Russian billionaire, Alisher Usmanov, who has been sanctioned by the UK has declared he no longer owns many properties sanctioned, potentially putting them beyond the reach of the law and the government.
The Ex-Arsenal shareholder, Alisher Usmanov’s £82m London home and Surrey mansion which has been put into Trusts linked to the oligarch.
This has, as a result, raised questions over the effectiveness of sanctions imposed since the invasion of Ukraine began. However, the UK government has said Mr. Usmanov “cannot access his assets”.
On March 3, 2022, seven days after Russia’s invasion on Ukraine, which began on Thursday, February 24, 2022, Alisher Usmanov was added to the list of sanctioned Russian businessmen. His assets were frozen, banned from visiting the UK, and British citizens and businesses were also banned from dealing with him.
The UK government said sanctions would cut him off from “significant UK interests including mansions worth tens of millions”. But this is now in doubt because a spokesman for Mr. Usmanov said he is no longer the legal owner of many of those assets.
Foreign Secretary, Liz Truss, disclosed that “We will hit oligarchs and individuals closely associated with the Putin regime and his barbarous war.”
Born in Uzbekistan in the Soviet Union, Alisher Usmanov, 68, owns USM Holdings, a huge conglomerate involved in mining and telecommunications, including Russia’s second-biggest mobile network, MegaFon.
His wealth has been estimated at $18.4bn, (£14bn) including “Beechwood House in Highgate… and the 16th Century Sutton Place estate in Surrey”, the UK government said. Further research into his assets estimated that the Beechwood House is likely to be worth about £82m. But a spokesman for Mr. Usmanov pointed out that most of the billionaire’s UK property, as well as his yacht, have all been “transferred into irrevocable trusts”
Per the details of the Trusts after being signed, cannot usually be amended, modified, or revoked after they’re created. Mr. Usmanov’s Spokesman said when the assets were transferred, Mr. Usmanov no longer owned them“Nor was he able to manage them or deal with their sale, but could only use them on a rental basis. Mr. Usmanov withdrew from the beneficiaries of the Trusts, donating his beneficial rights to his family”.
The spokesman was answering questions about Mr. Usmanov’s wealth put to him as part of an investigation into the assets of 35 oligarchs alleged to be in close alliance with Russia’s President, Vladimir Putin.
The Russian Asset Tracker is a global partnership involving 27 media organisations including the Guardian, the Organized Crime and Corruption Reporting Project (OCCRP) and BBC Panorama.
The project identified $3.4bn (£2.6bn) worth of specific assets that it said belonged to Mr Usmanov. But if Mr. Usmanov is not the beneficial owner of much of this property, it could be beyond the reach of UK sanctions. And the same could be true for other oligarchs.
According to Lawyer and Sanctions Expert, Michael O’Kane, “it’s very common for high net worth individuals… to structure both their commercial enterprises and their personal wealth in a way that gives them maximum tax efficiency.
Quite often that results in structures whereby they release ownership and control in return for more tax efficiency. In order for an entity to be designated under sanctions, it needs to be owned or controlled by a sanctioned person. The more opaque and complex the structures of ownership the more difficult that is to establish.”Lawyer and Sanctions Expert, Michael O’Kane
Who really owns Sutton Place?
Tracing the ownership of the two houses targeted by the UK government has become extremely difficult. Per ongoing investigations, they have been held through a complex web of trusts and companies registered in places like the British Virgin Islands, which have until recently not required the ultimate owner to be disclosed. This illustrates the difficulty investigators will have in working out which assets should be subject to sanctions.
Despite offshore secrecy, a British-based media agency has been able to identify two trusts that have owned the properties and the involvement of one of Mr. Usmanov’s closest business associates.
They involve a long-time associate of Mr. Usmanov, Farhad Moshiri, who is the owner of Everton Football Club, but he is not subject to sanctions. He’s a shareholder in Mr. Usmanov’s company USM, which sponsored Everton until the Club terminated the relationship in the wake of the Ukraine invasion.
Leaked documents obtained by the International Consortium of Investigative Journalists and other corporate records revealed that Mr. Moshiri is the shareholder of a company in the British Virgin Islands called Coney Holdings Limited.
Until 2014, it owned the shares of the corporate trustees of the Sutton Place Property Unit Trust, which owns the Surrey Mansion, drawing a direct link between Mr. Moshiri and the house.