The European Union’s move to adopt sanctions on six of Russia’s wealthiest individuals, even as half said they wanted the invasion of Ukraine to end, highlights the precarious position the country’s elite find themselves in amid the ongoing attack.
The restrictions imposed are some of the most sweeping yet on Russia’s super-wealthy, freezing assets and putting in place travel bans and trading curbs. The EU is already working on further measures to penalise more oligarchs, people familiar with the plans have said, as it looks to isolate those with close ties to Russian President Vladimir Putin from the financial system and global economy.
Alisher Usmanov owns a major stake in USM, a Russian investment group that has holdings in one of the world’s largest iron ore producers – Metalloinvest – and telecommunications company MegaFon. He’s a former shareholder in England’s Arsenal Football Club and also controls Russian newspaper KommersantCredit:Bloomberg
“Anyone perceived as having close links to the top rungs is going to face severe reputational costs,” said Andrew Lohsen, a fellow in the Europe, Russia and Eurasia program at the Centre for Strategic and International Studies. “It’s going to be harder for them to do business and participate in society in some of the cities around the world.”
Some Russian billionaires are attempting to walk a fine line as they navigate the fast-moving geopolitical tensions.
One of those sanctioned by the EU, Ukraine-born Mikhail Fridman, on Friday called the war a “tragedy” in a letter to employees of LetterOne, the Luxembourg-based investment firm he owns with other Russian billionaires including Petr Aven, who was also sanctioned. He urged for an end to the “bloodshed.”
Meanwhile, Alexey Mordashov, who is majority owner of one of Russia’s biggest steelmakers, said “what is happening in Ukraine is a tragedy for two fraternal nations” and urged that a way be found to “resolve this conflict and stop the bloodshed,” according to Russian news agency TASS.
Along with stakes in Russian companies and extensive real estate holdings around the world, many oligarchs also own football-field-sized yachts and private jets. The UK last week banned all private Russian aircraft from the nation’s airspace and has instructed ports to block any vessels they believe are owned, controlled, chartered or operated by any person connected with Russia, or by sanctioned individuals.
Still, any attempt to seize such assets may prove difficult as laws vary by jurisdiction and many of Russia’s ultra-wealthy own their possessions through holding companies and offshore corporations.
The US, meanwhile, has blocked American companies from doing business with Russia’s central bank and said it would prevent the country’s major financial institutions from using the SWIFT messaging service in coordination with European allies.
Historically neutral Switzerland said on Monday it’s adopting EU sanctions on Russia, including asset freezes.
Here’s a look at the six tycoons sanctioned by the EU, who collectively have a net worth of more than $US60 billion ($82 billion).
Mordashov, 56, is the largest shareholder of Severstal, one of Russia’s biggest steelmakers, and also controls major stakes in gold producer Nordgold and German travel company TUI.
Mordashov became Severstal’s chief executive officer in 1996 at age 31 after accumulating a majority stake in the company using two investment funds he created to buy workers’ shares.
A former economist who earned an MBA in 2006 from Northumbria University in the UK, Mordashov has a net worth of about $US21.9 billion, according to the Bloomberg Billionaires Index.
“I have absolutely nothing to do with the emergence of the current geopolitical tension,” Mordashov said Monday. “I do not understand why the EU has imposed sanctions on me.”
Usmanov owns a major stake in USM, a Russian investment group that has holdings in one of the world’s largest iron ore producers — Metalloinvest — and telecommunications company MegaFon.
He’s a former shareholder in England’s Arsenal Football Club and has acquired stakes in JD.com and Uber Technologies. Usmaov, 68, who also controls Russian newspaper Kommersant, has a net worth of about $US19.7 billion, according to Bloomberg’s wealth index.
“Anyone perceived as having close links to the top rungs is going to face severe reputational costs. It’s going to be harder for them to do business and participate in society in some of the cities around the world.”
In a posting Tuesday on the International Fencing Federation’s website, Usmanov called the EU’s decision “unfair” and “defamatory,” and announced he was suspending his duties as president of the sports association.
Fridman is the largest shareholder of Alfa Group, an investment company that owns stakes in Russia’s Alfa Bank — which is also a target of EU sanctions — and food retailer X5.
He also has holdings in German oil and gas producer Wintershall Dea and the international mobile-phone operator Veon through LetterOne. He resigned from Veon’s board effective Monday.
“I do not make political statements, I am a businessman with responsibilities to my many thousands of employees in Russia and Ukraine,” he wrote in Friday’s letter to employees, a copy of which was obtained by Bloomberg. “I am convinced however that war can never be the answer.”
Fridman, 57, has a net worth of about $US10.6 billion.
Aven is the chairman of ABH Holdings, a company through which he holds a roughly 12% stake along with Fridman in Alfa Bank. He also owns a piece of LetterOne and previously received more than $US1 billion from the 2013 sale of his holding in a joint venture between Russian tycoons and BP Plc.
Aven, 66, has a net worth of about $US5.6 billion, according to Bloomberg’s wealth index.
A statement issued on behalf of Fridman and Aven following the EU’s approval of sanctions against them said they plan to contest a move based on “malicious and deliberate falsehoods.”
Timchenko, 69, controls Volga Group, a Russia-based investment firm with interests in energy, transportation and construction. His biggest holdings are in publicly traded natural gas producer Novatek and chemicals manufacturer Sibur. He sold a stake in oil trading firm Gunvor Group ahead of facing US sanctions over Russia’s 2014 annexation of Crimea.
Timchenko was also sanctioned last month by the UK government as the Ukraine crisis escalated. He has a net worth of about $US11.1 billion, according to Bloomberg’s index.
Ponomarenko, 57, is chairman of Sheremetyevo International Airport, one of Russia’s largest. He made his fortune building a stake in Novorossiysk Commercial Sea Port in the early 2000s with his partner, Alexander Skorobogatko, and later invested in real estate through his proceeds from the logistics firm.
He has a fortune of about $US2 billion, according to Bloomberg’s wealth index.
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