US Treasury targets more Russian oligarchs

Chris Hamblin

19 April 2018

The US Government, in its accompanying press release from the US Treasury, has drawn its rationale for the decision from its conviction that Russia is the one member of the United Nations' security council that should not be allowed to invade other countries without UN permission. In justifying the sanctions it has also registered its distaste for the idea that a great power should instigate violence abroad or back any regime that murders its own citizens or operate for the disproportionate benefit of a few very rich people. Treasury Secretary Steven Mnuchin, formerly of Goldman Sachs, unloosed a tirade of his own against great powers taking part in malicious cyber activities and attempting to influence the outcomes of elections in other countries.

New UHNWs on the list

The new blacklist targets people whom the Treasury listed in late January in its "Countering America’s Adversaries Through Sanctions Act section 241 report." Executive Orders 13661 and 13662 provide the authority for it. All their assets that are subject to US jurisdiction must be frozen. The Treasury is threatening to sanction non-US persons that knowingly facilitate significant transactions for them, although the details of this are vague.

Vladimir Bogdanov is on the list "for operating in the energy sector of the Russian Federation economy," an innocent-sounding activity which the US Government believes to be heinous. Bogdanov is the director general and vice chairman of the board of directors of Surgutneftegaz, a Russian oil company on which OFAC imposed various sanctions in September 2014. The Treasury's press release does not say whether this month's sanction has anything to do with that older sanction, or whether it has sanctioned the rest of the Surgutneftegaz employees.

Oleg Deripaska is on the list for having acted on behalf of a senior official of the Government of the Russian Federation - again, an innocent-sounding activity in view of the fact that few senior government officials anywhere in the world could function well without others acting on their behalf. Indeed, there are 683,000 employees in the Russian central/federal government's core ministries alone, according to the Organisation for Economic Co-operation and Development; most of them presumably act on behalf of senior officials. In its press release the Treasury does not say whether it has sanctioned them.

Deripaska has also committed Bogdanov's sin of operating in the energy sector. The Treasury's press release draws attention to a rather megalomaniacal Louis XIV-style statement that Deripaska once made to the effect that he does not separate himself from the Russian state. It has also taken umbrage at Deripaska's possession of a Russian diplomatic passport.

The Treasury adds that it, or perhaps some other unspecified agency, has investigated Deripaska for money laundering and accused him of threatening the lives of business rivals, wiretapping a government official illegally and taking part in extortion, racketeering and bribery. The press release does not say whether anyone has substatiated its accusations.

Suleiman Kerimov is on the list for another inadvisable activity - being an official of the Russian Government. With perhaps a large fraction of 683,000 of these on its sanctions lists already, it is easy to see how OFAC might have overlooked one or two late stragglers such as Kerimov.

This oligarch is a member of the Russian Federation Council. On 20 November last year he was detained in France for two days. The US Treasury alleges that he brought hundreds of millions of euros into France – transporting as much as €20 million at a time in suitcases, in addition to transferring funds in more conventional ways – without reporting the money to the French tax authorities. It believes that he launders the funds through the purchase of villas and also accuses him of failing to pay €400 million in taxes related to villas.

OFAC is 'designating' Igor Rotenberg for operating in the energy sector of the Russian economy. Rotenberg acquired 79% of the Russian oil and gas drilling company Gazprom Burenie from his father, Arkady Rotenberg, after OFAC 'designated' the latter in March 2014. Igor Rotenberg’s uncle, Boris Rotenberg, owns 16% of the company. Like his brother Arkady Rotenberg, Boris Rotenberg was 'designated' in March 2014.

Kirill Shamalov is on the list "for operating in the energy sector of the Russian Federation economy." He married President Vlatimir Putin’s daughter Katerina Tikhonova in February 2013, whereupon his fortunes improved dramatically. He acquired many shares in Sibur, a Russian oil and gas company. A year later, he was able to borrow more than $1 billion through a loan from Gazprombank, a state-owned entity subject to US sectoral sanctions pursuant to Executive Order 13662. That same year, long-time Putin associate Gennady Timchenko, who is himself on a blacklist because of order 13661, sold an additional 17% of Sibur’s shares to Shamalov. Shortly thereafter, Kirill Shamalov joined the ranks of the billionaires around Putin.

Andrei Skoch is on the list "for being an official of the Government of the Russian Federation."

Viktor Vekselberg is on the list "for operating in the energy sector of the Russian Federation economy."

New companies on the list

OFAC has blacklisted 12 companies that are owned or controlled by the people we have just mentioned. On top of this, as always, OFAC expects the regulated community to go on obeying its '50% rule,' seeking out and freezing the assets of any company that is 50%-owned by the Russian oligarchs on its sanctions list.

The companies are as follows.

B-Finance Ltd, based in the British Virgin Islands, owned by Oleg Deripaska.
Basic Element Ltd, based in Jersey, owned by Oleg Deripaska.
EN+ Group, Jersey, Oleg Deripaska.
EuroSibEnergo, Russia, Oleg Deripaska.
United Company RUSAL PLC, Jersey, controlled by EN+ Group.
Russian Machines, Russia, Oleg Deripaska.
GAZ Group, Russia, Oleg Deripaska.
Agroholding Kuban, Russia, Oleg Deripaska.
Gazprom Burenie, Russia, Igor Rotenberg.
NPV Engineering Open Joint Stock Company, Russia, Igor Rotenberg.
Ladoga Menedzhment, Russia, Kirill Shamalov.
Renova Group, Russia, Viktor Vekselberg.

Russian state-owned firms

Rosoboroneksport is a state-owned Russian weapons trading company that has gone on the blacklist in accordance with Executive Order 13582 "for having materially assisted...the Government of Syria." The Russian Financial Corporation Bank is now on the list for being owned by Rosoboroneksport.

Newly blacklisted Russian PEPs

Andrey Akimov is the chairman of Gazprombank. The Treasury has put him on the list "for being an official of the Government of the Russian Federation."
Mikhail Fradkov is the President of the Russian Institute for Strategic Studies . The Treasury has listed him "for being an official of the Government of the Russian Federation."
Sergey Fursenko is on the board of Gazprom Neft, a subsidiary of Gazprom. The Treasury has blacklisted him "for being an official of the Government of the Russian Federation."
Oleg Govorun is on the list for the same reason.
Alexey Dyumin is the governor of the Tula region of Russia, on the list for the same reason.
Vladimir Kolokoltsev is the Minister of Internal Affairs and General Police of the Russian Federation, on the list for the same reason.
Konstantin Kosachev is on the list for the same reason.
Andrey Kostin is the president of state-owned VTB Bank, on the list for the same reason.
Alexey Miller is the chairman of Gazprom, on the list for the same reason.
Nikolai Patrushev is Secretary of the Russian Federation Security Council, on the list for the same reason.
Vladislav Reznik is a member of the Russian State Duma, on the list for the same reason.
Evgeniy Shkolov is on the list for the same reason.
Alexander Torshin is the deputy governor of the central bank, on the list for the same reason.
Vladimir Ustinov is on the list for the same reason.
Timur Valiulin is in the Ministry of the Interior and is on the list for the same reason.
Alexander Zharov and Viktor Zolotov are on the list for the same reason.

Concurrent with this action, OFAC is issuing two general licences to minimise any immediate disruption it might be causing to US persons, partners and allies.