Digest of the main news 20.08/26.08
1️⃣ Frozen Russian assets
The US and the EU are close to providing Ukraine with a $50bn loan to be repaid from future proceeds of frozen Russian assets. In our previous digests, we explained that the EU faced difficulties in disbursing this loan, as the US had doubts about the EU's continuation of its sanctions policy against Russia.
Now, the US is ready to provide $20bn if the EU updates its approach to extending sanctions against Russia. If the sanctions legislation does not change, the amount will be less.
At the same time, the international arena is actively discussing the financing of Ukraine's recovery from frozen Russian assets. Canadian Finance Minister Chrystia Freeland expressed confidence that Ukraine will start receiving funds from frozen Russian assets shortly. According to her, only technical aspects of this process are being discussed. In addition, Japanese Ambassador Kuninori Matsuda said that his country is working with G7 partners to provide external loans from frozen assets to accelerate financial inflows to Ukraine.
This support is echoed by other G7 countries, which in a joint declaration adopted on 25 September in New York pledged to use the proceeds of frozen Russian assets to rebuild Ukraine. The declaration also stressed that Russian assets will remain frozen until Russia stops its aggression and compensates for all the damage it has caused to Ukraine.
It is worth recalling that Denmark has demonstrated its confidence in the long-term freezing of Russian assets by investing a total of DKK 4.2 billion ($628 million) in the Ukrainian defense industry. For this purpose, Denmark will raise funds from Russian-frozen assets.
The European Union does not plan to restrict Ukraine's use of the €35bn loan to be provided by the European Commission. Vice-President of the European Commission Valdis Dombrovskis noted that frozen Russian assets will partially serve as collateral for this loan.
2️⃣ International sanctions policy
🔸New sanctions against Russia
The US has expanded sanctions against Russia to cover virtual financial transactions. The restrictions include PM2BTC and Cryptex platforms, as well as Russian citizen Sergey Ivanov, who is associated with Cryptex, for money laundering and cybercrime. The US State Department is offering up to $10 million for information leading to Ivanov's arrest.
The United Kingdom imposed new sanctions on five ships and two shipping organizations involved in Russia's liquefied natural gas (LNG) sector. These measures are aimed at limiting Russia's plans to increase its share of the global LNG market from 8% to 20%, which is an important source of funding for the war against Ukraine. The sanctions targeted the vessels Pioneer, Asja Energy, Nova Energy, North Sky, and SCF LA PEROUSE, bringing the total number of sanctioned vessels to 30.
On 24 September, New Zealand Foreign Minister Winston Peters announces the extension of sanctions against Russia and Belarus in response to the invasion of Ukraine. The sanctions targeted five individuals and six organizations, including those involved in the occupation of the Zaporizhzhia nuclear power plant and the Russian military-industrial complex, as well as Belarusian figures who support the aggression. New Zealand, together with its international partners, is committed to holding all those who support the war to account and has already imposed sanctions on more than 1700 individuals and organizations since 2022.
🔸Circumventingsanctions
For the first time, the UK has issued a fine for violating sanctions against Russia. Integral Concierge Services received a fine of £15,000 for providing property management services to a sanctioned person whose assets were to be frozen. In the period from 2022 to 2023, ICSL made or received 26 payments related to these services, knowingly violating UK financial sanctions. The company did not appeal against the decision and paid the fine in full, which was the first such practice for the UK Financial Conduct Authority.
The Netherlands reached a settlement agreement with an Amsterdam-based company and its director suspected of violating the Sanctions Act. The prosecution alleged that the company had unlawfully paid millions in dividends and a loan to Russian companies associated with sanctioned persons. As part of the out-of-court settlement, the company will pay €195,000 to the state and its director will pay €20,000.
3️⃣ Sanctions policy of Ukraine
On 20 September 2024, the HACCU ruled in favor of the claim filed by the Ministry of Justice of Ukraine to impose sanctions on Mikhail Gorilovsky and his business partners Viktor Buyanovsky and Andrey Menshov, founders and top managers of the Russian Poliplastik group of companies. The court's decision orders the seizure of these individuals' assets in favor of the state for their support of Russia's aggressive policy. The companies of the Poliplastik Group supplied products for the construction of sewage facilities in occupied Crimea, developed polymeric materials for small arms, and cooperated with the Russian military-industrial complex.
As a result of the court decision, the corporate rights of several companies that were part of the Ukrainian part of the Polyplastik Group were seized. In particular, the authorized capital of Eurotrubplast Trading House LLC, Kalush Pipe Plant Rubizhne Pipe Plant, Polimerteplo-Ukraine LLC, as well as shares in Ukrainian Polymer Group LLC and Cordflex LLC.
In addition, the HACC upheld the claim of the Ministry of Justice to impose sanctions in the form of asset forfeiture to the state on the assets of Alisher Usmanov's USM Group. The court ruled to recover assets for the state, including iron ore products over 165 thousand tonnes and 100% of the authorized capital of Peter-Service Ukraine LLC. The defendants supported Russia's aggressive policy by supplying products to the Russian defense industry, providing telecommunications services to the Russian military, and sponsoring propaganda.
The HACCU Appeals Chamber also upheld the appeal regarding the recovery of assets of Royal Pay Europe LLC into the state's revenue. As a result, cash of more than UAH 53 million, US dollars, euros, and domestic government bonds in the amount of more than UAH 1.75 billion, together with income from these assets, were recovered. The appeal of Royal Pay Europe LLC against the decision of the first instance to recover the assets was dismissed.
At the same time, the Ministry of Justice of Ukraine filed a lawsuit with the HACC to impose sanctions on Russian businessmen Mikhail Fridman, Pyotr Aven, Andrey Kosogov, and Rissa Investments Limited. The Ministry is seeking to recover assets, including an 82% stake in Alfa Insurance PrJSC and stakes in several companies, such as Alfa-Leasing Ukraine and Parity Finance, as well as 100% of the shares in Myrhorod Mineral Water Plant and other companies indirectly owned by the above-mentioned individuals and Rissa Investments Limited.