a degree in physics from Moscow State University. After deciding he would never land at the top of the field, he dropped out of a physics Ph.D. program and started selling computers instead.

In the late 1980s, as the Soviet Union collapsed, he moved to the U.S. to study business at the University of Pennsylvania’s Wharton School.

Milner worked at the World Bank in Washington, D.C., in the early 1990s and then moved back to Russia to run a brokerage. Inspired by a report by the famed internet analyst Mary Meeker, he launched an incubator and investment fund to develop Russian internet companies in the mold of EBay Inc. and Inc.

He founded Digital Sky Technologies, a precursor venture capital firm, in 2005, just as valuations were recovering from the 2000 dot-com crash.

By the late 2000s, Milner, looking to diversify beyond Russia, created DST Global and set his sights on Facebook. When DST first invested in Facebook in 2009, it was at a $10 billion valuation, a huge price for a young company during the middle of the recession.

But almost overnight, the $200 million investment, which included more Usmanov-connected funds than previously disclosed, according to a 2017 New York Times report drawing on leaked documents known as the Paradise Papers, established DST as one of the top venture capital firms in Silicon Valley.

As his fortune grew, Milner spent lavishly on his personal life. He also put up more than $75 million to fund a search for extraterrestrial life and dropped an additional $300 million on the Breakthrough Prizes.

In 2013, he invested in the satellite company Planet Labs PBC and in Elon Musk’s rocket company SpaceX. Milner says the investment in SpaceX was for about $10 million. He sold his position two years later for $23.56 million.

The SpaceX deal hasn’t been previously reported. Around the same the time, the company, a major Pentagon contractor, was bragging publicly that its rockets didn’t use Russian components, unlike others in the space industry.

In April 2014, the company sued the U.S. Air Force for the right to compete for contracts, complaining that existing agreements were funneling money to Russia’s defense industry, including to Russians who were subject to U.S. sanctions.

Milner says he was under no pressure to divest and sold his stake only because he didn’t appreciate the full potential of the satellite market. “I underestimated SpaceX,” he says.

“Divesting early was a mistake.” He says he admires Musk and has talked with him about topics such as looking for aliens and traveling to the stars. Representatives for SpaceX didn’t respond to requests for comment.

Besides Breakthrough Listen, which searches for communication from aliens, Milner has also funded Breakthrough Starshot, which is in the early stages of a decades-long project to build tiny and ultrafast spacecraft that would fly to our neighboring solar system, Alpha Centauri.

He says the war in Ukraine throws the purpose of the projects, outlined in a treatise he published last year called the “Eureka Manifesto,” into sharper focus. If we learn that life does exist beyond Earth, the discovery could “be the unifying moment for our civilization,” he says. “It can be our generation’s equivalent to the first step on the moon. One of those moments when we all feel as one.”

He says he’s confident that life beyond Earth would demonstrate that our current distinctions based on national borders hold us back.

“If there’s a civilization out there that’s a million or a billion years ahead of us, I’m very confident that it came together as one,” he says. Milner, in other words, is a lot more forthcoming on hypothetical intergalactic political questions than he is on questions about Vladimir Putin.


Updated: 3-21-2022

Who Are Russia’s Oligarchs And Can They Sway Putin?

Plenty of countries have super-rich business leaders with political influence. Russia took this to a different level. The wealthy, connected men who enabled and profited from the transformation of Russia’s economy and society under President Boris Yeltsin came to be known as oligarchs.

(An oligarchy is government by a small group of people.) Though Russian billionaires these days are routinely called oligarchs, their role in society has changed under President Vladimir Putin, complicating efforts to target them as a way to punish Russia’s government for the invasion of Ukraine.

1. Who Are The Oligarchs?

Russia’s original oligarchs included some of its earliest entrepreneurs from when Mikhail Gorbachev loosened the strictures of Communist Party control in the late 1980s. They made fortunes in the 1990s as Russia, under Yeltsin, was transformed from the capital of the Soviet Union into a primitive state of capitalism. Yeltsin’s government expedited that process by privatizing state assets at deep discounts, putting massive wealth in the hands of a select few — some of whom then struck a deal to use their fortunes and media assets to help Yeltsin defeat a resurgent Communist Party to win re-election in 1996. That deal came to be known as “loans for shares,” as the government placed its cash in the banks of oligarchs, took the money back as loans, and then defaulted on them. In essence, the oligarchs got state assets in exchange for state money. Significantly, these oligarchs also exerted sway on Yeltsin’s administration, influencing policy and in some cases serving in formal government positions.

2. What Became Of That Group?

A few remain active in business: Vladimir Potanin, Russia’s wealthiest individual, who heads MMC Norilsk Nickel PJSC, the world’s largest producer of refined nickel and palladium; and Mikhail Fridman and Petr Aven, whose commercial bank, Alfa Bank, became the anchor business of Alfa Group, a holding company that today owns interests in telecommunications and retail. Others fared considerably less well after Putin succeeded Yeltsin in 2000. Mikhail Khodorkovsky was stripped of his wealth and imprisoned for a decade on tax-evasion and money-laundering charges that he says were retribution for supporting political parties opposed to Putin. Freed in 2013, he lives in exile in London and continues to criticize Putin. Boris Berezovsky and Vladimir Gusinsky fled Russia as they faced similar jeopardy. Berezovsky was found dead at his home near London in 2013. Alexander Smolensky largely dropped from public view after 2005.

3. What Is Putin’s Issue With Oligarchs?

By the time Putin emerged as the all-but-assured successor to Yeltsin, the early oligarchs were widely despised by the Russian public, and Putin promised they would “cease to exist as a class.” Two oligarchs in particular — Gusinsky and Berezovsky — drew his wrath because their media businesses were covering him critically. In a July 2000 meeting at the Kremlin with 21 leading business tycoons, Putin laid down the law: They could remain titans of industry but had to stay out of politics. “Rather than eliminate oligarchs as a class, Putin has institutionalized them and, to an extent, tamed them into more seemly behavior,” a 2002 Washington Post story noted.

4. Who Are Today’s Oligarchs?

Some Russians who accumulated wealth in the Yeltsin era further prospered under Putin. They include well-known multibillionaires Oleg Deripaska, Roman Abramovich, Alisher Usmanov, Viktor Vekselberg, Mikhail Prokhorov and Vagit Alekperov. In “Putin’s People: How the KGB Took Back Russia and Then Took On the West” (2020), Catherine Belton points to “a new caste of oligarchs, all of them Putin’s KGB-connected associates from St. Petersburg,” whom Putin installed at the helm of strategic sectors of the economy in a process that became known as “Kremlin Inc.” (Before entering politics, Putin was a foreign intelligence officer with the KGB, the former Russian secret police and intelligence agency.) Many of these newer oligarchs are longtime friends of Putin, such as Gennady Timchenko, who met and befriended the future president as he was coming up the ranks as deputy mayor of St. Petersburg and sparred with him at a judo club in the city. (Timchenko controls Volga Group, an investment firm with interests in energy, transportation and construction, and has a net worth of about $11 billion.) Others in this category include Yury Kovalchuk, the biggest shareholder in Bank Rossiya, who co-founded with Putin a dacha cooperative outside St. Petersburg; and Arkady Rotenberg, another former judo sparring partner of Putin, who sold gas-pipeline construction firm Stroygazmontazh in 2019 for about $1.3 billion.

5. Do They All Steer Clear Of Politics?

Pretty much, as memories remain vivid of Khodorkovsky’s 10 years in prison. The oligarchs’ tacit agreement not to criticize Putin was on display after Russia invaded Ukraine on Feb. 24. Several Russian billionaires issued statements criticizing the conflict, but stopped short of condemning Putin himself. Fridman told Bloomberg that “to say anything to Putin against the war, for anybody, would be kind of suicide.”

6. Can They Sway Putin?

That’s the hope, at least, behind sanctioning them. But the Russian billionaires who have been sanctioned say they have little influence over Putin. Fridman, who owns a stake in one of Russia’s biggest banks, said he’s never even met Putin one-on-one. The U.S. has had sanctions in place against some of these billionaires for years, dating to Russia’s 2014 annexation of Crimea.

7. Are All Russian Billionaires Oligarchs?

The U.S. Treasury Department seemed to suggest so in 2018 when it published a list of 96 purported oligarchs that was virtually identical to Forbes magazine’s roster of Russian billionaires. But while it’s true that many of the country’s billionaires have the superyachts and luxury real estate that have become associated with the oligarch lifestyle, many haven’t been sanctioned by Western governments so far. As to what level of wealth, private-sector power and Kremlin connections makes a billionaire an oligarch, that’s in the eye of the beholder.

Abramovich Yachts Moved To Turkey As Chelsea Sale Heats Up

Both of Roman Abramovich’s superyachts have been moved to Turkish shores as the Russian billionaire contends with sanctions and the prospect of asset seizures from the European Union and U.K.

The Eclipse, a 533-foot superyacht owned by the 55-year-old billionaire, was located in waters off of Marmaris in southwestern Turkey as of Tuesday, according to vessel data compiled by Bloomberg. The 458-foot Solaris, which departed Barcelona on March 8, was nearby in waters outside the tourism resort of Bodrum.

Abramovich has been hit with sanctions by both the EU and U.K. in the past two weeks as governments target Russia’s wealthy elite in response to the country’s invasion of Ukraine. His two yachts, which collectively cost well in excess of $1 billion, left port earlier this month before he faced penalties from any Western government.

Turkey hasn’t joined the EU and U.S. in imposing sanctions, cutting off travel from Russia or seizing Russian billionaires’ assets. That makes it one of the nearest international destinations for Russian jets and yachts seeking to avoid impounding or seizure. Abramovich’s jet has also made at least two stops in Turkey since Russia’s invasion of Ukraine began, flight-tracking data show.

Abramovich is in the process of selling Chelsea FC, the U.K. football club he’s owned for almost two decades. Bids were due on Friday for one of the world’s biggest sports assets and a bevy of buyers has already lined up to make offers.

Among the latest entrants: Centricus Asset Management Ltd., which partnered with Cheyne Capital’s Jonathan Lourie and Talis Capital’s Bob Finch. The offer values Chelsea at more than 3 billion pounds ($3.9 billion), including commitments for further investment, a person familiar with the matter said.

Abramovich is the largest shareholder of Evraz, Russia’s second-biggest steelmaker, and also owns a stake in metal producer Norilsk Nickel. He is Russia’s eighth-richest person with a net worth of about $13.9 billion, according to the Bloomberg Billionaires Index.

Updated: 3-22-2022

Russian Steel Billionaire’s Superyacht Impounded in Gibraltar

Transport Secretary Grant Shapps said he is doing “all I can to cripple Russia’s aviation and shipping industries” after Gibraltar seized a superyacht owned by billionaire oligarch Dmitry Pumpyansky.

The 72-metre long vessel, Axioma, was impounded by authorities in the British overseas territory on Monday.

Mr Pumpyansky is the owner and chairman of steel pipe manufacturer OAO TMK, which has supplied Russia’s state-owned energy company Gazprom since 1998, according to Forbes.

His net worth is estimated at £1.84 billion.

He was sanctioned by the UK last week in response to Russia’s invasion of Ukraine on February 24.

Mr Shapps said: “We cannot stand idly by while (Russian President) Vladimir Putin tramples over a sovereign, democratic country, laying waste to homes and hospitals.

“That is why the Government has deployed an unprecedented range of sanctions against Russia.

“It’s not just here in the UK those sanctions apply, either. They are being mirrored in our overseas territories too, which is what led to the multi-million-pound superyacht of Dmitry Pumpyansky being seized and impounded in Gibraltar yesterday.

“As Transport Secretary, I’m doing all I can to cripple Russia’s aviation and shipping industries, and my message to Putin and his cronies is loud and clear – there is nowhere to hide.”

Russian Billionaires Are Running Out Of Havens To Stash Fortunes

Sanctions put wealth abroad at risk, but repatriating assets to a country on the brink of economic ruin is a dire proposition.

Glance at a map, and Cyprus is barely a blip relative to Russia’s vast expanse. The Mediterranean island is a mere 0.05% the size of the world’s largest country.

But for Russia’s top 0.05% — its oligarchs and billionaires — Cyprus is hugely significant. It for years housed an outsized share of their wealth, in some cases even dwarfing what they held in the motherland itself.

At least, it did before Russian troops encamped on the border of Ukraine.

In recent weeks, some of the biggest assets held by Russia’s richest people have been whisked out of Cyprus, under pressure from European Union regulators wielding sanctions on the one hand and Vladimir Putin’s demands to repatriate wealth on the other.

Victor Rashnikov last month transferred a $4 billion stake in one of Russia’s biggest steelmakers from a shell company in Cyprus back to his home country, two weeks before he was sanctioned by the EU.

Steel tycoon Alexey Mordashov made a similar move on Feb. 28, the same day he was sanctioned. He shifted arrangements for part of a $1.5 billion stake in German holiday-tour business TUI AG from a Cyprus entity to one in the British Virgin Islands.

More recently, a Cyprus holding company for Novatek chairman Leonid Mikhelson transferred a roughly 14% stake in the Russia gas producer to him individually on March 17, according to a regulatory filing Monday. The position was worth about $4.8 billion when the Moscow stock exchange halted trading last month, according to data compiled by Bloomberg. He hasn’t been sanctioned.

And even before the war, Vladimir Potanin — Russia’s richest person, with a $24.7 billion fortune — was moving assets away from the island. His holding company left Cyprus late last year in favor of a special tax zone in Vladivostok, established by Putin to encourage the wealthy to bring their money home. He hasn’t been sanctioned.

As Russia increasingly becomes a pariah in the global financial system, billionaires who have long sheltered their fortunes abroad suddenly have far fewer options for where to put their money. Repatriating assets to a country careening toward economic ruin, putting them within Putin’s grasp, is a dire proposition.

But so is keeping them in the U.S., U.K. or in EU jurisdictions, like Cyprus or the Caribbean, where they face freezes, blockades or possibly seizures.

Their best bet is somewhere relatively neutral, said Ronen Palan, a professor and expert on tax havens at City University London. The war in Ukraine has already boosted the amount of Russian money flowing into Dubai, whose government has urged a “peaceful” solution to the conflict.

Hong Kong is another possibility, though the long shadow of China’s Xi Jinping is a potential threat to the primary objective of offshoring Russians. Other spots include Mauritius and the Maldives.

“The main reason why the wealthy in Russia take money out is to safeguard their assets,” said Palan. “It’s not so much about tax avoidance, as we think about it in the West.”

Some 20 Russians rank among the world’s 500 richest people. Worth a combined $261 billion, more than half of them have used Cyprus holding companies for their main assets, according to filings. Russia has entwined itself in the island’s culture and economy for decades, since its backing of the country’s Greek Cypriot majority during its division. It has flourished as a haven thanks to low taxes, EU membership and a legal system based on English common law.

A handful of the billionaires have holdings in the British Virgin Islands or elsewhere in the Caribbean, a region popular for its strict secrecy. At least three more use vehicles in Europe.

Mikhail Fridman, Petr Aven and German Khan — who are all under EU and U.K. sanctions — use Luxembourg entities to control investment firm LetterOne, which has holdings spanning energy, retail and telecommunications.

Roman Abramovich used shell companies in the Caribbean, including BVI and the Cayman Islands, and an Austrian bank to invest billions of dollars in U.S. hedge funds and private equity firms, according to the New York Times, which said Concord Management in Tarrytown, New York, facilitated many of the transactions.

Abramovich took direct control last month of his $445 million stake in London-based steelmaker Evraz PLC, moving shares out of a BVI holding company and into his own hands. The U.K. sanctioned him on March 10.

The moves may face challenges as sanctions mount: German authorities said on Friday they had blocked Mordashov’s transfer to the British Virgin Islands while they investigate the deal. For his part, Mordashov has called the Ukraine war “a tragedy” and said he doesn’t understand why he’s been sanctioned.

Spokespersons for Mordashov and Abramovich declined to comment. A representative for Rashnikov didn’t respond to requests for comment. At the time he moved his stake in Magnitogorsk Iron & Steel Works, the company said Cyprus was becoming “less attractive” for Russian investments and that Rashnikov wanted to make use of legal and regulatory advantages in his homeland.

Magnitogorsk Iron & Steel Works said in a March 18 statement the sanctions against Rashnikov are “groundless and unfair.”

Indeed, in some ways the sanctions are aiding Putin’s demand for the richest to bring home their far-flung wealth. His ultimatum dates back to the Crimea invasion in 2014 when an initial round of sanctions on oligarchs and billionaires helped to prompt laws around so-called de-offshorization.

Oligarch Companies Want To Pay Their Debts. But Sanctions Stand In The Way

Steelmaker Severstal set to default Wednesday, according to a person familiar with the matter.

Russian companies owned by sanctioned oligarchs say they are having trouble making payments to their foreign creditors, potentially setting them up for default even though they have the funds to pay.

The first major default since Russia invaded Ukraine and the West unleashed punishing sanctions could come as soon as Wednesday. Steel giant Severstal PAO owed a coupon payment due on a dollar bond on March 16 with a five business-day grace period, which expires Wednesday.

Severstal paid the $12.6 million interest payment to a unit of Citigroup Inc., which collects the payments for bondholders, according to a person familiar with the matter. That money was transferred to the bank’s U.S. accounts, but hasn’t yet ended up with the bondholders.

Severstal could announce early Wednesday that Citigroup has told the company that it won’t pay that money, the person said. This would place it in default by the end of Wednesday.

In a statement last week, Severstal said that it believed Citigroup may not process the payment. It said it sent a test payment worth 1% of its coupon to see if it would go through.

A spokesperson for Citigroup declined to comment.

The U.S., European Union and other Western allies enacted sanctions on individuals and put measures in place to restrict Russia’s central bank.

The measures have disrupted the ability of Russia’s most prominent companies to access global financial markets. Western banks are reluctant to touch Russian money without strong assurances that what they are doing is legal, leading to delays and confusion.

Severstal is based in Cherepovets, north of Moscow, and is one of Russia’s largest steelmakers. It is majority-owned by Alexey Mordashov, one of the country’s richest men with an estimated fortune of $29 billion. Mr. Mordashov was included in the EU’s sanctions list and Italian police seized a complex of residential buildings on the Mediterranean island of Sardinia he owns last week.

It is possible that Severstal’s default may still be avoided if the payment is allowed through at the last minute. Russia’s government was able to make a transfer of dollars to foreign bondholders last week, avoiding default, because of exceptions written into the sanctions to allow some debt payments.

Moscow also backed down from an order from President Vladimir Putin that Russia’s debt payments should be made in rubles, even for bonds denominated in other currencies.

A Severstal default would be the first major Russian company default in six years, according to S&P Global. The last was Far-Eastern Shipping Company PLC, a Russian transportation company, which restructured its debt in 2016.

Another steelmaker which counts Roman Abramovich as a major shareholder, said on Monday that an $18.9 million coupon payment on a bond was blocked by Société Générale. It was due on March 21.

A spokesperson for Société Générale declined to comment.

Evraz said in a statement that the payment blocking had its roots in the U.K. Treasury’s decision to include Mr. Abramovich on its extended sanctions list. Mr. Abramovich is sanctioned by both the U.K. and the EU, including an asset freeze and a travel ban.

Severstal and Evraz have both said that they have the funds and are ready to make their payments and meet their obligations.

“Apart from malfunction of financial infrastructure, there are no reasons for a potential event of default,” the Evraz statement said.

Russia’s companies have about $98 billion of hard-currency debt outstanding and are due to make around $17 billion of payments this year on that debt, according to JPMorgan Chase & Co. International investors hold about $21 billion of Russian corporate bonds, or 22% of the total stock, a March 2 report by the bank said.

Investors have been reluctant to buy the bonds, even though they trade at a deep discount and despite the companies saying they want to pay.

Severstal’s $800 million bond, due in 2024, was trading at around 15 cents on the dollar on Monday, according to AdvantageData. Evraz’s note was priced at 64 cents on the dollar.

“We are concerned the ability and willingness of Russian companies to pay may decrease, as we may not see the removal of the sanctions for a while,” said Tatjana Greil Castro, a credit portfolio manager at Muzinich & Co.

Bonds issued by Russian firms including Gazprom PJSC, Severstal and Evraz are in a popular JPMorgan emerging-market corporate bond index known as the CEMBI. The bank said on March 7 that it would exclude Russian sovereign and corporate debt from its indexes, effective at the end of the month.

Other prominent Russian companies have been able to make good on their interest and principal payments since the invasion began. Energy major Gazprom paid investors on time when a $1.3 billion bond matured on March 14.

Rosneft sent $2 billion to investors that week for a bond that matured on March 13. The payment was about two days late, but ultimately arrived within its grace period, according to bond investors.

Both Gazprom and Rosneft’s top bosses are on the U.S. and the U.K.’s sanctions list, but the companies are primarily owned by the Russian government.

Updated: 3-23-2022

The Father Of Russia’s Oligarchs Won’t Be The Last To Go

By the time he left this week, Anatoly Chubais, architect of the country’s 1990s privatizations, was no longer in Putin’s inner circle. His departure still matters.

It’s a defection already being brushed off by the Kremlin as a “personal” issue. Of course. The truth is that as Moscow gets bogged down in a Ukrainian war far more costly than imagined, the abrupt departure of a crucial figure of the post-Soviet years — a man who helped push Vladimir Putin into power by giving him his first Kremlin job — will sting.

Anatoly Chubais’s name evokes the mayhem and hope of that first decade of post-communist life. He was an economist, a market reformer, a red-haired pioneer under Boris Yeltsin who launched a thousand asset sales.

At breakneck speed, Chubais dismantled a decrepit economic system and, in the process, turned a handful of men into billionaires. He’s frequently been blamed (even targeted) for the unequal distribution of wealth that resulted, but he described his choice at the time as “between bandit communism or bandit capitalism.”

Now, Chubais has left an increasingly isolated Russia behind, apparently for Turkey, in the highest-profile desertion since Putin’s ill-fated invasion of Ukraine began a month ago. But there is no room for doubters. Putin, ratcheting up his threatening rhetoric, has talked of “cleansing” the country and warned of a “fifth column” of “national traitors.”

In weighing up what this eye-catching departure means for a regime under pressure, it’s important to consider what it isn’t.

Chubais is not an oligarch, so this exit is not a sign of mutiny among billionaires — who in any event are no longer propping up the political system as they did under Yeltsin. Nor was he any longer in Putin’s tight inner circle.

That is increasingly made up of figures from the security services or those tied to the regime through hydrocarbon rents. Chubais’s last sinecure was the role of climate envoy for Putin — a president hardly bothered by the world’s carbon budget.

His was the highest-level defection so far, but arguably the most expected of the high-level defections, as Ben Noble, who researches Russian domestic politics at University College London, put it to me.

And yet he was also one of several men of the system who for years had been able to exist just outside it, in what Noble describes as a liminal space, even as Putin’s Russia darkened. Now he was forced to choose sides.

Crucially, Chubais is not alone. Bloomberg News reported on Wednesday that the highly regarded central bank governor, Elvira Nabiullina, had sought to resign after the invasion, only to be reappointed last week for a new term and left to manage the fallout from a war that has left Russia economically isolated, and has undone her work of years. Others in the economic elite — if not the political one — have signaled discontent.

Of course, those in the most distant orbit around the Kremlin speak up or leave first. Chubais has less to lose than fellow travelers from St. Petersburg’s liberal administration such as Alexei Kudrin, a former finance minister and currently the head of Russia’s Audit Chamber, or Herman Gref, who leads the country’s biggest lender, Sberbank. Their comments and actions will be worth watching.

None of this should take away from the significance of Chubais’s exit. High-profile figures outside the Kremlin are now not only calling for peace, as the billionaire Oleg Deripaska has, but also voting with their feet, with all the costs that implies.

There’s no return. In an environment where few are under the illusion that the operation in Ukraine is the swift success it was supposed to be, every departure emboldens more.


Updated: 3-24-2022

Abramovich’s Dubai House Hunt Shows Russian Diaspora Widening

Chelsea owner’s private jet was spotted in Dubai, as the sanction-free Middle-Eastern city state attracts Russians.

In Dubai’s swankiest neighborhoods, property brokers say inquiries from Russians looking for villas and apartments are skyrocketing. Among them: Roman Abramovich, the tycoon who owns Chelsea Football Club.

While the Russian billionaire’s present whereabouts aren’t publicly known, he has in recent weeks been house hunting on Dubai’s Palm Jumeirah, a man-made, palm-shaped island dotted with luxury residences, according to people familiar with the matter.

The tycoon’s interest in the emirate is the latest sign of how more and more Russians are flocking to the city state as other favored jurisdictions increasingly sanction and shun some of their compatriots.

Lawyers for Russian businessmen say some are attempting to move assets to the United Arab Emirates, of which Dubai is a part. Specialist aviation sites have identified jets belonging to Russian tycoons, including that of Abramovich, coming to the city, though it is not known who was actually on board. The U.K. and European Union have placed sanctions on Abramovich, but there are none imposed by the UAE.

The UAE has taken a careful political position aimed at maintaining its ties with Russia, surprising Western officials. The Gulf state abstained on a U.S.-led resolution in late February to condemn Russia’s invasion of Ukraine at the U.N. Security Council, saying the outcome of the vote was a foregone conclusion.

While superyachts, property and jets with believed ties to the Kremlin are being seized across Europe, direct flights are still landing from Moscow in Dubai, where no sanctions are being rolled out.

“In Dubai there’s an old saying that goes: when the region does well, we do well, but when there’s a crisis, we do really well,” said Chirag Shah, the founder of the consultancy 1 International FinCentre Associates, who was previously the chief strategy and business development officer at Dubai’s financial free zone, speaking broadly about the city’s ability to navigate global upheaval from wars to politics to the coronavirus pandemic.

But the outrage over Russian President Vladimir Putin’s actions is also drawing unwanted attention to the hub’s open door policy.

Even before the Ukraine war, the UAE was in the spotlight over its international money flows. The global financial crimes watchdog, the Financial Action Task Force, earlier this month placed the country on its gray list, which means it’s among jurisdictions such as Panama and South Sudan that FATF says don’t do enough to counter dirty money flows.

Now the money flowing in from Moscow has left some U.S. Treasury officials concerned that CIPS — the Chinese cross-border yuan payment system seen as a potential rival to the global SWIFT transaction messaging system — may be turning into a key vehicle for Russians to route their money to the UAE using the offshore Chinese yuan to circumvent U.S. sanctions, people familiar with the matter said. Executives and spokespeople at Shanghai-based CIPS Co. and the U.S. Treasury Department didn’t respond to requests for comment.

Representatives for the Dubai and UAE governments didn’t respond to requests for comment. The UAE government has said that it’s made significant progress in strengthening regulation of financial inflows.

Repeated efforts to reach Abramovich weren’t successful. An associate who acted as his liaison with the media in the past declined to answer questions, saying only that she isn’t a dedicated spokesperson and that his press office would be in touch if it had a comment. Calls and a text message to the London number she provided for his press office weren’t answered.

An Abramovich spokesperson said in a Feb. 28 statement that the tycoon was trying to help broker an end to the war. The Wall Street Journal reported this week — citing people familiar with the situation that it didn’t identify — that Ukraine’s President Volodymyr Zelenskiy had advised President Joe Biden to hold off sanctioning Abramovich because he might prove a useful go-between in efforts to negotiate peace.

Where Are Russia’s Rich Right Now?

One of Abramovich’s private jets has been in Dubai in March, according to data from ADS-B Exchange, a plane-tracking website.

Dubai is already a favored destination for many Russians, pulling in tens of thousands of Russian tourists every month. Russian ice-cream is on sale at the city’s popular La Mer beach-side development. Delicacies like Russian-style sour cream and cottage cheese are available at some grocery stores.

Even Russians with transparent sources of income and without links to state authorities are afraid that they will be lumped together with sanctioned businessmen or that their assets could be taken away, said Daria Nevskaya, a partner at the Moscow-based lawfirm FTL Advisers, which serves wealthy Russians. Some rich Russians are trying to restructure ownership of their assets “so that they are not subject to a witch hunt,” she said.

Nevskaya recently arrived in Dubai herself because the firm has seen a surge in demand from Russians to register companies in the UAE to hold their assets, including financial ones, she said.

Did Covid Help Dubai Grow?

Since the Ukraine invasion, Dubai’s geographic location between east and west, its speedy work visas and well-developed infrastructure have made it attractive to not just rich Russian businessmen but also prominent global employers.

In recent weeks, Goldman Sachs Group Inc. moved staff to the Gulf hub from Moscow in response to the invasion, people familiar with the matter have said. Visa Inc.’s chief executive officer said Tuesday that the firm had relocated more than 100 employees and their families from Russia to Dubai.

Such moves come after the Middle Eastern hub made big gains drawing new business and investors with its Covid response. In the past few months, the UAE has ranked among the top three places on Bloomberg’s Covid Resilience Ranking thanks to its high vaccination rate, open travel routes and relatively contained virus outbreaks.

Dubai also announced a series of reforms during the pandemic to burnish its credentials as a finance center, handing out thousands of long-term visas to executives in a bid to tie them longer to the emirate.

That helped the emirate’s financial free zone, the Dubai International Financial Centre, attract nearly a thousand new company registrations in 2021, a record. It also posted its highest ever revenue and operating profit.

Veteran emerging markets investor Mark Mobius moved his base permanently to the Persian Gulf city from Singapore after the Asian nation put in strict travel restrictions during the pandemic.

“I never thought of living here, it was an investment,” Mobius said about visiting Franklin Templeton’s office here for years and buying himself two properties with views of the world’s tallest tower more than a decade ago. “Now we see it’s become a global center,” he said from the lobby of his Dubai residence overlooking an infinity pool and the world’s largest ferris wheel.

Why Dubai Faces Increased Scrutiny

The increasing appeal to rich Russians is also evident. Demand from Russians for Dubai property is up 40% so far in March compared with February, the Russian newspaper Kommersant reported, citing real estate firm Golden Brown Group.

Nevskaya, the lawyer, said a popular way for Russians to obtain a residence visa in the emirate is via the purchase of real estate worth 5 million dirhams ($1.5 million), while a cheaper option is to obtain a residence visa by opening a company.

“If we talk in absolute numbers about UAE residency, the demand has increased by 100%” from Russians, said Polina Kuleshova from residency and citizenship advisory firm Henley & Partners.

A Russian influx will bolster Dubai’s heft but there’s also the risk it complicates relationships with long-time allies like the U.S., people familiar with the matter have said. The U.S. Treasury Department sent two senior delegations to the UAE late last year to deliver a warning to the country, saying it weakened Washington’s global sanctions programs.

At the same time, other destinations are also attracting Russian citizens. In Israel, realtors and immigration lawyers have said they are fielding enquiries from thousands of Russians who have Jewish heritage.

Meanwhile, the financial center of nearby Qatar is being seen as an alternative destination for non-sanctioned Russian firms to open offices for the representatives and move funds from overseas, according to a person familiar with the matter.

The Qatar free zone has received many requests from Russian business owners in the past few weeks, the person said. A representative for the financial center didn’t respond to a request for comment.

But for now the Russian influx is underpinning a high-end boom in Dubai. Hotel lobbies echo to the sound of Russian and one car dealer — who asked not to be identified discussing the matter — is going so far to hire more Russian speakers after seeing a big uptick in demand for luxury vehicles from Moscow migrants.

Updated: 3-25-2022

Gennady Timchenko Is Richest Russian to Have Family Face U.S. Sanctions

* Billionaire’s Wife, Two Daughters Included In New Restrictions
* Relatives Of Putin’s Spokesperson Among The Others Targeted

By the time the Biden administration sanctioned Gennady Timchenko this week, it was nothing new for the Russian billionaire. He’s one of the few ultra-rich individuals who has been penalized by the European Union, U.K. and U.S.

But it came with an added sting: The sanctions included his wife and two daughters.

That makes Timchenko the wealthiest Russian billionaire yet to face U.S. sanctions directly applied to family members, as the government looks for new ways to step up pressure on Vladimir Putin and his allies a month after the invasion of Ukraine.

“They personally gain from the Kremlin’s policies,” President Joe Biden said in a tweet Thursday announcing sanctions on more than 400 individuals and entities. “And they should share in the pain.”

The Timchenko family didn’t reply to requests for comment sent through the Elena & Gennady Timchenko Foundation.

The latest move by the U.S. is part of a widening crackdown on Russian elites and family members who could be benefiting from their assets or helping to protect them. Timchenko, 69, is founder of the now-sanctioned Volga Group, an investment firm with interests in energy, transportation and construction. He has a fortune worth $12.9 billion, according to the Bloomberg Billionaires Index.

“Ultimately, governments have unease with targeting based on your bloodline,” said John Smith, former director of the U.S. Treasury’s Office of Foreign Assets Control, who’s now at Morrison & Foerster. “It’s not something a government generally wants to do, but they can be forced into it by the bad acts of the people who use their families as human shields.”
Western Links

Timchenko’s sanctioned daughters have connections in the West. Ksenia Frank, who sat on the board of Timchenko’s firm, Transoil, has Finnish nationality and heads the family foundation’s supervisory board.

Frank studied French and philosophy at the University of Edinburgh, according to the foundation’s website. She also earned a master’s degree from the Insead business school, which is the alma mater of her husband Gleb Frank, the son of a former transport minister under Putin and who was also sanctioned.

The sanctions also hit Timchenko’s wife Elena, the founder of the family foundation who also has Finnish citizenship, and daughter Natalya Browning, who has British nationality. His 131-foot yacht, Lena, which has been blocked by Italian authorities, was also on the sanctions list.

Gennady Timchenko’s son, Ivan Timchenko, wasn’t sanctioned.

The measures indicate the U.S. is turning more aggressive in applying sanctions, said Rachel Alpert, co-chair of Jenner & Block’s national security, sanctions and export controls practice.

In early rounds, family members were targeted for having some connection to the Russian state or its military, but now “just being an adult child of a person who is sanctioned is enough,” she said.
‘Luxurious Lifestyles’

The U.S. has sanctioned other prominent Russian families since the Ukraine invasion as well.

Those close to Putin spokesperson Dmitry Peskov “live luxurious lifestyles that are incongruous with Peskov’s civil servant salary,” according to the U.S. Treasury. That includes the multimillion-dollar apartment given by Russia’s government to his wife, Tatiana Navka, an Olympic ice skater. Peskov’s daughter, Lisa, who has a popular Instagram account, posted on her Telegram channel that the penalties were a “witch hunt” fueled by “frenzied hatred of everything Russian.” They are all sanctioned.

The Treasury Department also sanctioned family members of Yevgeny Prigozhin, who financed the Internet Research Agency, the Kremlin-linked troll farm that interfered in the 2016 U.S. elections.

It additionally targeted the wife and daughter of Nikolay Tokarev, the president of Transneft who served with Putin in the intelligence services in the 1980s. The $50 million real estate empire of Tokarev’s daughter includes an oceanfront island villa in Croatia, according to the Treasury.

The U.S. isn’t alone in targeting relatives of Putin allies. The U.K. this week sanctioned Polina Kovaleva, described as the stepdaughter of foreign minister Sergei Lavrov who owns a London property worth about 4 million pounds ($5.3 million).

Smith, the former OFAC director, said enforcers in drug wars would target kingpins’ family members who were used to hide assets, and authorities are using the same strategy when applying sanctions on influential Russians.

Selective Sanctions

Sanctions of Russian family members have been selective. Suleiman Kerimov transferred his main asset, a stake in Russia’s biggest gold miner Polyus, to his son Said in 2015. Suleiman, worth $12.4 billion, was sanctioned by the U.S. in 2018 and by the U.K. and EU this month. Said hasn’t been sanctioned.

The Kerimov family shifted the headquarters of the holding company that controls its Polyus stake from Jersey to Cyprus, according to a filing this week.

In the U.S., a 2020 Senate report found Igor Rotenberg helped his father avoid 2014 sanctions with asset transfers, by using shell companies and the secrecy of New York art auction houses.

“If an oligarch is using his family as a pasture for his wealth, then it’s an easy issue for governments to say we’re going to stop that sanction evasion and sanction the spouse or children,” Smith said.

Timchenko was born in Armenia in 1952, grew up in Ukraine and East Germany and studied engineering before working at a Soviet builder of nuclear reactors. He joined the Soviet Ministry of Foreign Trade, and by 1991, as the Soviet Union was collapsing, he positioned himself at a key European importer of Russian oil.

In 2000, he started his own oil trading company, Gunvor. By then he had befriended Putin while he was the deputy mayor of St. Petersburg. Putin was also chairman of a judo club that Timchenko co-sponsored.

As Gunvor thrived, Timchenko in 2007 formed what was then called Volga Resources. Through the investment firm, he bought stakes in gas producer Novatek, which came to constitute his most valuable holding.

He sold his position in Cyprus-based Gunvor in 2014 ahead of U.S. economic sanctions, in which the Treasury alleged that Putin had investments in Gunvor and could have access to the company’s funds.

Timchenko has since expanded into other industries, acquiring stakes in construction company Stroytransgaz and the rail company Transoil, which was sanctioned this week along with Volga.

On March 21, Timchenko resigned from Novatek’s board of directors. The company didn’t provide a reason for his resignation, but it came in the weeks after the EU and U.K. sanctioned him.

Russian Billionaires’ Money Has Octane Bracing for Fallout

* London Lender Takes Step To Bring Letterone’s Stake Below 50%
* Sanctioned Billionaires Fridman, Aven Co-Founded Letterone

Jonathan Samuels set up Octane Capital to help property developers deal with unpredictable times.

The London-based lender is now dealing with its own unexpected headache.

Octane, which has made more than $1.3 billion of short-term loans over the past five years, was created with the backing of LetterOne Holdings, a $20 billion investment firm for Russian billionaires, including co-founders Mikhail Fridman and Petr Aven, who were sanctioned by the European Union and the U.K. after the invasion of Ukraine.

Luxembourg-based LetterOne itself hasn’t been sanctioned. Still, Octane is taking precautions.

The firm has issued shares to its management with voting and distribution rights that would kick in if a “sanctions event occurs,” according to a March 15 filing, a move that takes LetterOne’s stake below 50% and shields Octane from asset freezes if the U.K. targets LetterOne. Meanwhile, LetterOne’s representatives at Octane have resigned from the company’s board.

“Steps were taken prior to any sanctions announcements in the U.K., with an abundance of caution, to protect them in case of any unexpected and unlikely fallout,” a LetterOne spokesman said.

The situation underscores how Russian billionaires’ money has swept through London’s finance industry in the past decades, funding private equity and real estate, and how the invasion of Ukraine has complicated those investments.

LetterOne said in its latest annual report that it finances U.K. property developers and landlords through Octane. Samuels, 44, partnered with a fund from Pamplona Capital Management made up of mostly LetterOne’s money to launch Octane in 2017. LetterOne took control of the investment around early 2020.

On Thursday, Pamplona said separately it planned to liquidate three funds with ties to LetterOne, which has been the London-based private equity firm’s biggest investor with almost $3 billion.

Goldman Sachs Group Inc. and law firm Kirkland & Ellis have also paused new business with Pamplona, the Financial Times reported Friday, citing two people familiar with the matter that it didn’t identify.

Octane has provided more than 1,100 mortgages since its inception, specializing in bridge financing and specialty buy-to-let mortgages. LetterOne had a controlling stake in Octane in November and also provided revolving credit lines.

The U.K. sanctioned Fridman, 57, and Aven, 67, on March 15 along with fellow LetterOne shareholders German Khan and Alexei Kuzmichev, who both resigned from the firm this month. The EU extended its sanctions list the same day to include Khan, 60, and Kuzmichev, 59.

Britain stepped up its efforts again on Thursday when it imposed sanctions on Alfa Bank, a Moscow-based lender founded more than two decades ago by Fridman.


Updated: 3-27-2022

These Are The Russian Tycoon Mansions On The French Riviera

Authorities are turning an eye to the so-called Bay of Billionaires, which is dotted with palatial residences.

The opulent mansions of Russian billionaires in Londongrad have already felt the sanctions blow. But farther south from the U.K. capital, in a coastal corner of the French Mediterranean, wealthy tycoons have also purchased sea-view real estate over the years.

Tucked away behind high walls and tall trees, the palatial residences might be a less visible display of wealth than the billionaires’ yachts that have been impounded in European ports. Still, the French government — which has set up a task force to scrutinize all relevant financial assets — says it has frozen more than half a billion euros’ worth of real estate in France, including some 30 properties.

The Cap d’Antibes, a peninsula that juts out into the Mediterranean east of Cannes, and the nearby so-called Bay of Billionaires form an enclave that first gained its exclusive reputation decades ago as a hot spot for rock stars and royals, bankers and barons of industry.

Rich Russians started settling in there and in nearby Saint-Jean-Cap-Ferrat shortly after the fall of the Soviet Union. Now several of them have been sanctioned by the EU, freezing bank accounts and other assets owned by the targeted individual. As a result, underlying property holdings can no longer be sold, mortgaged or rented out.

Here are French Riviera estates tied to people sanctioned by the European Union, based on publicly available property data, court rulings and previous news reports.

Château de la Croë

The 26,000 square-foot château with a rooftop pool sits isolated at the tip of the Cap d’Antibes on a 18-acre property and was purchased by Roman Abramovich about two decades ago.

Built in the late 1920s for a newspaper magnate, the Victorian-style mansion was previously the residence of several crowned heads. King Edward VIII moved in just after he controversially abdicated in 1937 to marry American socialite Wallis Simpson.

The château was then owned in the 1950s by billionaire Greek shipping tycoon Aristotle Onassis and later by his lifelong rival, Stavros Niarchos. A fire destroyed part of the property in the 1970s, and it remained abandoned for decades until Abramovich swooped in and spent more than 150 million euros on renovations over the years.

Ownership: Abramovich has never made a secret of owning the château, which is also confirmed by a legal dispute between him and French tax authorities. Abramovich declined to comment.


Villa Hier

Russian billionaire Suleiman Kerimov has been linked to the high-end property on Cap d’Antibes. The mansion includes a tennis court and giant oval outdoor pool, overlooked by an elongated greenhouse. French authorities have said the property was acquired for 127 million euros in 2008.

Ownership: Kerimov was charged in 2017 over suspicions that he used figureheads to acquire several Riviera properties, including Villa Hier; he denied wrongdoing and the charges were overturned a year later in a major setback for French prosecutors, who say the case is still ongoing. Kerimov’s French lawyers didn’t reply to a request for comment.

Commodities tycoon Andrey Melnichenko made quite the splash in 2005 at his wedding at Villa Altaïr, with live performances by Whitney Houston and Christina Aguilera, according to Forbes. The founder and controlling shareholder of EuroChem is listed as the 100% beneficiary owner of the company that holds the property.

Melnichenko is also know for having two superyachts designed by Philippe Starck. One — the largest sailing yacht in the world — has been seized by Italian authorities in Trieste, while the other is currently close to the Seychelles.

Ownership: According to France’s registry of beneficiary owners, Melnichenko is listed as holding 100% of the shares of the company that was used to buy the property, though when contacted he said he doesn’t personally own the villa.

La Chabanne And Lusetto

Alexander Ponomarenko acquired these two side-by-side villas in 2008 for 83.5 million euros before undertaking extensive renovation work. A collection of buildings, the property sits on 4 acres of land with direct sea view. La Chabanne was kitted out with a new pool and underground parking during the refit that took several years.

Ownership: Ponomarenko acquired 70% of the property in his own name, but France’s registry of beneficiary owners now lists the mother of his children as holding 95% of the company that owns the real estate. Ponomarenko didn’t respond to calls seeking comment.


Villa Nellcôte

The residence acquired mythical status when the Rolling Stones recorded their seminal Exile On Main St. album there in the 1970s, long before steel tycoon Victor Rashnikov set his sights on the plot. The chairman of Magnitogorsk Iron & Steel Works reportedly acquired the Belle Epoque mansion — located in a town adjacent to Saint-Jean-Cap-Ferrat — in 2007 for 83 million euros.

Ownership: Rashnikov is listed as holding 1% of the shares of the company he set up to buy the property, according to filings; in 2012 he made a donation to his daughter Olga, who is currently listed as holding 94% of the shares, according to France’s registry of beneficiary owners. Rashnikov didn’t return calls and messages seeking comment.


La Petite Ourse

Less frequently cited as a vacationing hot spot for rich Russians, glamorous Saint-Tropez nevertheless has its fans. Alexey Kuzmichev, one of the founders of Alfa Group, acquired villa La Petite Ourse, a comparatively more humble dwelling that still boasts lush grounds and a large a swimming pool.

While little is known about the property, Kuzmichev got in a legal row with his architect when he undertook renovation works about a decade ago.

Ownership: Kuzmichev is listed as controlling all shares of the company vehicle used to acquire the real estate, according to France’s registry of beneficiary owners. Kuzmichev declined to comment.

Vadim Moshkovich’s Mansion

Looking onto Saint-Jean-Cap-Ferrat from the tip of Nice is the mansion of Vadim Moshkovich, founder and controlling shareholder of agricultural conglomerate Ros Agro Plc. It’s unknown when Moshkovich acquired the property.

Ownership: Moshkovich is listed as the 100% beneficiary owner of the company set up to buy the property. He declined to comment.

Updated: 3-29-2022

Half of Russia’s 20 Richest Billionaires Are Not Sanctioned

Half of Russia’s 20 richest people have not been sanctioned over its war in Ukraine, leaving a group of super-rich, powerful billionaires free to operate around the world without legal restriction.

In total, tycoons worth a total of at least $200 billion before the war started have been hit by sanctions. Yet the list of who’s blocked –and who’s not – reveals a patchwork pattern of cross-border penalties that has spared many Russians with business interests in key global markets, a Bloomberg News analysis shows.

The attempt to isolate Russia from international finance and pressure President Vladimir Putin – while minimizing spillover to the global economy – has seen the U.K. sanction 10 of the richest billionaires and the European Union nine. By contrast, the U.S. has sanctioned just four.

Only Three Men Feature On All Three

Half of Russia’s 20 richest people have not been sanctioned over its war in Ukraine, leaving a group of super-rich, powerful billionaires free to operate around the world without legal restriction.

In total, tycoons worth a total of at least $200 billion before the war started have been hit by sanctions. Yet the list of who’s blocked –and who’s not – reveals a patchwork pattern of cross-border penalties that has spared many Russians with business interests in key global markets, a Bloomberg News analysis shows.

The attempt to isolate Russia from international finance and pressure President Vladimir Putin – while minimizing spillover to the global economy – has seen the U.K. sanction 10 of the richest billionaires and the European Union nine. By contrast, the U.S. has sanctioned just four.

Only three men feature on all three lists, with four of Russia’s five richest men not sanctioned anywhere. They are led by the country’s richest man, Vladimir Potanin, a metals magnate who was worth $30 billion on Feb. 18, the final day of data before sanctions began rolling out three days later.

The richest sanctioned Russian on the list is Alexey Mordashov, the controlling shareholder in Severstal PJSC, Russia’s fourth-largest steelmaker, who had his assets frozen by the EU on Feb. 28 and by the U.K. two weeks later.

Energy executive Leonid Mikhelson, steel tycoon Vladimir Lisin and Vagit Alekperov, chairman of oil giant Lukoil PJSC, are among the other richest Russians who have not been sanctioned. All own significant holdings of publicly traded companies operating in Russia’s highly politicized business environment.

Tracking who’s sanctioned where remains difficult because Washington, Brussels and London issue penalties in a series of unlinked notices. Australia, Canada and Japan have imposed their own restrictions.

Sanctions experts say that decisions not to censure some of Russia’s richest men is at least partly linked to their critical stakes in vast energy, metals and fertilizer companies.

“There are reasons to go after some oligarchs and there are reasons to hold some in abeyance,” says John Smith, who headed the U.S. Treasury’s sanctions unit, the Office of Foreign Asset Control (OFAC), until May 2018, and is now a partner at law firm Morrison & Foerster in Washington, D.C.

“It can either be because they’re not believed to be close to the Kremlin decision-making or that they may be too difficult to sanction at the outset, and governments want to develop a plan before they pull the trigger.”

The U.S. has learned from the experience of 2018, when it sanctioned billionaire Oleg Deripaska, who controlled United Co. Rusal International PJSC, the world’s largest aluminum company outside China. That caused global prices to soar, only stabilizing after Deripaska agreed to relinquish control of Rusal in 2019.

How Have Sanctions Impacted Russian Billionaires?

Some Russians were targeted because of their clear links to state-owned companies, regardless of their net worth: Igor Shuvalov, a former first deputy prime minister, is now chair of state-owned bank VEB, while Sergey Ivanov is CEO of state-controlled diamond company Alrosa PJSC and a board member at Gazprombank.

The unprecedented sanctions are rippling across continents, with wealthy Russians moving assets and unwinding holdings as authorities in Italy, France, Spain and elsewhere have moved to seize yachts and ground private jets.

Roman Abramovich, the biggest shareholder in Russia’s second-largest steel producer Evraz Plc, is selling Chelsea Football Club after being sanctioned by the U.K. and E.U.

Alisher Usmanov, who owns 49% of USM, which controls steel and iron ore producer Metalloinvest, was sanctioned by the U.S., U.K. and the EU. He had already transferred most of his real estate and other property into irrevocable trusts of which he is no longer a beneficiary, a spokesperson said.

That move has complicated government efforts to block his property, including his 156-meter-long yacht Dilbar, now languishing in Hamburg, Germany.

Concerns about possible market fallout quickly became clear, even though Usmanov is believed to own just under 50%, the threshold at which sanctions kick in on his companies.

After the U.S. sanctioned Usmanov on March 3, blocking his personal assets, the U.S. Treasury turned around the same day and issued licenses allowing any companies majority owned by him, directly or indirectly, to continue operating.

Action has not been unanimous. Any major business operating in Russia does so only with Putin’s blessing; the billionaires must stay on the right side of the government. Still, proximity to Putin isn’t easy to measure and wealth by itself doesn’t always translate into influence over the Kremlin, as some sanctioned billionaires have argued.

Sanctioning Mordashov, the EU cited his “links with Russian decision-makers” and his stakes in National Media Group, controlling television channels, and in Bank Rossiya, which opened several branches across Crimea after it was annexed in 2014.

“I have never been close to politics,” Mordashov said in a statement. “I fail to understand how these sanctions against me will contribute to the settlement of the dreadful conflict in Ukraine.”

Severstal was the first Russian company to miss a coupon payment on foreign-currency debt after Citigroup Inc. declined to process a payment after EU and U.K. sanctions on Mordashov. In a sign of how complex global systems mean sanctions in one jurisdiction can impact another, U.S. investors can’t get paid even though the U.S. hasn’t sanctioned Mordashov.

“Companies are evaluating the risks not only legally, but reputationally,” Smith says. “They don’t want shareholders questioning why they’re dealing with Russia.”

Will Sanctions On Russians Work?

One month after the invasion, Russia is now the most sanctioned country in the world. Freezing central bank reserves and kicking some banks out of the international payments system has battered the ruble and caused the country to teeter on the verge of a default.

However, Bloomberg’s analysis of thousands of sanctions records shows there are striking differences between the penalties imposed by the U.S., U.K. and EU.

Overall, the U.S. has frozen the assets of 852 people, the European Union 775 and the U.K. 982. But many of those sanctions do not overlap. While almost 550 people have been sanctioned by both the U.K. and EU, common ground with the U.S. is more elusive.

Even experts are having a hard time untangling the threads, saying the divergences could undermine the effectiveness of sanctions.

“I definitely don’t see a single pattern anywhere,” says George Voloshin, a sanctions expert who tracks Russia as director of Paris-based Aperio Intelligence. “I still don’t think policymakers are on the same page in terms of strategy, although they claim to have some coordination.”

Why Some Billionaires Haven’t Been Sanctioned

Many leading unsanctioned billionaires are active in vital global commodity sectors and own significant stakes in major companies that supply Western nations.

“A primary objective of sanctions has to be that we hurt the sanctions target more than we hurt ourselves,” Smith says. “When you talk about gas, Europe still needs Russia. The U.S. and its allies will be looking very carefully to see what products from Russia may be nearly essential to us and third country companies and seek to avoid those impacts.”

Potanin, who made his fortune in the 1990s, is one of Russia’s original oligarchs and remains unsanctioned. He is one of several tycoons who’s played hockey with Putin and helped the Kremlin stage the Sochi Olympics in 2014. In the wake of the invasion he lost coveted positions at U.S. cultural institutions, and surprised many by criticizing Kremlin plans to seize assets of foreign companies pulling out of Russia.

Potanin owns 36% of MMC Norilsk Nickel PJSC, making him the largest shareholder in a company that accounts for about 10% of refined nickel and 40% of global palladium output – crucial for the manufacture of semiconductors, already in short supply before the war.

Mikhelson, the second-richest Russian, is also unsanctioned, though he has extensive business ties to Gennady Timchenko, a billionaire so close to Putin that he was among the first to be sanctioned by the U.S. back in 2014.

Mikhelson owns about a quarter of Novatek PJSC, the largest non state-owned gas producer in Russia and a major supplier to Europe, while Timchenko owns 23.5%. He and Timchenko’s combined stakes are close to the 50% threshold that the U.S. uses to trigger formal sanctions on companies.

In practice, fear of running foul of sanctions has led some companies to go beyond official rules and steer clear of doing business with entities tied to sanctioned people.

Banks and corporations “will be very wary of conducting transactions with any entity that has significant ownership by a sanctioned individual,” Voloshin says.

Several steel tycoons have escaped sanctions even as the EU imposed a ban on imports of certain Russian steel products, a move that’s expected to cost Russia 3.3 billion euros ($3.6 billion) in lost export revenue.

Lisin, chairman of Novolipetsk Steel PJSC, the country’s largest, was worth $28 billion before the invasion and remains unsanctioned. He came out against the war on March 8, saying it was a “tragedy that was hard to justify.” Abramovich, the Chelsea owner, has escaped U.S. sanctions after President Voldymyr Zelenskiy asked Washington to spare him because he was helping with peace talks, according to a person familiar with the situation.

Alexander Abramov, Abramovich’s long-time business partner who owns 19.3% of Evraz, is not sanctioned anywhere. Their combined stakes are close to the 50% threshold. Evraz has extensive operations in North America and has worked with lobbyists in Washington.

Soaring prices for fertilizer supplies may have dissuaded the West from sanctioning some other key billionaires. Among the most prominent is Andrey G. Guryev, the largest shareholder of PhosAgro PJSC, Europe’s biggest manufacturer of phosphate fertilizers.

He’s the beneficiary of a company that reportedly owns Witanhurst House in London, worth about $350 million, the second-largest private residence in London after Buckingham Palace. He has not been sanctioned but the EU and U.K. sanctioned his son, Andrey A. Guryev, forcing him to step down as PhosAgro’s CEO.

“I really don’t know why they sanctioned him because he’s just an executive of the company,” Voloshin says. “It doesn’t have any impact on the company itself.”

One Kremlin connection stems from PhosAgro’s former chairman Vladimir Litvinenko, the head of St. Petersburg’s mining institute, who oversaw Putin’s PhD in 1996 and now holds 21% of PhosAgro, worth $1.8 billion before the invasion.

Will There Be More Sanctions?

The invasion of Ukraine changed U.S., U.K. and EU sanctions policy. Historically Brussels has followed Washington’s lead and struggled for consensus among its 27 members. This time around it was far more aggressive. The U.K. then rushed through a legislative change to enable mass updates to its sanctions lists. Only the addition of 347 names on March 24 brought the U.S. close to parity.

“The EU has war on its doorstep,” Smith says. Concerns over the risks from close ties with Russia mean EU nations have moved on sanctions “faster than anyone would have expected.”

As a result, a string of prominent billionaires have been sanctioned by the EU and the U.K. but not by the U.S. They include Andrey Melnichenko, founder of EuroChem, a producer of mineral fertilizer and agricultural products based in Zug, Switzerland. “He has no relation to the tragic events in Ukraine,” a spokesperson for Melnichenko says.

“There is no justification whatsoever for placing him on any sanctions lists.” Victor Rashnikov, the controlling shareholder of Magnitogorsk Iron & Steel Works PJSC, was sanctioned by the EU and the U.K. but not the U.S. Likewise for the Alfa Group billionaires – Fridman, Petr Aven, German Khan and Alexei Kuzmichev. None of them is involved in Russian exports considered critical to global markets.

Beyond the billionaires, there are other lesser-known but politically connected figures who haven’t been affected at all.

“We’re not at the end of it,” Voloshin says. “When you look at further potential targets, I wouldn’t look at who’s close to the Kremlin but rather the impact the sanctions will have on the global market.”

U.S. Targets Oligarchs’ Hidden Assets, Russian Military Supply Lines

Deputy Treasury secretary, key to Washington’s sanctions posture, is in London to discuss next steps with allies.

The U.S. government and its allies plan to sanction institutions and individuals who help Russian oligarchs hide their assets, while governments are also working on new measures intended to disrupt supply chains necessary to provide Russia with “the tools of war,” Deputy Treasury Secretary Wally Adeyemo said Tuesday.

In response to Russia’s invasion of Ukraine, the U.S., the European Union, the U.K., Australia and others have said they are moving to scrutinize the assets of a handful of rich and powerful Russians.

Western governments say these oligarchs have profited from close ties to Russian President Vladimir Putin. Many have spent lavishly outside Russia, boosting local economies with property purchases and other investments.

Now, authorities around the world see them as a way to pressure Mr. Putin. Governments have wide latitude to target individuals with asset freezes without proving criminality. Targeted individuals can challenge the sanctions, but the process can take years.

Mr. Adeyemo, a senior Treasury official responsible for sanctions policy, said those efforts have some oligarchs seeking to avoid scrutiny and protect their assets from being frozen. He said governments were now committed to preventing that.

“Many of these individuals are attempting to move assets in order to avoid accountability. To those considering assisting these elites in hiding their ill-gotten wealth: We will find you,” he said during a speech here at Chatham House, a think tank focused on international relations. “And let me be clear: We are prepared to sanction those providing material support to sanctioned Russian elites.”

Since Russia invaded its neighbor on Feb. 24, the U.S. and its allies have agreed on a lengthening list of measures intended to weaken the Russian economy and cut it off from the international financial system, as well as keeping key imports, such as semiconductors, out of Russia.

Mr. Adeyemo said those measures had created an economic crisis inside Russia and presented Mr. Putin’s government with a choice between “spending its dwindling resources on propping up its domestic economy or continuing to finance the invasion of Ukraine and other destabilizing activity.”

During a tour of European capitals that began Sunday in London, Mr. Adeyemo said further measures are on the way, including moves targeting Russia’s ability to supply its war effort.

“We are planning to target additional sectors that are critical to the Kremlin’s ability to operate its war machine, where a loss of access will ultimately undermine Russia’s ability to build and maintain the tools of war that rely on these inputs,” he said.

While the U.S. and its European allies have worked closely in deploying sanctions in the weeks since the invasion, one point of contention centers on targeting Russian energy exports, and whether new sanctions would inflict job losses and other pain on some European countries, whose trade with Russia dwarfs that with the U.S. Mr. Adeyemo said the U.S. would build its capacity to supply its European allies with liquefied natural gas, an alternative to Russian gas that is a major source of energy for a number of European countries.

He said the success of sanctions will be down to the work the U.S. and its allies have put into building an international economic and financial system since the end of World War II. “A country like Russia will struggle to operate its economy without access to this system—despite Moscow’s best efforts to disentangle from it and build up defenses for this very scenario—because of the power of the system we have collectively built,” he said.

Mr. Adeyemo said more work is needed to underpin that international system, including implementation of a global tax overhaul agreed to last year, and facilitating help to countries that face the threat of food shortages as a result of the war.

Fighting has cut off exports of wheat and corn from Russia and Ukraine, two of the world’s largest producers.

“In addition to a lack of concern for the lives of Ukraine’s people, the Kremlin has shown a disregard for the pain and suffering its invasion will cause to those that lack access to food and other vital agricultural products,” Mr. Adeyemo said.

Updated: 4-1-2022

Latvia May Strip Citizenship as Scrutiny on Russian Billionaire Grows

* Petr Aven’s Citizenship Comes Under Question Over Ukraine War
* Aven Says He Opposes The War: ‘There’s No Justification’

Latvia is introducing legislation that would allow citizenship to be revoked, a move that comes after calls to rescind the status of sanctioned Russian billionaire Petr Aven in response to the invasion of Ukraine.

Aven, whose net worth is $5.7 billion according to the Bloomberg Billionaires Index, has had his assets frozen since he came under European Union penalties in response to Russia’s attack. In Latvia, he’s been stripped of an honorary doctorate and a top state award.

Now, his citizenship in the former Soviet republic may be on the line. Justice Minister Janis Bordans sent a set of proposed amendments to a parliamentary committee this week, his spokesman told Bloomberg News. The ministry said the rules aren’t meant to target any specific individual and didn’t name Aven.

“I have Latvian roots, I appreciate and love this country,” Aven said in a message. “I have repeatedly stated that I am against the war, there is no justification for it.” He said, “I think this initiative was put forward by someone in some ‘moment of weakness’ and will go unnoticed.”

The amendments would let citizenship be revoked for those who offer support for carrying out “war crimes, genocide and crimes against peace and against civilization,” the text says. Although the text doesn’t explicitly refer to Russia, the language on war crimes reflects the Latvian government’s accusation that President Vladimir Putin’s forces have committed such crimes.

Latvian security officials would make the determination on whether citizens met those standards, according to a procedure laid out in the draft. The changes would have to be approved by parliament.

The legislation also stipulates that a Latvian national can be targeted for providing false information or “concealing facts” in the application process. Aven, whose grandfather was Latvian, was granted citizenship in 2016 after meeting naturalization requirements and passing a language exam. The billionaire has been accused in media reports of receiving help passing the language test.

Aven had won admirers in the nation of 1.9 million with his local charity. But Putin’s Feb. 24 invasion of Ukraine, coupled with the reports about the language test, triggered calls in Latvia to strip Aven of his citizenship, a measure not currently possible under the country’s law. Bordans had said his ministry would study the issue.

In imposing sanctions on Aven, the EU said the billionaire “is one of Vladimir Putin’s closest oligarchs,” who meets the Russian leader often. The 27-member bloc accused Aven and his business partner Mikhail Fridman of trying to assist the Kremlin in lifting Russian sanctions imposed due to its annexation of Crimea in 2014.

A statement issued on behalf of Fridman and Aven following the EU’s approval of the measures against them said they plan to contest a move based on “malicious and deliberate falsehoods.”

Along with Fridman, Aven has stepped down from his boards and management posts of his companies, including Alfa-Bank, Russia’s largest privately held bank, and investment firm LetterOne.

Roman Abramovich’s Abrupt Transformation From Shunned Oligarch To Wartime Envoy

Russian billionaire was recruited to deliver messages directly to Putin and to help Ukrainians understand what he is thinking.

Early on the morning Moscow began its invasion of Ukraine, Russian billionaire Roman Abramovich was jolted from his sleep by a cellphone call from a Ukrainian movie producer with an urgent request. Was he willing to help stop the fighting?

Ukrainian government officials were worried their Russian counterparts weren’t accurately relaying their messages to the Kremlin, according to people familiar with the matter. They wanted a Russian businessman to act as an informal go-between—to deliver messages directly to Russian President Vladimir Putin and to help them understand what the Russian leader was thinking.

Alexander Rodnyansky, the film producer who made the call, knew Ukrainian President Volodymyr Zelensky from back when the president had been an actor. And he knew Mr. Abramovich through the businessman’s funding of independent cinema in Russia.

Mr. Abramovich wasn’t the first person the producer approached, according to the people familiar with what happened. But other potential go-betweens had already turned him down, saying the stakes were too high. Mr. Abramovich, though, said he would do it.

It was the beginning of a head-spinning transformation for the billionaire. Until recently, he was known mainly as the prominent Russian oligarch whose assets were being pursued by Western governments because of his ties to Mr. Putin.

In recent days, some Ukrainian officials have praised what they say is his constructive role in peace talks, thanks in large part to that connection to the Russian president.

“We invite Roman, and we say, ‘Listen, can you ask your boss, why is it this way?’ ” said Ukrainian negotiator David Arakhamia, explaining that by “boss” he means Mr. Putin. “Normally [Mr. Abramovich] comes back pretty quickly with some alternative solutions.” Kremlin spokesman Dmitry Peskov said earlier this week that Mr. Abramovich “is involved in ensuring certain contacts between the Russian and Ukrainian sides.”

Mr. Abramovich’s involvement has sparked debate about his motives. Some European and U.S. officials have speculated he got involved in the peace efforts to try to ward off further sanctions on him, according to people familiar with their thinking. He already faces U.K. and European Union restrictions, but hasn’t been subject to U.S. measures on account of his role in the talks.

While engaging as a go-between in the talks, he also has been reshuffling assets to shield them from sanctions, including shifting control of an investment vehicle associated with him, moving two megayachts and trying to sell some U.S. hedge-fund assets.

People close to Mr. Abramovich said his involvement isn’t an attempt to protect his business interests. He wants to help end the bloodshed, they said, noting that he is taking personal risks to do so. Serving as a back channel to Mr. Putin, they added, could backfire. If talks fail, the Kremlin could hold him partly to blame, and the West could accuse him of a publicity stunt.

For more than a month, Mr. Abramovich has traveled across Eastern Europe, Russia, Israel and Turkey acting as a back channel, according to people familiar with his movement and meetings.

He has met repeatedly with Russian and Ukrainian officials in hotel rooms and offices. He has held talks with Messrs. Putin and Zelensky and met with Turkish President Recep Tayyip Erdogan, whose government has played a mediator role in talks.

Following a meeting with negotiators in Kyiv in early March, Mr. Abramovich’s skin started peeling off, and he temporarily went blind, according to people familiar with the incident. Some of those at the meeting believe he and others affected were poisoned by Kremlin hard-liners who want to derail the talks. The Russian government has denied that.

Ukraine’s negotiators said Mr. Abramovich is proving a useful fixer. During a meeting in Belarus days after the incident, he established a rapport with the Ukrainian side, negotiators said. In addition to passing Ukrainian requests to Mr. Putin, he has helped on a variety of issues, big and small.

Ukrainian officials said he has worked to secure some corridors to help people leave bombarded Ukrainian cities, and he has worked to facilitate prisoner exchanges. The Ukrainian government, nonetheless, has repeatedly criticized the Russian military for attacking these humanitarian corridors.

Other successes have been smaller. The Russian delegation initially insisted Ukrainian officials travel to Belarus for talks. Mr. Abramovich helped arrange to have the talks held online.

Mr. Abramovich, a former oil trader, had emerged from the financial chaos of 1990s Russia as an oil tycoon, benefiting from his connections to the Kremlin, under both Mr. Putin and former President Boris Yeltsin.

He subsequently spent lavishly, buying London soccer club Chelsea FC, high-end property in places like London and Colorado and museum quality art, and donating to philanthropic institutions, including Jewish charities.

During his long business career, he managed to remain on the right side of the Kremlin. His businesses flourished while other oligarchs who crossed Mr. Putin saw their holdings stripped away.

Over the years, through various lawyers and spokespeople, he has repeatedly denied he was financially linked to Mr. Putin or had any special relationship with him. In recent years, he has tried to avoid getting entangled in Russian politics.

In the days before Russia attacked Ukraine on Feb. 24, the Ukrainian film producer Mr. Rodnyansky, whose son advises Mr. Zelensky, contacted three Russian businessmen to ask them to be back channels to the Kremlin, according to a person familiar with the matter. Each of them declined.

After Mr. Abramovich got his call, he weighed his options and contacted the Kremlin to get its signoff on the role. In late February, he traveled to a Warsaw hotel to meet with Ukrainian government officials to agree on the parameters of his job: to be a neutral middleman to stop the loss of life and help establish a process for seeking peace. His role wouldn’t include trying to forge policy.

Mr. Arakhamia, the Ukrainian negotiator, said the Kremlin wanted the talks to be held in person in Belarus, which would require an overnight journey for the Ukrainian delegation. Zoom meetings, the Russians argued, would present security concerns. Mr. Arakhamia said Mr. Abramovich persuaded the Russians to accept Zoom.

As the war intensified and Russian shelling of cities increased, Mr. Abramovich worked to try to get supplies in and refugee convoys out of the Ukrainian cities of Mariupol and Berdyansk, at times working one-on-one with a senior Ukrainian minister, according to people familiar with the discussions. Mr. Abramovich also has tried to facilitate at least two prisoner exchanges, these people said.

Mr. Abramovich has a direct line to Mr. Putin and has contacted him often, according to people close to the process. When he can’t get in touch with Mr. Putin, he speaks to the presidential administration chief of staff, Anton Vaino.

In early March, when Western governments began sanctioning oligarchs with tight ties to Mr. Putin, Mr. Zelensky asked President Biden to hold off sanctioning Mr. Abramovich because of his role in the talks, according to U.S. officials. The Biden administration agreed.

Ukrainian officials made a similar request to the British government, according to people familiar with the matter. London sanctioned him anyway. A spokesman for the U.K. government said it doesn’t comment on individual cases. The EU also sanctioned him shortly after that.

As scrutiny in the West intensified, Mr. Abramovich put his soccer team, Chelsea, up for sale. One day later, he was in Kyiv with Ukrainian lawmaker Rustem Umerov and another negotiator.

After finishing the talks around 10 p.m., they headed to an apartment in Kyiv. Suddenly, the men started feeling sick, with irritated eyes and with peeling skin on their hands and face, according to people familiar with the incident. Mr. Abramovich later sought treatment in Turkey and made a full recovery.

Over the past 10 days, he has been in Moscow, Poland and Turkey, traveling by private jet, road and rail, according to people familiar with the shuttle diplomacy. He met in Kyiv earlier in March with Ukrainian officials, including Mr. Zelensky.

At one point, Mr. Abramovich was trying to leave Ukraine via Poland, an EU member, but couldn’t get his plane into the country because of EU sanctions. So he flew on a Turkish plane to Istanbul, then changed to another plane and flew to Moscow.

On Tuesday, he was in Istanbul greeting Mr. Erdogan before formal peace talks began there. Later that day, Mr. Abramovich was seen sitting at an open-air restaurant at a luxury hotel, sipping tea and talking with Ukrainian officials.

At the Istanbul talks, Russia signaled an intention to soften its assault on Kyiv, sending global financial markets higher amid hopes it was an early sign that peace talks were making progress. Those hopes soon faded. Moscow has redoubled its ground and air assaults in eastern portions of Ukraine. Negotiators plan a next round of talks, via videoconference, early this month.

Updated: 4-4-2022

Spain, FBI Seize Billionaire Vekselberg’s $99 Million Yacht

* Viktor Vekselberg’s Tango Impounded In Palma De Mallorca
* U.S. Says It’s First But Not Last Seizure Hitting Putin Allies

A yacht belonging to Russian billionaire Viktor Vekselberg was confiscated in Spain at the request of the U.S. government, which said it was the first — but definitely not the last — asset seizure targeting individuals close to Vladimir Putin.

“Together, with our international partners, we will do everything possible to hold accountable any individual whose criminal acts enable the Russian government to continue its unjust war,” U.S. Attorney General Merrick Garland said in a statement.

The 78-meter-long (256 feet) ship called Tango is valued at more than 90 million euros ($99 million). The yacht has been impounded at the port of Palma de Mallorca by the police in coordination with the Federal Bureau of Investigation, according to a statement from the Spanish Civil Guard on Monday.

Vekselberg, who’s chairman of Renova Management AG and is worth $16.9 billion, according to the Bloomberg Billionaires Index, has been sanctioned by the U.S. Treasury Department’s Office of Foreign Assets Control but not the European Union.

The Cook Islands-flagged vessel is registered by a Virgin Islands-based entity, managed in turn by other firms located in Panama, the police said.

The seizure was coordinated through the U.S. Justice Department’s Task Force KleptoCapture, an inter-agency group aimed at imposing stiff penalties on wealthy Russians in response to Moscow’s military invasion of Ukraine.

“Today marks our task force’s first seizure of an asset belonging to a sanctioned individual with close ties to the Russian regime,” Garland said. “It will not be the last.”

Vekselberg has been under OFAC sanctions since 2018, in part over Russia’s 2014 annexation of Crimea and other earlier actions taken against Ukraine. Last month, the U.S. government redesignated Vekselberg under the latest sanction regime and specifically identified Tango as a blocked asset, along with a private Airbus A319 jet.

Spanish authorities acted in response to a U.S. request after a seizure warrant was filed in federal court in Washington. The warrant alleges that the Tango “was subject to forfeiture based on violation of U.S. bank fraud, money laundering, and sanction statutes,” according to Justice Department.

“Separately, seizure warrants obtained in the U.S. District Court for the District of Columbia target approximately $625,000 associated with sanctioned parties held at nine U.S. financial institutions. Those seizures are based on sanctions violations by several Russian specially designated nationals.”

European member states are working with other countries, including the U.S., through the “Russian Elites, Proxies and Oligarchs” task force — known as REPO — whose aim is to identify the assets of individuals and entities sanctioned in the wake of Russia’s invasion of Ukraine and take the legal steps needed to freeze, seize or confiscate their assets.

The U.S. action follows a series of similar moves by European countries after EU authorities imposed sanctions on Russian billionaires and businessman to prevent them from moving their assets.

In Spain, which is home to some of the largest ports in Europe used by owners of large yachts as a base to sail the Mediterranean as well as refit ships, the government had previously seized three other yachts.


Updated: 4-6-2022

Russia’s Two Richest Tycoons Face First Western Sanctions

* Vladimir Potanin And Leonid Mikhelson Named On Canada’s List
* U.K. Also Adds Mikhelson As Response Grows Over Ukraine War

Vladimir Potanin and Leonid Mikhelson, Russia’s two richest people, were sanctioned by Western governments for the first time since Vladimir Putin’s invasion of Ukraine.

Canada added the two billionaires to its sanctions list, along with Viktor Vekselberg, Kirill Shamalov, Dmitry Pumpyansky and Vadim Moshkovich, according to the government’s website. The U.K. on Wednesday also sanctioned Mikhelson, as well as several other wealthy Russians.

Potanin, 61, has a net worth of $28.9 billion and Mikhelson, 66, is worth $25.5 billion, according to the Bloomberg Billionaires Index. They had avoided early rounds of sanctions partly because of their stakes in massive metals and energy companies, some experts say.

Governments are intensifying their pressure on the Kremlin as the country’s invasion of Ukraine drags on and amid allegations of atrocities by Russian forces. The U.S. on Wednesday imposed penalties on two of Russia’s largest banks, some large state-owned enterprises and Putin’s daughters, Mariya Putina and Katerina Tikhonova.

Potanin is president of MMC Norilsk Nickel PJSC, which accounts for about 40% of global palladium output and 10% of refined nickel, and has a stake in Russian company Petrovax Pharm.

Mikhelson is the chief executive officer and shareholder of Novatek, the largest non-state-owned natural gas provider in Russia. He also holds a stake in petrochemical producer Sibur.

Updated: 4-7-2022

Superyachts, Seaside Apartments and Suitcases Full of Cash: Russians Pour Money Into Turkey

Western sanctions and capital controls imposed by Moscow have sent Russians looking for havens for their cash and assets.

Turkey is fast becoming a haven for Russian money, from oligarchs parking their superyachts on the country’s shores to young dissidents and tech workers flying from Moscow with cash in suitcases.

The influx of Russian money highlights how Turkey has opposed the invasion of Ukraine while acting as an intermediary between the two countries. The strategic U.S. ally and NATO member state has condemned the invasion and sold weapons to Ukraine while choosing not to impose sanctions on Russia, a decision that also shields Turkey’s economy from the worst of the fallout from the war. Turkish leaders have also acted as mediators in the crisis.

Since Moscow launched its invasion of Ukraine in February, thousands of Russians have flown to Turkey, one of a shrinking number of countries where they can still fly directly, with many choosing to stay.

Some of these Russians are relocating to cosmopolitan Istanbul or coastal resort cities like Antalya, a popular tourist destination for Russians before the war that is becoming a permanent home for some.

The Russians are using a variety of means to overcome Western sanctions that cut off some Russian banks from the Swift payment system and capital controls imposed by Moscow that limit the amount of foreign currency Russians can send abroad. Among the most common are Russian cash-transfer companies that operate in Turkey, cryptocurrencies and simply carrying thousands of dollars in cash through airports, according to Russians and Turks interviewed for this article.

The Turkish government has said it won’t stop Russian funds flowing in, even from oligarchs, as long as the money is legal. Turkey badly needs foreign currency after an economic crisis last year that caused its currency, the lira, to lose about 45% of its value against the dollar in less than three months. The U.S., U.K., and European Union have imposed sanctions on Russian oligarchs with alleged ties to President Vladimir Putin over the war in Ukraine.

“If you mean that these oligarchs can do any business in Turkey, then of course. If it is legal, and it is not against international law, I will consider it. If it is against international law, then that’s another story,” said Foreign Minister Mevlut Cavusoglu, speaking to an international conference in Doha, Qatar, on March 26.

The U.S. government has been silent on Russians moving their money, with Washington praising Ankara’s role in hosting Russian-Ukrainian peace talks.

Inflows of Russian money may already be helping Turkey’s finances at the margins.

Turkey’s central bank took in about $3 billion in just two days in mid-March resulting from swaps with domestic banks, according to publicly available data. That money was likely largely composed of deposits from Russians, said Omer Gencal, an economist and former executive at HSBC Turkey and other major Turkish banks.

“This money poured into Turkish banks, and they transferred it to the central bank via swap deals,” said Mr. Gencal. “They see Turkey as a safe haven,” he said of the Russians.

Moscow’s invasion of Ukraine has driven an increase in Russians buying property in Turkey, including some who have invested more than $250,000 each to acquire a Turkish passport under the country’s citizenship-through-investment program, real-estate brokers said.

Gül Gül, the chief executive of Istanbul real-estate company Golden Sign, said that in the past month Russians have begun to outnumber her previous base of clients, who mostly came from Arab countries. The newly arrived Russians are buying as many as four apartments at a time, usually with cash, in order to invest the $250,000 required for citizenship.

“Currently, out of 10 flats we sell, six or seven are bought by Russians,” said Ms. Gül. “They are mostly businesspeople, wealthy ones, some of them oligarchs.”

Among the oligarchs who have parked their assets in Turkey is Roman Abramovich, who has moved two of his superyachts to Turkish ports in recent weeks, though one has since left. Mr. Abramovich has unexpectedly emerged as a player in Russian-Ukrainian peace negotiations brokered by Turkey.

After weeks of operating a back channel to Mr. Putin, Mr. Abramovich showed up at formal negotiations between Russia and Ukraine in Istanbul on March 29. Mr. Abramovich didn’t respond to a request for comment.

Another yacht owned by former Russian President Dmitry Medvedev, a 74-meter-long vessel called Universe, docked in Istanbul last week, according to publicly available ship-tracking data.

At the beginning of the invasion of Ukraine, the Turkish government scrutinized Russian money flowing in.

Turkish lenders, particularly private banks, have also been wary of running afoul of Western sanctions, according to bankers and analysts. The banks strictly applied government rules—for example, a requirement to obtain a residence permit before opening a bank account, according to people familiar with the rules.

Those initial restrictions soon gave way to a more permissive approach to Russian money. At a single branch of one state-owned bank in Istanbul, Russians have opened more than 600 accounts in recent weeks, according to a person with knowledge of the accounts.

Many of those fleeing Russia are young people including artists, tech workers, academics and others who opposed the invasion of Ukraine or fear they could be drafted into the military. Many left carrying hundreds or thousands of dollars in cash because of capital controls that the Russian government imposed.

“I don’t want my money to be used to kill Ukrainians,” said a 25-year-old graphic designer who traveled to Istanbul from Moscow in March after protesting the war. “If I can’t change the system, I’ll remove myself from the system.”

The exodus of young Russians has meant that a range of Russian and foreign companies have had to adjust to the fact that a significant portion of their workforce has fled.

Search-engine company Yandex, classified-ad site Avito, commercial bank Tinkoff and software firm DataArt collectively had more than 1,000 workers fly to Turkey, according to people familiar with the matter. About 900 Yandex workers flew to Turkey shortly after the beginning of the war, though around 300 of them have since left, said a person familiar with the matter.

Yandex said it “offers an opportunity to work remotely, and some employees work from different locations, including Turkey.

We do not regulate their whereabouts.” DataArt said it is exiting Russia and expects several hundred employees to leave the country by this summer, but didn’t comment on the number going to Turkey.

Western sanctions and Visa Inc. and Mastercard Inc.’s decisions to shut down operations in Russia have prompted Russians to get creative about how to move their money. One option is the Russian Mir payment system, which works at certain locations in Turkey. “We accept Mir” signs have begun cropping up in grocery stores around Istanbul.

Middle-class Russians have mostly brought a few thousand dollars at a time, either in cash or by using Russian wire-transfer companies that continue to operate in Turkey. One popular service is KoronaPay, which allows people to wire money out of Russia and withdraw money in Turkey and a range of other countries. The company allows transfers worth more than 15,000 euros, equivalent to $16,400, as long as customers verify their source of income, according to the company’s website.

“They’re paid in rubles so they bring rubles,” said Volkan Celikyurek, a money changer in Istanbul’s Laleli neighborhood, which is frequented by Russian traders and one of the only areas where exchange offices buy and sell rubles.

“I bought at most 100,000 rubles at a time. But there are those who bought millions,” he said.


Updated: 4-8-2022

U.K. Grounds Russian Oligarch’s Private Jet

A private jet owned by Russian billionaire Eugene Shvidler has been banned from flying in the UK as part of sanctions in response to the war in Ukraine.

Transport Secretary Grant Shapps announced that he has deregistered the aircraft, meaning any certificates in place to permit it to fly have been suspended.

The Cessna aircraft with the tail registration G-LATO is at Biggin Hill Airport, south-east London, where it was due to undergo maintenance and repairs.

It was blocked from leaving on March 19 last month on the order of Mr Shapps to enable an investigation into its ownership to be carried out.

Mr Shvidler is a friend of Chelsea Football Club owner Roman Abramovich.


Updated: 4-9-2022

France Confiscates Sanctioned Russian Oligarch’s Painting

French authorities confiscated a painting lent by sanctioned Russian oligarch Petr Aven to billionaire Bernard Arnault’s foundation where a blockbuster exhibition in Paris just ended, Agence France-Presse reported.

The painting, called “Pyotr Konchalovsky Self-Portrait,” is being withheld by French authorities, AFP reported, citing sources.

The French Culture Ministry announced the decision to hold the artwork while sanctions are in place on Saturday without identifying the oligarch, the news service said.

Officials are considering the fate of another piece from the show that’s owned by a private foundation tied to another oligarch who’s just been sanctioned, the ministry said, according to AFP. The news service identified the oligarch as Vyacheslav Kantor.

Aven was sanctioned at the end of February by the European Union for his close ties to Russian President Vladimir Putin following his country’s invasion of Ukraine.

The Konchalovsky portrait was part of a show called the Morozov collection, which ran from Sept. 22 to April 3 at the Fondation Louis Vuitton in Paris, an art center set up by Arnault, the founder of luxury group LVMH.

Another painting that was due to be returned to a museum in Ukraine — “Portrait of Margarita Morozova,” by the Russian artist Valentin Serov — will remain in France until the situation in Ukraine allows for its safe return to the Beaux-Arts Museum in Dnipropetrovsk, AFP reported, citing the ministry.

The collection featured around 200 pieces which came mostly from the Hermitage Museum in St. Petersburg and the Pushkin State Museum of Fine Arts in Moscow, though other institutions in the Russian capital, Belarus and Ukraine also sent pieces. The value of the collection was estimated at at least $1.5 billion.

The paintings were being taken down a day after the exhibition ended for their planned return to their respective lending institutions, Bloomberg News reported on April 4.

The Morozov collection was set to perform even better than a previous exhibition held at the foundation called the Shchukin collection which took place in 2016 and 2017 and attracted 1.2 million visitors, a spokesperson said last month.

Updated: 4-12-2022

Richest Russian Strikes Deal As Sanctions Snare Other Oligarchs

* Billionaire Vladimir Potanin Bought Rosbank Unit From SocGen
* Head Of Nickel Giant Has Avoided Penalties In U.S., U.K., EU

While many Russian tycoons were scrambling to shift their assets and move their superyachts in the wake of Western sanctions, the country’s richest man, Vladimir Potanin, was doing all that and more.

Potanin’s Interros Capital, which redomiciled to Russia from Cyprus in December, agreed on Monday to buy Societe Generale SA’s entire stake in Rosbank PJSC. It’s an asset Potanin knows well: He and fellow billionaire Mikhail Prokhorov previously owned the bank, hired some of its executives and had planned to take it public in the mid-2000s until SocGen took a 10% position.

Within a few years, the Paris-based lender controlled the entity, Prokhorov was no longer a shareholder and Potanin cashed out his remaining stake.

It has been a difficult period for Potanin, 61, the president of MMC Norilsk Nickel PJSC. The miner is facing increased freight costs and insurance issues and it’s tougher to find ships to carry its nickel, according to people with knowledge of the situation.

Interros’s planned 90 billion ruble ($1 billion) investment in Russian projects aimed at international tourists might be partially suspended. And he has lost positions alongside the world’s elite at nonprofits in New York that he cultivated over decades.

Still, Potanin’s ability to make a major purchase from France’s third-largest bank puts in stark relief the difference between him and other oligarchs of his generation: He’s not sanctioned by the U.S., U.K. or European Union. While other billionaires like Vladimir Lisin have also avoided penalties, Potanin wielding his $29 billion fortune to strike deals with the West contrasts with Mikhail Fridman and Petr Aven, who have said in interviews that sanctions ruined their lives.

“One reason the deal is possible is that he’s not on the sanctions list,” said Jerome Legras, a managing partner in Paris at Axiom Alternative Investments. While full terms of the accord weren’t disclosed, SocGen said it would take a hit of about 3 billion euros ($3.3 billion) on the sale. That suggests as long as Russia’s banking system doesn’t collapse, Potanin “will have made a great deal,” Legras said.

In a statement through Interros, Potanin said he bought back SocGen’s stake “to maintain the stability of Rosbank and create new opportunities for its clients and partners.” A spokesperson didn’t immediately reply to a request for additional comment.

Potanin is Russia’s richest person, largely due to his roughly one-third stake in Nornickel, according to the Bloomberg Billionaires Index.

He’s one of the country’s original oligarchs who’s still wealthy, profiting along with Fridman, Aven and other bankers in the 1990s from the privatization of natural resource companies after the Soviet Union’s collapse. Potanin was also first deputy prime minister under Boris Yeltsin.

Nickel Defense

Canada recently added Potanin to its sanctions list, the first time a Western government has targeted him after the Ukraine invasion. Leonid Mikhelson, Russia’s second-wealthiest person, had also previously escaped penalties for more than a month but has since been singled out by Canada and the U.K.

Experts say it’s little mystery why Potanin remains largely unscathed: His Nornickel accounts for about 40% of the global output of palladium, which helps cut pollution from cars, and 20% of high-grade nickel, a key metal in electric vehicles.

Any penalty levied on the company could recoil on Western governments through supply shortages and higher prices for crucial raw materials. Though Potanin doesn’t have a majority stake, sanctioning him could reverberate through Nornickel and the industry as well.

U.S. President Joe Biden “can’t say that for all nickel coming in from Russia, we’ll dump it in the Boston harbor,” Jay Newman, a former portfolio manager at Elliott Management Corp., said in a phone interview. Sanctions “are not targeted to people whose products we need.”

Still, Biden has taken some steps to rectify the raw material imbalance. He invoked the Defense Production Act on March 31 to increase domestic nickel production and wean the country off of “unreliable foreign sources” for critical minerals and metals.

Some 20% of the nickel comes from Russia, much of it from the mine of Potanin’s Nornickel that was once a Siberian gulag.

‘Enormous Pressure’

While Nornickel is still distributing its metals under long-term deals with industrial clients, some of the world’s largest transport companies, including A.P Moller-Maersk A/S, halted bookings in and out of Russia. Shipments of palladium, traditionally done by passenger jets, have had to be re-routed with flights from Russia cut to only a few destinations.

Finnish company Outokumpu Oyj, one of the world’s largest stainless-steel manufacturers, and Germany’s BASF SE are among others distancing themselves from Russian nickel. Outokumpu Oyj said it’s looking for alternatives while BASF said it was fulfilling existing contracts but not pursuing new business with Nornickel.

The environmental footprint is also a concern — Nornickel is the world’s largest polluter of man-made sulfur dioxide, according to a 2020 Greenpeace report.

The company is investing more than $4 billion to build sulfur capture and utilization facilities in Norilsk. It’s part of a strategy to “dramatically” reduce emissions, a Nornickel spokesperson said.

Biden is “under enormous pressure to sanction anything Russian he can identify, including nickel,” said Michael Klare, author of “Resource Wars: The New Landscape of Global Conflict.” “This is going to be a tough balancing act because there are so many valuable materials that come from Russia that are critical to the world economy.”

“But people are ferociously angry,” he said. “Sanctions may go far and there will be economic consequences.”

Pragmatic Posture

In his few public remarks on the Ukraine crisis, Potanin has hinted at these tensions. He has voiced his opposition to the country’s retaliation against international penalties and cautioned not to burn bridges with foreign companies leaving Russia, instead advocating for “calibrated, pragmatic” counter-moves.

“In light of the economic restrictions directed against Russia, there may be an understandable desire to act symmetrically,” Potanin said on Norilsk Nickel’s Telegram channel on March 11. “But the example of Western countries shows the economies of these countries themselves suffer from the imposition of sanctions against Russia. We must be wiser and avoid a scenario where retaliatory sanctions hit us ourselves.”

Potanin’s fortune has fared better than most other Russians tracked by the Bloomberg Billionaires Index. His net worth is down by about $100 million since the day before the Ukraine invasion.

Interros redomiciling to Russia may help shield his assets from possible sanctions, as well as the divorce claim for as much as $7 billion that he’s been fighting in London. The holding company said it wants to be an anchor investor in Russia’s Far East, which is why it chose to register in the so-called offshore zone on Russky Island in Vladivostok.

Interros holds most of its assets in Russia and finds it natural to invest from Russia, especially as the benefits that were offered only in international offshore havens are available, Potanin said in a statement.

As for Rosbank, Potanin’s holding company owned it starting in 1998, before SocGen acquired a position in 2006 and later merged it with other Russia operations.

The agreement with Interros came “after several weeks of intensive work,” SocGen said. It expects the deal to close in the coming weeks, pending regulatory approval.

Updated: 4-13-2022

Roman Abramovich Has $7 Billion Of Assets Frozen In Tax Haven Jersey

* Jersey Authorities Are Latest To Target Russian Tycoon
* Jersey-Registered Firm Provided $1.4 Billion Loan To Chelsea

A Jersey court froze more than $7 billion of assets linked to Roman Abramovich, equivalent to half of the Russian billionaire’s publicly estimated wealth.

Police in the English Channel tax haven raided premises “suspected to be connected” to Abramovich, while the local Royal Court imposed the asset freeze, according to the Jersey government. It’s the latest sign of a crackdown on offshore wealth held by sanctioned Russian billionaires.

Abramovich was sanctioned by the European Union and the U.K. last month as part of sweeping penalties against tycoons believed to be close to Russian President Vladimir Putin. Western measures against Abramovich have left his assets frozen and the future of his football club Chelsea FC uncertain.

Representatives for Abramovich, who has a net worth of $13.9 billion according to the Bloomberg Billionaires Index, didn’t immediately respond to requests for comment. Jersey’s Law Officers’ Department said it couldn’t currently comment beyond the statement.

The moves comes as Cayman Islands authorities separately announced that they had frozen some $7.3 billion of assets tied to Russian individuals and companies sanctioned by the U.K.

Abramovich himself has long-standing links to Jersey.

Camberley International Investments Ltd., which has an address in the island’s capital St. Helier, is the provider of an outstanding $1.4 billion loan to Abramovich’s Chelsea holding company, according to U.K. filings from last year.

As part of the Channel Islands, Jersey is a self-governing British crown dependency 14 miles away from France that relies on Britain for its defense. Aside from financial services firms and tourists, the island has long been a magnet for the rich.


Updated: 4-14-2022

Oleg Deripaska’s Superyacht On The Move As Sanctions Bite

* Russian Tycoon’s Clio Headed To Turkish Port After Maldives
* U.S., Allies Sanction Moguls To Deter Russian War On Ukraine

Clio, a $65-million superyacht tied to Oleg Deripaska, the Russian aluminum billionaire whose connections to Vladimir Putin have put him on sanctions lists, is on the move again after being anchored off the Maldives.

Follow Clio’s Journey

The 239-foot yacht had been in the Indian Ocean for at least two months as scrutiny around Deripaska and other oligarchs close to Russia’s president increased following the Feb. 24 invasion of Ukraine. Clio is heading for Gocek, Turkey, and was expected to reach its destination Friday afternoon local time, according to vessel data analyzed by Bloomberg News.

Deripaska, who has been under U.S. sanctions since 2018, sits atop an industrial conglomerate that includes a major provider of military equipment to Russia. The European Union sanctioned him earlier this month on the same day the bloc targeted Putin’s adult daughters. The U.S. and EU have levied sanctions on tycoons and those accused of enabling Moscow’s war in Ukraine.

Authorities in the U.S. and allies in the U.K., Italy, France and Germany are trying to locate the luxury boats and other properties of Russian tycoons.

Nearly a dozen yachts have already been seized — Italian authorities confiscated a 530 million-euro ($578 million) superyacht owned by Russian billionaire Andrey Melnichenko, while Spain confiscated Viktor Vekselberg’s $90 million Tango as well as the $600 million Crescent believed to belong to Igor Sechin, head of Moscow-based Rosneft Oil Co.

Clio, which sleeps 18 and has its own elevator, previously appeared to be on the move around March 20, heading northwest from the Maldives. On March 21, its automatic identification system, or AIS, displayed a message that would have been inputted by the crew indicating there was “armed security” on board, according to data compiled by Bloomberg. That message isn’t unusual to ward off pirates in the region.

A few days later, the AIS showed Clio was headed to Dubai, before making a U-turn south, displaying it was en route to Mumbai. It then made its way back to Male, the capital of the Maldives, where it had been anchored, ahead of the 3,000-mile (4,828-kilometer) journey northwest through the Red Sea and Suez Canal toward Port Said.

Video Of The Clio

The actions by the U.S. and its allies have scattered Russian yachts to locales perceived as less likely to seize the pleasure boats, including parts of the Middle East and the Caribbean, according to space-based analytics and data firm Spire Global Inc. Megayachts owned by Russians account for as much as 10% of the global fleet, according to industry watcher The Super Yacht Group.

Fijian authorities were surprised this week by the arrival of the $325-million Amadea yacht owned by sanctioned gold tycoon Suleiman Kerimov, local media reported. Fiji port requirements state that any yacht arriving in the country must obtain approval from government ministries.

The Turkish coast seems to be a favored destination for Russian yachts, including Roman Abramovich’s Solaris. Many vessels owned by sanctioned moguls have gone dark and stopped broadcasting their locations, in contravention to international maritime law.

U.K. Freezes 10 Billion Pounds Of Assets Linked To Abramovich

Two of Roman Abramovich’s longstanding associates, one of them a director of Chelsea Football Club, were sanctioned Thursday by the U.K. government in a move intended to freeze assets worth as much as 10 billion pounds.

The government said it sanctioned Chelsea director Eugene Tenenbaum, described on the soccer club’s website as one of Abramovich’s “closest associates” and David Davidovich.

According to the Foreign Office, Tenenbaum took control of Evrington Investments Ltd., an Abramovich-linked vehicle, on Feb. 24 shortly before Russia’s invasion of Ukraine. Davidovich took Evrington over from Tenenbaum a month later.

The decision to target the pair comes hours before a deadline to bid for the club owned by Abramovich since 2003. The four bidders have been told that the final decision on any sale, and whether it goes ahead, rests with Abramovich, according to a person familiar with the situation.

The potential buyers include groups led by former Guggenheim Partners executive Todd Boehly, Bain Capital co-chairman Stephen Pagliuca and former Liverpool chairman Martin Broughton. The Ricketts family, owners of the Chicago Cubs baseball team, is also in the running.


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