Senior politicians are demanding action to stiffen the rules after an investigation by The Times and Transparency International revealed details of property owned by families of sanctioned oligarchs
Thomas Saunders, George Greenwood and Emanuele Midolo
March 08 2023
The Times
The government’s sanctions regime must be strengthened to include relatives, according to campaigners, as it emerged the eight-year-old daughter of one of Vladimir Putin’s former regional governors owns a £2.3 million flat in Kensington.
Analysis by The Times has revealed that hundreds of millions of pounds of property are held by the family members of individuals with links to the Kremlin who have been sanctioned either by London or Kyiv.
More than 1,300 individuals have had their assets in the UK frozen since the Russian invasion of Ukraine last year.
However, properties owned by family members of those with ties to the regime are far less likely to have been touched, records released under new anti-money laundering disclosures show.
An investigation by The Times and Transparency International can reveal:
- The wife of a UK-sanctioned oligarch owns commercial premises in Paddington bought for nearly £100 million, which include an office block, rented by WeWork, and a pub.
- A Ukraine-sanctioned Russian tobacco magnate has passed parts of a £40 million 19th-century Surrey estate to his children.
- The eight-year-old child of a former regional governor, who has chaired the Russian Bar Association and is sanctioned in Ukraine, owns a £2.3 million flat in Kensington.
- The family of a pro-Russia Crimean political activist, who helped facilitate the region’s annexation by Russia and is wanted in Ukraine on suspicion of treason, own a string of properties in Earls Court and Tulse Hill.
Last night the government was facing calls to overhaul the sanctions regime from senior Conservative MPs.
Sir Iain Duncan Smith, a former Tory leader and co-chairman of the all-party parliamentary group on Magnitsky sanctions, said: “We need to get on top of all this very quickly. The UK should take a lesson from the US government: they’ve sanctioned more people and with greater levels of degree when it comes to families than the UK has. The UK is, categorically, lagging way beyond the US. The UK has to do two things now: first, accelerate the way it addresses its sanctions, picking up on family members; and second, it has to turn its head to the seizure of these assets because that money can be used for the benefit of Ukraine.”
Alicia Kearns, who chairs the foreign affairs select committee, said: “An effective sanctions policy relies on enforcement. While oligarchs try to hide their gains using their children, parliament has passed laws to close down such loopholes through the Economic Crime [and Corporate Transparency] Bill. We now need law enforcement to use the tools available to them, such as unexplained wealth orders, and the government to give them the confidence and proper resourcing to do so.”
Sir Robert Buckland, the former justice secretary, said: “The economic crime bill before the Lords now is an opportunity for us to really clamp down and make sure that the reach of sanctions is as effective as possible.” The revelations will draw attention to the ways in which sanctions regimes can potentially be circumvented.
Unless specifically designated, those closely linked to a sanctioned person are able to divest themselves of assets at will, even when a sanctioned person provided the funds to purchase them. Currently, relatively few relatives of sanctioned individuals are also under sanctions.
Dame Margaret Hodge, the Labour chairwoman of the all-party parliamentary group on anti-corruption, said: “Our sanctions regime is falling to pieces almost as quickly as it was built. And it will continue to let Russian oligarchs off the hook until we close the loopholes, toughen up law enforcement, and put an end to our culture of opaque ownership.”
Ben Cowdock, the investigations lead at Transparency International UK, said: “Those designated on the UK sanctions list have often shared their wealth among those close to them, using trust structures to blur the lines of ownership even further. Following the money is an important factor in making sanctions effective, especially when those designated often share their wealth among family, friends and associates.”
New transparency disclosures reveal that Elena Berezkina, an art patron, owns a development in Eastbourne Terrace in Paddington, west London. Her husband is Grigory Berezkin, who was estimated to be worth $750 million in 2021 by Forbes Russia, and was among the 200 richest business people in the country. Berezkin is the chairman of ESN Group, a Russian private equity group with investments in media, energy and infrastructure. He is subject to a UK asset freeze and travel ban on the grounds of “supporting the government of Russia by directly owning and controlling an entity carrying on business in a sector of strategic significance” — the energy sector. He is also sanctioned in the EU, which claims he is a “henchman” of Vladimir Putin, with the president having attended the signature ceremony for a deal between ESN and business partners to invest in Russian shipbuilding. He is currently appealing against his sanction. Elena Berezkina is not sanctioned in the UK or EU, but is subject to sanctions in Ukraine.
The property was purchased for £96.75 million in January 2011, Land Registry documents show. Berezkina declared her ownership commenced in 2015.
The offices, which are let to the co-working company WeWork and the mining giant Rio Tinto, could now be worth twice that sum. The companies have faced their own controversies, with WeWork struggling to make a profit while Rio Tinto has faced investigations into its business practices.
Berezkin is also cited as the person behind the Russian treasury bonds scheme in 2017 that was designed to encourage wealthy Russians to repatriate their wealth and mitigate the impact of any new sanctions.
ESN bought a controlling stake in the Russian media company RBC in 2017, after Kremlin insiders had allegedly grown tired of critical reporting of the Russian government under the firm’s previous ownership.
In Europe, Berezkin has been subject to a number of asset freezes. It was reported that in 2022 French authorities had seized €70 million worth of properties, including several chalets. These assets were held by French companies owned by Berezkin and his wife.
It was also reported that Italian authorities froze a €15 million property owned by Berezkin by Lake Garda in northern Italy. Berezkin had acquired a “golden passport” in Cyprus in 2012, but last April the Cypriot authorities announced they had revoked his citizenship.
Lawyers for the Berezkin family said he is challenging his EU sanctions, including allegations made in his sanctioning statement. They said he is also considering a challenge of his UK sanctions, but that he did not wish to comment further.
The eight-year-old daughter of Vladimir Gruzdev, a Russian billionaire and former regional governor, also owns property in the UK, principally a £2.3 million flat in Kensington. Her ownership was declared to have commenced in February 2022, according to filings at Companies House. The flat comes with a parking space and maid’s room and was originally bought through a Cayman Islands-registered company. Gruzdev, like Putin, is a graduate of the Red Banner Institute, one of Russia’s foremost espionage academies. He served for three years in the state’s foreign intelligence services before moving into business, according to a now-deleted biography on the Russian Bar Association website archived on Ukraine’s government sanctions portal.
He quickly became a successful businessman, helping to found Seventh Continent, a large grocery retail chain across Russia and Belarus. In 2007 he sold his stake to a partner, making himself a billionaire. As of 2021, Forbes put his net worth at about $900 million, placing him 133rd on the magazine’s Russian rich list.
Gruzdev has also found success in Russian politics, winning a seat at the Russian Duma in 2003 before becoming governor of the Tula region, south of Moscow, in 2011.
He was awarded both the honorary diploma and certificate of honour by Putin himself during his time in the Russian parliament. He resigned from office in 2016 and recently held the position of chairman of the Russian Bar Association. Although sanctioned by Ukraine, he is not on the UK sanctions list. Gruzdev declined to comment.
The Witley estate in Surrey was developed by the 19th-century fraudster Whitaker Wright. Wright committed suicide after being sentenced to seven years in prison and much of the estate was then bought by William Pirrie, the shipbuilder behind the Titanic.
Oleg Smirnov and his wife bought the Surrey estate for £30 million in 2018. The Russian businessman co-founded the Russian tobacco giant SNS Group in the early 1990s, which accounts for about 20 per cent of the country’s cigarette market. In the decade before the Ukraine war, Smirnov ingratiated himself with the UK establishment. He and his wife are listed as one of four major donors to the Royal Albert Hall and were also big donors to the King’s charity, the Prince’s Foundation.
In 2016, Smirnov donated £100,000 to the Conservative Party through a UK subsidiary of his tobacco company, Global Functional Drinks. Smirnov, who acquired EU citizenship after buying a “golden passport” in Malta in 2016, has been sanctioned in Ukraine. Parts of the Witley estate were bought by a Guernsey-based company, Witley Park Limited, for about £7 million later in 2018.
Companies House filings show that until at least September 2021 Oleg and Galina Smirnov were majority owners of the company, with their two British daughters holding minority stakes. In 2019 the Witley parish council newsletter named the oligarch and his wife as the new owners of the estate. According to the newsletter, Smirnov had significant plans for the estate, which included adding two missing wings to the mansion that had burnt down in 1952. By December 2022, a separate filing for the Guernsey firm showed that parts of the estate had passed to Smirnov’s 15-year-old son, who now jointly owns the properties with his two sisters. Smirnov has been sanctioned by the Ukrainian government since October last year, but he is not subject to sanctions elsewhere. Smirnov was approached for comment. The Royal Albert Hall said it completed appropriate due diligence on the donations, which it had accepted since 2017.
The Conservative Party said: “The donation was fully vetted and cleared in line with Electoral Commission rules.” It added that Smirnov was not the sole person involved with Global Functional Drinks.
It is understood the last donation to the Prince’s Foundation was made in 2021, and all donations adhered to charity regulator guidelines.
Teenage relatives of a pro-Russian Crimean politician wanted on grounds of treason by Kyiv for his role in Russia’s illegal annexation of the Ukrainian territory own a string of properties in London.
The teenagers are the niece and nephew of Mikhail Britsyn, who played a significant role in Russia’s annexation of Crimea, and are recorded as the beneficial owners of multiple properties.
Britsyn is sanctioned by Ukraine, and wanted by the country over his role in voting to hold a referendum on whether Sevastopol should become a part of Russia as a member of the city council after the Russian invasion in 2014.
The children’s mother, Karina Zaman, was a pro-Russian politician in Crimea before the annexation, a member of a regional council within Sevastopol, the largest city in Crimea, and a founding member of the NGO Russian Political Forum Sevastopol alongside her brother, according to Ukrainian company documents.
Her brother continues to maintain a public profile in Crimea where he is a member of Sevastopol’s regional political council for Putin’s United Russia party, vocally supporting Russia’s renewed invasion in 2022.
Along with Zaman, Britsyn featured as a director of a company associated with the management of the properties owned by his relatives alongside other members of the Britsyn family.
Both the management company and the properties were ultimately owned by a Gibraltar-based company, which registers its beneficial owners as Zaman’s teenage children.
The family were approached for comment. No other family members are currently subject to sanctions.
Dame Margaret Hodge said: “Every month, new stories emerge about children, grandchildren or partners who suddenly become trustees in large business empires, or become the owners of luxury yachts, planes and mansions around the country. And that’s just the tip of the iceberg. Where is the urgency from the government to crack down on this? Until we fix it, new sanctions will be nothing more than a slap on the wrist. We cannot afford to fail Ukraine on this, nor can we continue to be awash with Russian money.”
Cowdock, of Transparency International UK, said: “Lifting the veil of offshore secrecy helps to ensure the UK sanctions regime has teeth while enabling a crackdown on illicit wealth invested in real estate here. Ministers should be proud to have finally delivered this reform after years of delay. Given the speed at which this law was passed, it’s no surprise our research has found the new register has a few loopholes that need closing.”
He added: “The widespread use of trusts continues to prevent those investigating financial crime from identifying suspect funds invested into UK property. The government should seek to address this.”