What doesn’t kill ‘em: Russian billionaires in UK staying put despite tighter sanctions

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Seizures in favor of Ukraine

In her previous capacity as Foreign Secretary, the UK's new Prime Minister Liz Truss always emphasized the nation’s commitment to enforce and even tighten anti-Russian sanctions. Like her predecessor Boris Johnson, she stands in firm support of Ukraine. The UK announced a second tranche of sanctions against Russia on the very first day of the Russian invasion of Ukraine: on February 24, 2022. Since then, the scope of sanctions has been growing, and the lists have come to include legal entities and individuals with ties to Vladimir Putin. In all, the British sanctions list features over 1,000 Russian nationals. One of the most famous figures is Roman Abramovich, the former owner of Chelsea Football Club. In May, he was authorized to sell Chelsea at 4.25 billion pounds on the condition that 2.5 billion pounds would remain frozen in his account with an English bank for further donation to the war victims aid foundation in Ukraine. However, when Liz Truss entered office on September 6, it turned out that Abramovich had kept the money in his account.

Why is the donation to war victims taking so long, wondered Labor MP Chris Bryant? However, Under-Secretary of State Rehman Chishti refrained from comment on this particular case, reiterating that the British sanctions list includes 1,100 individuals, of which 123 are oligarchs and their family members. Their aggregate fortune amounts to 130 billion pounds, but all assets are currently frozen – along with those of 120 companies and 19 banks, totaling 940 billion pounds. This accounts for 80% of the Russian banking sector’s and its partners’ assets put together. Furthermore, over 60% of the Bank of Russia's foreign assets have also been frozen. According to the Foreign Office representative, this demonstrates the government's unwavering commitment to meet the criteria set by the parliament and do everything in its power to bring those responsible for aggression against Ukraine to justice.

The deputy was not appeased and cried out: “Nonsense!”

Bring the golden visas back!

Chris Bryant is on the Foreign Affairs Committee, which brings together deputies from all parliamentary factions. Late in June, the Committee published a report titled “The cost of complacency: illicit finance and the war in Ukraine”. Listing meaningful sanctions-related measures implemented by the British government after February 24, the committee criticizes all previous governments, including Boris Johnson’s, for overlooking illegal transactions and assets, the “dirty money” that had been flowing into the country, undermining national security for years. The report welcomes the amendments to the Economic Crime Act, which now includes a register of overseas entities and their beneficial owners, but concludes that the measures envisaged by the Act, which came into force on May 14, are insufficiently comprehensive or efficient, whereas its implementation has not been ensured with additional law enforcement funding.

The authors of the report believe the government has failed to take into account the presence of “enablers”: legal entities and individuals helping those under sanctions. The Committee recommends that the government establish a unit that would enforce the sanctions and finance the unit’s work throughout the Ukrainian crisis. It also suggests improving international coordination and imposing collective sanctions, merging the sanctions lists with those of the US, the EU, Canada, or Australia.

Furthermore, Committee members demand that the government review particular cases of granting British citizenship, especially to the holders of so-called “golden visas” (Tier 1) obtained in exchange for major investments on British soil. Obtaining such a visa entitled foreigners to applying for a residence permit for themselves and their families. An investment of 10 million pounds bought you a permanent residence permit in just two years. After spending five years in the UK, a golden visa holder could apply for British citizenship. The UK stopped issuing such visas a few days ahead of Russia's invasion of Ukraine.

According to anti-corruption NGO Spotlight, half of over 6,000 golden visa holders were screened for “posing a possible threat to national security”. In the period between 2008, when the golden visa system was introduced, and 2015, the British authorities issued around 3,000 such visas, of which 700 were to Russian millionaires. The government never reported on the particulars of the visa application process or the visa holders’ identities. The Foreign Affairs Committee demands that the government review each case of issuing such visas after 2015, with special attention to individuals who may have obtained a visa or citizenship with violations of national security checks.

Back to Russia?

The report does not mention Evgeny Lebedev, the son of Alexander Lebedev, a former KGB resident agent in London and subsequently a prominent Russian banker. The press and the House of Commons have recently voiced concerns that the owner of two British papers, who has not had his Russian citizenship annulled and has been welcomed to the House of Lords (by his presumed “friend” Boris Johnson), could still pose a threat to national security despite the reassurances of security services. The debate resumed after Italian journalists reported having sighted Johnson, the Foreign Secretary at the time, leaving Evgeny Lebedev’s villa without security or assistants in 2018. In the summer of 2022, Johnson indeed admitted to the Parliament that he had indeed had frequent one-on-one meetings with Alexander Lebedev at his son’s villa during his tenure as Foreign Secretary.

The BBC's investigation revealed that, despite seemingly harsh sanctions and tight anti-money laundering legislation (everyone still remembers Mikhail Fridman’s and Petr Aven’s complaints over not being able to afford help), Russian oligarchs still successfully find loopholes in the law.

However, their struggle in the context of sanctions is visible, especially considering that, apart from mundane worries, the list of their problems includes searches or even criminal prosecution for violating sanctions. In May, the BBC covered a search in Petr Aven's London apartment, which culminated with the confiscation of 400,000 pounds. The operation was carried out by the Combating Kleptocracy Cell (CKC), a specialized task force of the UK’s National Crime Agency.

Unsurprisingly, some of the billionaires who have ended up on the sanctions lists and have been faced with encumbering restrictions in countries where they have been living for years and hoped to stay are weighing their options. If we were to believe the Financial Times, the Kremlin has been reaching out to rich emigrants asking them to come back.

The Financial Times has received two first-hand accounts to that effect and a few more testimonies from those with knowledge of such conversations. To find out how the sanctioned businessmen are faring, the newspaper interviewed seven Russian entrepreneurs, as well as a few high-profile bankers, executives, and former and current public officials.

According to the author of the piece, many said the sanctions were pushing them back to Russia. “Some think: ‘How badly do I need it after all? I can go back to Moscow, enjoy fine dining, and live without worries’,” says one of the interviewees. He argues that the sanctions are consolidating the elites around the Kremlin, including those who would prefer to distance themselves from the current Russian government.

Western leaders had counted on the opposite effect, the FT journalist points out. They assumed that, faced with the risk of losing their fortunes, the businessmen would direct their dissatisfaction toward the Kremlin and exert pressure on Putin.

It would appear that Bloomberg's report on Russian billionaire German Khan, who had lived in the West for almost ten years before returning to Russia due to sanctions, confirms the trend of Russian oligarchs “pulled back into Putin’s embrace”. (The EU and the UK placed Khan under sanctions in March 2022.) However, Khan, a major Alfa Group shareholder, did not go to Moscow to enjoy fine dining or manage Alfa-Bank's assets, according to The Insider's sources. His objective was to continue negotiating the sale of Alfa-Bank in Russia. It is therefore generally wrong to assume that oligarchs who were once close to Putin are retreating to Russia. Thus, Petr Aven, Khan’s partner in LetterOne, recently left the UK in protest over the “insufferable conditions” caused by the freezing of his assets. However, instead of Russia, he chose to move to the US, which hasn’t sanctioned him.

Bloomberg interprets the return of certain billionaires to Russia as a “victory for Vladimir Putin”. The Kremlin had long been trying to lure its rich citizens back into the fold. As the publication points out, the sanctions have increased the Russian elite’s dependence on the President and made Russia a more attractive place to keep their assets, which may become frozen in the West. However, this victory remains theoretical. First of all, the experience of London residents Mikhail Khodorkovsky and Evgeny Chichvarkin disproves the statement about Russia's appeal for storing fortunes. Secondly, as harsh as Western sanctions may be, they are still balanced out by security, which will most certainly be compromised in the event of their return to Russia. Lately, this has implied not only risks of criminal prosecution but also fear for personal safety. Such mind-boggling incidents as Roman Abramovich’s poisoning during his mediation in the peace talks do little to spark patriotic nostalgia among emigrant entrepreneurs.