LONDON — The British government has stepped up pressure on Kremlin-linked businessmen, sanctioning a handful of Russian oligarchs, including Roman Abramovich, the billionaire owner of British soccer club Chelsea FC.
It was the first time a Western government had acted against Mr. Abramovich. His trophy assets, including Chelsea, a high-end property in London and mega yachts, helped turn him into one of the most high-profile oligarchs who is now the subject of intense scrutiny from the public. authorities following The Russian invasion of Ukraine.
The United States, United Kingdom and European Union have led global efforts to punish and pressure Russian President Vladimir Putin for the invasion with a series of sanctions against the country’s banks and central bank, as well only through restrictions on oil purchases in some cases and by targeting the assets of Putin associates, Russian government officials and businessmen considered close to Moscow.
The UK government said on Thursday it was sanctioning Mr Abramovich over his ‘preferential treatment and concessions from Putin’ and said a UK-listed steel company he partly owns is supplying steel to the Russian army. A spokeswoman for Mr. Abramovich did not respond to a request for comment.
Mr Abramovich has an estimated net worth of 9.4 billion pounds, or $12.4 billion, the UK government has said. His UK assets will now be frozen and he will be banned from traveling to Britain, the government has announced. Mr Abramovich has previously said he was trying to sell Chelsea, and a person familiar with the matter said he had put his London properties on the market.
The government said it would provide a special license to allow Chelsea to continue operating, despite the sanctions. Sales of Mr Abramovich’s club and homes are now blocked. The UK Treasury must grant a license to allow any sales to proceed. Mr. Abramovich will not be entitled to receive the proceeds of the sale, according to the government.
The sanctions effectively exile Mr Abramovich: he cannot pay for electricity to his properties or buy a cup of coffee in the UK, officials said.
The UK also announced a series of sanctions against several other Russian oligarchs, including tycoon Oleg Deripaska; Igor Sechin, CEO of Rosneft; Andrey Kostin, President of VTB Bank; and Alexei Miller, CEO of Russian energy giant Gazprom.
The announcement marks the UK’s most high-profile sanctions sweep to date. Representatives for those people were not immediately available for comment.
UK agencies, like those of other governments, including the US, have the power to temporarily freeze the assets of individuals or entities within their jurisdiction, without proving criminality. Owners are generally prohibited from selling or benefiting from them until sanctions are lifted or successfully challenged. However, governments generally cannot take ownership of assets except after lengthy legal proceedings that would require proof of breach of law. The UK government, however, is considering laws that would give it the power to seize sanctioned assets.
Across the West, Russian oligarchs are facing an unprecedented coordinated assault on the businesses they created in the wake of the collapse of the Soviet Union. Anger over the invasion of Ukraine – and hope that sanctions could pressure Mr Putin to change course – has sparked a hunt for the assets of these oligarchs by the US, UK and European. London has become the epicenter of surveillance.
From the mid-1990s, it was a welcome recipient of Russian investment. But following the invasion of Ukraine, the British Parliament passes an emergency law to facilitate the freezing of the assets of those with links to the Kremlin. UK Foreign Secretary Liz Truss said this would allow the country to sanction hundreds of individuals by March 15.
“There can be no refuge for those who supported Putin’s vicious assault on Ukraine,” British Prime Minister Boris Johnson said.
The UK government has recently come under fire for not sanctioning enough oligarchs, giving them space, critics say, to sell assets or transfer them to associates. British officials had previously delayed sanctioning Messrs. Abramovich and Deripaska, partly out of caution about protracted legal battles, officials said. New laws due to come into force next week will limit the amount of damages the government is required to pay if people sue for being punished.
Representatives for Mr. Deripaska and United Co. Rusal PLC, the aluminum giant he partly owns, were not immediately available for comment. Mr Deripaska has not been to London for more than two years, a person familiar with the matter said. Mr Abramovich has in the past maintained a relatively high profile in London, attending Chelsea games, for example. He has rarely been seen here in recent years.
Highlighting the difficulties authorities can have in seizing the assets of oligarchs, many are owned by family or through a complex system of offshore companies. The house Mr Deripaska used in London’s exclusive Belgravia area is owned by a family member, according to the person familiar with the matter.
Oligarch Alexey Mordashov, sanctioned in the European Union but not the UK, transferred control of his majority stake in UK-registered mining company Nord Gold PLC to his wife, according to company filings , days after Mr. Putin ordered the dispatch of troops to Ukraine. Nord Gold declined to comment.
Mr Mordashov, in a statement, said he had “absolutely nothing to do with the emergence of the current geopolitical tension, and I do not understand why the EU has imposed sanctions on me”. A spokeswoman declined to comment further.
Mr. Abramovich sold many of his early business interests, which included an energy giant now owned by natural gas company Gazprom. Mr Abramovich, however, still owns about 2% of MMC Norilsk Nickel PJSC, one of the world’s largest producers of critical minerals, and 29% of Evraz PLC, a London-listed steel and mining company with operations in Russia. , in the United States and elsewhere. The United Kingdom said on Thursday that Evraz had supplied steel to the Russian army. Mr. Abramovich has also invested in a number of startups, according to a person familiar with the matter.
The UK’s Financial Conduct Authority said it had temporarily suspended Evraz from trading pending clarification of the impact of UK sanctions. Later Thursday afternoon, Evraz said he did not believe the sanctions against Mr. Abramovich applied to the company. It clarifies that in the last five years, two directors have been appointed by Mr. Abramovich, and that it therefore does not consider him to be a person exercising effective control over the company. Evraz said it only supplies steel to the infrastructure and construction sectors.
The acquisition of Chelsea by Mr Abramovich in 2003 was the start of a wider madness in London. He bought several luxury properties, including a 15-bedroom mansion on a street in London nicknamed “Millionaires’ Row”. He also bought many works of art and one of the largest yachts in the world.
SHARE YOUR THOUGHTS
Will sanctions against Russian oligarchs be effective in pressuring Vladimir Putin to end the war? Join the conversation below.
The 553ft yacht, called Eclipse, reported on Thursday evening that its last position was near Madeira, close to West Africa, according to ship tracking sites FleetMon and MarineTraffic. He had previously given his location to Philipsburg, in the Netherlands Antilles, in the Caribbean. Another of his yachts, the 460ft-long My Solaris, departed earlier this week from Barcelona, where it had been moored for three months, according to tracking sites. On Thursday, the ship was sailing south of the Sicilian port of Ragusa.
Mr. Abramovich, a college dropout orphaned at a young age, made his money in the oil business. He partners with Boris Berezovsky, a mathematician turned entrepreneur who has close ties to former President Boris Yeltsin. The two merged their oil interests to create OAO Sibneft, which was later privatized.
The deal turned Mr. Abramovich into a multi-billionaire. After creating Sibneft,
he then helped found Rusal, the world’s second-largest aluminum group.
The UK government has said Mr Abramovich and Mr Putin have had a close relationship for decades and the tycoon has benefited financially from that relationship. This included tax breaks received by companies linked to him, the purchase and sale of shares from and to the Russian state at favorable rates and contracts his companies received in the run-up to the World Cup. football 2018, said the government.
—Benoit Faucon contributed to this article.
Corrections & Amplifications
Roman Abramovich acquired Chelsea in 2003. An earlier version of this article misspelled the football club’s name as Chelsa. (Corrected March 10)
Write to Max Colchester at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8