Russian aluminium tycoon Oleg Deripaska was one of the most heavily damaged by sanctions announced by the U.S. government last week. A high-profile ally of Russian President Vladimir Putin with links to the British political class, he is part of what anti-corruption activists say is an unhealthy relationship between British and Russian political interests.
In 2008, a political scandal was caused after two high-ranking members from either side of the political establishment met on the Greek island of Corfu.
Labour peer (member of the House of Lords) and then-Business Secretary Peter Mandelson and then-shadow Chancellor George Osborne met on a luxury yacht. Mandelson was later accused of using the trip to undermine Prime Minister Gordon Brown and offer favors to the yacht’s owner. Osborne was accused of trying to solicit donations from the owner. Both denied the accusations vigorously, but said they had met the owner several times previously.
The yacht belonged to Russian billionaire and aluminium magnate Oleg Deripaska.
Deripaska was reportedly the worst-hit of the members of Russian President Vladimir Putin’s inner circle placed under sanctions by the U.S. Treasury Department on April 6. The sanctions, announced during an ongoing political crisis sparked by an attack on a former spy and his daughter in an English city, and the U.S. said it was acting to counter a “range of malign activity around the globe,” including undermining elections and assisting the Syrian government.
“Russian oligarchs and elites who profit from this corrupt system will no longer be insulated from the consequences of their government’s destabilizing activities,” said the statement.
According to Bloomberg’s billionaire’s index, Deripaska’s net worth fell from nearly $8 billion to just over $5 billion in a few days after the annoucement.
In announcing the sanctions, the Treasury said Deripaska “has been investigated for money laundering, and has been accused of threatening the lives of business rivals, illegally wiretapping a government official, and taking part in extortion and racketeering. There are also allegations that Deripaska bribed a government official, ordered the murder of a businessman, and had links to a Russian organized crime group.”
Anti-corruption activists see web of Russian influence
The Anti-corruption Foundation, a Russian investigative group headed by Alexei Navalny, the Russian government’s most high-profile opposition leader, has accused Deripaska of corruption. They told the UK’s Serious Fraud Office Deripaska’s accommodation (on a luxury yacht) of Russia’s Deputy Prime Minister Sergey Prikhofko may have breached anti-bribery laws.
Vladimir Ashurkov, who works for the Anti-corruption Foundation from London, where he sought political asylum in 2014, told WikiTribune that Russian oligarchs like Deripaska “influence the political establishment for the purpose of the British authorities turning a blind eye to the flow of corrupt money from Russia.”
Ashurkov thinks the legislation to tackle the flow of illicit Russian money in London already exists, but law enforcement agencies have been too under-resourced to enforce it.
“It’s all in the political will,” said Ashurkov. “For years our organization has been bringing cases of corruption to the attention of the authorities and we never got any response or traction.”
“The size of this influence is difficult to measure but I’m sure such effect is taking place,” said Ashurkov, who suggested that much of this influence is indirect, such as through investment.
Deripaska’s links to British politicians are among the most well-publicized. Conservative peer Lord Barker was named chairman of EN+ October 2017, shortly before it floated on the London Stock Exchange. Unnamed sources told the FT Barker is not prepared to step down following the sanctions.
Deripaska also still has links to Mandelson, whose PR firm Global Counsel is retained by EN+ (FT, may be behind a paywall).
Global Counsel and Barker did not respond to inquiries.
Deripaska is not alone in connecting with parliament’s upper house. Among the other connections, cross-bench peer Lord Sidelsky is a non-executive director of oil company Russneft, and Lord Myners is a director of telecoms group OJSC MegaFon, which is owned by the oligarch Alisher Usmanov, a major shareholder in London’s Arsenal Football Club.
Analysts expect UK to stay in line with Washington
A Kremlin spokesperson responded to the market volatility on Monday, saying it was “emotional fallout” from the sanctions announcement, and the market would correct itself.
Market observers are less confident, particularly since the U.S. government warned there will be “conesquences” for British banks helping the listed entities in a way that undermines the sanctions.
Per Hammarlund, a strategist at Swiss private bank SEB Group, told WikiTribune the full implications of the sanctions are not yet clear.
“I expect the UK, Germany, and France to abide by and assist U.S. efforts to enforce the sanctions,” said Hammarlund.
Due to the size of the entities under sanctions, Hammarlund warned that smaller bankruptcies could be seen when financing for non-essential subsidiaries dries up, “the cost of which may have to be borne by the local government or banks,” said Hammarlund.