Putin’s oligarchs challenge sanctions by pretending to be "ordinary businessmen"

Russian billionaire Roman Abramovich is trying to challenge EU sanctions and recover about $1 million from the Council of Europe, The Wall Street Journal reports. He filed a lawsuit in the European Court of Common Pleas in May. Also challenging the sanctions are USM founder Alisher Usmanov, Alfa Group co-owners Mikhail Fridman and Petr Aven and other Russian oligarchs. A total of about 30 people have already filed such lawsuits against the EU. About 10 more have filed similar requests to the EU directly, expecting that it would lift the imposed sanctions by itself. 

Abramovich got under EU and UK sanctions in mid-March. Brussels justified its decision by saying that Abramovich is "a Russian oligarch with long and close ties to Vladimir Putin," which "helped him to maintain his considerable wealth." The billionaire's taxes were a "significant source of revenue" for the Russian budget.

Challenging the sanctions, the oligarch uses his Portuguese citizenship and taxes paid to Great Britain as a cover. He stated that the sanctions violate his rights as a citizen of the European Union. However, earlier in another case, the EU court had already confirmed that EU citizenship was not a hindrance to personal sanctions. Abramovich also argued that he paid more taxes to Britain and the EU than to Russia. This allows him not to be regarded as a sponsor of the Russian state, the oligarch believes. He submitted his arguments to the EU, the Times wrote in June.

Abramovich earned his initial capital back in the Yeltsin era, like most Russian oligarchs. At the same time, he was able to fit into Putin's system, building both his and Putin's wealth and influence. In 1995, he bought the Siberian Oil Company for $100 million at a loans-for-shares auction.  And in 2005, he sold it back to Gazprom for $13 billion, by which time it had already become Putin's personal wallet. This deal allowed him to become one of the richest men in the world, buying soccer clubs, castles, and yachts.  In 2011, during his trial with Boris Berezovsky, he admitted that the auction was a sham, and the subsequent buyout of the company's shares was effectively a bribe.

Abramovich was one of the sponsors of the construction of Putin's palace in Gelendzhik, as was discovered by ACF investigators. He regularly attended Putin's roundtables with oligarchs and was scheduled to attend such a meeting on February 24, the day of the invasion of Ukraine. But he arrived late and met with the president face to face. According to three FT sources, Putin gave his personal "blessing" to Abramovich to act as a mediator in the negotiations with Ukraine.

The authorities of Jersey Island, where the oligarch kept most of his assets, are trying to uncover the detailed history of Abramovich's enrichment. In spring, they launched an investigation into how the oligarch acquired oil companies in the 1990s and how he made his fortune in post-Soviet Russia. Island authorities are also investigating whether Abramovich evaded U.K. sanctions after the war began. This was reported by The Wall Street Journal, citing its sources.

The OCCRP (Organized Crime and Corruption Reporting Project) discovered that Evraz, a company owned by the oligarch, had worked with the Russian National Guard (Rosgvardia) and companies that supply the military and manufacture tanks and explosives for more than a decade. 

For example, Evraz NTMK, based in Nizhny Tagil, sold $1.4 million worth of steel in 2018 to Uralvagonzavod, which produces tanks and civilian transport vehicles. Evraz's subsidiary supplied the plant with vanadium slag used to harden steel in weapons production.

The company may have been involved in providing services that helped destabilize Ukraine, British authorities believe. According to the investigators, the company may have provided steel for the production of Russian tanks and continues to do so since the start of the war.

Billionaire Alisher Usmanov was one of the first to try to challenge the sanctions - he did so in late April. He explained his request by the risk of bankruptcy of his companies - Megafon, Metalloinvest and Udokan Copper. He asked to expedite consideration of the case, because the sanctions "will affect the lives of hundreds of thousands of employees and their families."

However, first and foremost, Usmanov took care of his personal well-being. As the journalists of the Russian Asset Tracker project found out, he withdrew his assets in Great Britain - a mansion in Surrey county, a London house and other assets totaling 2.6 billion pounds - from direct management. Although the British government claims Usmanov "lost access to the assets," investigators doubt it.

In his lawsuit, the billionaire denies that he supports the war. He has not spoken publicly about it. The oligarch believes that the sanctions against him "are based on trumped-up and unsubstantiated accusations, which hurt [his] honor, dignity and business reputation." 

Like all of Putin's oligarchs, Usmanov is trying to convince the world that he is just a businessman unjustly harmed by sanctions. In reality, he serves as an important part of the corrupt system built by Putin and his entourage. In 2017, the Anti-Corruption Foundation published an investigation about the real estate and yachts used by Dmitry Medvedev, who then served as the Prime Minister. It was Usmanov who, through sham charitable foundations, gifted Medvedev a manor worth 5 billion rubles.

In late May, billionaire owners of the Alfa Group consortium Petr Aven and Mikhail Fridman sued the Council of Europe. The EU imposed sanctions on them on February 28. An article about the sanctions in the Official Journal of the EU claimed that Aven "benefited from his government connections," while Fridman "has managed to cultivate strong ties to the administration of Vladimir Putin."

The oligarchs complained about financial difficulties because of the sanctions - for instance, they were unable to pay for cleaning services. Aven calls the sanctions unfair: "If the court decides that you are corrupt, that it's about dirty money, it's absolutely understandable. But [putting people on sanctions lists without a court decision] - I don't understand that."

In late May, British authorities opened a criminal case against Aven, accusing him of violating sanctions restrictions. He is allowed to spend no more than 2,500 euros a month in the kingdom. However, the country's authorities believe that the businessman spends considerably more and "lives beyond his means."

Aven took part in Putin's meeting with oligarchs on February 24, but he denied any connection with the president. Aven, Friedman and other oligarchs' ties to the Kremlin and the KGB were exposed by journalist Catherine Belton in her book Putin's People. Belton argued that the oligarchs were able to keep the business they created in the early 1990s through contacts with the special services and a good personal relationship with Putin. According to Belton, Aven, who worked in the Yeltsin-Gaidar government, was involved in Putin's system of selling state resources abroad in exchange for food. The authorities wanted to solve the food crisis this way, but there was no actual import of products. As a result of the parliamentary investigation, the City Council suspected Putin of corruption and embezzlement of funds and recommended his resignation. 

Other oligarchs challenging Western sanctions include Severstal owner Alexei Mordashov. He, along with other oligarchs, sponsored the construction of Putin's palace near Gelendzhik. Mordashov transferred donations to the Petromed firm, which was run by Putin's friends. Some of this money ended up in the accounts of offshore companies in the British Virgin Islands, Panama and Liechtenstein. These offshore companies were used to finance the construction of the palace. 

In May, lawsuits were filed against the European Union by VEB.RF and its head, Igor Shuvalov, owner of the infamous "Corgi jet". As ACF discovered, the Shuvalov family owns an undeclared private jet, a Bombardier Global Express. Igor Shuvalov regularly uses the plane for business flights, and his wife takes her dogs to international exhibitions in it. While he was Deputy Prime Minister, Shuvalov purchased ten luxury apartments in the high-rise building on Kotelnicheskaya embankment whose market value was 600 million rubles. 

Also trying to challenge the sanctions are: Magnit shareholder Alexander Vinokurov (son-in-law of Russian Foreign Minister Sergei Lavrov), Eurochem shareholder Andrei Melnichenko, members of Dmitry Pumpyanskiy's family (TMK and Sinara Group), Vadim Moshkovich (shareholder of Rusagro), Igor Kesayev (shareholder of Mercury Group), former Uralchem head Dmitry Mazepin, Viktor Rashnikov (Magnitogorsk Metallurgical Plant) and others.

The oligarchs are trying to present themselves as "mere businessmen," deny having close ties to the Kremlin, claim that the sanctions violated their rights, and ask for them to be revoked. But in fact, it was their ties to Putin and their participation in corrupt schemes that allowed the Russian oligarchs to acquire and maintain their fortunes.