Between autumn 2022 and June 2023 CiFAR and European Investigative Collaborations, with the support of OCCRP and thanks to IJ4EU and NED, coordinated investigations into how far sanctions applied against Russian individuals following the invasion of Ukraine were being effectively implemented in Europe.
These sanctions are designed to prevent designated persons from using their assets – be it money, property, cars or yachts – or transferring them overseas. In effect, these sanctions are supposed to freeze in place all assets of these individuals in Europe until the sanctions are lifted. Our previous work on sanctions, especially anti-corruption sanctions, led us to believe however that this might not be the case.
Indeed, the investigations, published by Mediapart (France), Info Libre (Spain), and Domani (Italy), showed that it is likely sanctions are being evaded in several cases through the transferring of assets to family members. It also demonstrated that there are high levels of discrepancy between European countries in how assets are publicly reported – making it harder for civil society to do its role. Because of this, our investigations for the first time painted a picture of the EUR 3 billion in assets currently frozen in Italy and Spain.
Our investigations showed that there were key issues with how European governments have been implementing sanctions. These findings are important both for ensuring that Russian assets are effectively sanctioned and for other sanction regimes.
1. European countries lack transparency in how they report frozen assets
While some countries have been proactive in listing the assets frozen under the Russian sanctions regimes, in some jurisdictions authorities have cited privacy concerns and not made this publicly accessible.
When information is not made public, authorities are reliant on state actors alone to check if sanctions are being enforced. Public disclosure of assets frozen on the other hand enables civil society actors, including investigative journalists, to check to see if these are the only assets relating to the sanctioned person and if those assets are properly frozen.
Disparities in information across European countries also risks that some jurisdictions become more desirable as destinations for oligarchs on the long run, as they know public scrutiny will be less in case of any future sanctions.
2. Billions are hidden in Italy and Spain
As two of the jurisdictions which did not disclose frozen assets, our investigations demonstrated the extent to which both Italy and Spain have been popular destinations for the wealth of oligarchs.
With the combined assets in both countries amounting to more than EUR 3 billion, both countries hold a substantial portion of the total assets frozen in Europe.
3. Sanctioned oligarchs may have been using family members to evade sanctions
While sanctions are designed to be used to prevent sanctioned persons from accessing their funds, our investigation has revealed suspicions that transactions have taken place that have seen assets transferred to family members.
Current sanction regimes do not always include the names of close family members and for persons not sanctioned immediately following the invasion of Ukraine, the opportunity was there to transfer these assets to close associates and family members before sanctions were imposed.
This means that sanctioned persons may still be able to enjoy their wealth without restriction, including transferring it outside of European countries, using family and friends as proxies.
Transparency is lacking in European countries
Russian oligarchs’ evasion tactics call into question the effectiveness of European sanctions
The properties of sanctioned Russian oligarchs that have been frozen worldwide amount to 58 billion dollars (53.244 billion euros), according to the latest figure published by the REPO (Russian Elites, Proxies and Oligarchs) Task Force, created by the European Union, the G7 and Australia. Of that figure, €21.5 billion have been frozen in the European Union and €18.39 billion in the United Kingdom.
But to date, none of these jurisdictions offers a complete and public overview of the assets behind these figures, nor is it possible to request this information as journalists. While France provides a partial list of companies and addresses of frozen real estate, Italy, Spain and the UK provide no information and there is no European country that provides full data.
Accessing this data for the RussianEscape investigations has however provided insights into how sanctioned persons are evading asset freezes and give a glimpse of what could be done if data was routinely available.
Read more: (ES)
Billions are hidden in Italy and Spain
Assets frozen in Italy
Frozen assets identified in Italy for the first time through this investigation amount to just over two billion euro – or 10% of the EU total frozen assets. The list of frozen assets includes yachts, five planes, eight companies and over a hundred real estate properties, as well as hundreds of thousands of euros deposited in current accounts and many other asssets. These are the assets that, from February 2022 to date, have been frozen by the Italian authorities relating to 24 Russian citizens and four companies.
Some valuable frozen assets include: SY A (a yacht) worth EUR 530 million, which, according to the Italian authorities, belongs to Andrey Melnichenko, former owner of the Eurochem (fertilisers) and Suek (coal) groups; The Scheherazade (a yacht), which cost EUR 650 million, is, according to some press reports, formally attributable to Eduard Khudaynatov, a historical collaborator of Vladimir Putin, former CEO of the state giant Rosneft, now owner of the private Independent Oil and Gas Company; a real estate property (estimated value €1.2 million) in the name of Musa Bazhaev, a businessman active in the mining sector; and assets attributable to Vladimir Putin’s friend Boris Rotenberg: real estate (worth €3.6 million) in Costa Smeralda and 50 per cent of Aurora 31 Srl, a company that owns the hotel of the same name located in Rome, a few metres from Via Veneto. Both properties attributed to Boris Rotenberg are formally registered in the name of the Cypriot company Logotax Developments Limited.
Read the full investigation: (IT)
Assets frozen in Spain
Over 1 billion euros in assets have been frozen in Spain, reported for the first time by InfoLibre as part of the #RussianEscape investigations. This includes real estate, yachts, airplanes and bank accounts and relates to 24 oligarchs and their families. Assets also include a company owned by Russia’s Ministry of Transport.
As with Italy, the most valuable assets frozen in Spain are yachts – valued at over 800 million euros. This includes the Lady Anastasia, owned by Alexander Mikhiv, CEO of the state arms export agency Rosoboronexpor; the Valerie, owned by Sergei Chemezov, head of Rostec; and the Sasha Primero and the Neva Primero, both owned by Vladislav Reznik, president of the Rus insurance company.
Another key part of the sanctioned assets are properties, many in the most exclusive communities on the Mediterranean coast. This includes 15 properties that have been seized relating to Igor Vladimirovich Lebedev, vice-president of the Duma, and five relating again to Sergei Chemezov.
Many of these properties have been hidden behind company ownership structure and InfoLibre’s investigation has identified several properties relating to close family of sanctioned persons that have not yet been frozen.
Read the full investigation: (ES)
Living in luxury: how families of Russian oligarchs escape war sanctions in France
This story explores how the assets related two key persons closely related to Putin remain in use, due to their ownership by family members, and the raises the broader questions of whether EU sanctions are providing a loophole for oligarchs through the use of family assets.
- The villa of Evgeny Zubitskiy, CEO and majority shareholder of IHM, was placed under sanctions by the European Union (EU) on 8 April 2022, because the company is a major “source of revenue” for the Russian government. However his brother, Andrey Zubitskiy, can continue to enjoy Villa Della Robbia in full legality. He has not been placed under sanctions, even though he is involved, alongside his brother, in the management of IHM.
- In 2016, the daughter and ex-wife of Dmitri Peskov, one of Vladimir Putin’s most loyal followers, bought a luxury flat in Paris for €1.77 million, including €477,000 lent by a Russian state-owned bank and €1.3 million paid in cash. On 8 March 2022, eight days after Dmitri Peskov was placed under sanctions, his daughter Elizaveta sold her 25% stake in Sirius, the company that owns the Paris flat, to her mother for just 250 euros. This transfer was made two months before Elizaveta Peskova was herself placed under European sanctions on 3 June 2022. Her mother is the only member of the family not to have been sanctioned.
From Brianza to Switzerland: how an oligarch saved a company
This story looks at the case of Eurochem Agro Spa, an Italian company frozen after the imposition of EU sanctions imposed against Aleksandra Melnichenko, wife of Andrey Melnichenko, one of the world’s best-known Russian oligarchs and believed by Italian authorities to belong to them. With 127 million euros in sales in 2021, the company is wholly owned by the holding company Eurochem Group Ag, based in the Swiss canton of Zug.
This investigation comes to two conclusions – and asks two questions:
- Why are European countries acting differently with respect to the assets of this company? While Italy and Cyprus have imposed sanctions on the company based on a conclusion that the group is owned, controlled or otherwise related to the Melnichenkos, Germany and Belgium consider that the Melnichenkos’ ownership or control over the group cannot be proven.
- Why in October 2021, four months before the outbreak of the conflict, did Italy’s Eurochem Agro Spa dispurse 24 million euros in dividends and reserves to its parent Eurochem Group, registered in Switzerland and why has this group not been sanctioned?
Read the full investigation: (IT)
The mystery of Deripaska’s luxurious villa: frozen but still for rent
Villa Walkirie is one of the most opulent properties on the Costa Smeralda. It consists of at least four villas and is surrounded by 10,000 square metres of Mediterranean scrub. Worth at least 10 million euros, this property belongs to Oleg Deripaska, the so-called aluminium czar: one of the many oligarchs who ended up on the European sanctions list after the invasion of Ukraine. It has technically been frozen by Italian authorities but seems to be still available for rent, with agents offering it for EUR 150,00 per week.
It is possible that it was the State Property Agency that rented the villa complex belonging to Deripaska, however the department declined to answer enquiries and, according to a private security agent working in Porto Cervo, the agency does not rent out Villa Walkirie. So who is renting out this property?
Sanctioned Russian tycoons maneuver in Spain to save their assets from seizure
Despite being subject to EU sanctions, Vladislav Reznik, president of the insurance company Rus, has not had his properties frozen. This is surprising given that his two yachts have and all of them are in the name of the same company. Official sources argue that ownership has not been established, but the company is administered by his wife and was previously owned by a trust registered in London, of which Reznik was a trustee. Similarly, Sergei Chemezov, president of Rostec, has had his yacht frozen but a property he seems to own through a series of companies and family members, is on sale for EUR 8.4 million.
Read the full investigation: (ES)
Saving villas from seizure: the strategy of Putin’s oligarch
Alisher Usmanov, who created a company on the Isle of Man for the mooring of a superyacht in Barcelona, ceased to be a beneficiary of The Paullic Trust just 17 days before the invasion of Ukraine. The Court of Justice of the EU now needs to determine whether or not the beneficiary of the trust exercises control over the properties registered in the name of that legal entity.
Four villas located in some of the most beautiful spots in Sardinia belong to this trust. Documents obtained by Domani show that the villas belong to this trust through a series of companies located between Italy, Cyprus, the Isle of Man and Bermuda. All of these properties have been frozen by the Italian State because it considers them the property of Usmanov, included on the EU’s sanction list.
The question then remains: who is now behind The Paullic Trust and has this been used as a tool to evade sanctions, with foreknowledge of the invasion of Ukraine?
Eurallumina, the seized oligarch’s company. What will the government do?
Eurallumina, based in Sardinia, is deemed to be one of the largest bauxite refineries in Europe. Without announcing it publicly, the Italian Financial Security Committee has decided to freeze the share capital of the company, which is worth 15.5 million euros, because it considers it part of the assets of Oleg Deripaska, one of the most-known Russian oligarchs. Officially, the shares of Euroalumina are held by the Cypriot company Libertatem Materials Limited, which belongs to the Russian group United Company Rusal, founded by Deripaska in 2000. From now on, therefore, the Agenzia del Demanio will have the management of the group in hand. But what does the Italian State intend to do with this company? Will Italy invest the money promised by Rusal to relaunch the refinery?
Read the full investigation: (IT)
Sanctions conundrum: the Superjet case puts the government at a crossroads
Superjet International Spa is an Italian company producing civil aircrafts, created with a joint investment by the two State owned companies Leonardo (Italy) and United Aircraft Corporation (Russia). Now that the Italian government has decided to freeze the share capital of the company belonging to the Russian shareholder, equivalent to 90% of the total share capital, the future of Superjet and its workers is at risk.
Read the full investigation: (IT)
What should happen now
These weaknesses in the sanction regimes could easily have been avoided. Building on these investigations, sanctioning jurisdictions should:
- increase the resources they have dedicated to sanctions monitoring and oversight
- publicly provide information on sanctioned assets to allow for independent verification of sanction compliance by the media, civil society and members of the public
- ensure that sanctions are not evaded through the direct or indirect transfer of assets to family members and friends
- investigate and enforce any sanctions breaches found and, where they do not have effective legislation, introduce penalties for sanction breaches
- proactively open investigations into the source of sanctioned money and prosecute where a criminal offence is believed to have occurred.
Read more on the topic
Sanctions Watch documents people subject to anti-corruption sanctions across the world and analyses sanctions as a tool against corruption. Sanctions Watch documents designations made under the following anti-corruption sanctions regimes: Canadian sanctions; EU misappropriation sanctions; Swiss sanctions UK sanctions and US sanctions.
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